The Ramsey Show - App - Why Company Credit Cards are a Bad Idea (Hour 2)

Episode Date: December 14, 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. Thanks for joining us. The phone number here is 888-825-5225. That's 888-825-5225. That's 888-825-5225. Jordan starts off this hour in Augusta, Georgia. Merry Christmas, Jordan. Merry Christmas to you.

So my question is, I'm 19, and I got a really good job right now, and I was wondering, as of right now I'm reigning, and I was wondering should I start looking to buy a house, you know, save up? Because I was doing the math, and about a year and a year and a half, I would have 20% down for a house. Wow. Should I just save up and buy it outright? Good for you.

Well done. So what are you making? Well, depending with overtime, which I start getting overtime in January, I would take home about $40,000-something this year, Well, depending with overtime, which I start getting overtime in January, I would take home about $40,000 this year, and then I do have my girlfriend who lives with me, and she takes home $1,600 a month. So she makes about $20,000 a year.

Okay, and you said you're 19. Yes, sir. What do you do for a living? I actually work for Bridgestone. Okay. I work in a plant. Good for you. Okay, cool. Good. Well do you do for a living? I actually work for Bridgestone. Okay. I work in a plant. Good for you. Okay, cool. Good.

Well, you're doing well. And you have zero debt? Yes. Yes, sir. Zero debt. And you have your emergency fund? That I would have completed by March. Okay.

It would be about March. I would have the three to six months. At that point, I would start saving for a house if you want to. No question about it. You're getting in there pretty young, but that's not a bad thing. Yeah, that's why I was just curious. I didn't know if it was too early or not. No, there's no such thing.

I mean, there's nothing that says you can't buy a house. You do not buy a house with someone you're not married to. Of course. Under any circumstances. So your girlfriend's income does not enter into this equation. Okay, gotcha. I do plan on proposing to her in April, though. Okay.

When you walk down the aisle, then we can talk about buying a house together. Gotcha. You know what I would do if that's the case? I would wait until, you know, if you're proposing to her in April, when are you thinking about getting married? Do you have any idea? Probably until she graduates from school which is that would be about two years or a year and a half okay and what's the point in waiting um i thought that would be the smart way so she'd actually have her own you know actually have a job out in college an actual you know more steady income

and everything and being part-time i didn't know okay but you're acting like you're married already yes i mean we live together and everything i know so what's the point i see exactly what you're saying okay there's no difference well there is a difference but there's no there's no tactical structural difference except that you go in and start your life. I mean, are her parents paying for her school? Yes. If you were married, would they continue to? Well, I'm pretty sure yes.

Okay. And then, yeah, I just get married on New Year's Eve. I don't care. I mean, you know, it's up to you guys, whatever you want. Because you're already acting like it, and you're talking about combining incomes and everything else. I would not combine money, and I would not combine ownership until you are actually married, okay? Okay. And I probably wouldn't buy a house until you are.

Okay. And then that way you can buy the house together as a married couple and use her income towards the savings of that, all that kind of stuff. And, of course, if she has any debt she's bringing into this marriage, we'd want to clean that up before you buy. But you've got plenty of time to do all of these things and get them in the right order. Thanks for the call. Open phones at 888-825-5225.

Rachel is in Louisville, Kentucky. Hi, Rachel. Welcome to the Daveville, Kentucky. Hi, Rachel. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you so much for taking my call. Appreciate the work that you do. Thank you. How can I help?

Yes, sir. I am a single mother of two children. Both of them are in their teenage years. They are bigger than me. I make a little over $30,000 a year. Debt is about $10,000 to $15,000. Most of that is student loans. I'm new to this whole trying to get the credit together and all of that. And I wanted to try to get a new car. I have a Toyota Sienna, which is about 15, 20 years old. It has almost 300,000 miles on it. There are definitely some things that are going

wrong with the car and some safety issues when I took it in to the guy to just look at it because I don't have the money to get it fixed. But I don't know. I'm kind of behind in everything and just kind of trying to see what's the best avenue for me to possibly get a car at a good interest rate rather than. You can't afford to get the car fixed. You can't afford a car payment. Well, yeah, that's true. Yeah, it is. So we want to keep you away from car debt.

I hate that you're driving a piece of crap, and it's scary right now. I get you you got a couple kids and a junkie car and uh you know and you've been living hand to mouth for a while you've been scratching and clawing just trying to make it i hear you and so i want good things yeah i want good things to you i don't want someone while you're treading water to throw you a boat anchor thank you and that's kind of what And that's kind of what a car payment would look like in your world right now. It would sink you. You're just hanging on. So let's avoid that.

Let's work on a couple things. One is I want you to go to our nine-week class, Financial Peace University. I'm going to pay for it. Okay. And I want you to, you know, I'm going to give you the one-year membership to Financial Peace on top of that to hook you up with every dollar, okay? And you're going to be okay, kiddo.

We're going to walk with you, all right? And we want you to learn how to handle money here, and you've been starving to death a long time. The second thing we've got to do is we have to get your income up on a temporary basis and permanently. How old are you? I'm 34. Okay.

I'm 34. I'm renting a home, and I'm kind of thinking about moving out of the home and possibly moving in with my mom and dad, who already has my sister and her two kids. There are five there. I don't want to do that unless it's a short-term plan where I have a plan to get back out. Okay. Okay, and the plan is we're going to get your debt paid off and save up the money for a better car and then we're going to get back out okay and that means while you're there uh they can help you watch and knock a noggin on those teenagers and uh thump them on the head because teenagers need that periodically it's just part of life and um then then while they're doing that

uh you're going to work like extra jobs and stuff, and let's get this stuff cleared up as fast as we can. Because here's the situation. $20,000 changes your life. Yeah. Right? Yes, sir. Because you'd be debt-free with a $5,000 car, and you're driving a $100 car right now.

Yeah. Okay? It changes your life. $5,000 car and you're driving a $100 car right now. Yeah. Okay. It changes your life. $20,000. And what that is is $1,000 a month for 20 months or $1,500 a month for a year. Okay. Extra income plus making the income that you got scream. What do you do for a living?

I'm a receptionist at the moment. Okay, good. And then we need to start thinking about long-term. You're 34. What's the 48-year-old you doing that makes $100,000 a year? My nonprofit organization helping young men become the kings that God has destined for them to become. That's a great mission. Usually doesn't pay 100 grand a year.

Could, but it was a massive nonprofit. But let's start living that dream, okay? Let's start taking the steps towards making all of that happen. You hold on, and we're going to make you the queen that God destined you to be. We're going to get you in financial peace and help you do this. You can call me back if you need some help. Kelly's going to pick up and get you signed up, kiddo. Did you know, statistically, when it comes to life insurance and protecting your family,

that women are more likely to be uninsured or underinsured than men. This doesn't make any sense. Women make up half the workforce, contribute mightily to family incomes, and in many cases are the breadwinners and take care of their families 24 hours a day. This is one of the most overlooked areas when it comes to financial planning. Maybe it's a relic of the past, but a loss of income or the need to replace family care is equally important for women as it is for men. Single moms, working moms, and stay-at-home moms all need term life insurance. Rates are actually lower for women, which is why I send you to Zander Insurance. They shop the top term life companies to find the lowest rates available.

You can compare rates online at Zander.com or call 800-356-4282. This is something every family has to deal with. That's Zander.com or 800-356-4282. Ron is with us in St. Louis. Hey, Ron, welcome to the Dave Ramsey Show. Hey, Dave, great to talk to you. You too. Quick question. I recently looked at my credit report, and after neglecting to look at it for probably 15 years,

I looked at it, and it had what were four, it said debts and bad standing in it. And three of them pretty easily taken care of uh they're just like cable bills stuff like that total of 1600 bucks no problem one of them was a repossessed vehicle from like four and a half years ago. Now, it says this vehicle, the account is closed, and it says there's a $7,500 debt on it. But it says closed. I don't really know what that means, that it's closed. I feel morally obligated to pay for it. I just don't know how to go about doing this if it's closed.

Well, by closed, all it means is they gave up trying to get you to pay it. That's all that means. Okay. And so just reach out to them, and they'll settle that for about a quarter on the dollar. The $7,500 is what's called the deficit, the difference in what they sold the car for versus what you owed on it at the time. At repo price, you were at repo price you were $7,500 upside down and um right and it's four years old five years old and so you know if you

offer them a couple grand they're gonna take it okay yeah this was from i've never been really great with money but these are the only debts i have i am debt free other than these and this is from one of those old uh like a buy here pay here car lot yeah and uh so is it closed no no no it's still there okay then it'll be fairly easy to wander over there and work out a deal nice nice okay yeah man uh so i'm like i'm nine thousand bucks from being debt free then well no i mean enough no you're you're a lot closer than that because if you uh if you if you work out a deal for two thousand dollars to settle this then um you know then you're going to be in you're just about what three four thousand dollars $4,000 from being debt-free. So whatever you do on old debts, get it in writing that what you're sending them clears the account.

Now, would an email be considered writing? Yes, yes. But print out a hard copy of it so you don't lose it. And keep a copy of your proof of payment. So let's say that the guys at the car lot agree to two thousand bucks on the pay by here pay here you give them the two thousand dollars you have proof of the two thousand dollar payment and in writing from them in some form that you keep a hard copy of stapled to the check that you gave them or the money order

that you gave them or whatever you give them okay Okay? And you have proof hard copy of both things. So that if it ever comes up again, you've got written hard copy proof. Because these things have a, sometimes they resurrect and have a second life. And you want to be sure you're ahead of the game on that case. You want this behind you forever and ever. I'm glad you're cleaning up things, Ron. Time to get on top of it. I'm proud of you.

Aaron is with us in Pueblo, Colorado. Hi, Aaron. How are you? Good, Dave. How are you doing? Better than I deserve. What's up? Well, I got a question in regards to future value, I guess,

for my son's education or for paying off the house early. I've got emergency fund, everything taken care of there. I just didn't know. I have enough to cover the rest of the mortgage now. However, it would be dipping into what was set aside nest egg early. And I don't know if it would be worth it to go through and pay that mortgage off now and then. How much is in this account? Well, enough to cover the end of the mortgage. How much is in the account?

Right around $50,000. And how much is the mortgage? $39,000. Okay. And the account, is it a retirement account? No, no, it's just basic savings. Oh, okay. And so you can write a $39,000 check out of your $50,000 savings account today and be debt-free house and everything?

Right. And why wouldn't you? Well, I'm a little tight on income right now. So what I'm looking to do is try and get completely debt-free. I'm debt-free except for the house, obviously, but I just want to be completely debt-free and then fully fund. When you write a check and you pay off the house today and you have $11,000 in the account, what's your household income?

Forty. Okay, and you have no house payment and no payments of any kind at that point right correct can you do a budget and live on 40 with no house payment no payments of any kind yeah it i mean it's been tight now but that's because you're paying a house payment staying home with the kids you're paying a house right right you're not anymore how much is your house payment uh like 500 okay so you got 500 more room in your budget now right right You're not anymore. How much is your house payment? Like $500. Okay. So you've got $500 more room in your budget now, right?

Right. I think that makes it work. All right. That's kind of what I was thinking. I just didn't want to jump and put the cart before the horse. No, I don't think you are. You've got $11,000 left. We're going to call that your emergency fund of three to six months of expenses. Don't touch that for anything.

And that should cover you if you're in a $40,000 household income. And then let's get on a written budget, you and your wife, and let's start trying to attack some of these other issues, the longer-term wealth-building issues like your kid's college and like your retirement so that you retire with dignity. And then let's also start working on, like you said, your income pinch right now. So what is the steps to get the income up short-term and long-term? If you're 100% debt-free, you are in a much more secure position.

And that's where I would want to be. I'd write that check today. Merry Christmas. Ray is with us in Phoenix, Arizona. Hi, Ray. How are you? I'm doing wonderful, Dave. How about yourself?

Better than I deserve. What's up? Thanks for taking my call, and I pray you and your family have a wonderful Christmas. You too. I have a marital question. So my wife and I just got on the program here recently, and we're in baby step two. We've got about $41,000 in debt. It's a combination of student loans and credit cards and a couple car loans. I've got a bonus check that could pay that off right now. I grew up differently than she did, and I had more of a foundation in financial management. For my father, she didn't. We've kind of been struggling with that in our marriage. And I'm fearful of using this bonus check to pay this debt off while we're making some progress. And she's growing and making progress in the baby step two.

I'm questioning whether or not I should do that or continue along the path that we're on of paying off the debt in the snowball. Okay. So you said my wife and I are on this program, but what you really meant was you're on the program and you're hoping she's going to learn it. Yes, she's willing. Verbally, she's committed to it. Yeah, she's just struggling emotionally based upon how she's grown up.

How old are you two? 40. She'll be 40. And I'm 52. So you've been married 20 years? Oh, no, no, no. No. No, we've only been married seven years.

Oh, okay. Okay. I was just guessing based on your age. Okay. Yeah, second time around. Okay, cool. But it's a wonderful situation. First time around on both of you, was money the issue?

No. She was in an emotionally abusive relationship. Okay. I got married very early in my 20s, and neither one of us understood what commit was about. Gotcha. But money was not the issue, yeah. Cool. Well, I guess what I was trying to say is what I'm trying to make sure of is

that you're not really upset with your last spouse, and that's not the case. No, not at all. And blaming it on her kind of thing. So I don't know. I mean, when Sharon and I have something like this, we just lay it on the table and talk about it. And it would sound something like, I want us to continue on and play all the way through on this. I got to be real honest and kind at the same time, honey, and say, I'm a little worried to do that because I'm worried that you're going to stick to this.

I need some extra pinky swear spit shake from you that you're going to do this, right? Right. And then I would write the check that day, and as soon as the bonus check comes in, I'd be debt-free, and I'd keep working it, and you work the plan together. Why don't you go through Financial Peace University together? And, you know, it's a nine-week class, and I'll give you that and the one-year membership, too, the Financial Peace membership. I'll just give you that for Christmas.

Merry Christmas. And you two go through that together, and that'll kind of solidify and form it. 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. We'll be right back. in the U.S. to ensure you receive reliable coverage virtually anytime, anywhere. Plus, you can keep your same phone and number and add multiple lines to save more.

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We're from Nixon, Missouri. Which is near? Right south of Springfield. Okay, cool. Welcome to Nashville and all the way down here to do your debt-free scream. That's right. That's right. How much have you paid off? We paid off a touch over $29,200, and we did that in 20 months.

Good for you. Thank you. And your range of income during that time? It basically hovered around $60,000 to $64,000 take-home, and then also we had about $6,000 to $8,000 in Murphy expense during that time, too. Okay. What do you all do for a living? I'm a senior analyst at a local health system,

and she is director of household operations and side gig extraordinaire. Okay. I love it. That's fun. So what kind of debt was this, $29,000? The $29,000 was basically four student loans and a van. Okay. Yep.

Cool. What happened 20 months ago that put you guys on fire? Sure. 20 months ago, we took your class, FPU, together. So that's really what started it. But our story goes back a lot further. We've been married going on 11 years this year. So when we started our marriage, we were on the same plan

in terms of accumulating debt and living the normal American way. And so we did that game. You know, interest-free credit cards and just trying to time everything so that we wouldn't pay interest. And then eventually it caught up to us. And then I came across you at a social gathering with some friends

and I read your book quickly, which is weird because I don't read usually, but I do now. So yeah, it was great. And then I read your book and I was on fire and I came home and I told her what we were going to do. Okay.

Yeah. So you can imagine how that went. Yeah, I bet. What happened, Kayla? Your husband went crazy. Right. He went so crazy that Dave was a cuss word in our house. I bet.

Yeah. Like every time finances got brought up, we fought and it wasn't even about finances half the time, but it just caused other fights in our house. Right. So the turning point was we had to sell a house that we should have been able to afford, but couldn't because of all of our interest-free payments. And then we moved closer to a family, and our church that we started attending, Aldersgate and Nixa, was offering FPU.

Uh-oh. It's all around you. You can't get away. I couldn't. So I finally gave in and was like, okay, let's see what Dave's all about. So 20 months ago, we started the FPU class there, and then the rest is history from there. Very cool. What was the biggest thing you learned that caused you to be able to get out of debt that other people should know that they need to do?

What's the secret to getting out of debt? You know, like everybody says paying off you know the budget um every dollar is great um just having a plan um knowing your why i think that's why i think your program's great is it shows you you're working towards something greater 10 15 20 years down the road um but i think at the end of the day you just got to want it to um that once that you know that switch turns then you go yeah for me it was um you know we started coordinating our classes after we took the first one wow yes we've done i mean you did a complete about face just a little bit um so we just finished our third class and

just you know hearing you during the class is a lot easier than hearing it from my finance husband. Yeah, right. So just doing the coordinating helped stay focused for me. Yeah. And that was the biggest thing for me. Oh, there's nothing like teaching something or leading something that makes you actually do it yourself. Exactly. You know, it changes everything. For sure. Way to go, you guys.

Thank you. Way to go. I'm proud of you. Thank you. So other than the two of you, who were your biggest cheerleaders? Definitely our church family, Aldersgate and Nixa. And then we have some best friends that we lived close by that's doing the baby steps also. Okay.

So they were pushing us and we're pushing them. A little positive peer pressure in the old gang. Oh, yes. There you go. And then also our classes, you know, the people who have taken the classes we've coordinated. It's just great to see their story and see them grow and develop as well. Yeah. So that's always inspiring.

And we just finished up our third class. It's been the biggest we've had so far. So that was really exciting. Wow. So, yeah, it's just everybody's just pulling for us. And we're glad to be here. We're excited. Now, Kayla, you're an old pro now.

But can you think back to the first day? Okay. Well, you're kind of an eye roll. The church is doing it okay i'll go and you're sitting in that first class when did the switch flip and what caused it um so i was the typical i'm going and crossing my arms the whole time yeah um it was probably the third class where i finally was like okay maybe, maybe we can do this. Maybe my husband was right and we need to switch paths because, you know, moving forward with our kids, we want to give them on the right path.

So definitely, you know, doing that. You started to believe it might work. Just a little bit. And I think that's what that sounds like. The switch. Okay. This might just work when that occurred to you. That's like, okay, that's right over the bubble now.

Yeah, for sure. Very good. Very cool. Well, congratulations. Thank you. Thank you for leading Financial Peace University at your church. We appreciate that. We love it.

It's rewarding. It's fun to watch these people change their lives. It really is. It's awesome. But it also kept you on track the whole time, and here you are. Yep. In person. And you brought the kiddos with you.

We did. And their names and ages are what? So we have Logan, who is nine, Micah, who is six, Leighton is four, and little baby Cohen is six weeks. Oh, my gosh. Yeah. We're a little busy. Yeah, man. Little Cohen.

All right, buddy. Come around the front, bud. That's fun. Very, very cool. Well, congratulations, man. A little calling. All right, buddy. Come around the front, bud. That's fun. Very, very cool. Well, congratulations, you guys. Thank you. Got a copy of Chris Hogan's retire-inspired book for you. That's a number one bestseller.

And also, we're going to be sending you a copy of the new one in January. Everyday Millionaires, because you're going to be one. That's awesome. Oh, yeah. Thank you. Outrageously generous. That's your next steps. Good stuff.

Michael and Kayla and the gang. Springfield, Missouri. $29,000 paid off in 20 months, making $60,000, $64,000 take home. Count it down. Let's hear a debt-free scream. Are you ready? Can you do it? Just like we practice?

All right, we have a backup plan. All right, ready? Three, two, one. We're debt-free. Love it! Wonderful! Way to go, you guys. Now that is a family tree that's changed right there.

Well done. Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings. Free samples, free shipping, new promos all the time. Always use the promo code Ramsey. Blinds.com. KC is in Michigan. Dave will work for an oil and gas company, and we were just bought out.

The new owner gave us an American Express business credit card instead of doing in-house charges, and a gas station card. I have to call and activate my card and my Social Security and birthday. What are your thoughts? You're liable for that card, dude. If they don't pay it, you're liable for it. I think that sucks. I would ask them to do something other than American Express card

because the business card leaves the employee liable as well and you can read it on their online you can read their actual agreement, it's online and that's why, you know, if it was his card they wouldn't need your social security number and your birthday to use his card but they are going to hold you liable sir if they if the company pays late it's going to ding your credit if the company doesn't pay

they're going to come after you i don't know if i want to do that or not matter of fact i'm positive i don't want to do that i'm positive i don't want to do anything with the american express company under any circumstances a little bitter aren't we dave yeah i am i can't stand those people we deal with their collections department all the time and you can tell they're lying if their mouth is moving hunter is with us in vancouver washington hey hunter how are you hey dave doing great how are you? Better than I deserve. What's up? Awesome. So I'm 20 years old, and I'm trying to figure out basically if you think it'd be a good idea for me to invest in myself and go back to school. I have one semester of school under my belt in business, but I ended up taking the last almost two years off now. Actually, about exactly two years now.

How are you going to pay for it? Because I got offered a job. What's that? How are you going to pay for it? Because I got offered a job. What's that? How are you going to pay for it? It'd be myself. My parents would probably help me out, probably go half and half with me. You have the money? I mean, I work a full-time job. That's why I left school.

Okay, so you can cash flow it? Yeah, probably. Not borrowing money. Yeah, definitely go get a degree definitely i think it's wonderful that's if that's the path of your career you want to chat you want to head on that'd be a great idea this is the dave ramsey show Thank you. alex is with us in Michigan. Hey, Alex. Welcome to the Dave Ramsey Show. Hi.

Hi. Merry Christmas. Merry Christmas to you. How can I help? So, my husband and I are kind of in a good-slash-bad situation. I don't know. First of all, we got your book, Total Money Makeover, and within two days, my husband and I are done. I mean, we're so on fire and ready. So we are 25 years old.

My husband's in the Army National Guard, and we have four young children under the age of five. We own a house that's completely paid off, and we have about $25,000 in debt. So right now we're tackling our debt, and within 19 months we plan on completely being debt-free. Look at you! Get after it! Oh, we are totally getting after it. We make about $32,000 a year.

I'm a single mom, and he is working full-time. But our ultimate goal is to get a bigger house. I mean, our house is really tiny right now now and our littles are, like I said, they're five years old and under. So right now we're okay. But as they get bigger, we really wanted to afford like a five bedroom house. So each one of our girls, cause they're all girls want so they can have their own room, but we want to pay cash as much as we can. And I know on the baby sets, it says to, you know, save our retirement and the college funds well how do we should we start saving for our house right after we become debt free i mean what's your suggestion right well let's walk the baby steps let's be debt free

and have the emergency fund in place and a lot of times if people don't have a home that's where they save up a down payment and so you could save save up there, what we call Baby Step 3B. You could start saving there to make your move up. So what does your husband do for a living? He's currently in the Army National Guard trying to become a PA through the Army side. But he works at a factory. He does midnight shifts. pa as in pa as in physician's assistant yes okay and what is the track on that how long is it going to be for

that's well he has to put in a packet and the packet is due january 31st and so he has all this prereqs on his shadowing his classes and and pretty much the Army gets to decide if he gets in to this program or not. So, you know, I believe, we believe that he's going to get in because he's so incredibly smart and he's a dedicated soldier. Let's pretend he gets in. When would he complete? He will leave probably around August of next year for two years in San Antonio. And I will stay up here with the kids. Really?

Well, we've discussed this. I feel like the Army would pay for us to move down there, and they'd pay for our housing. But I haven't ever seen him, Dave. And our church family is here. My family is here to help. I mean, these four young kids are hard to take care of. And what's the point of me going, you know, to somewhere I don't know?

Because your husband will be there. That's why. I couldn't do that. I mean, he – Well, I feel like we're never going to see him. This is an accelerated PA school, and all the clinicals, and it just seems like I'll never see him. So... You do what you want to do.

I couldn't do that. So, well, here's the thing. I think the reason I'm asking all the questions about the PA is I'm trying to figure out when your income is going to go up dramatically. And it's at the completion of that. That's when it's going to go up. Whether he's military or whether he's not, a PA is going to get paid a lot better than he's being paid now. Agreed? Yes. And we have our house paid off right now. That's going to make it very easy for you all to move up in-house.

Do you think we should stay for the house before we start saving for our retirement yes i'm just yes okay but if i were in your shoes i mean you're not going to do this but i'll tell you what i would do because i can't i'm a homebody i cannot be gone from sharon as much as you're talking about i work hard all the time there are days i leave when it's dark and i get home and it's dark and i don't see her awake that happens that has happened over the years running a business i understand what he's going to be on a schedule he's going to be on and all that and understand you're near your mommy and you're near your church and all that stuff i'd sell that house and i'd move to san

antonio i put that house money in the bank and are in an investment and I'd get a bigger house than you're in now, more suitable to your family that the military will furnish to you while he is going through PA school and live with your husband. That's what I would do if I were in your shoes, but you do whatever you want to do i don't care it doesn't affect me um but i i couldn't do what you're talking about doing um i couldn't be away that much i and you know i know he's gonna be gone a lot i know he's working all the time i know all that but you're also crammed in a little tiny house right now already and you could get into a bigger place that the military would furnish to you that's what i I would do. And I'd be with my husband if I were you. That's a long, arduous thing you're signing up for

with five babies under the age of five by yourself for two years. And I know your family's around to help and all that, but that's a long run, kiddo. You do what you want, but that's my opinion, and you always get that when you call here because that's what you ask for. Kristen is with us in Austin, Texasxas hi kristen how are you hi dave how are you better than i deserve how can i help um so my husband and i are in um baby step two and as we've been paying off uh credit card after credit card uh i've been cutting them up and canceling them out. I mean, canceling them completely.

Good. So I just wanted to confirm that that is the right thing to do, because every time I tell Sam it's not. Certainly close them, yeah. Oh, okay, I thought you said no. No, of course you close them. Why do you need them open? We're done with them.

Every time you tell one of them that you want to close it, they don't want to close it? Well, of course, they're in the credit card business. Right, right. And, no, I just, whenever I, there's certain family members that I've talked to that are, you know, oh, well, what about your credit score? And that was my question about credit score. How does that affect? Your credit score is going to go down.

Right. But your credit score is not a measure of winning. It's a measure of how much you play kissy face with a bank. Okay. The only way you have a credit score is borrow money and pay it back. Okay. Yeah, and we're no longer playing that game. Yeah, and so my credit score is zero.

Okay. And has been for almost 30 years. Okay, so when it comes time to buy a house in a few years. You would have to go to a mortgage company that does what is called manual underwriting, a mortgage company that only does lending on credit scores you wouldn't qualify for, which, by the way, I'm a multimillionaire,

and I wouldn't qualify for it either. Gotcha. Okay. So a mortgage company does manual underwriting. That means they check, they verify your employment, they verify your down payment, they verify that you paid your landlord earlier on time, they verify, you know, they do actual underwriting for the loan. They don't just make the loan based on one number called a credit score.

But a credit score is not an indication that you're good with money. It's an indication you're good at borrowing money and paying it back. That's where there's a difference. So you can be a multimillionaire and not have a credit score, and you can have a big credit score and not be a multimillionaire, which, by the way, is what happens most of the time. Because if you've got a 7, 800 credit, high 7s, low 800 credit score, that's probably cost you $100,000 in interest.

It's about the only way to have that. So I'd pay it all off. I'd be 100% done with it as quickly as I possibly can. Nathan's with us. And we'll have to catch Nathan later because I'm coming up on the clock here. I just looked up and saw it. Open phones this hour. It's been a good, good hour.

Jason's on Instagram. Dave, do you have guidelines as to how expensive a house you can buy if you do it with cash like with cars like it's less than 50 of your annual income no i do not the thing you'll find about housing is the greater your net worth the smaller percentage of your net worth it is so if you're worth 100 million dollars your house your personal residence would be a very small percentage of your net worth if you're worth $100 million, your personal residence would be a very small percentage of your net worth. If you're worth $1 million, your home likely is 40% to 50% of your net worth. If you're worth less than $1 million, it might be even greater than that

in terms of your net worth. But as far as the ratio on your income, no. I think if you pay cash for it, I'm not worried about it. But the trick is I would not want it to be super, super high percentage of my net worth, like 95%, 98%. I don't have any other money for very long anyway. If you pay cash for a house and you've got no money left except your emergency fund and then you go from there, that's okay. But let's quickly build some other investments and cash positions.

This is the Dave Ramsey Show. Hey guys, this is Blake Thompson, Chief Production Officer for The Dave Ramsey Show. Here's a tip. To keep from missing Dave's classic facial expressions to some of those calls, make sure you watch him live. Just visit DaveRamsey.com slash show each day from 2 to 5 p.m. Eastern.