The Ramsey Show - App - Why The Student Loan Extension Doesn't Help You

Episode Date: April 5, 2022

George Kamel discusses: Why you should keep paying down your student loans despite the pause extension announcement, How to handle debt in collections, Selling real estate, The mistake of trying to cashing out retirement to clean up financial mistakes. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm George Campbell, Ramsey personality, joined today by me, myself, and I. Just riding solo, guys, and we're having a good time so far, and we are so glad you've decided to join us. Open phones this hour, 888-825-5225 is the number to call. Maybe you're worried about inflation. Maybe you're about to make a big financial decision. You need some confirmation, some encouragement. I'm here for you. Gerard is kicking off this hour. He's in Philadelphia, Pennsylvania. Gerard, welcome to the show.

Hey, George. How are you? Great. How can I help today? So I graduated law school about five years ago with $145,000 in student loans. I got a car and a condo, which I know wasn't the best idea, but I ended up last year selling the condo for a $50,000 profit and I paid down a lot of that debt. So up until about a month ago, my debt was student loan debt was still $106,000. I, uh, I got a bonus at my job of about $91,000, which was more than my salary. And, uh, yeah, last week I decided that I was waiting around to see what would happen with the pause. And I, I wrote a check for $106,000 and paid off all my loans. Whoa, that's awesome.

Good for you, man. Yeah, yeah, thank you. You don't sound excited. I paid down pretty much all of my debt, but it drained almost all of my money, and I just found out today that they're extending that pause again, and my friends are giving me a hard time, and I'm just kind of like... Your friends are broke, aren't they? They are worried about... They are broke lawyers as well, yes.

So let's not take opinions from broke lawyers. Let's take opinions from lawyers who have no payments in the world. Yeah, and so, I mean, I don't have that much money money left but i was just sort of wondering where to go from here you're about to have a whole lot of money you have what's your household income uh it's just me it's uh 80 80 000 is my base salary okay so let's say 80 000 base and you have no more debt you still have the car loan no no that was the last of it so you have no more debt? You still have the car loan? No, no. That was the last of it. So you have zero debt?

Zero debt. And I moved back home. My parents are in Florida and I decided to stay at their house while they're there. That was a huge help and came down my debt, but I kind of want to get out on my own, but now I don't have that much money. So how much money do you have to your name in savings and your checking account?

Savings and checking combined, about $13,000. And to you, that's $0? You said you have no money. No, it's money, but I mean, you know, well, to go from, you know, $125,000 to the bank in 13 in a week is kind of… Yeah, but we've got to look at your $125,000 in the bank with $106,000 in debt. You don't have $125,000 to your name. That's true. So when you look at your net worth, right, what you own minus what you owe, it's a very different picture. If I've got $200,000 in the bank but I owe $2 million, I'm broke.

Right. And so I want you to be encouraged that you did the right thing. It sounds like you've got some remorse here, some regret. Yeah, I just think because they just announced today that they're pausing those payments i don't care if they kick it to 2028 man you did the right thing by paying off your debt there's no point kicking the can down the road even further because how much was your student loan payments when you add them up um but when they when they restarted they probably would have been uh probably eight or nine900 a month. Okay.

So let's do some basic math here. $900 a month times 12 means you can invest that money. You can save that money. That's money back in your pocket from your hard work, not going to a lender to make them rich so they can build another building downtown. So I don't want you to have any FOMO about how you paid off your student loan debt and your friends are going, dude, you're an idiot.

You're going to keep pausing it until three years from now. And they're going to continue to be broke. They're going to continue to live on payments. So I want to encourage you. You're going down the right path. You make 80 grand. You have 13 in the bank.

What is three to six months of expenses for you? About eight. Eight was about five months. That's five months. Okay, so let's call it 10. Let's call it 13. You've got your emergency fund in place. Now let's begin investing 15%.

Okay. Do you have any retirement options? I did put, I have a Roth IRA that my family told me to start before I started making too much money. And that has 23 in it. And then I have a 401k that was just started and has four in it. Great. So let's invest. And this is the way I would do it. Match beats Roth beats traditional. So do they have a match in the 401k? No, it's just a flat contribution regardless of what I contribute. Okay.

And that's already vested. And then I'm going to move to the Roth option. So do we have a Roth 401k or is it just traditional? It's just a traditional 401k, and then I have my own Roth IRA. Those are my only two. So if I'm in your shoes, I'm going to fully fund the Roth IRA for the year with my paychecks. Once I'm done with that, I'm fully funded, I'm going to put the remaining 15% into my work traditional 401k until I hit 15%.

Okay. That's it. And if you do that and you're renting right now. Well, I'm, my, my parents are in Florida and I'm staying with that. I'm staying in Florida. Okay. Um, but I would like to get my own place cause I'm coming back soon. So beyond that, we can start saving up for a house down payment and I want you to save 10% to 20%, 15-year fixed rate mortgage where the payment is no more than a quarter of your take-home pay.

If you do those things, you are going to have what we call financial peace. And you're going to do it really quickly because you're not paying a lender $900 a month. That same $900 now becomes your down payment savings. You see where I'm going with this? Right. Yeah, I do.

Man, I'm more excited than you are. I'm ready to get into this house, man. I'm going with this? Right. Yeah, I do. Man, I'm more excited than you are. I'm ready to get into this house, man. I'm ready to do some things. You've got to stop listening to your friends. Yeah, it was just, you know, it was the biggest check I ever wrote by about a factor of 10. So it's kind of, you know, a lot of FOMO, like you said. Well, you didn't really have that money because you owed it.

And debt is when you owe anything to anyone for any reason. And so you had a facade that you had a lot of money. And I'm proud of you for even saving up that much money. That's unfathomable to a lot of people. But I want you to be encouraged that that money had a name. It had the lender's name on it from day one. When you signed those papers to take out $146,000 in student loan debt, you owed that money. Right.

Well, Gerard, I've gone as far as I can go, man. I don't know why you're bummed out. I mean, America's cheering you on, going, Gerard, way to go. The whole crowd out here in Ramsey Solutions Lobby is cheering you on. You did the right thing. You just got to stop hanging out with broke lawyers. Your life will change drastically, man. Get plugged in with people following the Ramsey Solutions Lobby is cheering you on. You did the right thing. You just got to stop hanging out with broke lawyers. Your life will change drastically, man. Get plugged in with people following the Ramsey plan.

You're going to realize, man, I'm on the right path. I'm doing the right things for my financial future. I'm not doing things to impress anybody anymore. I'm doing what's right for Gerard. And that is how you know you are winning. Thanks for the call, man. This is The Ramsey Show. In an uncertain world, being a good steward of your money is more important than ever. While some circumstances can't be controlled,

there are items within your budget you can take charge of, such as your health care costs. For nearly 40 years, Christian Health Care Ministries, or CHM, has provided a budget-friendly means of sharing for medical bills when our members need it. Learn more by visiting chministries.org slash budget. That's chministries.org slash budget. Christian's chministries.org slash budget. Christian Healthcare Ministries is a Ramsey Trusted Provider.

Welcome back to The Ramsey Show. I'm George Camel, your host today, flying solo. Give me a call, 888-825-5225. All right, so I recently spoke with our lawyer friend on the line, Gerard, and he had some regret about stroking the check to pay off the rest of his $106,000 student loan balance because his lawyer friends were clowning him saying, dude, they're going to keep pausing student loan forgiveness. They're going to keep pausing the student loan payments. What are you doing, man? Just leave it alone. What's the point in paying it off? And so we just got wind that the Biden administration is kicking the can down the

road again. That's what they're alluding to. Now through the end of August, they are pausing student loan payments. And let me tell you, the people that come here and do their debt-free scream, so many of them have said, man, that student loan pause helped me pay off my debt faster because we attacked it with a vengeance while it was paused. While we didn't have to make payments, while interest wasn't accruing, that helped us get ahead and make extra payments on principle and knock this thing out. And you'll hear people in the Borrowed Future documentary go, I took out $120,000, but it turned into $200,000. How did that happen?

And it's all because of interest. That's how this works. The average student loan balance when you graduate right now is $38,792. Keeps going up. Average loan term about 10 years, average interest rate about 5.8%. And so me and James, the producer, and Ben and Zach, we're in there just being nerds, just crunching some numbers for you, America. And I want to report back some interesting findings. When student loans got paused back in 2020, let's just say that you didn't make any payments. Well, the interest isn't accruing, so you feel pretty good about yourself. There's no payments. But let's say you did pay on those loans and you

got them knocked out. Here's some of the savings you would have had. Year one, you would have been paying $1,645 in interest. Year two, you would have paid $2,041 in interest. And year three, $1,858 in interest. So that comes out to about $5,500 you save by just paying off those student loans and not dealing with that interest while it's not there. So I want to encourage you, America, to pay off your student loans regardless of when the payments are going to get unpaused, because now is the time. This is a gift from the government, which never happens, except for those stimulus checks. That was fun while it lasted. But this is a gift because they're not having your payments accrue interest. You can

attack the principal. You can make progress faster than ever using the debt snowball. List out all of your debts from smallest to largest, regardless of the interest rate, which is hilarious because we're not dealing with interest rate right now with these student loans. And then knock them out from smallest to largest. And you're going to make so much progress. And you're going to be on this stage right across here from the glass from me doing your debt-free scream. That's what I want for you. I want those payments to turn into savings, to turn into investments. The opportunity cost of you not using that $900 towards your goals, towards your investments, and instead giving it to Sally Mae, you think you're doing anyone a favor but them man so i don't care when they kick the can down

the road i don't care if it's 2028 2038 you got to get this debt out of your life they're not doing you any favors that's my rant for the day the second one james you're welcome take count there aaron is joining us up next in fort myers florida aaron welcome to the ramsey show hey george thanks thanks for having me on the show. Absolutely. How can I help today? So for my wife and I, we have taken serious the baby steps and trying to pay off our credit card debt currently. That's what we're trying to do. For about the last six months, we've been trying to do that. We started 2022 just from years of bad habits and not making a lot of money with about $35,000 in credit card debt. For a couple of those credit cards, they went into collection just because we were unable to make those payments.

So for the start of 2022 until now, we've been able to knock out about $10,000 of those credit cards. So that was two of those credit cards. Awesome. We currently have three more. Two of those are in collections. So that's about a total of about $15,000 that are in collections. And then we have another credit card that is not in collections, and that's about $10,000. So we have about $25,000 left to pay in credit cards.

Now, I have already spoken to one of them. It's in collections. They've given me an offer. And with that offer, we feel like that's something we want to do. It's like 60% of the $8,000 amount. We want to pay that off in three payments, but while we're doing that, we're unable to make the minimum payments on the one that's not in collections. So my question is, do we allow that just to go, the lapse, and just go into collections while we're trying to knock

off these, well now, smaller amounts because of the offer that they've given us to knock out those credit cards, just kind of to have that snowball effect to get rid of a credit card, focus on the next one until we can get there. Have you communicated with that third card and said, hey, listen, we're trying our best to get out of this thing. We're not going to be able to make payments for the next three months. So we actually, my wife just got off the phone today with that credit card that is not in collection. They basically told us there's nothing they could do. They have no offers for us to lower the interest or to make the payments lower. And they said, the only thing we could do

is for you to make that minimum payment in April. And maybe after that we can talk. That was the only thing that we tried after talking to a couple different people. And so that's where we're at. Are you guys working 70 hours a week yet? Probably, well, definitely more. I am a first responder here in Fort Myers, and I probably average between 90 to 120 hours a week. Whoa! Dude, that is next level.

So what's your household income right now? So this past year, because I actually just transitioned. I was in ministry, and so I was making okay for what I did, but I wasn't making a lot. Transitioned to first responder. Base income is about 50, and I just finished a year doing that, and I ended at 65 just with all the overtime, 65,000. And my wife is a stay-at-home mom, three kids.

And so, yeah, 65,000 is what we made in 20, well, this calendar year, I should say. Okay. Is she able to do any kind of work outside the home, even part-time, remote? I would say it would be difficult. We could do it. Just our kids are in a private school, which is something we're actually switching over. We're going to homeschool next year, which will save us some money there. You're too broke to be in private school at this point. Exactly. Yeah.

What other debt do you have? We have school loans and that's it. Our school loans is something we currently just realized we're going to have to put on the back burner. We want to get rid of our credit cards and then move on to school loans. We have about 30 in school loans as well. And no car payments? No. Thankfully, we own our two vans. Okay. Well, I want you to be in direct communication with all of the collectors, the credit card companies. Be proactive about this and make sure that you get the agreed amounts in writing, whether that is physically they mail it to you or they email it. Something that you can print out. Keep copies of that because you need proof that this is what they said they said.

And then don't give them any access to your checking account. Don't give them any access to your checking account. Don't give them any personal information about your income, where you work, none of that. And then once you agree on the terms, we're going to be about the business of knocking this out. And I would try, if they've agreed to settle on that 60%, talk to them and say, hey, listen, I can do this. I've got to keep up with this card over here, but I can start this payment plan in a month. Are you okay with that? And my guess is they're going to say, cool.

I mean, if you're going to send us money, we'll take it when we can get it at this point. Yes. But I would not send this other card to collections and then have to deal with this one over here. You're trying to juggle too many balls, and they're going to drop. And so what you can do is be in direct communication. Let them know, here's what I can do. Listen, we're trying our best here. I'm working 120 hours a week as a first responder. In fact, don't tell me you're a first responder, but just tell them you're working your tail off to get rid of this debt. And you want to do it. You know you owe some money and see what they're willing to settle

for across the board. If you can save up that amount in cash and do lump sums, you can do payment plans, do that. But make sure that you are in control of the conversation. Don't let them dictate your life. Okay. So you would recommend trying to talk to collections, see what we can do to navigate that. And don't let that other card go into collections. I would not just let it fall into collections because you can't make it. That's a worst, worst case scenario, man. Wishing the best for you guys as you climb out of this pile of debt. And when you do, please never look back, never go into debt again. Man, your family's on the line here. You love them.

Do what's right for them. Get out of debt, stay out of debt, build for the future, leave a legacy. That's what this plan is all about. This is The Ramsey show I'm George Camel Ramsey personality and host of the Fine Print and Entree Leadership Podcast. Open phones this hour, 888-825-5225. I want to talk to teachers out there for a second. All year long, you teachers have been grinding it out to make sure your students are actually learning,

despite all of the distractions they're dealing with right now. And you guys work so hard hard and you care even harder. It's teachers like you who've taught our foundations and personal finance curriculum and changed the lives of over 5 million students across the country. That's incredible. Our curriculum is now in 48% of schools across America. And if you've ever wondered, man, why don't they teach us stuff in school? Well, we're out there. We're doing this thing. And teachers are leading the charge. And we want to celebrate teachers this month because it is National Financial Literacy Month. And the teachers out there are helping our students get financially well and learn all of

these things. We want to celebrate teachers with our special teacher appreciation giveaway sponsored by Borrowed Future, our hit documentary about the dark side of the student loan industry. So this month, teachers can enter the giveaway to win some awesome cash prizes. Two lucky teachers will win $5,000 cash each to use however they want. And three teachers will win an additional $1,000 cash. And there's more prizes where that came from. So don't miss out, teachers. If you know one, you've got one in your life, please tell them about this. Go to ramseysolutions.com slash teacher for a chance to win. All right, let's go to the phones. Chris joins us in Cleveland. What's up, Chris? Hi, George. Thanks for taking my call.

Absolutely. What's going on with you? So we have some rental properties, seven of them, And they're the only things that we have debt on at this point. Five of them, in fact, still have mortgages on them. And I have a tenant moving out at the beginning of May. And my thought is perhaps I should sell that property because it would enable me to pay off at least four of the properties that do have mortgages on them, to where I only have one mortgage left. I love that plan. I have about a $10,000 capital gains tax that I have to pay as a result.

However, I would then be realizing a higher capital gains on the remaining properties. Yeah. I mean, I like this plan. What's stopping you from doing it? Just making sure I'm not missing anything, to be honest. No, I mean, you know our stance. We want you to have paid for real estate. And so if you were going back in time and say, hey, let's do it slow. Let's pay cash for these. But the fact that you're wanting to get out of this debt as soon as possible, I think it's great. You can sell one. I mean, do you love it? Are you going to miss it? I mean, it produces nice. I mean, we own it pretty clear. We only owe about, of the total value of the property, about 25% of the

total value of the property is in the debt. Okay. So that's the other thing. I'm like, okay, if I just, and I never, I didn't take any more than a 15 year mortgage on any of them. Wow. So that's kind of what I'm struggling with. I think, if I just, and I never, I didn't take any more than a 15-year mortgage on any of them. Wow. So that's kind of what I'm struggling with. So you sell one, you pay off four, and you just have one mortgage left in your life. Correct. Man. And that's going to free up a lot of payments, isn't it, that you were making on the mortgage?

Certainly. How is that for cash flow? Well, yeah. Even without the seventh property, I ended up with about a thousand dollars more cash flow on a monthly basis to where I could throw that at the last mortgage and hopefully pay that off within a couple of years. Yeah. That'll speed up your progress on that last one. And you have a paid for primary residence? Yes. Awesome. And no other debt to speak of? No. No. How old are you? I'm 50. Wow. Well, you've done really well,

man. You've made some great investing decisions aside from taking on the debt. I mean, you were really diligent about the whole process, not getting yourself underwater here. So do you want to be in real estate long-term? Yes. I mean, I'd like to have 10 to 15 properties, ultimately, as kind of my retirement plan, if you will, beyond my 401k, my SEP, and my wife's retirement stuff. That's fantastic. So you guys are investing for the future. You've got that. You've got cash flow from rentals, and you're going to retire with multi-millions of dollars?

Yes, that's the plan. I like this plan a lot. Well, I'm selling this thing today, knocking out the other four mortgages. I got one left. And then you can build some serious wealth. When you have all that cash flow, all your income, and you're not making a payment to anyone. Yeah, that's kind of what I was thinking. But I just was thinking maybe I should just let it ride for the last few years here and then go at it slowly.

But at the same time, I really like the idea of not having those anymore. Yeah. Four birds, one stone. And you can always get some more real estate later on. Right. That's my thought. Way to go, man. Okay.

Thank you so much for the call. Thanks for confirming my thoughts. I really appreciate it. I was worried about it. Absolutely. That's what I'm here for. A little smile in your day, a little pep in your step, a little encouragement. Valdo joins us next in Omaha, Nebraska. Valdo, welcome to the show.

Hi, thanks for having me. Did I say that right? Is it Valdo or Valdo? Valdo, you said it right. Nailed it. Rhymes with Waldo. Perfect. Okay, what's going on? How can I help? So my question today is, should I cash out part of my retirement accounts to pay off the personal loan that I took out to pay off my soon-to-be ex-wife from the pending divorce? This just got real complicated. How old are you? Yeah, just turned 28. No, we are not going to touch retirement.

Okay. The penalties on that, I mean, it'd be like taking out a loan at 35% interest. Yeah, that's a big one. It's a bad move. So let's say cashing out retirement is not on the table. What do we owe? What's the debt owed here? I owe $10,000 on student loans, $11,000 on a car, and $22,000 on that personal loan, and that's all I have.

Okay. And so what's going on with the ex? We split up about three months ago, and we're going to divorce here in about 30 days, waiting on the courts. But I'm going to owe her about $18,000, and that's why I took out the personal loan to cover the divorce costs. So you have the money to pay her the $18,000? Yeah. Okay, but you have $22,000 that you took out instead of $18,000. Yeah, and on top of this,

in the past three months, I've paid off about 20 grand in other debt. Way to go. Okay, so we're all set here with paying her, so we don't need to go into any more debt, right? You're just looking for a shortcut to get rid of the debt you currently have. Yeah. And so you're going looking for a shortcut to get rid of the debt you currently have. Yeah. And so you're going to rob your retirement with a 401k loan or cash it out to do this.

I don't like that plan. How quickly could we clean up this debt just using the debt snowball? Listing them out smallest to largest, paying them off regardless of interest rate. By Christmas. I like that plan. What a great Christmas gift to yourself, especially after what you've gone through this year. Yeah, yeah, definitely. And so there's not a good shortcut to get out of debt other than paying off the debt methodically. And so that's where the debt snowball comes in. And now how much is the car worth? It's about $18,000. So you got $11,000 on the loan.

It's worth $18,000. If you sold it, you'd have $7,000? Yeah. Could you buy a car for $7,000 that would get you from A to B right now? Yeah, I could. That feels like it would speed up your progress, leaving you with $32,000 left, your student loan and the personal loan. And then after Christmas, Valdo gets to give himself a great gift, and you can upgrade the car because you're out of debt.

We're going to get a fully funded emergency in place, and we'll get you back in a better car. Would you be willing to do that, to speed up the process by months? Yeah, I think I would. I like that plan. Because, I mean, out of your debt, the car loan, it's a big chunk. Yeah. It's a fourth of your debt just sitting there. If I can knock out a fourth of my debt today, I'm doing it.

Yeah, and that car, I originally leased it. I bought it. I was financing, but that's always hanging over my head too. Yeah. Man, I just wanted to simplify your life. You've gone through a lot. I know how hard divorce is, and I'm so sorry you're going through that. And so what I want for you is just a deep breath, some simplicity, no payments, just Valdo starting his new life with no debt. And if you can do that by Christmas, by selling this car or even faster, that's what I'm doing. So I'm pulling for you, man. I'm so sorry you're going through this. But the faster we can clean up this debt without the shortcuts, the better. And selling

that car is one of the only shortcuts I'm okay with because it's not robbing your retirement that you've worked really hard for. Thanks so much for the call. This is The Ramsey Show. We'll be right back. You're listening to The Ramsey Show. I'm George Camel, Ramsey personality, host of the Fine Print and Entree Leadership Podcast. You can check all of those out at RamseySolutions.com, on the Ramsey Network, or wherever you listen to podcasts. Open phones this hour, 888-825-5225 is the number to call. Marsha joins us next, all the way from Cincinnati, Ohio. Marsha, welcome to the show. Hi, thank you so much for taking my call.

Absolutely. How can I help? So I have one, well, I have many questions, but I have one question. I wanted to know how to, I guess, verify letters that you're not sure if it would be a scam or not. Because I got a letter, I used to, I was in the military for 10 years and I got a letter from EFAS, so the Department of Finance, saying that I owed a Social Security tax, and I just wasn't 100% sure if this was like a scam or if this was real. I know people can really make documents like, you know, detailed to make it look real. So I just wanted to call and get your advice on how to know if something is a scam or not. Yeah. Well, generally, if you think it's a scam, it's a scam. It's a scam.

Okay. So, I mean, I'm not saying ignore it. I would try to verify. I would actually call, go to their website of whoever you think it's actually from. So if it's the IRS or Department of Finance, call them directly at their number. Because what they can do is they can actually spoof those numbers. And so if the call is incoming to you, it may look like a real call from the IRS, even if it's not. And so there's lots of scams happening out there, especially around tax time. This is when scammers make their money. And so I would

just verify with them. Have you called them directly? Not yet. I just got the letter today and it just threw me off guard of like, what is this? You know, so I just wanted to call and see. I know you guys have talked about scams, you know, a lot. So that's why I wanted to call and get your advice on, you know, what to go about, how to go about verifying if this was, you know, a real document or this was, you know, a scam. Yeah. Well, if it has the address on there, the number, I mean, you can, I would start Googling, doing some research, figure out who's actually contacting me. And is this legit? Does it have sensitive information that you're like, how did they get this? Does it

have your social security number on there? Uh, I would have to look and see. Um, let me see. Does it have payment options? What is it actually saying? Yes, it's from the Defense Finance and Accounting Service, and it has my home of record. And then from what I see, it gives you like a QR scan code option to pay. I wouldn't scan that if I were you. They're probably hoping you scan that, and it could be some virus. It could ask for sensitive information. And so I would not scan that. I would ignore it.

But what I would do is I'm looking at their website right now. I'm going to go to their contact info and get in touch with them and say, hey, I got this letter in the mail. Here's what it says. And I'm 99% sure they're going to say, oh, that's a scam. Just rip it up and throw it out. Don't worry about it. Okay. And the dates are from when I was in the military back in 2020 and I was active duty and I separated over this past summer and I'm like, why is this now just coming to me? That makes me kind of iffy on like, why wasn't this taken care of when I was active duty? And that's why I'm calling that just doesn't settle right with me.

Oh, absolutely. All right. Well, go on their website. Get in touch with them. But my guess is you're ripping up that letter and avoiding it. So I'm proud of you for being vigilant and seeing the red flag and going, I'm not going to pay this. And I want to encourage all of America to do the same thing. If you get a weird gut feeling, you're probably right. And so I always like to do my research, contact people through their legitimate websites, call them, don't let them call you. And letters are next

level. I mean, you can forge that and make it look like it's really coming from that place. And so do your due diligence for sure. All right, moving on. We're headed nearby to Dayton, Ohio. Corey joins us there. Corey, welcome to the show. Corey, are you with us? There's Corey. Did I do that right? I'm from Ann Arbor, but I am Corey. Oh, there's multiple Corys. Okay, hang on, Corey. We're coming back to you. We're coming back. No worries. No worries.

All right. Did I do that right? Hold on. Guys, I'm really struggling today. Corey, are you with us? Yeah, I'm here. Can you hear me? Wow.

I hit a whole bunch of buttons there. I'm glad you made it. Thank you. What's going on? So I have a question about what my next step should be. I'm in baby step four, five, and six, and I'm just about to complete my associate's degree. I've just got a job as an intern for a job that will help me get my full-time employment and what I'm going to school for. Awesome.

I'm wondering what I should be focusing on next with my money. Should I be going for paying off my bachelor's degree or focusing on retirement or maybe even using a VA loan to get a home loan? Okay, hold on. You just told me that you are in Baby Step 456, but you're talking about paying off your bachelor's degree? Yeah, because I'm about to graduate with the associate's degree. I'm debt-free right now. Okay. To get the bachelor's degree, I'll have to go into debt. Whoa, whoa, whoa.

Have to. Those are some fighting words, Corey. Oh, I'm sorry. Why right now. Okay. To get the bachelor's degree, I'll have to go into debt. Whoa, whoa, whoa. Have to. Those are some fighting words, Corey. Oh, I'm sorry. Why do you have to? I guess I don't have to. It's just the fastest way to get it. The fastest way. But is it the best way?

Probably not, no. So let's focus on the best way so that you don't start your adult life paying your student loan debt and wondering why you don't make enough money. Well, I'm 30, so I've been in there for a little bit. Okay. So how much money do you have to your name? I have about $12,000. Okay. So you got $12,000.

You're debt-free. Let's call that your emergency fund. Is that enough for three to six months of expenses? I have an emergency fund of $5,000 set aside. Okay. Outside of the 12? No, part of the 12. Okay. Well, let's separate those two so we don't get confused because all of a sudden, you're not sure what's what when it comes to emergencies. So I'm going to try to cash flow this experience. Have you done your research to see if this is the most affordable option to do what you want to do?

Yes, I have. At the end of it, it will be about $27,000 of the student loan if I chose to do that, which I really like to avoid. Yeah. I mean, so my question is how quickly could we save up that much money? How quickly could we apply for scholarships like a part-time job in order to bring that cost down, in order to do that thing without debt? Do you need the bachelor's degree right now or can you get to work? Not really. For computer science and the bachelor's degree is what sets aside for a software developer job.

Hold on, man. You're telling me you need a bachelor's degree to do computer science? To be a software developer, yeah. Incorrect. I don't buy that. There's so many courses online you can do. They're looking for a skill set. They don't care about the piece of paper. Really? I'm telling you right now, we have hundreds of developers here at Ramsey Solutions, and if you quiz them and ask them about their college experience, I guarantee you there'd be a large majority that didn't have the traditional bachelor's degree route.

And so I would be taking pause. You got your associates done. Let's take a pause. Let's actually look at the jobs you'd want to do, contact those employers and say, hey, listen, here's my situation. Do I need the bachelor's degree or is there other certifications that I can do? And I think you're going to finally go, yeah, we just want someone who can code. Okay. Yeah. So I don't think you need to go another $27,000 in debt to do this. Okay. Well, that's good news. So I would do a lot of research. You mentioned a lot of things you could be doing with your money. Right now, I want to focus on

getting that job that you want and not going into debt to do it. Once you're there, boom, then we can focus on starting to invest 15% because we don't have debt. We have a fully funded emergency fund. We can start talking about a house and all the different goals that you have. But I want you to focus on getting this education to the path that you want to take. So should I maybe do this at the internship I have currently or should I drop this internship? Is it a paid internship? Yes, it's paid, but it's not paid very much. So what's the goal of the internship, to gain experience?

To gain experience so I can become a software developer when I got my bachelor's degree is what I was originally thinking, but that's kind of changed now. Well, if you're gaining experience through the internship, do you need the bachelor's? I don't know. I really don't know. I think we've got some questions to answer, Corey, but I hope I steered you away from just willy-nilly just wandering into some more student loan debt to hope that you get this job. So I'm pulling for you, but I'm telling you, in that

world, you don't need a piece of paper that says, Corey is good at coding. You just need to be good at coding. Rooting for to be good at coding. Rooting for you, man. That puts this hour of The Ramsey Show in the books. My thanks to no co-host today. So I guess thanks to myself. Thanks to all the folks in the booth making the show happen. And thank you, America, for tuning in. We can't do the show without you. We love you. We'll be back with you before you know it. Hey, folks, Ken Coleman here. Did you know The Ramsey Show is one of the most popular podcasts in the world? Get your daily dose of advice on life and money. Check out all of our shows from The Ramsey Network wherever you listen to podcasts.