The Ramsey Show - App - When You Feel Pressure to Buy a House (Hour 3)

Episode Date: August 1, 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. I'm Dave Ramsey, your host. This is your show. It's all about you. The phone number is 888-825-5225. That's 888-825-5225. Akimi starts off this hour in North Carolina.

Hi, Akimi. How are you? Hi, Dave. How are you? Thank you so much for taking my call today. Sure. What's up in your world? I am 30 years old.

I'm married, and combined, me and my husband have roughly $328,000 worth of student loan debt. I know a house is out of the question. Goodness. But wait a minute, who's the doctor or lawyer? Unbelievable. Neither one of us. I'm a clinician. I'm a counselor, marriage and family counselor, and he does graphic design and engineering. But I just graduated last year, i'm still why so much student loan debt for those degree fields well he's out of state so that's where he got hit in the head he has 166 000 so he went to a different state that's why his is so high graphic artist uh-huh and and mine mine is undergrad and graduate combined. Okay. What's your household income? Combined together, we're, let's see, I make $45,000 a year.

He makes about $55,000. Okay. It's going to be a long slog, isn't it, kiddo? It is. I know. I already have no hope. Well, I want you to have hope, but it's going to be a distant light over the horizon. I mean, you've got mathematical issues here with $100,000 towards $300,000.

I mean, if I do 60 a year out of your 100 and put you on beans and rice into 300, that's like, what, in that five years? Yeah. Yeah. You've got a tough five, six years ahead of you, and that's if you really, really dial it back. And, no, you don't need to buy a house until you clean this mess up. Unbelievable. Kids are out of the question, too, right? Do what?

I'm saying kids would probably also be out of the question, out of the scenario. No, but you won't be able to quit work and stay home. Oh, no, no, no. I've never wanted to, but I couldn't do that. Okay. I mean, kids, you can have kids, and they're not that expensive. I mean, you know, they eat what you eat usually, if you're smart, once they get past the early stages anyway. But kids don't break you. But, you know, you don't have an extra $30,000 to save up and put down on a house while you've got $338,000 in student loan debt making $100,000.

Yeah, absolutely not. Yeah, we're in an apartment, so we're going to – I told them we need to stay there until we knock down some of this debt. Yeah, you need to get some progress on it before you even move to a rental house but um yeah i think you're gonna it's gonna take you a while so you're gonna have to live somewhat of a life but you know you don't need to plan on vacations and you don't need to plan on expensive car purchases or anything else you've got a substantial mess on your hands and you're gonna have to really lean into it to make it go away inside of 10 years. You can do it in five. You're going to have no life at all.

You can do it in six and have a tiny bit of a life. But it's not going to be buying a house and it is going to be you're having kids during that time for sure. I mean, that's a long time to put off having kids. But so are either one of you let's see he's in graphic arts he's making 60 why are you only making 40 as a counselor that's low no i so i work full-time as at an insurance company i'm not fully licensed yet so i'm provisionally licensed so i work part-time at a crisis center so i won't get my full salary as a clinician until i'm fully licensed

which will be about what another year you got a year worth of practice about a year about a year and a half anywhere from a year and a half to two years since i just started at the crisis center this year you have to get so many hours of practicum yes sir okay all right and then your master's allows you to pass and start yeah as a, you ought to be up around 100, shouldn't you? Hopefully. Yeah. See, that changes our numbers a little bit once you get there. Okay.

Because it doubles your income. It takes you from 100 to 160. Yes, sir. You know, and household income, and that changes the curve. So you might do this. You know, given that, you might do this in four years. Okay. But you guys are just going to have to be very intentional.

I don't want you freaked out, paralyzed with fear, but I want you scared enough to stay on task. Okay. You know, a healthy kind of a fear, like don't touch the hot stove kind of fear. Right, okay. Not I'm overwhelmed, I'll never get out of this, and I'm hopeless. Not that. That's not what we want. You've got to fight through.

But you can do it. I can mathematically see it. I just know you've got a long, tough life ahead of you for these next couple years. Okay. And quick as you can get that practicum under your belt and double your income, the faster you do that, the faster this mess is gone, and the faster you move on past it, right? Yes, sir.

So that gives you a whole other reason to crank up those hours to get, because it's a number of hours in most states, is it in North Carolina? Yes, it is. We need 1,500 before we can be fully licensed. Yeah, and so I'm working that like it's my overtime job because it gets me towards 100K income away from my 40. Okay mean i'm gonna go in all in on that uh you know for this you know maybe we can turn two years into 12 months if you go bizarre crazy on that or maybe 14 months or something you know instead of just going well the normal is no normal ain't where you are right so you know get after it and um have you guys been through financial peace university

no sir we haven't my mother-in-law i want you to go through it because i want the support around you for you to guys to get dialed in on a hardcore track that gets you out of this mess okay and i'm going to pay for it i'm going to give it to you okay well thank you thank you all right it's a nine-week class. You have to go once a week for nine weeks. You have to attend if I give it to you free. And then someday when you're out of this mess, you find somebody that's scared and overwhelmed with student loan debt, and you pay for them to go through.

But that's later on, okay? You'll have plenty of opportunities to do that as a clinician, I promise you. Wow. Thank you for the call. Open phones at 888-825-5225. Diana is in Fort Lauderdale. Hi, Diana. How are you?

Hi, Dave. I'm great. How are you? Better than I deserve. What's up? So I'm calling about, I'm currently in baby step three. I'm 33 and I'm renting and my current salary is $65,000 a year. I was previously contributing to 401ks and IRAs, so I have about $40,000 in that. And then I have my current

savings is about $30k, which includes my emergency fund. How much of that is your emergency fund? I'd say about $10k. Okay, so you've got $20k in excess of that is your emergency fund? I'd say about $10,000. Okay, so you've got $20,000 in excess of that in savings for what? Well, that's my thing. I want to purchase a home. I just don't know how long to be in Baby Step 3 before. I'm currently renting, and my family is kind of recommending that I go ahead and buy already, and I just don't know if I can get what I want. I mean, I have taken a look around, and what I want is great, you know, something short-term,

but when I think about future, a five-year plan, I kind of want something bigger. Well, if you want to buy and move again, you're probably ready to buy. But if you want to stay somewhere five years, you're probably going to need to save a little bit more, I'm guessing, in the Fort Lauderdale market. And so, you know, but broke family members giving you financial advice, that isn't who we listen to. You listen to your heart. You're doing really good with money,

and I think your judgment is going to tell you when to do this. I mean, you're not going to be in there but another year no matter what you do. So you're going to be fine. 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. Thanks for joining us, America. This is Common Sense for your dollars and cents. It's called The Dave Ramsey Show. Russell is with us in Springfield. Hi, Russell.

How are you? I'm doing very well. Dave, thank you very much for taking my call. Sure. What's up? I have a quick question about, I'm trying to see if restructuring this loan would be better or just pay it off as is. I have an $8,500 personal loan that's an interest rate of 27.9%. I have the opportunity to take $6,790 of that, put it onto a credit that would be 0% interest, so 3% upfront charge, but then for a year, it's 0% interest.

And that would allow me to actually, I'd have to put less towards that high interest loan, but it would allow me to pay it off in probably about four months and then take all that extra money that I'm putting on that towards the new $6,700 loan that I just took out. Okay, so you're going to pay the $6,800 off in four months. No, the $8,500, which is what the personal loan is. That will be paid down by the $6,700 at 3%. And then for the rest of the full year, I have 0% on the money that I put today. I got that part.

So you're saying you're going to reduce how much debt? How much debt are you going to pay off in four months? In four months, there will be at least about $3,000. $3,000 in four months? Yeah. Okay. And what is your household income? Between $50 and $55.

Okay. So $1,000 a month is what we're talking about here, that you're going to pay this debt off. Yes. Okay. And that will get me out of the 27.9%. So let's just do some basic math for a second, okay? $8,500 at $1,000 a month plus some interest is nine months it's going to take you to be debt-free. Does that make sense?

Does that sound right? Yeah, on that one loan, yes. Oh, you have other debts. There's a car loan and a student loan involved as well. Okay, and how much do you owe on your car? $12,300. And how much is owed on the student loan? $24,700.

Okay. All right, we'll go back to this piece of math first, the $8,500. In nine months at $1,000 a month, you'll have that paid off in nine months. Agreed, right? Now, that's both of these loans. But I won't be able to put $1,000 a month on it. Why? I don't have that much funds.

Right now it's going to be about $700. That's weak. You need to do your budget over. That's weak now you need you need to do your budget over that's weak okay you need to be paying off at least twelve thousand dollars a year on fifty five thousand dollars a year okay at least i'd like to see you doing more so quit eating out i'm not sure on those numbers yet well i'm just saying here's the numbers listen 55 000 12 000 out of that that's a that's a minimum you got to pay 12 000 off a month i mean a year out of 55 000 you're not you're going to be in debt forever if you don't crunch if you don't crunch your budget down to nothing. So we're going on beans and rice, rice and beans, not going on vacation.

Christmas is a craft, and we don't go out to eat. You don't see the inside of a restaurant unless you are there working. That's the only time you're going to be in a restaurant for the next little while until you get this mess cleaned up. You have debt coming out your dadgum ears, and you've got to work it off. Now, let's go back, though, to your original math equation and use my numbers for a second, and you're going to have to go home Now, let's go back, though, to your original math equation and use my numbers for a second, and you're going to have to go home tonight and work on your budget, okay?

But let's use $1,000 a month, and here's what you're dealing with, okay? You're going to save on nine months on $6,800, basically 24% a year, which is about 18%. So this event is going to make you about $600. Okay? So restructuring this loan the way you're talking about, if you pay it off inside of nine months like I'm talking about, is a $400 to a $600 savings somewhere in there.

Is that worth it? The answer somewhere in there is that worth it the answer is yes it's worth it you send me a check for four hundred dollars i'll cash it right now having said that though you need to listen real careful to this you don't have a four hundred dollar problem you have a forty thousand dollar problem So you need solutions that are bigger than $400 to get after this, and that's your budget and extra work and selling stuff and Craigslist and tightening down and tightening down and tightening down because you've got a car, a student loan, and a credit card to pay off. And interest rate manipulation is not going to get you where you

want to go it's okay to do it but you know out of all the money that you need it's about one or two percent the other 98 is going to come from the sweat of your brow and the crunching of your budget do you see the difference i do so here's what happens. People get distracted. People get distracted and think that they did something by this interest rate manipulation, this debt restructure. And then they don't do anything else. And so they have a 1% positive movement in their life instead of a 99% positive movement in your life. And to have that, you're going to have to cut to the bone all around your life to make this happen. And so it's okay to do this debt restructure. It's not a bad thing unless it makes you feel like you have done all you can do,

and now you can go back to coast mode. Coasting is never an option for you again. You have a lot of very difficult work to do. It's going to take you almost three years to clean up this mess. never an option for you again. You have a lot of very difficult work to do. It's going to take you almost three years to clean up this mess, but you should be 100% debt-free except your home in three years making the kind of money you're making. People do it all the time. Ryan is with us in Chicago. Hey, Ryan, how are you?

Hey, Dave, I'm well. Honored to speak with you. Thank you, sir. How can I help today? Well, my wife and I have been contemplating a rather big career move here. We currently live in Chicago, and it's been a goal of mine to get back to Oregon for a long time. And I think I'm about to get a good job offer, finally. The only caveat is it would be a tremendous step down in pay from about $125 right now to about $80.

Okay. Why is that a good job offer? Well, for the valley I grew up in, there's not a lot of industry out there. Mm-hmm. And trying to get back close to my parents. Mm-hmm. And my siblings and whatnot. My wife's on board with the move.

We are debt-free in looking at our budget. We can make the numbers work and still put money into savings. It's just scary being put to a tremendous step down and pay for it. Okay. Is that a permanent step down? I mean, is there a way to take that income back up? What do you do? I'm in operations management.

So it would be a lateral move, only I'd be starting over with a new company now. There is, I see tremendous opportunity for growth with this company. They have expansion plans in the future. So yeah, I certainly see upward potential for my income as well as my wife. She just started doing direct sales from home this past year. She started doing what from home? Direct sales from home.

She sells for Rodan and Fields. Okay. And is she making any money? Yeah. She's done all right. This first year, she's kicked up her income to about $800 a month right now. And that's continued to grow. That's gross. That's not net's continued to grow. That's gross.

That's not net. Yep, yep, it's gross. That is net, sorry. That is net. Oh, okay. All right. Well, and, of course, that's a multi-level, and so for that to work, it relies on relationships. And she's moving into an area where she knows no one.

She has, of course, my family out here and my friends i know we're actually hoping that creating new relationships relationships out there will help her grow her business well it's going to be very very difficult um but there's multi-level relation multi-level is a very tough way to grow relationships so that part of it i'm not excited about for you. It's okay. It's okay. It's not a bad move. You can do it. You've done the math.

If it's where you guys want to live and a choice you want to make, that's not bad. I always wonder, though, is there not a place you can make more money doing something in that same area? That's always my third option pitch that you fell for. They promised you exclusive access to travel anywhere you want. Tropical beaches, mountain getaways, or whatever. Oh, my gosh. They claimed it was the affordable way to travel, and then they convinced you it was a good investment. But here's the deal. Search any auction site for your exact timeshare and see what it's selling for.

It's listed for a dollar with no bids. That's not a good investment. Now, I know I'm just adding salt to a very old wound, but look, if you tried calling the resort and they won't take it back, if you tried selling it and no one will buy it, call Timeshare Exit Team. Timeshare Exit Team will get you out. You'll have to be patient. It can be a long process, and it costs money, but it works.

They're so confident in their exit service that if they don't get you out, you get a 100% refund. Call 844-999-EXIT. It's free to talk. 844-999-EXIT. TimeshareExitTeam.com From Indianapolis, Stephen and Lisa are with us. Hey, guys, how are you? Hey, we're doing well.

Welcome, welcome. I see on my screen you're debt-free. Congratulations. Thank you. Thanks. Awesome. on my screen you're debt-free. Congratulations. Thank you. Thanks. Awesome. How much have you paid off? $123,000.

I love it. And how long did that take? It did take 11 years. 11 years. All right. And what kind of range of income during that time? We started off with $60,000, and that dropped when we started having kids and leave the state home. Picked up some part-time jobs along the way.

And then last year, we had a big jump up to $160,000 now. Okay. So it dropped from $60,000 down to what? It would fluctuate between $50,000 and $55,000. Okay, down to like $50,000. And then all the way up to $160,000. What happened on that jump? I had a job change.

I got a grant to go back to school and get an advanced degree and then got hired in in a new position. Wow. What's your advanced degree in? It's an MBA in educational leadership. Good for you, man. Congratulations. So the $123,000, is that your home?

No. Everything but the house. Okay. So what was it? It was a combination of school debt from college and new car. New car and wedding. Wedding. Okay.

And so 11 years you've been pounding on this. Yeah. Wow. The first three months after FPU, we did 15,000, then found out we were pregnant, and so we kind of had to readjust the snowball so we could plan for maternity leave. Right. But just kept at it. Right. And then how many kids do you have now?

Three. So during this time, you had three kids. Three times you stopped the debt snowball while you were, you know, working the pregnancy plan, right? Yes. And then get back on it. Wow. Very cool. So how does it feel after all that time to finally be through this?

It is exciting. It feels very freeing. How did you stay with it all that time? A lot of prayer. A lot of prayer and just a lot of coaching one another. But you didn't add any debt, so you weren't like living a regular life. You were fighting it, but it was just painfully slow. Yeah, I mean, it was, like I said, the extra job.

No cable, no vacations, no extra stuff. For 11 years? Yeah. Wow. I mean, you've got to For 11 years? Yeah. Wow. I mean, you've got to feel like you've been set free. It's really exciting. We sold our house last year and moved to another house, and it's a 15-year mortgage, but we're on plan to have it paid off in 10.

And in this one year, we've doubled the equity we had in this house compared to the 10 years we were in our former house. So now it's kicking in. Yeah. It's incredible. Very cool. And you're making this great income now. Yes.

So, I mean, wow, what a turnaround. I mean, this versus, say, six years ago where you were just like, are we ever going to get out? And now here you are with $160,000 and, you know, got plans to pay off the house in under 10 years, and it's a newer house. Yep. That's a cool place to be. Well, congratulations, you guys. So you got married 11 years ago? That's what started the process?

Yes. Yes. Well, I came from a family that I just saw my parents struggle a whole lot, and one day we were sitting in church, i told steven at the time we have to do this before we get married this is a must the financial the financial peace university class in church or what yeah okay so this meaning the class yeah okay because you're like looking back at the way you grew up mom and dad were great but they didn't know this stuff and i got to learn this stuff no we definitely lived paycheck to paycheck and i didn't want that for my life or my kids yeah you need a new set of information than i got growing up

yeah we all need different information than we got growing up absolutely some more than others but i mean that's not an unusual thing. And so what about you, Stephen? Did you know all this stuff already kind of or before you were married or what? Oh, absolutely not. Lisa has always been the disciplined one, and I was, let's just spend what we have. And so now she's much more disciplined, and is the one that kind of kept us going and would keep directing the ship back to where we needed to focus our money. Got it. Way to go.

So what do you tell people the key to getting out of debt and sticking with it all that time is? It's all about being communicative, communicating with one another, being on the same page, because if we're not on the same page, then it's not going to work for us. And just the idea that the sacrifice now is going to lead to great rewards later. Okay. So you've got to see a light at the end of the tunnel that's not an oncoming train. Absolutely. And with your plan, paying off the small things first,

those were the little victories that we needed to have up front. Those student loans were killers from before we got married. small things first. Those were the little victories that we needed to have up front. Those student loans were killers from before we got married. Those were killers for us, and that was that monkey on your back. But those other wins kind of gave us the fuel to keep moving forward. Very cool. Well, congratulations, you two. Very well done. We've got a copy of Chris Hogan's retire-inspired book.

That needs to be your next chapter. And now that you've built up some momentum here and you've turned the corner, we want you to move towards that millionaire status and be outrageously generous as you go along, okay? All right. All right. Stephen and Lisa, Indianapolis, Indiana, $123,000 paid off in 11 years, making $60,000, then down to $50,000, and now all the way up to $160,000.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Ha, ha, ha! Way to go, you guys! Awesome! Very, very well done. Very proud of you guys. Awesome. Very, very well done.

Very proud of you guys. Wow. That's a long time to fight through that. Wow. Tiffany is with us in New Orleans. Hi, Tiffany. How are you? Good afternoon, Dave.

Afternoon. How can I help? I am somewhat finished with Baby Step 2, and I have a question about Baby Step 3. Will my employer's guaranteed accrual satisfy Baby Step 3 if I were to separate from my employment? No. The amount I would receive? No. Okay.

Because it's an emergency fund. It's not an unemployment fund. You have other kinds of emergencies that have something to do other than a job. Transmission goes out of your car. It's not an unemployment fund. You have other kinds of emergencies that have something to do other than a job. Transmission goes out of your car, it's four grand. Accrual doesn't help with that. Okay. Mom's brother-in-law dies in California and you need to buy an airline ticket and go over to the funeral. The accrual doesn't help with that. It'll help you with the day off, but it won't pay for the ticket. And so there other kinds of emergencies now what it does do is it takes care of one of the big fears for an emergency fund and that is the loss of a job right that's your question and so

if you wanted to on the three to six months of expenses equation be on the three side rather than the six side, that would make a lot of sense. Yes. Because you've got this backstop on one of the big items, but other stuff can occur, so you always need that rainy day fund because rain comes in different forms. Mm-hmm. That's what it comes down to.

How long have you been teaching? Oh, I'm a government lawyer. Oh, a lawyer. I'm sorry. I thought you thought you said teacher i misunderstood okay cool so how long have you been doing that oh good that's 20 years wow so how much accrual have you got built up oh well they only guarantee three months three months oh okay oh so it's not like one of those things where you've got two years worth or something, no, and because I'm largely or basically through Baby Step 2, I have very little expenses other than my mortgage. Right.

That's what we hope for by the time you get there, by the time you get to Baby Step 3, because if you had to do Baby Step 3 with all that debt payments in there, it would be a lot bigger fund, you know, and so one of the reasons it's in that order in our baby steps but yeah i i want you to always have an emergency fund because emergencies come in different forms but the good news is you have a a steady job with a government position and something's pretty predictable and you have the accrual as a backstop so that takes out a lot of your risk but you do have other kinds of risks.

So let's have that emergency fund on the three times your monthly expenses side of the three to six months equation. Good question. Thank you for joining us. This is The Dave Ramsey Show. Can you believe this real estate market? Home shopping has become so competitive. There's a ton of new buyers in the market, and bidding wars are the new normal. Folks are under a lot of pressure to offer more money to get into that house. Don't do that.

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NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. our scripture of the day first peter 5 3 not domineering over those in your charge but being examples to the flock john quincy adams said if your actions inspire others to dream more, learn more, do more, and become more. You are a leader. There you go. Jared is with us in Tucson. Hi, Jared.

How are you? I'm well, Dave. How are you? Better than I deserve. What's up? So my wife and I have been doing our second go-around on Financial Peace University. We had a relapse a couple years ago. But we're doing good now.

We've got all our credit cards paid off. We're down to just the car, the truck, and the house. And we make enough money to where we don't feel like we need to sell either vehicle. We're actually putting money away every every pay period for like end of year savings is what we call it it's like christmas presents things we know are coming in the future and that's part of our zero base budget okay my question is should we be doing that or should we put all of that extra towards the debt and just deal with those expenses as they come up. Well, if you're going to do that, I want to detail it out.

We don't want to go into debt for Christmas, and so we need a plan for Christmas while we're getting out of debt. So that's fair. And you say, you know, what are you going to spend on Christmas? Well, $600, then that's $50 a month, right? So you can save towards a $600 Christmas budget or whatever your budget is. I don't care. And then you figure out what these other things are. The way you said that, it sounded kind of vague.

So we save for everything. Car tags, car maintenance. Car maintenance is not a year-end thing. It's not an annual thing. You need to have a car maintenance budget in your monthly budget that is set up to set a certain amount aside to cover car maintenance. If you're over-saving for that, that's not necessary. What is your household income? I make $110,000, and she just got a job last year for the school making about $15,000. Okay.

You're making plenty of money. I mean, car tags you should be able to just cover. What's a car tag cost in Arizona? The truck's about $600 a year. Uh-huh. Okay. All right. Well, I mean, what I would do is just detail that out.

I don't want a miscellaneous slush fund building up here while you're trying to get out of that. It only gets spent on what it's budgeted for. It's a very detailed spreadsheet. Okay. If you're going to nerd out and do it properly, then I ain't got any problem with it. That's an okay way of doing things. Yes, you can do that. Because those are items that are going to come out anyway.

And really what's happening here is when that expense comes up, it doesn't ding your monthly budget because it's going to ding your spreadsheet instead. Yeah. And so the money's going to be spent. It's either going to be a little bit of a monthly strain or you're going to do it this way and nerd out the details, which is awesome. I like doing that personally because I'm kind of wired like you are on that but some people that would drive them crazy to go into that much detail

all right well so the money's gonna at the by the end of the year all of this money is going to go out the door anyway because there are things we have to do car tags we have to do we have to do you know we're going to do something for christ, we're going to do something for Christmas. We're going to do something for this, something for that. And that's what you've got to do is you're getting ready for all of that. So good job, man. Good job. Becky is with us in Virginia.

Hi, Becky. How are you? Hi. How are you? Better than I deserve. How can I help? Well, my husband and I are just starting out on your program. And so we're on month two of creating a budget and trying to figure out where we are with our debt and where that stands.

And I've got to say, without this program, I would be totally hopeless. But my question is, we have a home that we're trying to sell, and my in-laws, we will have to owe them 10% of the home because they helped us back in my husband's first home. And so my question is, do we pay them right away, just get it out, or should we tack them at the bottom of our snowball list? What is your bargain with them, your deal with them? Are they supposed to be paid when the house sells? Well, it's kind of like um up in the air i mean this kind of we we were technically supposed to

pay them when we sold the first house but they said don't worry about it so they rolled it into the second house i would i would pay them when you sell it okay i don't want that hanging around that sounds kind of loosey-goosey and like something somebody could get sideways about somewhere in the future how much money is this um well the house is probably about 300 you don't know you don't know i'm third 10 of that i'm sorry you own 10 of that we'll give them 10 of that yeah of whatever it sells okay i'm confused as to mean, do you have a mortgage? Yes. All right. And so how much is the mortgage?

We pay on that house about $1,800. No, the balance. The balance. Oh, the balance. The balance is about $244. Okay. I'm confused as to how this deal went down because the deal is not logical now. They were supposed to get 10% of whatever the house sells for any time? When we sell it. I know, but I mean, for what? In return for they gave you a little, gave him so much?

They gave my husband money in the first home that he purchased. Yeah, but it ought to be 10% of the equity, not 10% of the sale price. Okay, well, I'll figure out, ask him those details. Yeah, that doesn't sound right. Because, I mean, they did not give him 300. I mean, the first price was, say, $150,000 or whatever it was, right? They didn't give him $150,000. They gave him $15,000 or something.

Right. Okay, so they ought to get that back plus some return on that was the idea. And so it should be 10% of the equity. Well, they get their $15,000 back, whatever they put in. And I don't know. Look at it. But $30,000 does not sound right to me. I don't know. I don't know what their not sound right okay uh to me i don't know i don't know what their bargain was you need to look at the math on that but if you own 30 grand

sheesh um this is why you don't do family deals like this right here but uh if you own 30 grand pay them out of the house sale don't wait till later i don't want this dragging along i don't want any question in the air about what is what. Just pay them and be done with it. How much other debt have you got? Oh, 200. On what? Well, we've had house-itis. We've had car-itis.

We've had pretty much it all. There's like 3,000 in medical, 77 in credit card, and then the rest is my van and some personal junk. It's a mess. Yeah. What's your household income? About $11,000 a month. Okay.

Yeah. So are you guys in Financial Peace University? I am wanting to start. Mm-hmm. Yeah. The way you said that, it sounds like he doesn't. Well, I'm not quite sure where he is right now. So I don't know.

I found the places near us, so I know that it is nearby. But I know the timing of it didn't work in the beginning, and I don't know exactly what was stopping us, if it was the little bit of money of it because um things are very very tight or just a commitment or what well obviously the plan you guys have been using sucks oh yeah so you need a new one yes yes like I said um this is what um the only reason why I'm hope is because of your program. Well, let me give you the class, and you guys go through as my guest.

You make too much money for me to pay for it, but I'm going to pay for it because I want to encourage you to go. And then when you guys get straightened out someday, when you find some couple that made a mess like you did and like I did, by the way, then you pay it forward and pay for somebody else to go someday. But I'll pay for you today. So hold on. I'll have kelly pick up and we'll get you guys signed up the only stipulation is he has to go it's not free if he doesn't go because i don't want you going over there without him because i will teach you all kinds of reasons to be mad at him otherwise i don't want that i want you guys

on the same team i don't want to cause marriage problems so hold on and we'll have kelly pick up as long as he'll go with you it's free so we'll sign you up for financial peace university man it's so scary to be in those situations y'all and um two hundred thousand dollars in debt not killing the house making a hundred making eleven thousand bucks a month so we're talking about 130 000 income and broke that's a scary place to be. That puts this hour of the Dave Ramsey Show in 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. Hey, it's Kelly, Dave's phone screener. We finished 2017 with a bang

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