The Ramsey Show - App - Why Not Use Credit Cards for Unplanned Expenses? (Hour 1)

Episode Date: May 6, 2019

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Live from the headquarters of Ramsey Solutions,casting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW. How's the status of the choice? I am Dave Ramsey, your host, back in the seat today after being gone for a week in California. We were there to do a Entree Leadership Summit event that was stellar. Four thousand four or three thousand folks off the scale. Absolutely incredible speakers and teachers all week long from Simon Sinek to Marcus Buckingham to Sarah Blakely, the founder of Spanx,

one of the youngest women billionaires in history. Very impressive lady. Carrie Lorenz, the first woman fighter pilot. Extremely impressive lady. Wow. And, of course, our friends Henry Cloud, Pat Lencioni. All of them just delivered. Oh, they let me speak, too.

And Chris Hogan did a great job, and Ken Coleman did a great job. So it was quite a lineup for leadership and for business. And I think it was the best event I've ever been to, and I happen to own it, so that's pretty cool. It was off the chain very good. And so that's where I've been. I'm back here for you guys. The phone number, 888-825-5225. That's 888-825-5225.

Starting off this hour is Akron, Ohio. Darcy is with us. Hey, Darcy, how are you? I'm good. How are you, Mr. Ramsey? I am better than I deserve. What's up? So I am graduating college next week.

Yay. What's your degree in? Finance. Yay. You got your job yet? Yes. Well, I have an accounting job lined up, so it's a good step, I guess. What are you going to be making?

I'll be making $46,000 a year. Not a bad start. For benefits and bonus a year. Not a bad start. For benefits and bonus. Yeah, not a bad start. And that gets your foot in the door. Here we go. Good for you. Well played.

Thank you. How can I help? Well, I'll be graduating debt-free, and I just paid off my car and everything, so I have no debt right now. And I was just wondering, I have, like, enough. I enough I have about like 25 saved up from a mortgage or a house and I live with my mom right now just so I can save money and that's what I've been doing so I could pay off school and I just wanted to know um I was watching some of your shows where you say like kids shouldn't live with parents, but I don't know what to do after this, I guess, is what my question is.

Well, here's the thing. Kids never live with their parents is not what I say. I teach people that your parents' home should be a safety net, not a hammock. Yeah. Okay. And so how old are you? I'm 22. So if you're still hanging out there when you're 32,

we're going to call you up and smack you around a little bit, okay? But if you're, unless there's a real health problem or some kind of issue, right? But, I mean, if you're just too lazy to leave, then, you know, any eagle that doesn't leave the nest eventually is called a turkey. And so, you know, we have to think this through. So do you have to panic and leave home by Dave Ramsey standards in the next 20 minutes? No. My 22-year-old daughter, my oldest one, moved home with us after she graduated and got a good job. And it was not for financial reasons. It just took a little while to get settled in.

And so she lived with us for about four months after she graduated. And then she went and got an apartment with us for about four months after she graduated and then she went and got an apartment with some friends and it helped her to go get that apartment so i i would tell you this i'm not on fire about this thing i'm just trying to keep people from hanging out for the wrong reasons and really using your mom as a crutch to save more money, only should be a temporary thing. Okay. So I would say if I were in your mom's shoes, I would want you gone by Christmas. Okay, that makes sense.

And it's still a good idea to get a house around here. Is that right, or should I rent? You can rent for a little while if you want to and save up more money and then get you a house. There's no sin in renting for a couple years. Again, I don't want you waking up at 42 still renting because you couldn't get your financial act together but renting for a little while as a time to get settled in get used to paying bills playing all the adult games that we play now all this kind of stuff i got to write the allowing i got to make sure the web is connected to my electricity so it doesn't cut off and all the stuff you got to do to just live life.

You know, I've got to buy groceries or there's not any. That kind of stuff. Nothing's done for you, in other words. All that kind of thing. And just getting all that settled is okay. And then buy a house in a year or two. Or, you know, something like that. But there's no panic like, oh, you're wasting money for a year if you rent for a year.

It's not. I mean, you're 22. You've got plenty of time. a year it's not i mean you're 22 you got plenty of time that's kind of what goes through my head though is just because um like reading everything and it's not equity so i feel like i'm just kind of dumping in there nothing it's normal when i was 22 i was in such a hurry yeah it's normal to be in a hurry and all i'm saying is if you'll go a little bit slower you'll actually get there faster right that's all i'm saying that's good yeah so you got it you're doing great you're graduating debt-free you already saved money you got a job you got a degree in something that's actually freaking usable you just are a rock star all

the way around i mean you're a home run kiddo i appreciate getting to talk to you absolutely amazing very very cool stuff all right los angeles is next justin's on the line hey justin what's up hey justin uh hey name uh mr ramsey how you doing i am better than i deserve sir how can i help all right so my uh my fiance and i are on uh step two. And right now, you know, we're having a disagreement. So my fiancé recently found out a couple months ago that, you know, for her entire life, she has had a developmental disability, which is, you know, at this point, we now have some extra expenses that we've had to take on to try to, you know, ease the burden for that. And she's taking a little period of time off working right now.

And when are you getting married? We're getting married sometime this year. Okay. That's when we would take on the burden, but we aren't married yet. Well, yeah, we're in the process of getting married. So I'm going to then, I guess, ask this question as if we're married because it's very much my intention, and that is why I feel this way. So my income right now currently is about $65,000 a year.

And I'm not in any debt, but every month is. I'm not really building much of a savings. I have about $2,000 saved now, but it's not growing at a very high rate. And your question is what? My question is basically is it okay to use a credit card when you know you have a steady job, you know you're going to be getting a couple thousand every couple weeks, but you have some expenses that have come up that weren't necessarily something you planned for. You know, well, not if you want to, not if you want to build wealth, you have to break

the cycle of depending on debt every time you need to cover something or want to cover something. Wealthy people, all the data we have from our millionaire research with millionaires tells us that they don't use credit cards. And if they do, they pay them off every month, and you're not paying this off every month. You're not living within your means. You have issues that have come up that your income won't cover

because you've got other crap in your budget that you need to get out of your budget. No. You do what you want to do. But if you guys want to have a good, solid financial plan and build wealth, you need to cut up your credit cards, and you need to get away from them as far as you can and make yourself cover these issues with real money, not pretend money called debt. This is the news, guys.

You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again. Here's the deal. Most people are paying too much interest on their largest expense, their home. So you're freaking crazy if you don't take 10 minutes to call Churchill Mortgage right now and see if they can save you money before rates rise again. A mortgage through Churchill could save you thousands or better yet, reduce

the time until you're debt free. Can you imagine how it would feel to no longer have that payment looming over your head every month? Just go to ChurchillMortgage.com or call 888-LOAN-200. Their team of experts will give you more clarity about your options and more peace knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. Thanks for being with us, America. This is the Dave Ramsey Show. Jason is in Tampa, Florida. Hey, Jason, welcome to the show.

How can I help? Hey, thanks for having me, Dave. Sure. What's up? Hey, quick question. I had two back surgeries in the last year. Ouch. What happened?

And I'm unable to perform my job, so I have to find a new profession. Well, what happened to your back? So I had a herniated disc. You heard it at work? Well, I heard it at home, and then I was working, and it kind of got worse from work, and then had the first surgery,

fixed it 100%, went back to work, and within two weeks, re-injured myself on the job. Oh, man. How old are you? So we went to court, or didn't go to court, got a lawyer, settled. And my wife is working full-time, so I'm like Mr. Mom for the past, I don't know, year and a half or so. So we have a pretty good amount in savings.

Now, before I actually... Stop a second. How old are you? Yeah. I'll be 45 this year. And what did you used to do? Installed security systems. And what do you...

How much settlement did you get? Close to $40,000. Yeah. And your wife makes what? She makes about $54 a year. And you guys have been draining down the savings during this year and a half? No. No, you've lived on her $54 and a half?

I was getting workers' comp. Oh, okay. And she actually does a side job. Yeah, and when does your workers' comp. Oh, okay. And she actually does a side job. Yeah, and when does your workers' comp run out? Oh, it's gone. It's out. Okay, so what is your new career going to be? Right now I'm looking for something in the customer service field.

Okay, how did you choose that? Just something that's not going to be so physical demanding on my body. Right. And I have years of customer service, like 20 years. Oh, okay. Over 20 years. There's a lot of things that wouldn't be tough on your body that aren't customer service, but if you've got a background in that, then you could move into that field.

Okay, good. Okay, so what's your plan then so well my my plan is obviously to to get a job you know asap um but before all this happened i went out and i got i got a truck now i have i have twenty thousand twenty five thousand dollars on the truck um i have no other vehicle my wife just has her vehicle do i pay the truck off and just be done with it if you don't get a job making 40 000 in the next month you sell the truck and get a different vehicle because your truck's way too expensive for this situation it's absurd and i don't want you using the settlement money to pay off a truck you really can't afford anyway um if you if you settlement money hadn't come along you'd be screwed

on this truck and if you don't get a job now if you get a job and your household income is 90 and you have a $25,000 truck then yeah pay off the truck reduce your settlement money by that much and work your baby steps but let's get you in in a position in your career first so that we can say this truck doesn't look stupid anymore because and you didn't know it when you bought it what was all always going to happen i understand that but where you're sitting today with a forty six thousand dollar income and mr mom has a twenty five thousand our truck doesn't work right that doesn't work but we're not going forward with that plan anyway so let's you know let's not panic and dump the truck today but no i wouldn't

pay it off today because you may be selling it but i would get a job as soon as possible like give yourself 30 days go to ken coleman.com start listening to ken's podcast on careers and i'm going to send you a copy of his book next week when it comes out on the 13th it comes out in seven days and it's called the proximity principle and also at his website are downloadable pdfs on the interview process and on the resume process and you need to download both of those and read them they're not very long and they're very very informative when you're in the heat of a job hunt but you need to you need to identify some places that you want to go to work and you need to get in the business of going to work there um you've been through awful painful stuff back pain is one of the worst things out there i'm so sorry you're facing that but you're 45 years old

you got 50 years to do something so let's get about the business of doing that something you got kids to feed and a truck to decide whether we're keeping or not. So you might as well take a bow. That chapter's closed. That act of the play is closed. We're going to come back out and do act two. And that's where you are. And act two is everything that happens to you wonderfully after back surgery.

And that's what's on your agenda. You got it, man. You can do this. Open phones at 888-825-5225. Thank you for joining us, America. Hey, guys, we're going to be doing an Entree Leadership Small Business Theme Hour on Thursday. We need your questions. If you want to participate in that hour and ask a question about how to operate your business

from a hiring and firing standpoint, a pay standpoint do i start this business do i close this business how do i deal with family and business how do i do marketing and business whatever your business question email it to me now and will kelly and the team will look at it they'll get back to you and set you up as a caller on the entree leadership theme hour this coming thursday it's the Small Business Theme Hour. Leadership Theme Hour. Email it to DaveOnAir. That's one word, DaveOnAir.

No dashes, no spaces, no nothing. DaveOnAir at DaveRamsey.com. And put Entree Leadership in the subject line so we'll know it's you. 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. You get free samples, free shipping, and with new promos every month, you'll save even more. Always use the magic word, the promo code Ramsey. Mike's in Texas.

Should I take out a 401k loan with my current employer to pay off my credit card debt? Absolutely not. Never take out a 401k loan that wasn't like sometimes there was no special situations or caveats never take out a 401k loan and here's why there's two big reasons one is you're going to unplug good mutual funds that are outperforming i'm paying myself interest yeah it's six and five percent and you could have been plugged into mutual funds that were paying you 10 to 15 percent depending on what the year is and what it's done and so you

miss out on all those returns while you're paying yourself interest no the second reason is when you leave your job and you will leave your job, when you get a better job, when they fire you, or when you die. One of those three things is going to happen. So when you leave your job, the 401k loan, if it is not paid back, is considered an early withdrawal by the IRS, and you have 60 days to repay the loan in full. If you do not, it is considered an early withdrawal and you will be hit with a 10% penalty plus your tax rate, say 30%. That's a 40% kick in

the teeth for doing something stupid. I call that stupid tax. I've done a lot of stupid things with money in my life and every time I did and I lost that money, I called it stupid tax. That's stupid tax. I have paid too much stupid tax. You know when I got some money? When I quit paying so much stupid tax. So it looks like it's smart, but it's a trick. Don't fall for the trick. You think you're paying yourself back.

It feels sophisticated. It feels like you're lowering the interest rate on your credit card. Let me tell you, you pay your credit card off. You get so pissed off, you sell everything in sight. sight you sell so much stuff the kids think they're next you take six extra jobs and you stay out of restaurants that's how you get out of debt there's no trick you cannot trick your way out of debt there's no shortcut you have to punch it in the face until you kill it that's all you can do You just have to beat the snot out of it. You can't dance with it.

You can't take it on a date. You can't take it on vacation. You have to punch it in the face until you kill it. That's how you get out of debt. It's visceral. It's emotional. It's psychological. I've had it! That's when you. It's emotional. It's psychological. I've had it!

That's when you get out of debt. Not like, I found a way I think I can trick the whole thing and I'm not going to have to actually do any real hard work and change myself because I've been stupid and I'm going to keep being stupid. No! Can't do that. I tried it all. Tried to out-earn my stupidity.

Didn't work. I couldn't do it. I tried to dance with the devil and the devil's's a step-on-your-toes dancer. This is The Dave Ramsey Show. We'll be right back. Omar and Crystal are with us in Albuquerque, New Mexico. Hey, guys, how are you? Doing great, Mr. Dave. Hey, I'm glad to have you guys. I see on my screen you're debt-free. Congratulations.

How much have you paid off? $68,000. Love it. And how long did this take? It took us 14 months. Good for you. And your range of income during that time? The very beginning, it was $50,000, and it went up to $100,000.

How'd you double your income in 14 months omar got a job well it's that omar oh my gosh okay cool what do you guys do for a living oh i'm a teacher and i'm an hvac technician excellent great. Yeah, so you're making good money. You got $68,000 in debt when you start. What kind of debt was this? We were pretty normal, Mr. Dave. We had mostly student loans, car payments, credit cards, you name it. Wow. So you were normal.

A little bit of everything. What was the big dog in the hunt? What was the biggest one of the loans? My student loans, Dave. How much? It was about $38,000. to everything what was the big dog in the hunt what was the biggest one of the loans my student loans how much it was about 38 000 oh yeah yeah over half of it okay cool yeah so how long have y'all been married it'll be two years in july okay so about 10 months into marriage you look up 14 months ago and said uh something's got to change. What happened?

Tell me the story. What lit your fuse? Well, right after Omar asked me to marry him, a colleague of mine gave us the Total Money Makeover as a gift, and she just told us to read it. And I had accepted a job in Abu Dhabi, the United Arab Emirates, and I told Omar about the book and everything, and he didn't really seem that convinced.

And it wasn't until the night before we got married, my uncle, he told us about the Total Money Makeover and kind of really inspired us and told us that we can pay off all our debt within one year with both of our incomes. So we moved over to Abu Dhabi right after we got married, and the night after we stayed there, we started reading your book, and we listed all our debts from smallest to largest,

figured out a debt-free date, and we just started working really hard. About seven months after living over there, Omar still couldn't really find a job, so I was doing a lot of tutoring. He was trying to find, you know, little side jobs here and there. And we decided last July that we were just going to move back home because Omar really wanted to be working. So when we moved back home in July, we really kicked it into triple gear. Omar got his job, I got my job, and we were both working two jobs at the same time and in last november that's when we became debt free ding ding how old are you two i just turned 30 and i'm 31 awesome man you guys are amazing congratulations how does it feel it was amazing

um it's it's the relief what did you learn about yourself and about each other while you were on this journey? What I learned is just communication is key for everything with our young marriage. It's just what we needed, just to communicate, and that was the key for me. And for me, it was more like it was discipline. It is definitely challenging to become debt-free, but we got so gazelle intense, and just what Omar said, communication was really important, and just being disciplined and really knowing every single day that we're being intentional and we're looking at the big picture and working towards that goal of being debt-free you know sometimes when people go through this they discover um

that they had superpowers they didn't know they had you know it's like i'm setting goals i'm hitting my goals if i can do this i can really probably do almost anything it's like you start to realize that when we're together when we we're communicating, like you both said, and we're on the same page, but when we set a very clearly defined picture, a high-definition picture, like Chris Hogan says, of our future, and then we start taking whatever steps necessary to cause that future to happen, that you control your own destiny. That's like having a superpower, isn't it? Absolutely. Does it give you confidence to do other things now oh yeah definitely this guy's the limit now yeah that's the way i see it and i keep hearing that

from people over and over so i was just wondering if that if you found that to be true as well who Who were your biggest cheerleaders? Your uncle. Well, you are in Abu Dhabi or whatever it was. I can't even say it. But, yeah, so it's hard to do it that hard to get cheerleading that way. But other people know you were on the journey, family or friends? Yes, my uncle and a couple of my cousins. And everybody did think that we were crazy because we were eating beans and rice. And, you know, we really were tight on our budget.

That's good. So the uncle is at your rehearsal dinner the night before you got married, and this is his rehearsal dinner speech to you? Basically, yeah. Yeah. That's exactly how it happened. I love it. That's amazing. I'm proud of you guys. Way to go. Very, very. Yeah. That's exactly how it happened. I love it. That's amazing.

I'm proud of you guys. Way to go. Very, very well done. You've got a very bright future. You're a sharp young couple. Well done. Well done. Thank you.

We've got a copy of Chris Hogan's Everyday Millionaires for you. That is the next chapter in your story for sure. Now that you've discovered your superpower, you're ready to go. I love it. All right, Omar and Crystal, $68,000 paid off in 14 months, making $50,000 to $100,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! That is how it's done, baby. If you have any friends or people who run down the millennial generation, just have them listen to this show because that's who we have on here every day. And here's what's weird. We don't seek them out. They're just the people that are doing this. Oh, we have old people doing it too.

People 58 and people 48 and people 38. But there's a whole lot of 26 to 30-year-olds doing this stuff right now. And so everybody says millennials are deadbeats and they have participation trophies and all that stuff. And there is that share of people who are, you know, they feel the burn and they want somebody else to fix their life for them and all that stuff. But I'll tell you what, most of these people, they're on fire for controlling their lives. And these people being the millennials, I love this generation. They are doing it, baby. You guys are doing it.

I'm so proud of you. Devin is with us in Youngstown, Ohio. Hi, Devin. Welcome to the Dave Ramsey Show. Hey, Dave. How are you? Better than I deserve. What's up?

Well, first off, I'm a huge fan, so it's an honor to talk to you. You too. But to make a long story short, I discovered you about two years ago, and I had recently just took out some money from a family member to buy a car because mine had broke down. I had no way to get to school, so that was my first mistake. And ever since then, I've been trying to get past baby step one, but every time I save up money, the car would break down. I had no way to get to school, so that was my first mistake. And ever since then, I've been trying to get past Baby Step 1, but every time I save up money, the car would break down. The car was only worth about $4,000. I put just about that much back into it. So I finally

ended up getting a different car after saving up a little bit of money. And I am now four days into the car, and the timing chain went. So I'm just frustrated because I've been trying to get out of Baby Step 1 for about two years now, and I just can't seem to get ahead. You're not very good at buying cars. No, I had my mechanic check it out and everything. I mean, everything looked pretty good. Your mechanic checked it out, and he didn't know the timing chain was on his last leg?

No, apparently not. Really? Okay. Yeah, I know. What kind of car? The G6, 2009. G6? Yeah. I, I know. What kind of car? The G6, 2009. G6? Yeah.

I don't know that. Who makes that? Pontiac. Huh. I'll be. How many miles on the thing? 120,000. Okay.

Well, that might be a timing chain. Okay. Well, crud. So you have two cars now, and neither one of them are any good? Yeah, I'm still working on selling the first one. Within three days, I posted it. There's been a ton of people coming to look at it. It seems it's about worth $2,400, $2,500 Blue Book value.

So private sale, I can get about that much. And you owe your relative $4,000? No, I owe my relative $36,000. So that's why I'm trying to sell this, pay him off about $25,000, and then work off the rest of that debt from the other car sale. Okay, independent of that car, you need to decide whether you're keeping the Pontiac and putting a timing chain on it or not. I think I'd ask my mechanic who didn't take the timing chain to give me a deal,

putting on a timing chain. I think he might guilt him into doing that. He ought to feel guilty. I'll check the car out. Okay. This is the Dave Ramsey Show. We'll be right back. Tammy is in Fort Wayne, Indiana. Welcome to the Dave Ramsey Show, Tammy. Hi, thank you for taking my call.

Sure, what's up? Well, my mother-in-law recently went into assisted living, and we sold her house. By the way, it's a one of your AEL keys. Oh, good. So she's got like $60,000 in an annuity, and then like the $95,000 that we just got from her house, and we're trying to figure out where to put that in order to last long enough, you know, depending on how, you know,

obviously we don't know how long she's going to live in assisted living. How much does assisted living cost? At the minimum it's $3,000. It kind of goes up with the amount of care that you need. Right now she's pretty good other than she's fallen several times. Okay, how old is she? So 88. Oh, and does is she? So, 88. Oh, and does she have an illness?

She has a sister who's 93. Does she have an illness? No, she's actually in very good health other than, you know, keep falling and injuring herself. I understand. Okay. Well, basically, and you're in charge of the money to help her as best you can? Yes. Yes.

Okay. Well, if there's $150,000, $155,000, we divide that by $36,000, which is $3,000 a month, or $48,000, which is $4,000 a month, that tells us we have three and a half to four years. Right. Which... Oh, I'm sorry. she does get social security so um the burn rate should only be around um all of her um social security and uh pension it comes to right around two thousand a month okay so so um she would have to live to 100 before you have a problem then?

$1,000 a month? I was thinking it. Yeah. If you're burning $1,000 a month, that's $12,000 into 150 is 10 years. Yeah. I guess I was thinking that it was going to be higher. It's closer to 2 to 4 burn rate. You said 3,000 plus some add-ons a month,

and you're a $1,000 burn rate on 2,000 over your Social Security, right? Right. Okay, so $1,000 burn rate is $12,000 a year. If it's $24,000 a year, then you've got seven years. I mean, okay, I'm doing a statistical analysis of someone you love. So that's very dangerous, okay? But statistically, from a guy on the outside of this looking in, the chances of this 88-year-old who's already had three falls living through this money

with the burn rate we're talking about are zero. She's okay. Okay. living through this money with the burn rate we're talking about or zero she's okay okay so somewhere around 96 or 97 years old you're going to start to have a problem right okay so what i mean should we just put it into like a cd type thing um yeah just put in the money we're not trying to make money here we're just trying to slow the burn rate and so yes everything you can everything you can do to keep the burn rate down makes the money last longer. I don't want to invest it to try to outpace the burn rate. Got it. I think that is our biggest concern, whether to invest it or something much safer like the CDs or money market.

You mean money market? That would be fine. I mean, that's what I would suggest, but you're going to be making 1% or 2%, which changes the formula slightly, but it doesn't fix the issue. If she lives to 103, we've still got issues mathematically. Right. We're going to run out of money. Now, here's the thing. If we take $150,000 and we invest it in good mutual funds, it makes 10%.

That's $150,000 and we invest it in good mutual funds, it makes 10%. That's $15,000. That adds one year for every year you do that to the burn rate issue, to our break-even analysis. Okay? Okay. Does that make sense? All right. Now, if you invest it and it goes down 10% instead of up 10%, which sometimes mutual funds do, then we took a year off of her breakeven analysis.

I don't like that. I wouldn't take the risk. Okay. I think that was my main question, whether to take the risk or not. And what is your household income? Ours is about 90, but my husband's getting ready to retire, And what is your household income? Ours is about $90,000. Okay. My husband's getting ready to retire.

Yeah. And what is your assets? What's your net worth? I think around probably $500,000 to $700,000. Good. You've done a great job. Congratulations. So let's think this through. Eight years from today, what your net worth is going to be is close to a million dollars or more.

Okay? And you don't invest the money, and it's making 1%, and you manage it as closely as you can manage it, and she's 96 years old, and she runs out of money. I'm not far off on those numbers. Right. You can cover the burn rate for a 96-year-old. That's your worst-case scenario. I would rather take that risk than the risk of a mutual fund going down

and leaving you with a knot in your stomach because mom's running out of money. Okay. Yes. That sounds good to me too. Thank you. Cool. Thank you for calling in, and thank you for taking such good care of her. You've obviously analyzed this very, very well. You've got it tied in good. But you manage your cost, and you manage any income you can do to get the income

as early as you can get it, as often as you can get it, and that keeps your burn rate at the smallest possible amount. Michael is with us in Richmond, Virginia. Hey, Michael, how are you? Hi, Dave. Thank you for taking my call. Sure. What's up? So, Dave, my question is, I think I know the answer, but I'm in the military. I will be out of the military in about a year.

I have my emergency fund for six months, $18,000, and I have $7,000 in debt. I know I can pay that today, or I can come up with those $7,000 in about three months. What is your income? About $7,000 in about three months. What is your income? About $52,000 a year. Okay. So if you can come up with $7,000 in three months, why couldn't you put it back in your savings in three months if you were debt-free today? That's what I thought you would say, but I kind of feel uncomfortable taking it out since

I'm losing my job basically in a year, and I still don't have another job lined up. Well, I know, but you just told me you could put it back in seven months or in four months or whatever, right? Yes. Okay, so put it back. Instead of putting it on debt, you're putting it back in your pocket, and your discomfort is going to drive you to do the right thing and make your budget squeak. That's right. Yeah, so what are you doing in the military now

uh i'm a truck driver but um when i'm outside i'm trying to go into the field of human resources i do have a bachelor's degree in business administration and human resources so i'm trying to go into that for you good for you so you got a year to look for a job and land it and you served in the military how long? I've been in the military for five years. Okay. Thank you for your service. How old are you?

Thank you for your support, Dave. How old are you? I am 28, Dave. You've got a bright future. You're going to do well. You've got really good stuff happening. You're being intentional. You're thinking about it.

The people that have trouble are the ones that wake up, and they have like three days left, and then they go, oh, crap, I've got to look for a job, you know, which is like, you know, immature, right? But people do that all the time. You know, you're going to get laid off in six months. So what do I do for the next six months? Nothing. That's dumb. You know it's coming. So you're being smart.

You know, you're not being dumb. You're looking out there. You say it's coming. It's coming. I've got to get ready. It's just coming right at me i have to have a plan and uh that's called being a grown-up adults devise a plan and follow it children do what feels good thank god it's friday oh god it's monday the little man can't get ahead these are statements about children

they may be in a 52 year old body but they're an emotional adolescent and can't get ahead. These are statements by children. They may be in a 52-year-old body, but they're an emotional adolescent. I have been an emotional adolescent. I've been an emotional infant. I know what it looks like to be throwing a little fit and crying because everything's not going your way. Because I'm that guy.

I used to do that all the time. And I discovered I had a superpower. Common sense. It's so rare Then I discovered I had a superpower. Common sense. It's so rare. It's like having a superpower. And you've got it too. You just need to activate your superpower. Look into the distance. Adults devise a plan and

follow it. Children do what feels good. This is the Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.