The Ramsey Show - App - Why You Should Avoid VA Loans (Hour 2)
Episode Date: July 5, 2019Take control of your money once and for all. The Dave Ramsey Show offers up straight talk on life and money. Millions listen in as callers from all walks of life learn how to get out of debt and star...t building for the future. Check out the fifth most downloaded podcast of 2018! Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR
Transcript
Discussion (0)
Live from the headquarters of Ramsey Solutions, broadcasting 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 as the status symbol of choice.
I am Dave Ramsey, your host.
Thank you for joining us.
We're glad you're here, America.
Open phones at 888-825-5225.
That's 888-825-5225. That's 888-825-5225.
Sean starts off this hour in Chicago.
Hey, Sean, how are you?
I'm good.
How are you doing today?
Better than I deserve.
What's up?
Okay, so I just graduated college, and I'm about to move to California, cross-country.
I'm from Chicago to start my job.
I took out $126,000 in loans. At this moment, I owe $140,000 because of interest and stuff like
that. And if I pay for 12 years at a steady rate, I will have paid over $200,000 with interest and
stuff like that. My starting salary is $75,000 and I'm looking at the payments that I owe,
especially for my new car in college,
and I'm starting to stress out, and I was wondering if you knew how I could basically take my first step into financial adulthood.
Sure.
Cool.
What are you going to do for a living?
I'm an aerospace engineer.
Okay.
That's my major.
So you're good at math, and that makes this overwhelming, doesn't it?
Yeah, it does.
So what part of this formula made buying a car a good idea?
Because it's not Chicago and it's not New York, it's L.A.,
so no matter what, I will have to drive to my work and I don't have a car.
Yeah, but what did you buy?
I got a Kia Niro.
Brand new.
It is brand new, yes.
Yeah.
And so you went and spent a bunch of money on a car when you were already over $100,000 in debt.
I did.
What do you owe on your Kia?
$27,000, $28,000.
Okay.
All right.
I got it.
Oh, sorry.
Well, number one, I cannot imagine a world in which I would accept 12 years of servitude as my future.
Yeah.
And so I'm a rip the Band-Aid off fast guy, not pull it off one arm hair at a time for 12 years okay yeah that just sounds that sounds excruciating to me and um so and and truthfully the best results we've had getting people out of
debt is a rip the band-aid off kind of guy um but what that just described was a young guy who just got his first job in freaking Los Angeles,
making $75,000 a year, who's getting ready, if you do what I tell you to do, to have no life.
Yeah.
Yeah.
And that means you've got to sell the car because you shouldn't have bought it.
It's a disaster.
And get you a cheap car, like a $5,000 car to drive to work.
And then keep living like a college student,
because you've never made $75,000 in your life.
You probably have never made $7,500 in your life.
Nope.
Okay.
So you've been living on nothing.
Well, sort of.
You've been living on student loans,
but you've been living on a very, very sparse lifestyle.
So I want you to live on beans and rice, rice and beans, a scorched earth deal.
And let's just do some simple math here.
Okay.
If the car is gone and we got a $5,000 car, which you've got to do, that was insanity.
And then we said, all right, out of 75,000, we're going to live on nothing.
So we're going to put 30,000 on the debt.
That's four years you're debt-free.
And four years you're debt-free.
And that's if you don't get a raise.
If you put 40,000 on the debt, which is really extreme,
that means you're probably working an extra job in addition to the new job you've got.
But you can work.
The good thing about working all the time is you don't have time to spend money.
And so you don't have time to go to the club.
You don't have time to go out on a date.
You don't have time to do anything.
You're just getting out of debt.
That's all you're doing.
And if you do that, you put $40,000 a year on this.
You're done in three years, my man.
Now, that sounds like a pretty much better life
because here's the thing can you imagine being the other side of this and by then you're making
85 or 90 you're three years older which puts you at what 28 years old probably right uh 25 now
three more would be you'll be you'll be 25 at that point you're're 22 now? Yeah, I'll be 25 at that point.
Okay, all right.
So you're 25 years old, you don't have a payment in the world, and you're making 90 grand.
That's the future you.
But between here and there is hell.
Yeah.
You're going to walk across hot coals, my man.
Or you can do the 12 years of servitude and keep your car payment because your friends think you're cool because you bought a car and got a new big job.
And that's just normal and broke.
And you're going to look like everybody else in L.A.
They all look nice and broke.
By the way, it's true of every city in America, not just L.A.
So you pull up at a stoplight, man, you can count the payments around you is what you can do.
That's most people.
And if you want to be most people, you can do that.
But you didn't call me to be most people.
You called me to not live 12 years of crap.
So I would just go down in the hole and not come out for three years.
And when you come out, you'll be a whole new person, completely clean and be done.
And that's going to be very hard to do i'm asking a lot of
a 22 year old young man um but the more you do that the more maturity you're going to show
that's living like no one else so that later you can live and give like no one else i know
mathematically you can do it the question is do you have the backbone to say no that many times to everything around you that is glittering in L.A.
for three whole years and work an extra job and sell the car you just bought?
So I'm asking you to do a lot of hard stuff.
It's not going to affect me.
I'm not getting any of your money.
The only person that's going to affect you.
But if you were my son and you were 22, that's what exactly what i would tell you to do knowing what i know about
building wealth that is your shortest path to becoming wealthy and if you do that you will
set yourself in a position in character and habits in processes in your life called budgeting
and you you'll set yourself up for a lifetime of success
but you can just wallow around in this and blame everybody else for you going 120 000 in debt
plus interest plus a car and blame everybody else if you want that's what some people do
they blame everybody else i was reading a thread morning. This millennial was whining about how society had beat them up.
And I'm like, I never hit you once, kid.
I'll just show you how to get out once you dig your own stinking hole,
whether you're 25 or 35 or 55.
We've all done stupid, and you've been doing it a lot lately,
so it's time to turn it around.
That's the thing.
So hold on. I'm going to send you a copy of turn it around. That's the thing. So hold on.
I'm going to send you a copy, a graduation gift.
It's called The Total Money Makeover.
It's a book that sold 6.5 million copies.
It's on the bestseller list every week for about 10-plus years.
And it'll show you exactly what to do step-by-step to get out of debt.
And I'm here to help you.
If you need help as you go along, Sean, you just let me know, man.
You call me anytime.
If you're working on this stuff and you don't understand something or you just need some
encouragement, I want you to go win.
I think you got the mental capacity to go win.
You wouldn't have gotten the degree.
Dumb people don't get the degree you got.
You're obviously a smart guy.
Now, the question is, are you going to be wise?
What's the difference between smart and wise?
This is The Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times.
You want to know how we do it?
Well, our team has been using LinkedIn jobs for years to find the best people from all over the country to come and help us change lives.
Think about it.
LinkedIn has more than 600 million active members.
I'm talking about people who come to LinkedIn to make connections, grow their careers, and discover new job opportunities.
In fact, 90% of LinkedIn users are open to new opportunities, but not actively scanning job boards.
This means LinkedIn Jobs gives you access to an entirely different demographic.
Don't wait.
One hire can change the direction of your company.
Post a job today at LinkedIn.com slash Ramsey and get $50 off your first job post.
That's linkedin.com slash ramsey.
Terms and conditions apply.
Our question of the day comes from Blinds.com.
You can find out why for yourself that Blinds.com is the number one online retailer of custom window coverings.
You get free samples with these guys, free shipping, great prices, fabulous service, great company.
Blinds.com.
Use the promo code Ramsey to get the best deal.
Blinds.com.
Katie is in Tennessee.
Dave, if I have a $300,000 mortgage debt,
should I still only get 10 to 12 times my income in life insurance,
or should I get more to include that debt amount?
10 to 12 times should cover your mortgage payment
if you're making your mortgage payment now.
If your income now will pay your mortgage payment and you get 10 to 12 times
that amount um you know let's say that you make a hundred thousand dollars a year and you get 10
times that that's a million dollars and you die your spouse takes a million dollars and invest it
if it makes 10 it creates a hundred thousand dollars so a hundred thousand dollars income
is a hundred,000 income,
and you were paying the mortgage with $100,000 before,
and now your spouse has got $100,000 off the investment alone,
and that's what 10 to 12 times will do, roughly.
It's a rule of thumb.
It's not an exact science, but it's very close,
and it makes sure that you buy enough life insurance
and that you buy term life insurance.
You never buy cash value insurance.
That way you can afford to get enough, for one thing.
The second reason is that cash value insurance, all the different versions of it, are a ripoff,
and you're much better off doing your investing in good investments.
Levi's with us in Houston.
Hi, Levi.
Welcome to the Dave Ramsey Show.
Hey, Dave.
Thanks for taking my call. Sure. What's up?
Hey, so I've been listening to your show for about 12 years now.
I grew up watching you on Fox Business, and I just really appreciate what you do for everybody.
It's really helped me out. My main question is,
what is your stance on VA home loans and why you don't like them?
The only reason I don't like them is they're more expensive than FHA loans and conventional loans.
That's the only reason.
Now, they're not necessarily more expensive if you are a disabled veteran.
Are you a disabled veteran?
No.
Okay.
If you're a traditional veteran with no disability qualifications,
the interest rate is slightly higher, the funding fees are higher,
and the behind-the-scenes fees are all gotcha fees.
The only reason anybody ever buys a VA loan is because they don't have a down payment.
Okay.
And you can get in with no down payment.
And, of course, we don't recommend that.
It means you're too broke to buy a house is what that means.
And so it really simply is because they're just more expensive.
Of the three, what are called conforming loans, FHA, VA, and conventional,
conventional is typically a Fannie Mae loan, FNMA, Federal National Mortgage Association.
Those three loans, an FHA, a VA, and conventional, VA is typically the most expensive.
Now, there's exceptions, again, if you're disabled or there's a few other things here or there.
But by and large, as a rule of thumb, you're going to want to go with a conventional loan.
It's cheaper than an FHA.
And the FHA and VA loans are both government-insured loans,
meaning the federal government is insuring the bank against default.
And built into that is a bunch of gotcha fees is what it amounts to.
And typically, again, higher interest rates.
So, hey, good question.
So let's do a little mortgage primer right quick.
Government insured means this.
If you take out a VA loan for $150,000 and you get foreclosed, and the bank takes the house, Bank of America
has a VA loan on you, Countrywide has a VA loan on you, and Countrywide forecloses on
you, and they sell the house that has $150,000 owed on it, and it only brings, well, a VA
loan, they wouldn't sell it.
A VA loan, what happens is as soon as they foreclose,
they call the Veterans Administration, VA,
and VA sends them a check for the loan balance plus all the late fees
plus the interest rates.
So Countrywide takes a loss on that foreclosure of exactly zero.
They deed the house over to the Veterans Administration.
You and I i the taxpayers are
now the owners of that house and that house is then sold if it sells for 140 000 and countrywide
got 152 432 dollars to cover all their expenses then the federal government takes a loss on the
loan and in that loss is the veterans administration's budget and in that loss is the Veterans Administration's budget, and in that loss is the
funding fee that funds the pool to cover the losses. So it's a federal government-insured
loan, just like a student loan, a Sallie Mae. It's a federally-insured loan, meaning the bank
is taking no risk by making the loan. An FHA is issued through the Department of Housing and Urban Development through HUD,
and it's the same thing, basically.
HUD insures the loan for Countrywide or Bank of America or whoever the mortgage company
is.
If you do not pay and they foreclose on, the mortgage company loses zero dollars they get a hundred percent of what was loaned
plus all the fees foreclosure fees lawyer fees title fees late fees interest rate fees bankruptcy
fees any kind of fees that they paid out they get a hundred percent coverage they take zero risk, and the federal government covers that loan 100%.
And so the banks love making VA loans, and they love making FHA loans.
However, VA and FHA have figured out a long time ago they have to cover a lot of these costs,
and they put fees in there to cover all those costs.
Fannie Mae is much more of an open market traditional mortgage in that a bank
is making a loan and they're taking a risk. And if you don't pay, they could lose money when they
foreclose. They could lose money on that house. And so that's why they make you buy PMI, private
mortgage insurance, that covers the first 20% of the sale price
if you don't put down at least 20%.
And because that covers them down to an 80% loan-to-value ratio,
and so a $200,000 house, surely they can get $160,000 out of it,
and surely they can get their money back.
And that's the way they look at it.
But that's a bank making a loan with some private insurance,
not federal.
The federal government is not involved in that transaction.
And it ends up being less expensive because guess what?
Those loans fail less often.
And FHA and VA loans, the VA loan was originally brought up
as one of the benefits to our fine veterans.
I just had the pleasure of meeting a World War II veteran a few minutes ago
here in the lobby.
And, you know, the original thing is the VA, the Veterans Administration,
was put in place to provide benefits to the veterans.
Sometimes it does a good job of that.
Most of the time it doesn't.
The VA benefits are not really that good.
I mean, when your only benefit for buying a house as a veteran is the most
expensive way to buy a house, That's not exactly a great benefit.
Didn't do a good job with that, right?
And so it should be cheaper for veterans.
That would be the idea, and not more expensive.
I mean, philosophically, it should be.
Not necessarily mathematically, not necessarily government policy or any of that crap,
but just philosophically, if you want to be a blessing to the veterans,
don't charge them more than they could get the house for without using the VA.
You know, duh.
It's kind of basic in my mind, but they do.
So that's it.
And the VA will chase you after foreclosure for the amount they lose on you if you're a veteran.
That's just really oxymoronic.
But they will.
They'll chase you harder than anybody else will.
FHA completely forgives the deficit.
They don't chase you.
The Veterans Administration will chase their own people
and chase them down and get
the money out of their hide, man. It's brutal.
We work with this stuff all the time
after the fact of the foreclosures.
So we get to see both ends of it, both
sides of it, and
that's how you see it done.
Conforming mortgage, while we're doing our little mortgage primer here, means in any
one of those three cases, those loans conform to a set of underwriting standards.
FHA loans all have exactly the same process for approval.
If you violate one step of the process for approval, it cannot be an FHA loan, and you
lose your government insurance.
Same thing with a VA.
It follows an exact process, different, but an exact process to be approved.
Same thing with a Fannie Mae.
It's all conformed.
All Fannie Mae loans are just alike.
And so you could take a, you know, I don't know, for instance, it wouldn't work exactly this way,
but you package them together, and they're sold as a security.
Fannie Mae bonds. You may have heard of your grandmother buying
a Fannie Mae bond. Well, all that is is four $250,000 mortgages put together that are all
just alike because they are conforming and then they sell them as a $1 million bond.
And so you package it together. So that's how they sell the mortgages on the secondary
market, how your mortgage gets sold to a different bank all the time.
You're always wondering how you end up with a different bank.
They're packaging these loans together because they're all just alike.
They're conforming to the same underwriting guidelines, so they're very marketable.
This is The Dave Ramsey Show. I got a call the other day, and I thought it was worth talking about again.
It was from a wife looking for life insurance for her family.
She asked why I only recommend term life insurance instead of cash value plans like whole life. I usually explain how you overpay for coverage, earn a horrible rate of interest, and don't get your cash value when you die. But this time, I just had her go straight to
Zander.com and get a rate. And then we compared that rate to the whole life plan, and she
immediately saw the huge savings. She realized all the things she could do with that money,
like paying down debt, investing in a smarter way. That made it real for her. It makes no sense to buy or keep a cash value plan
when there are smarter, less expensive ways to protect your family.
That's why I suggest that everyone go to Zander.com
or call them at 800-356-4282 and get a free quote.
That's Zander.com or 800-356-4282 From Rochester, Minnesota, Peter and Jessica are with us.
And it says on my screen, you guys are debt free.
We are, Dave.
I love it.
Well done.
So how much have you paid off?
How much have you paid off? How much have you paid off?
And how long did that take you?
11 months. And your range of income during that time?
Okay. What do you guys do for a living?
I work for the federal government and farm part-time,
and Jesse works at a retail greenhouse.
Very cool.
Good for you.
What kind of debt was the $150,000?
We were normal.
We had a little bit of everything, $80,000 on a business loan,
$40,000 on a home equity line of credit.
Then the rest was a combination of cars, a tractor, a UTV.
Okay.
So you didn't even make $150,000 during the 11 months.
How did you pay off $150,000?
We sold stuff.
Oh, a bunch of stuff.
What was the biggest thing you sold?
We sold part of a business that paid off about $80,000,
and then we also sold a tractor that sold off another $40,000.
Oh, wow.
So $120,000 on those two licks, huh?
Yep.
Wow.
Big deal, man.
That's a lot of movement there.
Amazing.
It was.
What happened 11 months ago that put you on this journey?
Well, we'd have to go back a little bit farther before that.
Before that, I have anxiety and depression, and it really kind of hit a low point, I'd say eight months before we started. And at that point, we decided we were going to change anything and everything in our lives
to help get me better.
And so I got some help.
And then when I was low enough, we started on the debt-free journey
and have never looked back from there.
Okay, cool.
So you got some good quality instructions, some good coaching, counseling, and help.
And on top of that, you got rid of all the financial stress.
Right.
That'll help.
And when we made the last payment, it was like a huge weight was lifted off my shoulders,
and it's been a huge difference.
Well, well done.
Congratulations. Well, Peter,'s been a huge difference. Well, well done. Congratulations.
Well, Peter, you got radical, man.
You sold everything in sight.
Pretty close.
The dog was worried.
I bet.
I bet.
I mean, when a farmer sells his tractor, it's a big day.
Yes, that was a hard one to part with emotionally, but we did it.
I bet.
Yeah, it was hard.
There were tears, but we had some good support standing there.
My brother stood there and was giving us hugs saying, you can do this.
It was a hard day and a good day.
Yeah.
Well, it got you where you want to go, and now without any debt and $125,000 income, you can start saving and building some of these things back, right?
Exactly.
And this time you'll own them instead of them owning you.
Well done.
Well done, you guys.
What do you tell people the key to getting out of debt is?
For me, I say it's two things, being intentional and then understanding contentment and being happy with what you have.
Yeah.
Amen.
Amen. Amen.
You really did have to grapple with that to sell all this stuff.
That's a very important point.
Okay.
What about you, Jessica?
I would have to say that you have to track your spending.
We use the EveryDollar app.
And then you also have to have some grace, that if you make a mistake,
you forgive yourself and
pick right back up and keep going yeah that's a part of your healing wasn't it yep that grace
thing is a big deal with yourself that's a really big deal well congratulations you guys did you
have a lot of people your brother cheering you on obviously other people yes we? Yes, we did. Good. Very cool.
And they showed a picture a minute ago of you guys obviously here in the studio at one point,
because I got my picture with you.
It just showed up on the YouTube channel.
Yep, we were there just a couple weeks ago.
Okay, very cool.
Good, good.
Well, congratulations, you two.
Very, very well done.
Got a copy of Chris Hogan's book for you, Retire Inspired.
And we want that to be the next chapter in your story where you become millionaires and outrageously generous along the way.
Well done, you guys.
Peter and Jessica, Rochester, Minnesota, $150,000 paid off in 11 months, making $125 a year.
Count it down.
Let's hear a debt-free scream.
Three, two, one.
We're debt-free!
Yeah!
This is how it's done.
Love it, love it.
Well done.
Well done, you guys.
Well, I'll tell you what.
A large number of these debt-free screams talk about the way they got out of debt,
and she said it.
You're doing your every dollar budget.
Do you know what she meant when she said that?
Well, that means they're one of the five million people, couples, families,
households that is using every dollar.
The world's best budgeting app, the most robust and elegant budgeting app that's out there.
And it's just exploded.
I mean, we just launched it a couple of years ago and it's 5 million people on this thing.
Pretty amazing.
You can download it for your iPhone.
You can download it for your iPhone. You can download
it for your Android. You can use it on your desktop and you can do your budget in about
10 minutes with every dollar. And we strongly recommend you guys jump on and get that done.
So make this the month that you take control. Do it. Go over there to every dollar dot com,
every dollar dot com and get this and get your budget going, people.
It's part of the formula of what it takes to win.
Lucy is on Twitter and says, Dave, how come you never consider bankruptcy
if individuals are deep in a financial crisis?
Well, a lot of different reasons, Lucy.
I don't yell at somebody if they've been through a bankruptcy.
I've been through one.
I'm not proud of that.
But in my 20s, I borrowed way too much money.
And that's what started this whole movement of ours is we quit borrowing money and we had to learn how to handle money after we went broke because I was stupid.
Now, not everybody that files bankruptcy does it because they're stupid, but I was.
And a lot of times the stuff you get yourself into is stupid.
Larry Burkett used to say that financial problems are not the problem. They're the symptom. because they're stupid, but I was. And a lot of times, the stuff you get yourself into is stupid.
Larry Burkett used to say that financial problems are not the problem,
they're the symptom.
You're disorganized, immature, impulsive,
don't know how money works, greedy.
You're something that causes you to make a series of decisions that put you into bankruptcy court.
And bankruptcy court does not fix the thing that puts you there.
It just fixes the debt.
You're still there after bankruptcy with all of your problems.
I was still there with all of your problems i was still there with all of my problems
and so bankruptcies in a very real sense treating the symptom
that's problem number one with me recommending bankruptcy
problem number two with me recommending bankruptcy is it's a life altering life
scarring decision
and so decision you should make on your own not because some down the radio told
you to it's in the same category as divorce you should never go through a divorce because someone
else told you to that's a decision you need to come to because it's a life-altering life-scarring
process it's not something you'd wish on anybody that you care about. And I wouldn't wish bankruptcy on anybody that I care about.
And so I will not have someone say I filed bankruptcy because Dave Ramsey told me to.
And so that's why I don't say, hey, oh, let's just go file bankruptcy.
It's because a lot of times it doesn't fix what's going on.
Number two, it's life scarring.
And I don't want you having had me make that decision for you.
You make that decision on your own.
I'm going to love you wherever you are.
I'm going to walk with you.
I'm going to tell you the truth, and I'm going to walk with you.
And the third reason is a lot of bankruptcies are filed that didn't have to be.
There's a lot of times there's a way out, And people just get beat up and beat on and lose hope.
And they just can't see the way out.
And so that's another reason I don't jump on bankruptcy is the answer.
But I'm not against bankruptcy.
I just don't.
I'm not mad at you for filing bankruptcy.
It's like I'm not mad at you for filing divorce.
I just wouldn't wish it on you because it's a horrible
thing to go through. Maria is with us in Peoria, Illinois.
Hi, Maria. How are you?
Good.
My question is, my daughters have savings accounts that we had set up several years ago.
They were three-year renewables.
The bank merged with another bank, and that renewable is no longer available.
So I'm trying to decide what to do with that money. Currently, we had to drop back into Baby
Step 1. My husband lost his job for three weeks and got a new one, but we're slowly rebuilding.
So I'm wondering if we should use that money now to build our emergency fund and start back into Baby Step 2 and then build their amounts back later.
How much is in their accounts?
One is close to $7,000 and the other one is closer to $6,000.
$1,000?
$100,000.
No, $100,000.
$100,000.
Okay.
And when your husband's working, what's your household income?
Well, he just started with this job.
It's $16.50 an hour, but it's more than 40 hours for the summer.
Okay.
And then I just got hired as a teacher, so I know my income is going to go up because I haven't been working as full.
I've been just doing home daycare, so my income is going to increase as well. So you've gone through a scary patch, but your household income now is over $50,000 a year.
It will be, yes.
No, it is.
I mean, you're both working.
You haven't collected any checks yet, but, I mean, your household income in the coming 12 is that.
So the need for $700 is not there.
Okay.
It's not like your family's not going to eat.
No, I just, we don't have anything in baby step one.
So your point is you cannot live in the fear of six weeks ago.
You live in the promise of the coming six weeks,
and that's how you make your decisions.
So if you were completely broke and your household was your lights are getting ready
to be cut off i'm using that money okay if i if i you know if there's no food i'm using that money
but that is not your situation right yeah it's just you you know and it's not a bunch of money
no no so yeah i'm gonna leave it alone'm going to leave it in the kids' names.
Because I think most parents, when you take, even though you put the money in there,
even though you technically own the money, because minors don't technically own money.
Correct.
Okay?
So even though all of that's true, for most parents, it feels so weird to, quote,
take your kids' money, unquote.
Right.
And I think for the little bit of bump you get in this situation,
I think the weirdness is going to offset it.
And so if I'm in your shoes, I'm going to leave it alone.
You've got a really good upcoming six weeks.
You're going to finish baby step one.
You're going to get back on baby step two.
You're going to get on your budget.
And now that you've been through this rough patch, you're going to to really really lean in because you don't ever want to be here again and seven hundred dollars doesn't
make much difference it'll buy a bag of groceries if your kids are hungry but your kids are not
going to be hungry george is with us george is in midland texas hi george how are you
i'm doing great and yourself how are doing, Dave? Better than I deserve.
What's up?
I'm brand new to
this program, to your show.
And I've been trying to
follow everything.
I know you mentioned paying off the little
accounts.
I've paid off all my credit cards
and I am left with my apartment,
which I pay $633,000 and an auto loan, which is right about $31,000.
Whoa!
I make $85,000 a year, but I am in the oil field, and I've been out here for four years.
I'm basically burnt, and I want to go back home, which is El Paso, Texas.
I'll be making $38,000 a year out there.
Should I stick it out here and try to pay off as much on that vehicle, or would it be okay to...
You need to sell a car.
Oh, yeah.
You need to sell your car.
Sell my car.
I'll be probably in like $5,000 negative equity.
You're $31,000 negative.
I see.
You've got a mess.
I have.
And $31,000, if you've got a job and a career that you're going to stick with making $85,000,
you could pay it off and keep it.
But you're not going to stay.
You're going to go make $38,000.
Having a $31,000 car debt while card debt while making 38 is known as insanity
i see that's just nuts man you can't do it mathematically i don't i mean i'm not picking
on you i'm just saying i want good things for you man and that car is gonna eat your lunch
when you're making 38 if you don't have any debt and you're back home and making 38 and you have
a better quality of life i don't have any issue with that that back home and making 38 and you have a better quality of life, I don't have any issue with that.
That's not a bad move at all.
Cool.
Go do that.
You know, because what you're saying is oil fields like 60 hours a week and they're working you to death.
It's hard, but it's hard.
80 to 100 hours a week.
Yeah, it's hard.
And it's not 80 to 100 hours where you're sitting on your butt.
I mean, you are.
You're exhausted all the time.
Exactly.
That's what you're saying.
And you're saying, I can do that for a little while to hit some goals,
but the 10 years from now, me ain't doing this.
Exactly.
That's for sure.
Now, I would challenge you to look at another option,
and that is go do something that gives you your life back that makes more than 38.
Let's have a different career path.
In other words, you've given me A, the oil field, B, 38 in El Paso.
I'm saying let's explore C since we're doing multiple choice.
And I don't know what C is, but let's just make it up.
I mean, this is America.
What do you want to be?
That's right.
Be it.
Just decide.
I see.
You know?
Okay.
Because you're not afraid of hard work.
We know that about you.
Right.
I mean, when you need to lean into something, you can do it.
So, I got to tell you, man, a guy like you, some people you can't teach them to work, you know?
But you know how to work.
I mean, if you're working oil field, I know what you're doing.
You know how to work.
And if you can do that, you can do a lot of different things.
So what is it you're going to lean into?
What do you want to be 10 years from now?
What are the steps to get there?
That's your C.
I don't like your A much.
I don't like your B much.
I want a better C.
I like B at $38,000 okay if you sell your car.
But you can't take a $31,000 car into a $38,000 scenario.
It's going to kill you.
It's going to eat you up, man.
And I don't want that for you it's just
stupid car so if you want to get your life back sell your car leave the oil field go make 38
or have a better c plan a b or c thanks for calling in man i think you got it in you because
i know you're not afraid to work open phones at 888-825-5225. You jump in. We'll talk about your life and your
money. David is in Indianapolis. Hi, David. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks
for taking my call. Sure, man. What's up? Me and my wife have a student loan issue. We had
10 separate student loans with Sally Mae. They were calling for a couple issue. We had 10 separate student loans with Sally May.
They were calling for a couple months.
We finally started to set up a payment plan,
but we didn't notice that they had sold off two loans to a different student loan company.
It was more of a debt collector style.
They garnished her wages just recently,
and we were trying to figure out what the best route would be uh the
loan balance was originally to 12 000 they currently quoted us at 25 and so 15 in principal
five in interest five in fees and cost and they said they'd settle for 18 i was wondering if
what the best route would be to come up with that 18.
If you can get the 18 together, I would take it and get it off the garnishment.
It'll give you a lot better cash flow in your situation.
Can you scratch the 18 up?
We cannot.
We have been following the baby steps.
We've got a $1,000 emergency fund.
So you don't really have the option of taking the 18.
I was going to inquire about a HELOC against our house just to get it off of Garnishment. No, I wouldn't do that.
I wouldn't do that.
I'd leave it sit on Garnishment for right now.
How much other debt have you got?
We have $75,000 in other debt, 22 on cars, 4 on a wedding loan,
and 50 on other student loan that we're currently
on payment plan for.
Okay.
And your household income is?
115.
Oh, that's good news.
So you're plowing through this pretty quick.
You'll be debt-free in two years.
Yes, sir.
We were doing really well, and we just got scared by the garnishment.
Yeah.
I think it kind of takes a breath out of you. It is
scary. It's emotional to have somebody take over your
life, which is what garnishment does.
Yeah, I think regardless of the garnishment,
if you just say $37,500 a year
for two years, we're going to be debt-free making $100,000.
You can do that. And
I think you're going to be okay.
No, I would not take out a HELOC to get rid of this.
It's just the emotional aspect of it.
Let's just lean in, get them knocked off as fast as you can,
and work your debt snowball and be debt-free in two years.
This is The Dave Ramsey Show.
Hey, it's Blake Thompson, Senior Executive Producer for the show.
You know you can listen or watch anywhere with the Dave Ramsey Show app on your smartphone.
Catch the full show or watch the highlights and check out Daveave's upcoming guests head to the app store and download it today