The Ramsey Show - App - Why 401(K) Loans Create Stress Upon Stress (Hour 2)

Episode Date: June 27, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, this is the Dave Ramsey Show, where America hangs out to have a conversation about your life and your money. Sitting in for Dave, I'm Chris Hogan, and I'm excited to take your calls, America, to dive in and talk about whatever's on your mind as it relates to money or life. But I need to hear from you. The number to call is 888-825-5225. Again, that's 888-825-5225, or find us on social at Ramsey Show. Very excited to be with you to dig in and talk about the things that are on your mind.

And so here's the deal. We're here for you. And so you can find us via social at Ramsey Show, or you can find me on social at ChrisHogan360. And we're very excited to talk with you and to really join you in your journey. As you know here, we're all about giving people hope and helping people to understand what's available, right? What do they want to do? And so we're chasing things down and helping you make progress. So I've got Susan on the line in Oregon. Susan, how can I help you?

Hi, Chris. I'm really excited to talk to you. I have heard multiple times from Dave to that it is not wise to invest to purchase time into your pension plan. We have a situation that I think is a little bit different, and I wanted your opinion. My husband spent six years in the Army, and he just got back into the government sector, and we are looking to buy back the time. It would be $4,700 total, And then his six years would obviously accrue interest over the next 30 years until he retires. I just didn't know. We kind of figured since it wasn't, you know, it's not $120,000,

it's not some huge amount, if it would be wise to do this or if it would be better to take that same amount of money and invest it somewhere else. Okay. Now, Susan, before we dig in on that, I need to know, what baby step are you all on? We're on baby step three. Okay. Baby step three. So we will be done in October.

And so in November, we would start putting the 15% towards this and it'll go really quick. Okay. So you guys just come out of paying off debt. How much debt did you pay off? About $10,000. Okay. Was that credit card or a student loan? What was it? It was kind of like personal loans, I guess I would call it. Okay. Gotcha. And so you all, did you go sit down and talk with someone about this military? No, not about this. No, he's my husband has done a lot of research on his own. Okay. Um, and I'm not, you know, I don't know everything that he's read, but he is of the opinion that

this is the best way to go. Okay. So how did he arrive at the $4,700 mark? That is what they told him. It is based off of, um, the, his base pay, the highest base pay that he got. Um, and it's a percentage, a 3% of that base pay. Okay. Now who's they, uh, 3% of that base pay. Okay. Now, who's they?

Whoever runs the government. The military. Okay. Yeah. I mean, I'm going to say this. As I look at this, whenever you start to get into time buyback, there's some hoops. And that sounds low. Typically, as people are talking to me about these, that's a much higher dollar amount. So if your husband's

done the research, again, I'm not a fan because it's money that could be used right where you are. And you guys aren't even in a position to be doing anything yet because you got to get baby step three in place, your fully funded emergency fund. So do me a favor. Whatever information they told you on the call, I want you to get that in writing, and I want you to go sit down with your SmartVestor Pro and dig into this and look at it. Again, I'm going to agree with Dave. I'm not a fan of buyback just because of typical loopholes that are involved. So that mindset aside, get your details, sit down, have a conversation with a SmartVestor Pro and kind of figure out kind of where you are and what the reality is. But again, mindset, not doing anything until we get this baby step three in place, the fully funded emergency fund.

Thank you for your call. Stay conducted, America. Here, I'm going to Matt. I'm going all the way up to Michigan now. Matt, how are you? Hey, Chris. How are you doing today? Oh, I'm focused and not finished, my friend.

How are you? Oh, I'm hanging in there. A question about a mortgage. So I just got married about two weeks ago. I had a house that I bought about a year ago. Okay. We've got about $140,000 left on the mortgage. Is it more benefit? Is it beneficial at all? It's paid bi-weekly. Now, I guess my mortgage is $650 a month. Okay. And I'm putting about, I want to put about $3,000 towards it. So a month, is it more beneficial to do $1,500 biweekly, or is it just $3,000 at the end of the month? Okay, that's a great question.

So you owe how much on this home? It's about $140,000. Okay, fantastic. So you're focused on attacking this thing. And we got a bunch of money for our wedding, too, so I'm going to put a huge payment down towards that, too. Okay, gotcha. Well, congratulations on getting married. And I like your focus.

I'm going to tell you this, you know, Matt, bottom line, yes, paying biweekly, it depends on how your mortgage is amortized. But bottom line, what you're doing, you paying $3,000 a month, that in itself is the key. Okay? And so it's not splitting hairs necessarily and looking at is it $1,500 every two weeks or just $3,000 a month. Okay? So I like that you're throwing $3,000 a month at the mortgage. You're going to have this thing knocked out, and you guys are going to be moving forward. Now, be careful because there are some programs out there, especially at the lending institutions,

that will charge you to set up on this biweekly payment plan. You don't need to pay that. You know, sometimes it can be anywhere from $5 to $25 they'll set it up on. And typically it's related to a HELOC, a home equity line of credit. You are doing the right thing. Send $3,000 in, throw it at the mortgage, knock this debt out, and as newlyweds, you guys are going to be in a whole different place financially because you're going to own your home outright.

You see, the goal, America, is not to buy a home. The goal is to own that bad boy. That means you have it. Nobody can tell you what you have to do. And so, Matt, I like this. I like your level of focus. I like what you're doing. And I want to encourage you to stay focused.

Stay on that and don't stop. Don't let off the gas. Be very intentional. Make sure you and your wife are working together as newlyweds, working with money. This is new, right? So you've got to flex that muscle where you're sitting down having that weekly budget meeting. It's really important. Talk about what money's coming in, what needs to go out, and you guys can get on the same page.

And if you do that once a week, just sit down. I'm telling you, eventually you'll get to the point to where you can meet every couple of weeks, right? Or then you can, once you've been doing it for several years, you can have a monthly budget meeting. So you have opportunities. You guys are in a great spot, an opportunity to move forward, owning your home and taking back control. I like this. Lorraine on YouTube sent me a question. She goes, I'm a single woman, 27 years old on baby step two. Once I pay off debt, do you think it's okay just to continue renting or instead should I purchase a home? Well, no

Lorraine. As you're attacking debt, renting is fine. Okay? Renting is not against the law. You're doing it the right way. Renting allows you to save up money so you can buy a home the right way. I don't want you to buy a home when you have debt. Get out of debt, build up a fully funded emergency fund, then you can save a home down payment. This is The Dave Ramsey Show. Do you know who is a prime target for identity theft?

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Call them at 800-356-4282 or visit Zander.com. It's just the smarter, more affordable way to protect your entire family. And it's the only plan I provide to my team. Zander.com or 800-356-4282. Hello, America. You are listening to The Dave Ramsey Show. I'm Chris Hogan, filling in for Dave. And we're taking your calls about money and life. So if you've got something on your mind that you've always wondered about, right, that you're in a tough spot right now and you're like, I'm ready to move forward, but-825-5225. Again, that's 888-825-5225.

Call us. You can also find us on social at Ramsey Show. It's a great opportunity. I want to also let you know that we will be traveling around the country this fall and doing Financial Peace Live. This is where we're walking people through the baby steps. And you're going to have an opportunity to come out and see us because you can win with money and we're going to show you how. And this is where we're going to be in the fall. We'll be in Austin, Texas on September 12th at Hill Country Bible Church. That will be me and Anthony O'Neill. Then we'll be in

Orlando, Florida, September 28th at Calvary, Orlando. That's going to be fantastic. That will be Dave, myself, as well as Anthony. And then we'll be in Seattle, Washington on October 2nd at Champion Center, and then Phoenix, Arizona on October 10th at Central Christian Church, and then Charleston, South Carolina on November 20th at Seacoast Church. So you've got an opportunity to come see us and get this information live. We have a lot of fun.

There's a lot of humor. We're telling stories about ourselves, things that we've done wrong, things that we've learned, but we're really helping people to dig into this information because this information has the opportunity to change your financial future as well as your family tree. But you just have to start doing it. And a lot of people tell me, they say, Chris, I feel like it's too late. Well, it's never too late, right? You've got an opportunity.

If you've got breath in your lungs, you've got an opportunity to do better right now today. Now, debt wants you to feel like that it's too late, right? It wants you to feel bad. And I'm telling you right now that that. Now, debt wants you to feel like that it's too late, right? It wants you to feel bad. And I'm telling you right now that that's a lie. I want you to realize you can move forward and it just takes a few things, the right attitude, the right information, and then the right actions. So you have an opportunity to do that. So I just want to encourage you to take control today because you can do this. All right, I'm going back to the phones. I've got Julie in Boise, Idaho.

Julie, how are you? I'm well, Chris. How are you doing? Oh, I'm focused and not finished, young lady. What's on your mind? So I wanted to get your thoughts on changing up the order of the baby steps. And the reason I ask is because of our particular time crunch. So my husband and I are in our young 30s.

We actually have a teenage daughter who will be going to college in three years and then two more who will be going to college in four years. We are on baby step two, hoping to finish that and baby step three in the next two and a half to three years. And so being on four, five, and six simultaneously gives us less money to throw towards college where it will be needed pretty much immediately by our three teenagers. Okay. Tell me this. What kind of debt, you say you're on Baby Step 2, what debt do you all have right now? It's standing at $49,700.

Okay. And break that down for me. What is that? We've got $470 on a credit card, $1,100 on a school trip. We've got $11,300 about on a car, and then $36,800 on a HELOC. Okay. Was the HELOC, was that used in the purchase of the home, or did you all do a consolidation prior? What we did was we decided to consolidate our debt into a HELOC. Okay.

All right. And so looking at this, so you're wanting to shift the baby steps because you're feeling the crunch of college around the corner? Mm-hmm. Okay. Yep. How old is your oldest? She's 16. She'll graduate when she's 19, so in three years. Okay. okay so there's three years and then the other two are how old they're 14 and they'll graduate in four years okay so they're

great apart all right so you've got okay all right and so looking at this you guys have the debt but you're looking to shift the baby steps uh because you got college breathing down your neck. No. And I say this because it's a matter of time and focus, meaning the young people with going to school, there's an opportunity for them with scholarships and grants. So, you know, in the time they have three years before the oldest one goes and then four years before the others, now is the time for them to really be focused and being intentional with their grades. But the scholarships and grants are available.

There's also the opportunity for them to go to community college and knock out prerequisites for the first two years and get an associate's degree and then transfer right to a four year institution and graduate in two years. And so I don't see that there's a reason to change the recipe. It's just really a matter of changing kind of the feeling you're having inside right now and understanding that, Julie, there's not a law, number one, that says you have to pay for your kid's college. Right. That's not the case. What you don't want to do. And so you don't want to superimpose that on yourself. But I like the idea of wanting to help them. But the best way to help your young

people is to first put yourself in a position to be able to help. And so right now, what we've got to do is stay focused on attacking debt. You got to get your money back right now. It's going out in all kinds of areas. And so the mindset of following the baby steps, knocking out the $470 debt, then moving to the 1100, then the car, the 11 three, and then you can, then move into the $1,100, then the car, the $11,300, and then you can start to move into the HELOC. So you've got an opportunity, and you guys can do this. So I would not advise that you change the baby steps. What I would do is just change the level of intensity and then help your young people

to start to know that scholarships and grants are available. Are they getting the grades to be able to do that? And does it look like a four-year institution initially if they have the money or the scholarships or grants? Or is it a community college? And that's how you do it. And that way, you don't have to put that artificial stress on yourself. What you can do is really put all your attention on attacking the debt, and that'll help you stay focused. Thank you for your call. Next up, I'm going to California. I've got Stacey on the line. Stacey, how are you? Good. How are you, Chris? Thank you so much for taking the call. Oh, yes. I'm focused I'm going to California. I've got Stacey on the line. Stacey, how are you? Good.

How are you, Chris? Thank you so much for taking the call. Oh, yes. I'm focused and not finished. How can I help you? Well, my question is my parents are in a rent-to-own situation with the contract under my name. The deadline to put a down payment is October 1st of this year. They don't have the funds, so they're asking me to help out, me and my fiancé to help out and put the loan under our names that they will pay off.

So my question is, should my fiancé and I take out the loan to help my parents and then have this as an asset for us? Currently, I have $30,000 in student loans of debt and the same amount in credit cards. My fiancé and I have combined salaries, $140,000. Okay. Tell me how much student loan debt you had. I had $ have combined salaries, $140,000. Okay. Tell me how much student loan debt you had? I had 30, 35. Okay. And you have how much in credit card debt? About 25. Okay. And what's your income? My income is 60. Okay. All right. Because I think you told me you and your fiance's, and we can't combine them yet until you're married, okay? Yeah. But looking at this, so you've got 60,000, you make 60,000, you've got 30,000 in student loan debt and 25,000 in credit card debt.

Mm-hmm. And your parents are wanting you to sign on for a mortgage for them. Yes, it's the house's, the contract has already been under my name for two years for a rent to own agreement. I got you. And he, my dad has a really bad credit score my mom has no score at all so i am the kind of only person i'm an only child as well so this is kind of all on me right now right okay and so who's been paying the rent stacy

they have been okay you've not paid a dime in rent no okay so they've been there for two years they've been paying it. So, I mean, what I would do is talk about them getting it in their name. Do you know their financial situation? Do they have a down payment on a home? No, they don't. So they're going to get that $60,000 down payment for the home by him selling his business. Okay.

All right. Well, I don't like the idea of you taking on this loan. I mean, financially, you're not in a position to, to be honest. Financially, what you've got to do is get focused on kind of attacking the debt and cleaning up your own situation. $25,000 in credit card debt, then student loan debt. But I don't want you signing. I mean, when you do that, you're essentially guaranteeing this.

That means if your parents don't pay, they're going to be calling you. So I don't like this. It puts unnecessary stress all the way around. And if your parents have been in there, you've helped them out, right? They've been in it for paying for two years. All they ought to do is go talk to the landlord, sit down, look at how it was paid, and show that, hey, we've been paying this thing. Let them get the rent-to-own situation into their name. If they're not in a position yet, they can't buy. So they either need to keep renting from where they are or looking to find another place to rent. But don't do this to yourself. You'll set yourself up for failure. That's not what you want to do. You're chasing down progress. Stay focused, Stacey. You're not finished. This is The Dave Ramsey Show. Hello, America.

You are listening to The Dave Ramsey Show. I'm Chris Hogan, filling in for Dave. And you all have been fantastic with your questions, calling in. We're hitting topics all over the place, dealing with your life and your money. And that's why we're here. And I just want to keep hearing from you. Keep reaching out. We've had some fantastic visitors in the lobby.

People from Austin, Texas, Dallas, Texas, Denver, Colorado, Las Vegas, Nevada, as well as Los Angeles. And so people coming through. So I just want to remind you, if you're here in the area, come see us. Come by. You've got a great opportunity. You can look and check out the show. You can get a chance to go over into our bought this place, our coffee shop, have coffee and

cookies and things. So if you're in the area, if you're in Nashville, come see us. We'd love to meet you. All right. We're taking your calls. So if you've got a question, call us. That number to call is 888-825-5225. Again, that's 888-825-5225. Or find us on social at Ramsey Show. So find us, send us your question. We're here for you. All right, I'm going to the phones.

I'm going out to Phoenix, Arizona. I've got Charles on the line. Charles, how can I help you? Well, I've got kind of a nice problem. I'm 78 years old. My wife's about the same age. We have an income of about $12,000 a month. And we have about $1.8 million in paid-for real estate rentals.

All right. And I've got $1 million in the bank. What should I do with that $1 million that's 100% safe? Because leaving it in a savings dollars in the bank. What should I do with that million dollars that's 100% safe? Because leaving it in a savings account is rather ridiculous because it only draws like 0.01% or something like that. What should a guy do with a million dollars when he doesn't want to risk any of it? Okay. So, again, net worth, you've got 1.8 in real estate. Is that your complete net worth?

What would you say your complete net worth? What would you say your overall net worth is, Charles? Probably the $1.8 in real estate is my total net worth plus the million dollars in cash. Okay, gotcha. Do you owe any debt at all, Charles? Yes. Okay. I owe about $450,000 on a home that we live in, and the interest rate on that is like 3.2, which is one of the reasons I haven't paid it off, because it's also a transferable mortgage.

If I want to sell the house, and I'm going to in the next year or two, I can transfer that mortgage to the new buyer, which I think is an asset for sale. Okay, so you do plan to sell the house in a year, and then what are you going to live in? We'll probably be moving to a patio home okay gotcha so you've got a you got a long term do you owe any money on the rental property no okay fantastic so looking at this i think charles you you have like you said you've got a good problem my friend you guys have worked you've been focused and now you got to figure out what's next. So how many rental properties do you have?

Eleven. Eleven of them. Are you using property management or are you the property manager? I use property management. Okay, good for you. The reason I do that is because I have a good problem and we travel about two weeks out of every month. Okay, so you love to travel. How much are you guys spending on travel each month, you think?

Oh, probably $3,000 to $4,000 at least. Okay, all right. And do you have any 401K or any kind of investments at all in the market? No. Okay, why? Because I went through all that, and I made a pretty good chunk of change at it, and I decided I'm going to put everything in real estate. Okay.

And my income that I already told you is a state-sponsored pension, which is 100% safe. Okay, gotcha. And social security. And then about $5,000 a month comes from the rental property, which varies between $3,000 and $10,000 a month. Okay, you've got 11 rental properties? Mm-hmm. And you're only seeing $5,000 in income from that? That's what I'm budgeting, but I'm usually seeing more than that.

Okay, I would hope so. So here's what I'd do. You've got a good problem, Charles. You've got yourself debt-free. Now you've got to figure out what's next. Is there another property that you want to buy? I love that you're debt free, right? And as you're starting to think about the next house, you and your wife sitting down and talking about this, now you got to start to be intentional, all right? And so mindset-wise of also what kind of giving, what kind of trust funds do you want to set up, right, for grandkids or

kids? What kind of giving do you want to do in your community? So you've got an opportunity to do some things right now. So I would do that. You're right. That money sitting there in the savings account at the bank, that's not working for you. That money is kicked up in a hammock, right? I mean, I would rather you put it in a money market account and get a better rate of return than just a regular savings account. So let's get this money to work.

And I like that you're traveling, that you have a high definition dream of what you want to do. That's fantastic. But yes, that money needs to get moved. So do you want to buy another rental property for cash? Not going backwards, right? Do you want to do some giving? And what's the next housing situation look like when you all are looking to buy?

So again, you've got some decisions to make, but I like the idea that you've put yourself on a spot that you are 100% debt-free and you've got options. Great job, my friend. Thank you for your phone call. Next up, I've got Tanner in Wichita, Kansas. Tanner, how are you? I'm great, Chris. How are you?

Oh, I'm focused and not finished, my friend. How can I help you? So, my wife and I recently married. We have two kids, and we're just getting started on our journey. We are basically skipping step one. I already have a little bit saved up in an employee stock purchase program fund that I have. I basically always use that as my savings account. Right now, I'm looking at about $7,000 in credit card debt. I have two 401k loans,

one of which is about $7,000. The other one's about $7,100. And so I have about $8,000 or $9,000 in my employee stock purchase program money and I want to use about seven thousand of that and leave the other thousand as my maybe step one um I'm wondering should I use it for a 401k loan or knock out all my credit card debt basically at one time okay so you've got seven thousand in credit card debt and around fourteen thousand to seven thousand dollar 401k loans yeah it's fourteen thousand one hundred and sixteen dollars okay how tanner hey how old are you my friend i'm 27 27 years old what did you use the 401k loans for um whenever my wife and i got together i took took on some of her debt. She was staying at home, um, because we had a, uh, our first, our son.

And so at that time I basically took on her debt and to make it month to month. That's what I had to do. So. All right. And what's your, what's your household income right now? Uh, she stays at home right now. Um, I'm on pace to make about 80,000 before taxes this year. Okay, good.

And you've been on this job how long um oh coming up on 10 years okay okay well looking at this i mean i'm going to tell you to walk through the process uh obviously i want you to knock out the credit card debt and and and and get that out of your life but the employee stock purchase you know i want to talk about this for a minute because this is not a place that we're going to look at and think of it as an emergency fund. Right. And I know companies out there. I've heard people go through this where they end up buying company stock because they talk about, you know, you want to believe in the company. So we want you to buy the company stock. Yeah.

No, no, that's that's that's volatile. It's like going to Vegas. Right. You might win. You might lose. But the reality is, is we need this money. As you well know, you've utilized 401k to kind of make ends meet, which is not something you want to do because we don't ever want to pull money out and then take on the penalties and fees. So I would pull the money out of the employee stock purchase program, put $1,000 in a money

market account, direct $7,000 in a money market account, direct $7,000 toward the credit card debt, knock those out, call and close them and shut them down. Then you turn your attention on the 401k loans. See, that's being pulled out of your check automatically because it's a 401k loan. Most people out don't know that, that that's immediately pulled from you. And here's another little tidbit, America. If you lose or leave that job with a 401k loan, it becomes due within 90 days most of

the time. So it can create stress upon stress by touching 401k loans. So you don't, I'm touching your 401k. You don't want to do those loans whatsoever. So again, Tanner, follow the baby steps. As I said, you can do this. You can knock these debts out, get focused. Congratulations on getting married. But with your two little ones, I know you've got goals. You're making a good income, young man, 27 years old, making $85,000 a year. Now it's time to make some progress. So dig in, get focused, right? Because

you're not finished. This is The Dave Ramsey Show. hello america you are listening to the dave ramsey show uh i'm chris hogan filling in for dave james chiles is bringing us in with some smooth jazz uh excited to be here with you where we're taking your calls about money and life and make sure to call us now the phone number to call us now. The phone number to call is 888-825-5225. Again, that's 888-825-5225. Or you can find us on social at Ramsey Show. And I would be remiss to not tell you about my latest book. We did the largest study that's ever been done on millionaires. We talked to over 10,000 of them because I wanted to find out, is the American dream still alive and well? Is it still available to people?

Does it matter where you went to school? Does it matter how much you make? Well, here's the deal. I found out the truth. And so you can too, America. The book is Everyday Millionaires, How Ordinary People Built Extraordinary Wealth and How You Can Too. And you can get your copy by going to ChrisHogan360.com to dig in and find out what these 10,000 millionaires were doing.

And I break it down. There's all kinds of statistics in here. There's information. There's the amazing information to guide you on your own journey. But you know what's truly amazing inside of here? The stories about these millionaires, the stories in here are just absolutely encouraging because there are some people that came from less than nothing. OK, and they were able to build their way and focus over time. But I break it down for you inside the book.

If you don't have a copy, pick that up. You can go to Chris Hogan, 360 dot com. All right. I'm back on the phones. I've got Kirsten on the line calling me from Tucson. Kirsten, how are you? I'm doing OK. How are you? I'm doing okay. How are you? I'm focused and not finished, young lady.

What's on your mind? Well, I had a question. I have a parent who's incarcerated, and it's been a situation that's been going on for a couple years. She's almost done, because of all of these reductions that are being passed through Congress, her sentence has been reduced, and she's going to get out in about a year. I just sent her a copy of the total money makeover for herself because she did have debt before she went in, and we're trying to get her to where when she comes out,

she's able to be integrated back into society. And she's very close to finishing her degree in electrician work. So before I moved to Tucson, I made about $80,000 a year. And I took a year off and moved to Tucson. And I only make about $22,000 now. I send her money every week. And it's a little bit of a strain on my budget. And I just want to know morally, if you think that it's a... Sorry. I didn't think I was going to get emotional. I just want to know morally if you think that it's a good idea to be investing in her in this way. Because, I mean, I want her to be successful when she gets out. And I know that she'll help me back when she gets out and we'll be in a much better situation.

But at the moment, I just feel it bearing on me a lot. Kirsten, take a breath young lady um this is uh this is a real scenario and uh are you an only child no okay how many siblings do you have seven okay wow big family and so your your your mom has been incarcerated how long? Most of my life. She only has three children, so I have family with my other parents. Okay, okay. How old are you? I'm 26.

So most of your life she's been in and out? Yes. Okay. How much money are you sending each week? I used to send her $50 a week. Now I've been telling her that I really can't, and I think it's like, you know, it's $20 when I can. So it's when I have extra in the budget, but it takes away from my debt snowball, so I feel a little some kind of way about it. Yeah.

No, I understand. Do you have any kids? don't okay and right now talk to me about your debt what do you owe on i um owe about i only have a thousand left that i owe on my car so i'm almost done paying the debt off good um I have medical bills, and I include all of my current debt, so like the rest of my lease for my rent, and I have a cell phone with AT&T that I still pay on. And so with all of my debt total, I have $14,000 left, which I started my debt snowball two years ago with $80,000. Oh, wow. So I'm like close. So you have been attacking debt. Yes. So right now you owe $1,000. Oh, wow. So I'm, like, close. So you have been attacking debt.

Yes. So right now you owe $1,000 on a car. How much in medical bills do you have? Oh, right now it's a variable amount. I mean, the part that I'm paying on, I only have, I think, $2,000 left. Okay. But I just had an ER bill that might be about $5,000. But I'm settling that with insurance, so I'm not counting that in my total debt yet because it hasn't been assigned to me.

All right. Now, you mentioned also that your income had been around $85,000, but now it's $22,000. What were you doing before you moved? I worked in the oil field, and I did really well there. It's just that I worked there for five years, and it was very stressful, and I never got to build a life for myself because I worked 90 hours a week. No, I understand. Well, I, uh, this is a tough spot, right? I mean, uh, anytime you have a parent going through a situation like this, I think you looking at your budget and figuring out what you can afford to do. Um, I don't think

that there's a problem you sending, you know, $20, uh, when you can send it. Um, I don't think that there's a problem you sending you know twenty dollars uh when you can send it um i i don't think you need to feel the stress of the pressure to do more um and you know if you were telling me that your your mother was trying to guilt you into sending money then that's another boundary you know that we'd have to look at but and as far as you being able i like how you've stood up for yourself that you're sending in what you can. And again, looking at it real thinking realistically, what's this money being used for? Right? I mean, we have to be honest about that. Because you know, housing and meals and all that's taken care of. So what is it about? I like that you've sent her the total money makeover. And you're right that she's also trying to help herself pursuing kind of the electrician thing.

So when she comes out, hopefully she can stay out and begin to do right what what she needs to do for herself. So I think you praying for your mom, you being there and sending what you can is a good thing. But you're right. You've got your own stuff that you're trying to clean up here. And so, again, you know, just like I would tell a parent if they were dealing with a child, right, or an adult, young adult, that, you know, it's not the parent's job to do everything for that young adult. That young adult at some point has to work and start to be productive. But you can help them. And giving tools, the books and information like that is a way to be able to help.

And I think that's OK. But you stick to your budget and you stick to your plan. And if you're not able to and you don't have it, then you communicate that, right? And that's what you do. You don't feel unnecessary stress or pressure. You just want to communicate it and let her know so everyone's on the same page. And I like the path that you're on. You've had to grow up well beyond your years at 26 years old.

And I like the path that you're on. And I want you to continue down that road and make sure you get people around you. Right. Make sure you're plugged into a local church or some community groups, you know, where you've got an opportunity to have people that are supporting and cheering for you as well. Thank you so much for your call, young lady. I'll be praying for you and your family. All right. Next up, I've got John in Dallas, Texas. John, how can I help you? Hi, Chris. Hello, sir. I'm a veteran, but I've been trying to get everything. I've just been listening this week, but I'm renting right now, and I was thinking about buying a house, and so I wanted to use my option for a VA loan.

And I was looking if that was a good idea versus just continuing to rent. Okay. John, what baby step are you on? I'm not familiar. I've just been listening this week. But I would say that I do have a $1,000 cushion or a little bit over. And what debt do you have? Quite a bit.

Credit card, about $20. Okay. I have a medical bill that I'm paying monthly on, and then student loans that I'm paying on as well. Okay. So you've got debt, John. And so here's the deal, the reality. What we tell people to do is you don't want to buy a home

just because a program says you can or a bank says you can, right? No, because they're not making a payment. The bottom line is, is what you want to do is get yourself out of debt. That's attacking the credit card debt, the student loan debt. And then after that, you want to build up an emergency fund, three to six months of expenses. So it's piled up ready to help you if you need it. Then you can start to work on your home down payment. So that VA is going to be fine. Let it sit there. Thank you for your service, by the way, my friend.

But I want you to be really, really focused on getting yourself out of debt. Because you don't want to buy a home before you're ready. That causes headache and heartache. John, I'm going to send you the total money makeover so you can know exactly what's going on and how we do this. Because you can do it. I'm proud of you. Thank you for your call. I want to thank James Child, our producer, also Kelly Daniel, associate producer, and

I want to thank you, America, for tuning in and for calling in and joining me this hour. This is The Dave Ramsey Show. Once again, you made The Dave Ramsey Show one of the top five most downloaded podcasts last year. To get your daily dose of motivation and inspiration, subscribe today.