The Ramsey Show - App - Why Should I Pay Smallest Debts Off First? (Hour 2)

Episode Date: August 29, 2018

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🎵 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. You jump in, we'll talk about your life and your money. It is a free call at 888-825-5225. That's 888-825-5225. Rick is with us in Raleigh. Hi, Rick.

How are you? Hey, Dave. How are you doing? Better than I deserve. What's up? Well, I tell you, I've been a listener of the show for a long time, and I tell you, you really kind of put me in a good direction for everything I had going on.

Honestly, if I wasn't in the position I'm in right now, I'd be in a whole lot worse shape. So I appreciate everything, all the guidance and everything you've given me over the years. But I would be in a lot worse shape right now appreciate everything all the guidance and everything you've given me over the years but um i'm being a lot bit worse shape right now if it wasn't for um if for that by the way so i'm glad um let me kind of give you an idea of uh what i got going on here i just got out of a divorce and i have a child and um we were on our way to pay me my ex-wife we're on our way to pay me. My ex-wife was on her way getting completely out of debt. We didn't have any debt actually at one point.

We were in the process of selling the house and then she left. But now we were actually, we bought a really nice piece of land on a lake up here where we live at. We were going to build there and we were staying in a trailer really cheap, trying to pay it off pretty quick so we could start building. And then we got divorced. And since then, I ended up getting the land out of the deal. She currently has my daughter, and it kind of puts me in a tough predicament. She moved about 40 miles away from me,

and I still have that payment for that land that I'm making payments on for about $500 a month, and it's kind of been a burden on me. I'm still living in the trailer that we were living in whenever we were together. But as far as that goes, I mean, I still have a lot of other, I mean, good things going on, but I'm looking goes, I mean, I still have a lot of other, I mean, good things going on. But I'm looking at, you know, maybe I really need to be able to move closer to my daughter. And I have, you know, this land that I've been trying to sell for about a year. It's probably worth about $60,000 or $70,000.

And I owe about $45,000 on it and would it be for me to try to go ahead and buy a house closer my my child you know dealing with having to you know cussing everything else is it a bad idea for me to try to use an interest only loan on that land temporarily till i can get it sold and go ahead and try to buy a house closer to her for about $100,000 or less. Yes, that's about it. I'm sorry. You already have a loan on the land, right? That's correct.

And you're just wanting to get a cheaper per month loan? Yes, so I can afford to buy something a little bit closer. Yes, I would just go rent something closer and let's get this land sold. Cut the price. It's really hard to find anything in that area, you know, and I probably will end up being there for a while because if she stays there, she'll be going to school and stuff. Yeah, but you don't have the money to buy a house right now. Yeah, well, I mean, my expenses really aren't too, too bad. I mean, I made—

You just told me you're struggling with $500. Well, I mean, I've prepared for it. I mean, I made... You just told me you're struggling with 500 bucks. Well, I mean, I prepared for it. I mean, I'm a college teacher. I make anywhere from $43,000 to $50,000 a year. Rick, you do whatever you want to do, okay? But you're asking me what I would do? There's no way I would buy a house until this land is sold. I would move closer to my daughter.

I'd rent something inexpensively. I'd cut the price on the land and get rid of it. But there's not any way in the world I'm going to go buy a house and borrow, you know, restructure this debt on this lake property that you don't need, don't want, and isn't part of your future given that your life has changed. I'm sorry you've been through this hard time. I mean, it's heartbreaking what you've been through. And so, yeah, you're going to make some sacrifices to be around your daughter, and I think that makes you a great man and a great dad. But let's not get crazy. It does not require that you buy a house when you're broke

and have all this debt on this land. You need to get the land sold before you start talking about buying a house. So move, rent something, get rid of the trailer, cut the price on the lake property, let's clean up the dust behind us and move into the future. Thanks for the call. Brittany's in Wichita, Kansas. Hi, Brittany.

Welcome to the Dave Ramsey Show. Hi, Dave. Hey, what's up? Well, so I guess I'll kind of wrap it up. Long story short. So me and my husband, we recently bought a house in November of last year. I'm a full-time respiratory student, so I'll graduate in December. Good.

But with school starting again, we pretty much go back to having just one income, just my husband's income. And he makes probably a little less than $30,000, give or take. I work part-time as a student respiratory therapist, so I still bring home maybe like $6,000 or $7,000. I guess I just kind of wanted your advice on how we should go about kind of starting to build up an emergency fund. We have a ring payment, and then I have my student loans, but since I'm still in school, they don't really gain any interest right now because i'm still in school so should we try and right now your income is about 37 000 until you get out of school after december you're probably gonna not gonna make huge headway with that income if you can break even and just kind of keep everything current and maybe scratch together that baby step $1,000 by Christmas, I would call that in your situation a victory.

Now, when you get out of school in January and you get your full-time respiratory therapist job, whoa, now the household income shot up. Now we're on a budget, and now we're going to throw all that money at these debts and clean them up as fast as we can. But you guys are treading water from now until December. The good news is it's not that far. December will be here in about an eye blink, and maybe Hubby works an extra job during that time, loosen up things a little bit, deliver some pizzas or whatever. I don't know.

Maybe he picks up some OT. But let's try to figure out something just to make it through to December and maybe scratch that $1,000 together. The only payment you've got is on the ring, you said, because student loans are in deferral. But you come out of school. You get the big job in January, February. Boom, we are on our way then,

because your household income is going to more than double at that point. That's going to put you in a position to save, you in position to hit some of these other baby steps clean up these debts and all that kind of stuff hey thanks for the call we appreciate you joining us open phones at 888-825-5225 you jump in we'll talk about your life and your money this is common sense for your dollars and cents. Jessica's on Instagram. My parents don't have much saved and are nearing retirement age. They recently inherited a fair amount of money, around $500,000. They don't have any debt.

How do they handle this money to set themselves up for retirement? Well, they invest it. And they need to go to DaveRamsey.com, click on SmartVestor. I'm not in the investing business, but when you do that, put in your info. It'll drop down a list of the people we recommend in your area. They're called SmartVestor Pros. You sit down with them, and you start to learn about mutual fund investing and how to best do that.

And as you learn about it and you feel like you've got somebody with the heart of a teacher, then you're able to invest, and that money will help them create a great retirement. I get asked all the time, when in the baby steps is the right time to buy life insurance? My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs.

That's when they're at the highest risk. And no matter where you are in your baby steps, it's a necessity, not a choice. This includes working husbands and wives, as well as stay-at-home parents. It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance since it's the most affordable way to get the right amount of coverage and not break your budget. Go to Zander.com or call 800-356-4282. These are the guys I personally use. Term life insurance is inexpensive and your family needs this no matter where you are in your baby steps.

That's Zander.com. Or call 800-356-4282. Zander.com. Thank you for joining us, America. Patrick is up next on The Dave Ramsey Show in Charlotte, North Carolina. Hi, Patrick. How are you? I'm doing great, Dave. Thank you for taking my call. Sure. What's up? Well, you know, somebody once told me that, you know, the wise man learns from his own mistakes. And the wise man learns from the mistakes of others.

And the fool learns from his own mistakes. So you are probably talking to quite possibly the biggest fool on the planet. I doubt it. That's fun. Brother, we've all messed this stuff up. I'm 49. I've always been behind the curve on just about everything from graduating from school on time to getting married, starting a career. Um, and so here I am at 49,

my wife and I have been married about 15 years. We don't have any kids. We also plan on, uh, adopting some, some children here in the future. Um, and so, you know, we, we've discovered over the last several years that, you know, the end of the month rolls around and we can't rub two nickels together. You know, we have that conversation. Don't take out any money. You know, it's the first of the month and all this stuff is coming out. So we have outside of our home, we have about $48,000 in debt. But the thing that at this point in my life that's sort of keeping me up at night is the fact that I only have like $10,000 in retirement.

And so where I'm at right now, you know, it's only been within the last month that, you know, I've got my thinking right. Um, that, you know, my wife and I have been like, Oh, you know what? And, and for the record, my wife has been biting her nails for the last 15 years when it comes to finances. So she's always been the one that has been looking at the books and balancing the checkbook and juggling credit cards so that we're not paying interest and things like that. Okay. So you're ready to fix this? Absolutely.

Both of you? Absolutely. Both of you? Both. Okay. So you're ready to fix this? Absolutely. Both of you? Absolutely. Both of you? Both. Okay. So how long have you been listening to this show? I've been listening probably for the last two months. Okay. Good. Then you've heard me over and over talk about the baby steps being the shortest path to wealth,

which is what we're talking about here. We're not only talking about getting to the end of the month without any money, we're talking about getting to the end of our life without any money, which is even scarier than the month. So, I mean, being old and broke is real scary. So, yeah, what we're going to do is walk those baby steps. That's going to be your most direct method to do that. And, you know, and learn to invest, learn all about it and, you know, learn about generosity and learn about budgeting and learn about real estate.

And so I'm going to put you through the class that you should have gone through 30 years ago called called Financial Peace University. By the way, we all should have gone through it 30 years ago but it wasn't there then so okay and uh it's it's a one-year membership full online access including every dollar plus and uh of course there's nine weeks worth of lessons that'll be taught there in your area at a local church and you jump in and go through that i'm going to pay for it for you for a year so uh you i'm gonna pay for your membership and get you in. That will get you into the – you can attend that local class, that local group, and get that nine lessons, and you can get all of that same stuff online.

You and your wife go. And someday when you're rich and doing really well, you find some guy who's a late bloomer and you help him out, okay, because that's how we all get together and get this thing done, man. Hold on. I'll have Kelly pick up, and we'll get together and get this thing done, man. Hold on. I'll have Kelly pick up, and we'll get you signed up for Financial Peace University. Dan's in St. Louis. Hi, Dan.

Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for doing all this. Sure, man. What's up? My question is about prioritizing student loans to repay. I have them all sorted by how much interest they accrue annually. The biggest is kind of an outlier at $2,500. The next is $600 and then $300 and so on.

I've heard your advice about the snowball method, about staying motivated and all that. Maybe you hear this from people, but I think I might be able to look past that. I've already paid off. Why would you want to? Well, I think that I'm able to stay motivated without that strategy. So what? I've paid off. My concern is minimizing the interest paid.

Yeah, I know. But you haven't added it up. When you run out, the debt snowballs, paying it off smallest to largest, and you run out. How much student loan debt have you got? About $100,000. Okay. And what's your household income? I just got a job making $80,000.

Good. And you're single? Yes. Okay, so you're going to be debt-free in two and a half to three years? Absolutely. Okay. The amount of interest that you're discussing, trying to use your intellect only to solve this problem

versus my behavior-based issue, it didn't spit. Run the numbers out both ways. We're talking about less than, on $100,000 bucks we're talking less than 500 bucks one way or the other you are not you are not changing the world mathematically is my point if you succeed if you succeed and you might be able to i mean some people can but i don't know why you would want to try a plan that almost never works versus a plan that almost always works okay for 500 for 500 bucks on 100 000 so i mean you're right mathematically but the fun thing is when you actually run the case study out on it and you say

okay the whole thing's gone in two and a half years oh by the way that means or three years oh by the way that means in 18 months half of it's gone and so you know we're talking about this is dropping off so fast that if we were carrying this out 30 years there'd be a lot of interest to discuss in comparing the two and boy you would really have a strong case you know but when you actually crunch the numbers out i haven't done it on your particular one but you can do it i mean you're obviously have the intellect to pull the spreadsheet together you know so run it out both ways but i i'll wager with you that it's about 500 bucks because you know it you're just not carrying very much debt for very

long because you know after year one we're not dealing with a hundred thousand we're dealing with um you know 65 and after year two we're not dealing with 65 we're dealing with 30 um because you're gonna pay about 35 a year off for three years or maybe even more if you do what we're talking about and so when you run that out it's the changes are just very minimal plus you've not run this on interest rate you've run it on total interest accrued um which may basically cheat you to the higher balance not to the higher interest rate so what you're doing is technically not mathematically correct anyway mathematically correct would be highest interest rate to higher interest rate. So what you're doing is technically not mathematically correct anyway.

Mathematically correct would be highest interest rate to lowest interest rate. But again, the power of focus far supersedes whatever forced discipline that you can create there. So you can do it either way, man. Do whatever you want to do. But there's a reason that we've had all the success that we've had with millions and millions and millions of families getting them out of debt. Thanks for the call. Jill is next after we come back from the break. I'm not going to do that coming up.

It's too, too. I have to cram our answer into a short period of time. So, Jill, I'm going to make you wait so that I give you a good, slow answer. Alex is on Instagram. I'm 18 years old going to electrical school. I've saved $9,000 and growing. Is putting my money in an IRA with Edward Jones good, or should I have put the money in the stock market in an aggressive fund?

Well, it can be in an aggressive fund in an IRA with Edward Jones. It can be. But what we teach folks to do, Alex, is to put your money first out of debt, second, and make sure you're paying cash for your school and all that kind of stuff. Secondly, what we want to do, once you're out of debt, you want to build your emergency fund. And then when you do start investing into your Roth IRAs and so forth, put it across four types of mutual funds.

Growth, growth and income, aggressive growth, and international. If you want to sit down with one of the people we recommend, you click SmartVestor at DaveRamsey.com. It drops down a list of the SmartVestor pros in your area, and you select which one you want to work with. This is The Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major healthcare costs.

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chministries.org. In the lobby of Ramsey Solutions, Quentin and Morgan are with us. Hey, guys, how are you? Good. How are you, Dave? Good. We're good. Welcome, welcome. Where do you all live? We're from Louisville, Kentucky. Awesome. Welcome to Nashville.

Thanks. Good to have you. Just a couple hours down the road. About three, I guess, right? Yep. Welcome. Good to have you. All the way down here to do your debt-free scream. Yes, sir. How much have you paid off? $157, welcome. Good to have you. All the way down here to do your debt-free scream. Yes, sir. How much have you paid off? $157,000. Woo-hoo! How long did this take?

It was about, what, four years and seven months. Mm-hmm. And your range of income during that time? We made $70,000 to start out. Now we make $130,000. Doubled your income. How'd you do that? There was a lot of working weekends. I'm a pediatric nurse, so I worked weekends only for two years and night shift. And then Quentin got some promotions along the way.

Some promotions and bonuses. You guys are working your tail off, man. Very cool. What kind of debt was the $157,000? Go ahead. So probably the dumbest one was some pots and pans. Oh, that's right. And mostly student loans and then a car payment.

Okay. All right. So you're kind of normal. Yeah, we're pretty normal. How long have you guys been married? Five and a half years. Okay. Yeah.

So you were married about a year and something happened and you said, okay, after a year of marriage, we got a pile of debt here. We got to do something. Tell me how this happened. What was the journey you're on? Go ahead. So one day, I mean, we kind of had a table moment like you talk about. And we had all these payments piled up on the table, and we had a whole lot of payments left at the end of our paychecks on a monthly basis. So it was just this overwhelming fear of how am I going to support my family?

How am I going to be able to change my family? And it was a crazy experience, and that kind of got the ball rolling, got Morgan involved, and kind of went from there. Okay. So what happened? Well, we started going to a church right after we got married. They offered FPU, I think, the third week we started going. And so we signed up and took the nine-week class. Which church? It was North Madison Christian Church.

Yeah. Good, good. Okay. So you found Financial Peace University at your church. Yes. And you went, okay, just in time, because I'm freaked out. Yes. And you jump in there. And so what happened in the class?

So, well, we fell in love with the debt snowball and making sure that we made our budget. And then we used to have a spreadsheet Excel. It was really extra. But then we started doing the EveryDollar, which is way easier. Okay, good, good. So you use the EveryDollar app. Yeah, and we've also taught FPU three times. Wow.

Following up. So that keeps you going, doesn't it? Absolutely. It keeps you motivated watching other people with their journey yeah so we still get texts from people in our group that you know say hey we cut another link off of our chain and you know we're getting out of debt they have three kids and it's awesome neat that's so fun that's so rewarding thank you for doing that thank you thank you for doing that and that that also but it does it keeps you going going because it keeps your eye on the ball, keeps things focused.

Because four years is a long time to walk through this. It is. It is. And Morgan mentioned the chains. Like a couple weeks into it, I wake up one night because she's a night shifter. So I wake up one morning and there's this chain going around our entire living room. And I was like, what is this chain? And she's like, well, each of those is $1,000.

I was like, oh, okay. All right. So that was a motivator. Did you make it out of paper or? Yeah. Like a construction paper. Like a kindergartner. Yeah, I got you.

Okay. All right. Okay. So then you rip off a link every time you rip off $1,000. Yes. Okay. Okay. So I'm guessing with your income increasing like this that like half of this debt probably happened in the last year.

I would say. Pretty close, probably. Yeah, because there's a curve here to your income that's pretty substantial. So, you know, the four years, it was like a slow, slow, slow. Boom, we're done, you know. You really got, you caught your stride, you know, the four years, it was like a slow, slow, slow, boom, we're done, you know. You really got, you caught your stride, you know. Right. And we also, we stayed with my in-laws for a little bit, and that helped a ton. That was huge for us, and their support was awesome during that process.

So was that your biggest cheerleader? Who was your biggest cheerleader? Yeah, I mean, each other. And then we have a lot of friends and family that were very supportive throughout the whole process. And the more momentum we kind of picked up, the more they were like, how are you guys doing this? What's different about you guys? And that in itself is a big motivator. It is.

What motivated me the most was people that said that I couldn't do it. How many of those were there? Almost every person. So people saying, you know, you're always going to be in debt. You'll always have a car payment. You'll always have this. That's what motivated me because I wanted to prove them wrong. Yeah.

Good for you. Well done. So when you're sitting in the class, people say, okay, you did it. You paid off $15 157 000 in debt how did you do that what do you tell them the key to getting out of debt is um i'd say probably the first thing is communicating communicating between us we shared the same why and uh we you know our why was huge because it was we wanted to be able to give whenever we wanted. And we also wanted to change our family tree.

And our little one-year-old daughter that's in here probably tearing up your lobby, she's a huge motivator for us too. But the key, I mean, we were on the same page that way. We were on the same page with our budget. We were on the same page of where we wanted to go so that was that was a big deal yeah yeah what about you morgan well i can say that one of my stupid taxes was i bought a car straight out of college a brand new car and we paid it off but two months later i totaled it and i was also pregnant with our little girl but we were

able to pay for another car in cash because of that wow and just sticking with the budget like quentin said communication and having the same wine being a team yeah big deal very big deal well congratulations you guys i'm very proud of you very well done thanks again for leading all those financial peace university groups that's just that's. Very well done. Thanks again for leading all those Financial Peace University groups. That's just amazing. Very well done. Thank you. We've got a copy of Chris Hogan's retire-inspired book for you.

And that's the next chapter in your story, to be millionaires. And you brought the one-year-old, right? Yeah. What's her name? Finley. Finley is with us, okay? Let's get her in the shot, because her family tree is changed. Very cool. All right. All family tree is changed. Very cool.

All right. All right, cutie. Very fun. $157,000 paid off in four years and seven months, making $70,000 to $130,000. It's Quentin, Morgan, and Finley from Louisville, Kentucky. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free scream. Three, two, one. We're debt-free! I love it! Man, oh man, that's as good as it gets. Way to go, you guys. That is fun. That's fun. Well, that's how you do it. That's how you become a millionaire.

You get rid of all those payments. $157,000 in debt hanging around your neck. You're not going to become a millionaire. You're not going to build wealth. Not at substantial levels. It's your number one thing. We've recently studied 10,000 millionaires, and we learned something crazy. Millionaires do the stuff we teach in Financial Peace University. They on less than they make they avoid debt they're disciplined they're

responsible and they systematically and consistently invest over time and they're able to do that because there aren't any debt payments so you can become a millionaire and if you want to start your journey we can show you how to do it. Financial Peace University right now, what they're talking about they went through, is 20% off. It's on sale right now for only $119. Or you can consider our new exclusive bundle. It includes our number one program, Financial Peace University, and our new book, Everyday Millionaires, how ordinary people build extraordinary wealth and how you can too. This is by Chris Hogan. in our new book, Everyday Millionaires, How Ordinary People Build Extraordinary Wealth and How You Can Too.

This is by Chris Hogan. The book is in presale. We'll actually ship you the book in January when it comes out. The whole bundle's only $129, and that includes all the bonus items you get for buying the book in presale. This bundle's got what you need to become a millionaire.

Studying millionaires and studying the techniques that millionaires do in Financial Peace University. Just go to DaveRamsey.com and you can learn all about this stuff. We'll help you out. This is The Dave Ramsey Show. Thank you. now jill and phoenix is up welcome to the day ramsey show jill how are you hi i'm doing well thank you so much for taking my call sure how can i help uh so really quickly i'm just trying to figure out which debt to pay off first. So I guess just a little bit of background. We were on the path to being debt-free.

We only had our house and my husband's student loan payment. Then came a car accident in 2016, somebody else's fault. That took away my vehicle. Um, that settlement money that I got, I used to get a car for my husband, a newer car, um, and completely paid it off in cash. Um, so we were still without, without a car payment because I went back to driving my old pickup. So now, fast forward to March of this year, somebody runs into my husband and totals the car that we had just bought two years prior.

So now we have two car payments. Why do you have a car? Wait, wait, wait. You were driving your old pickup that's paid for. You got an insurance check when you got hit. Why did you go into debt? Oh, yeah. Well, my old pickup is pretty much running on fumes.

So you used the wreck as an excuse to rationalize and go buy cars you couldn't afford. Yeah, I guess you could put it that way. Yeah, okay. Because you had the money. I mean, they give you a check when you have a wreck. Right, right. Okay. that way yeah okay because you had the money i mean they give you a check when you have a rack right right okay so um so the well i i guess i should back up so i use the property damage to pay for my husband's car so i still have the settlement uh the the medical um settlement that i got and i'm using that to pay for my vehicle so that's pretty much your medical settlement is a monthly settlement no it was paid it was paid for outright so you

have a you have a lump sum in the bank yes i do how much is in the bank uh right now for that uh there's about 14 000 how much is in the bank total, not counting your emergency fund? In the bank total, we're sitting at about $27,000. And how much do you owe on your cars? For the cars, we're looking at about, this is going to hurt to say out loud, but we're looking at about 80. Oh, my Lord. Y'all lost your minds, didn't you? Yeah, I think so. Now that I've actually said it out loud, yeah.

So what's your household income? We get about $120 a year. Okay. You have to sell the cars. This is insanity. It's insanity. You have almost a year's income tied up in cars. Yeah, that's...

That's insane. So we are still waiting on the settlement for my husband's car accident. But, I mean, it took almost a year for mine to be processed. Yeah. So my plan was to use the money that we get back for his medical and put it towards his vehicle. How much are you going to get for that? I'm not sure. Yeah, and how much student loan debt do you have?

Right now we're sitting at $8,900. Okay. So I was paying, I was focusing on paying off the student loan. Okay. So here's the thing. Even if the cars were paid for in cash, $80,000 tied up in things that are going down in value when you make $120,000 is mathematical insanity.

You have bought cars that are way over in the stupid zone. They're very nice cars. But I don't know which one of these is the big one. A good rule of thumb if you ever want to build wealth is to not have more than half your annual income invested in things with motors and wheels.

Okay. And you're substantially over that. Well, if it's anything, I tried talking the husband into getting a different vehicle, but that didn't work out. Well, listen, you're not stupid people, but you've done some very stupid things here. I'm not stupid people, but I've done some stupid things in my life. And, you know, you call me, so you ask for it. Yes, yep. Because you know I'm listen you know i'm gonna love you enough

tell you the truth kiddo so i want you to win it doesn't affect me my life's gonna go on but i want you to win and you're not gonna win with these cars you guys are gonna this was very what has What has happened here is the emotions associated with two very bad car accidents and the physical drain exasperating those emotions, making it worse because of the injuries associated with it. How it just upsets your psyche and it upsets your life when you go through two very violent transactions, physically violent. It affects you. And in that moment of weakness, you guys walked off into the land of stupid. And you've really hurt yourself. There's been another car wreck now, and it's sitting in your driveway with payments on it. This is the third car wreck, okay okay so you you got to get rid

of these kiddo you're just not gonna win doing this it's just a stupid car i mean i like cars i'm a car guy but this is you just can't win this way now you do whatever you want to do but i've been doing this 30 years and i'm here to show you how to have a good life with your money, how to build wealth with your money, and how to drive whatever you want to drive eventually with your money. But you guys have made some serious mistakes, and they have four wheels on them. So you do whatever you want to do, kiddo. But that's what I would do if I were in your shoes. I'd sell both of them.

I'd get inexpensive paid-for cars that I can pay cash for. I would use the $27,000 and the other money that's coming in immediately to clear up the student loans and pay cash for cars. And get cars never again. All your vehicles added up and things with wheels and motors added up should never be more than half your annual income, with very, very rare exceptions. And you should always

pay cash hey i hope that helps i don't know if you're going to do it or not but that's what you should do thanks for the call janelle is with us in miami hi janelle how are you good thank you so much for taking my call sure what's up um my husband and i are considering in the next few years potentially moving to a different area like in North Florida. And there's an area we have our eye on. It's the master plan community. And so they've had like all this development going on for the past 10 years. And it's kind of one of those areas like they open up a new plot of land and, you know, you pick your plot where you want to put your house and build. And then they open up another one down, you know, a quarter mile away,

and it just keeps growing and growing and growing. Are homes being built on all of these each time they do it? Yes. So it's not all swampland in Florida, as the old joke goes. I hope not, no. It's not a bunch of lots sitting there that no as the old joke goes. I hope not, no. It's not a bunch of lots sitting there that no one ever built on and can't get out of. No, no, no, they're all built. Okay, so the neighborhoods are building out.

It's a successful development where families move in, and then there's a resale value, and you're not stuck, and so on, right? That's correct. Okay. I just feel like when we go up there there it's just very reminiscent to me of like the the housing bubble of 2005 ish like that i i experienced you know buying in a development like that back then and i just i feel like i don't know if it's like traumatized from the the housing crash to go into something where you you know, the plot of land is small.

And we have enough money to pay cash for a home. Wow, that's awesome. Yeah, it's part of the appeal of that, but it just kind of scares me to, like, put all that cash. Well, I mean, what would you put it in if you didn't put it in that? A home in a more traditional neighborhood? Well, we actually do have some other homes in other neighborhoods that are like old, established neighborhoods, like desirable communities and stuff. So we have some real estate investments spread out. I mean, listen, if you think the thing is overbuilt and there's a bubble, it may be because it's overbuilt. There's a bubble.

I don't know. I can't tell. Overall, I'm not hearing anything that scares me with what you're doing. But, you know, don't buy something that you're uncomfortable about buying. Buy something that you're more comfortable with. Why would you do that? I mean, you got the money. That's the good news.

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