The Ramsey Show - App - YOLO Is for Children! (Hour 1)

Episode Date: January 27, 2020

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Starting point is 00:00:00 Music 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'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Kelly starts off this hour in California. Hi, Kelly. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for taking some time in your
Starting point is 00:01:00 life to help us out. I'm honored. How can I help? I'm calling because I've heard a lot of people call in about whether they should sell their rental. We had followed your plan and we were on baby step three and my husband found a job and we were saying, okay, we want to leave the state. We're just tired of all the craziness in California, but God had different plans.
Starting point is 00:01:22 And literally in two weeks, we moved from Southern California to San Francisco Bay Area, the last place we wanted to be. But we have a house. It's like a 1,000 square foot townhouse in Southern California, which we turned into a rental because we had two weeks to get out. And so I'm wondering, should we sell it? Should we keep it? We have no plans of staying in the Bay Area. It's just we know we'll be here for at least probably five to eight years just for my husband's job. And then we still want to leave the state eventually. I would sell it.
Starting point is 00:01:55 We're wondering. Sell it. There's no point in keeping it. You're long-distance landlording for no reason other than you used to own it, used to live there you didn't you weren't living in the san francisco bay area and said you know what i'm gonna buy a rental house in san diego sandy oh we're in san francisco bay i know you're now but you've got the other ones in
Starting point is 00:02:19 southern california somewhere right yes so i just stabbed stabbed at San Diego being in the south. But anyway. Oh, I'm sorry. It's in Orange County. Okay. I mean, you didn't sit in San Francisco Bay and start buying rental property in Orange County. You got this rental property by default. It's long-distance landlording.
Starting point is 00:02:38 No, I wouldn't keep that. So how would, what would be the process of, I mean, selling? Because, I mean, for the last couple years, we had a real estate agent who, I mean, bless her heart, she does great in the community, but she doesn't have our best interest at heart. But she literally comes to our door and says, we have a seller. I mean, I have a buyer for you. Here's the contract. And we almost upgraded, and good thing we didn't,
Starting point is 00:03:05 because we would have been out of our home and priced out back into our own home. You just need to hire a good real estate agent and get the house on the market and get it sold. Okay, and so we don't need to necessarily be there? To sell it? Okay. No. And what would we do with the money? I mean, we just put it in a... Whatever baby step you're on, are you guys out of debt other than your home?
Starting point is 00:03:27 Yes. We're trying to build up our emergency fund again. Then that's what I would do. I'd finish up the emergency fund and then 15% of your income going into retirement. Then the next one is baby step five, kids' college fund, and so on from there. And you know the baby steps, just work them from there. But, yeah, you don't need to... The only reason you have a rental property in Orange County is because you used to live there.
Starting point is 00:03:48 It's not because it's a strategy. It's not because it's an intentional act. It was just by default, which is never a good way to end up in an investment. Sometimes it turns out okay, but it's just not good planning. Ah, Logan's in Tennessee. Hi, Logan. Welcome to the Dave Ramsey Show. Hello, Mr. Ramsey. How are you doing?
Starting point is 00:04:07 Better than I deserve. What's up? I just had a quick question about traditional IRA versus Roth IRA. Mm-hmm. So my company, well, first of all, my wife and I are about to finish up Baby Step 2 and start into Baby Step 3.
Starting point is 00:04:25 My company contributes 2% to a traditional or a simple IRA, regardless of whether I contribute or not, and currently I'm not doing that. It should be 3%. 3%. Okay, yeah. I was under the impression it was 2%, but if it's 3%. So anyway, my question was, I know the tax difference between the traditional and the Roth IRA. Should I go in once a year and withdraw that money, or not withdraw the money, but roll it over into a Roth IRA,
Starting point is 00:04:57 go ahead and pay the tax bill, and let it grow in a Roth IRA, or should I just leave it alone and start contributing after I'm done with my emergency fund? I would do Roth IRAs as contribution. The money that they're putting in has to be traditional. And I wouldn't fool with creating a tax bill until you're out of debt. Because when you roll that to an IRA from a traditional to a Roth, it creates a tax bill. And so I wouldn't fool with that until you got your house paid off. But once your house is paid off, you may want to start moving some of those funds that are in traditional. But your contribution can be Roth in a simple or just doing your own Roth IRAs, you and your wife.
Starting point is 00:05:36 And that grows completely tax-free. And that's what you always want to do. So here's the rule. Match beats Roth beats traditional. Match creates more money because it doubles your money than the tax savings does on Roth. But Roth grows tax-free, which beats traditional. So you want to max out match first, which in your case with a simple, it's a 3% mandatory match by law. So you don't have to do anything to get the match.
Starting point is 00:06:04 Actually, you're supposed to put in the three percent to get the match on that but yeah i would do that match first and get that um and then uh they may only be putting in two unless you're mad unless you're putting a contribution come to think of it but uh they're if you're putting in money up to three by law they're they're required to match on a simple because Because what a simple IRA is is a 401K for a small company. It's a simple 401K, a very inexpensive way for a small business to do a retirement plan. It doesn't cost hardly anything to manage it or set it up for you small business people, but you are required to match the first 3% that your team puts in.
Starting point is 00:06:42 So that's what we're doing there. But anyway, you want to do match first. Once you get to baby step four, then Roth, then traditional. And I would not convert any traditional funds to Roth until you got your home paid off. I'd rather your money go to that instead of the taxes. Once it's paid off and you're in baby step seven, then you can start converting stuff for instance every year i max out of course my roth 401k here in my own business and i match myself i'm required to match in traditional dollars not roth dollars all matching is done that way
Starting point is 00:07:18 so once a year i roll the uh the traditional match dollars into r, and I pay the taxes on them once a year. But I'm well into baby step seven. I don't have any debt to argue with about that money. I'd rather the money go to getting out of debt than to taxes. All right, Aaron is with us. Aaron is going to come up after the break, actually. Open phones here at 888-825-5225. Leslie on Instagram says, Dave, I just got a bill from a doctor visit in December of 2016.
Starting point is 00:07:47 Is there a time limit on how long they can wait to send a bill? This really messes up my budget. Yes, there's a statute of limitations that is, you know, depending which state it is, three years, seven years, or none, depending on where you are, and you would have to check an attorney for that. This is not a legal question, though. This is a stupid doctor question. And so you need to call up the administrator at the doctor's office and chew their butt and suggest that they give up their money because they're too stupid and incompetent to bill you for four years.
Starting point is 00:08:24 They don't deserve money if they wait that long to ask for it. Now, you can be a little nicer than that. You don't have to just chew their butt right off. But I'm just going to suggest to you that if you're that incompetent, you shouldn't have the gall. You should be too embarrassed to bill me. You should just write it off and forget it. This is the Dave Ramsey Show. I'm going to go on a little rant here for a minute.
Starting point is 00:08:57 I took a call from a father who wanted to know how to plan for the care of his special needs daughter after he dies. Why is it that parents of special needs children are so deliberate in their planning while other parents have a tendency to be sloppy? Do the needs of your family matter less if something happens to you? Oh, I'm sorry, did I just guilt trip you into getting some term life insurance? Well, then good. Your family needs you to step up. Having the right amount of term life insurance is a matter of personal responsibility.
Starting point is 00:09:24 If you want to use the new year as a reason for doing the right thing, then do it. Term life insurance is something every family needs, which is why I talk about it every day. It's not complicated, it's not expensive, and you need to do this now. Zander Insurance is the only place I recommend. Visit Zander.com or call them at 800-356-4282. Please learn from other people's mistakes and get this taken care of. That's 800-356-4282 or Zander.com. Now it's Aaron's turn. Aaron's in South Carolina. Welcome to the Dave Ramsey Show, Aaron.
Starting point is 00:10:27 Hey, Dave. How are you? Better than I deserve. What's up? Hey, I'm calling to ask you a question. I'm at the duty military. I just recently got orders to change base. We're selling our house here with the money that we are making off of it.
Starting point is 00:10:43 We'll be debt-free, and we'll have baby step three completed as well with our three to six months, and also a hefty down payment for another house. The question is, what do I do with the money? Should I invest it for the time being, or should I put it into another house? The housing market over there isn't quite so well as it is here. It's about 4% appreciation. Good question, and thank you for your service.
Starting point is 00:11:16 Okay, the short answer is most of the time in the early stages of your military career, you're not in a location long enough to make money, and the location that you're in is generally not hot enough to make money. The exception to that, obviously, is where you just were. But the way to technically do the math, you were on to something a minute ago. Where are you moving to? New Mexico. What part? It's a small town, Clovis, by Texas area.
Starting point is 00:11:43 Okay, so a large percentage of the real estate is owned by military people. Yes. Yeah, so those markets struggle to appreciate as much as a market that has more influences on the local economy than one thing. Okay, because what happens is a ton of military people buy a house and then a ton of them get moved, and so there's always an oversupply up for sale, meaning that the prices don't go up as much generally. That's why you're seeing that low appreciation rate.
Starting point is 00:12:16 But you can check my theory in each location you move to, and this will help you decide whether to buy or whether to rent. Most of the time, renting is a better idea and parking your money in a mutual fund until you become stabilized somewhere or if you're moving into a hot market. Now, the two statistics you want to look at are, one, the appreciation value of the home within a five-mile radius of where you're talking about buying, and a good real estate agent can pull that up as a statistic off of the MLS for you, the multiple listing service, okay?
Starting point is 00:12:50 And the second thing you want to look for that is a related statistic is average days on the market. They call it DOM. And that tells you how long a house sits before it sells. Now, they're related because usually the higher the appreciation rate, it's a hot market, the shorter the days on the market. Houses sell fast, right? Right. So if you find a 20-day day on the market and an 8% appreciation rate, that's a house you buy
Starting point is 00:13:20 because it's going to go up enough. In two or three years, you're going to go up 15%, 20%. You'll make some money in addition to your expenses, and you can sell the house quickly when you move, right? But on the other hand is if you find a 4% appreciation rate and 270 days on the market, that's nine months that thing sits there, empty, waiting for you to sell it. You're going to want to turn it into a rental property. Then you're going to end up with a rental property in all these cities that you couldn't sell the house every time you get moved. No, don't do that.
Starting point is 00:13:50 So, you know, if it's long days on the market and low appreciation, it's not going to go up enough in value to even cover your selling costs in the three years that you're there. And you can't get rid of the stupid thing because it sells really slow. Is that logical? Yes, and you can't get rid of the stupid thing because it sells really slow. Is that logical? Yes, it is. Okay. So that's how you can look at it and be very specific, not just conceptual, to your particular market. The concept, though, is most of the time in the military, unless you're in a major metro area,
Starting point is 00:14:19 you're not going to see enough increase in value, and you're not going to be able to get out of it. Renting is a better idea. But always check that theory against those actual statistics, particularly when you're in a situation like you're in where you've got a big down payment and you're debt-free and you have your emergency fund in place. I mean, you can do it easily. You just don't want to do the wrong thing.
Starting point is 00:14:40 All right, Kyle is with us in Italy. Hi, Kyle. Welcome to the Dave Ramsey Show. Hey, Mr. Ramsey. Pleasure getting the opportunity to talk to you. You too, sir. What's up? Thank you.
Starting point is 00:14:51 I'm trying to get my wife on board with going down the baby steps. Since we live in Italy, her idea is we have six months left here, and she wants to live it up, continue traveling. I want to get going on the debt because in six months we're going to be getting out and I'm going to be going to pharmacy school. And that's one of your advice. Yeah. Well, YOLO is for children.
Starting point is 00:15:16 I'm sorry? YOLO is for children. That's correct. You only live once. Thank God it's Friday. Oh, God god it's monday children do what feels good adults devise a plan and follow it and so i don't care if traveling is your plan that's okay as long as we get to go to pharmacy school and we have a plan but if you guys are deeply in debt and broke and you come out of the military and you move into pharmacy school all because she
Starting point is 00:15:43 couldn't say no to her prince self, that's a child. But if she's traveling responsibly and enjoying the fact that you're in the proximity of some of the greatest sites in the world by being in Italy, and she wants to responsibly take advantage of that as a part of your budget while you're achieving your other goals, that's an adult. So I'm not saying the travel makes her a princess. I'm saying how she approaches it and how she looks at it puts the two of you together. It might be that it's worth it for you to lighten up just a little bit and slow down
Starting point is 00:16:14 your get out of debt just a little bit on your gazelle intensity because you have the unique opportunity for a short time in Italy to see some of the world's grandest sights. And you'll look back on it 20 years later and say, back when we were in the military, we saw the Leaning Tower of Pisa, you know, or whatever, right? And so you'll have that opportunity. But on the other hand, you can't spend like you're in Congress and then go into pharmaceutical school broke. So you've just got to balance it out here.
Starting point is 00:16:41 And I don't know exactly what's happening here. My guess is I'm going to give her the benefit of the doubt and say, you're a super nerd So you've just got to balance it out here, and I don't know exactly what's happening here. My guess is I'm going to give her the benefit of the doubt and say, you're a super nerd and you've got this tightened down so tight she can't breathe, and she might not be asking for anything that's that unreasonable. Am I wrong? No, you're not. I'm the budgetary suspender.
Starting point is 00:17:01 We've got to shut her out. Yeah. So I think you might lose a small battle to use a military metaphor to win the war okay but but you just have there has to be reasonable boundaries in other words what i need from her if i'm in your shoes in order for me to loosen up and lighten up on my gazelle intensity is i need to realize i need her to say out loud that this is that she'll put some reasonable boundaries on this and it's not going to get out of control i mean in your head so sometimes a marriage counselor taught this when i was arguing with my wife years ago he taught sharing to me this he said sometimes when you're
Starting point is 00:17:39 arguing about something for the item that you're discussing for you it's a nine out of ten for them it's a one and if you'll talk it through to where you realize all she's wanting is a one and you're you're hearing nine on spending then you can get down to that one on spending lose that small battle win the war of being on the same team she gets to enjoy the the locale as a military wife and it gets one of the benefits of being in that area and you get to achieve your overall goals you might not be as far apart on the actual numbers as it sounds like because you we sharon and i when we're fighting we would we would digress down into uh just you know just over exaggerating everything you know like her one starts sounding like a 10 and my nine starts sounding like a 14 you know and so you know, just over-exaggerating everything. You know, like her 1 starts sounding like a 10, and my 9 starts sounding like a 14.
Starting point is 00:18:28 You know, and so, you know, you just got to look at it. On a scale of 1 to 10, what is this? And if it's a 1, shut up and do it. You know, if it's a 9 she's wanting to spend, then she's going to have to dial it down. And so it can be that it's just your perception and how you're coming at it that you're not hearing each other. That could be. Helped us.
Starting point is 00:18:48 We didn't fight as much after that marriage counselor taught us that, or when we did, it was a better fight, a higher-quality fight. It got somewhere with it. So if you're going to fight, you just need to have high-quality fights, right? It's a given if you're a hillbilly. You're going to fight. It's a given. Oh, yeah, Sharon's from the hills of East Tennessee.
Starting point is 00:19:07 Frying pan throwing. There's an Olympic event. Oh, all right. There we go, baby. Too much information on the radio in the first half hour of this hour. This is the Dave Ramsey Show. We'll see you next time. I love talking about companies that know how to do business right. You've heard of Grip6 belts, right? Well, if you haven't, it's the only belt you can get online with no holes, no flap, and no bulk.
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Starting point is 00:21:03 In the lobby of Ramsey Solutions on the debt-free stage, Justin and Brittany are with us. Hey, guys, how are you? Hey, how are you, Dave? So good. Welcome, welcome. Where do you guys live? Denver.
Starting point is 00:21:16 Oh, nice haul over to Nashville. Yes, sir. To do a debt-free scream. How much have you paid off? We paid off $105,000. Awesome. What's that? It5,000. Awesome. What's that?
Starting point is 00:21:26 It said keep it together. I know. $105,000. How long did it take? It took us two and a half years. All right. And your range of income during that time? It was about $140,000 to $160,000.
Starting point is 00:21:38 Cool. What do you all do for a living? I'm a GIS analyst in the IT department for a local municipality. And I'm in sales. I'm a national account executive for a company called a local municipality. And I'm in sales. I'm a national account executive for a company called Loomis. Cool. Yeah, absolutely. What kind of debt was the $105,000?
Starting point is 00:21:55 So I do have to say, Dave, we did not have student loans. Really? No, sir. So we had tax stuff, a couple medical bills. We actually had ovens. Our ovens busted before Christmas, of course. And then I have to say, of that 105, 57,000, Dave, was a vehicle. Whoa. Yes, sir.
Starting point is 00:22:15 A vehicle. A vehicle. It's like, you know, upside down equity three times over. You know, you just had to get the better car. The wrong snowball direction. Correct. The new car snowball, only it's awful. Yes.
Starting point is 00:22:29 I got it. Okay. I was in sales. I had to pull in the parking lot for a brand new fly ride, right? There you go. All right. So it was you. All right.
Starting point is 00:22:35 It was me. All right. What was the car? A Lincoln Navigator. Oh, sweet car. Yeah. Yeah. It's big enough you can roll a bunch of negative equity into it.
Starting point is 00:22:43 It's paid off now, though. You paid it off. You didn't sell it. No, sir. We paid it off. You didn't sell it. I wanted to feel the pain. I wanted to feel the pain. I was very adamant about, I know in past experiences when, you know, if you do it too fast, you do it too quick, you don't learn that lesson. And I was very adamant about, you know, I need to, we need to feel this. We need to feel the pain of taking the work to pay that thing off. So half of it was three negatives rolled into one navigator. Yes, sir. Wow. So what happened two and a half years ago that started this journey? So I was on FMLA with our baby, who's now two and a half, and my husband's in sales, and I had a hard time telling people
Starting point is 00:23:18 no. So while on FMLA, we ended up with a bread delivery service and pest control in Denver. And I was like, what are we doing? This is crazy. And I had bought the kit and it had sat under our bed for quite a while. Dusty FPU. Yes. And with a lot of time on my hands, I decided, you know what, we need to put the code in and we just need to go for it. So we did that. And when we put our minds to something, we go for it. And that's exactly we did that. And when we put our minds to something, we go for it. And that's exactly what we did. Wow. Well, I got to say, I was, uh, I'm in sales. So I always, I'm very skeptical, right? So when she first started talking to me, I was like, yeah, they just, they just want to take your money. Let's not, I don't want to do it. I don't want to do it. And she was like, no, there's, there's a church up the road. They have the
Starting point is 00:23:58 class. We need to go. And I was like, got our money. We got the kids. And I'm like, he didn't know. I was super skeptical. And, and, what I'm saying. And I'm like, he didn't know I ordered it. Yeah, I didn't. I was super skeptical. And finally, I was like, you know, for you, baby, I know this is something you care about and you're passionate about. I'll go and support you. But I'm telling you right now, this is a waste of time. And we went in there and sat down. And I listened to you and I listened to the program that first day.
Starting point is 00:24:18 And I had a paradigm shift, man. Wow. I had a change of heart. And I got it. Like, I got it. Like, I understood it. When you're the boss of your money and you tell your money where to go and you stop following it and letting it pull you along.
Starting point is 00:24:29 Like it just this paradigm shift. And then I, I left that class that day overcome with the spirit and it was just, babe, we got to get on board. We got to do this. And so from that day on, we, not only do we do it, but we started teaching it. We started co-facilitating it. Wow. I mean, a hundred percent in, I drink the Kool-Aid as they say.
Starting point is 00:24:44 Wow. And she did too. And, um, gazelle intensity. We sold co-facilitating it. I mean, a hundred percent in. I drink the Kool-Aid as they say. And she did too. And Gazelle Intensity. We sold everything in our house. I deliver pizzas on the weekends. I traded in my car and got a POS for a while. I mean, everything that you suggested, I'm like, let's do it. The faster we can get there, the better. Wow. And we had actually just built up our emergency fund and he was traveling like he does for work and our furnace went out on one of the coldest days in Denver of course so so we're in our bedroom with a space heater I have four kids and I'm just like this is insane so we had our emergency fund it cost I think nine hundred and fifty dollars oh wow yeah fix fix the furnace exactly and that's that picture that you saw I I was mad I said we just saved up this emergency fund we have all this Oh, wow. Yeah, fix the furnace. Exactly. And that's that picture that you saw.
Starting point is 00:25:25 I was mad. I said, we just saved up this emergency fund. We have all this stuff in two rooms that we don't even use, and we just sold it and built up our emergency fund, and we didn't stop after that. I love it. We just kept going. I love it. Very, very cool.
Starting point is 00:25:40 You guys are incredible. You're on fire, man. This is fun. How does it feel now that you're here? I can't even tell you. Oh, you know. Yeah. But it's a great feeling.
Starting point is 00:25:49 It's so humbling. A dream come true, actually, to come here. We left the kids at home because we wanted to actually have a vacation for the first time in a couple years. Yeah. You've been game on. So, yeah. So if I could really quickly, hi, Declan. Hi, Conley.
Starting point is 00:26:03 Hi, Rowan. Hi, Seth. They're watching. So are my parents. We have so much support. It was crazy. A lot of our friends had either done your program or were already living debt-free. Jennifer's watching.
Starting point is 00:26:15 Hi, Jennifer. And it was great. We kind of built our own community, it felt like. People knew what we were doing. We're very vocal. We talk about you all the time. And we started doing a pizza night at our house. Everybody would bring their own food. Uh, we would just hang out. And the one thing that we told our friends was, you know, keep asking us to do things. We're going to have to say no now, but one day we'll
Starting point is 00:26:39 be able to say yes. And they stuck by us and supported us. And it's been amazing. We have so many wonderful people in our lives. Two and a half years, though, of nothing. You can't use to it, though. It's amazing what the human body can do when it just adapts and gets used to something. Nothing. And we were what, $25 a weekend of fun money?
Starting point is 00:27:00 Yes. What's the budget? $25 a weekend. We made it work. What was the hardest thing, the time that you almost went we talked about I can't do it anymore it is the waiting it is the length of time you know that and I we've done other things that we just likened to other things that we accomplished
Starting point is 00:27:15 in our lives I lost 100 pounds and wow we've been sober for nine years and just some other things that we were victorious in and accomplished and we're just like you know we're just likening into that take it one day at a time. Don't look at the whole end game or get overwhelmed with the big picture. Like, oh, my gosh, we're never going to get there. If you think in that perspective, you never will. You take it one day at a time, just one day at a time. And that's what we did.
Starting point is 00:27:36 And little by little, I mean, here we are. How do you eat an elephant? A bite at a time. A bite at a time. There you go. You guys are incredible. I'm so proud of you. Thank you.
Starting point is 00:27:43 Very, very well done. Thanks, David. Very well done. Thank you. Very, very well done. Thanks, Dave. Very well done. Thank you. So your advice to someone who's wanting to do this, get Dave out from under the bed with a dust bunny. Dave and the dust bunnies. Yes. Get it out from under there.
Starting point is 00:27:55 Because get the old kid out. Get the Total Money Makeover book off the coffee table. It's not a coaster. So actually start doing this stuff. And what else would you do? Just be honest with yourself i think and and other people because i think so many people are inspired by you know us telling them we live in denver yes it's expensive we have four kids yes we have three
Starting point is 00:28:15 in daycare at one time you know i mean so what you know go work i was waitressing he was delivering pizzas you know we we knew that if we just did this for two and a half years, we'd be done. Wow. So just start. Just start. And don't give up. And once you get started, it's weird. You do get sucked in, don't you?
Starting point is 00:28:33 Yes. It's like you have your own little micro-economy. Mm-hmm. Your own little micro-weather system around your house, you know? And you just, because you get your eyes off of what everybody else is doing. It's just game on for us, our family. We're going to change our family tree. It becomes a singular focus for a period of time and culminates in a debt-free scream today.
Starting point is 00:28:55 It does. Well done. Thank you. Very well done. We've got a copy of Chris Hogan's book for you, Everyday Millionaires. That is certainly the next chapter in your story. You'll be there before we know it. Very, very well done.
Starting point is 00:29:08 You guys are game on. All right, Justin and Brittany, Denver, Colorado, $105,000 paid off in two and a half years, making $140,000 to $160,000. Count it down. Let's hear a debt-free scream. Ready? Yep. Three, two, one.
Starting point is 00:29:24 We're debt-free! free scream ready three two one hey man when you figure it out it's game on game on and some of you have bought financial peace university or somebody's bought it for you and it's under your bed it's not unusual for me to hear the Game on. Game on. And some of you have bought Financial Peace University, or somebody's bought it for you, and it's under your bed. It's not unusual for me to hear this story. Oh, they gave it to us when we got married, and it sat on the shelf for four years. I hear this stuff all the time. So get it out.
Starting point is 00:29:55 Get Dave and the Dust Bunnies. We are not friends. I don't like Dust Bunnies. It makes me sneeze. Get it out from under the bed. Clean off the kit. Get your butt in a class. All you got to do is go to one, and I'll hook you.
Starting point is 00:30:06 See what he said? That's it. Sounds like a bad 70s rock band. Dave and the Dust Bunnies. There you go. Who's playing bass? That's what I want to know. James.
Starting point is 00:30:17 James Child's playing bass. I'm on it. This is the Dave Ramsey Show. One of my favorite parts of this show is hearing your debt-free screams. You guys are our heroes. You've kicked debt to the curb and you've saved for the future. Now we want to celebrate with you. If you have lived like no one else and are currently in baby steps four through seven, well, it's time to enjoy some money.
Starting point is 00:31:03 And the perfect place to do that is on board our first ever live like no one else cruise in March. That's right, just a couple of months away. But get this, it's not too late to book your cabin. So don't miss your chance. This Caribbean cruise is going to be an incredible seven days at sea on a stunning new ship with amazing experiences. I'm talking all of our Ramsey personalities and other world-class entertainers.
Starting point is 00:31:30 We're stopping in the Bahamas, Puerto Rico, St. Thomas, and Turks and Caicos. It's going to be an amazing, debt-free celebration designed just for you. Don't miss the boat. Head over to RamseyCruise.com today to reserve your room. Thank you for joining us, America. We're glad you're here. Our question of the day comes from blinds.com, which has a 100% satisfaction guarantee, which is the you screwed it up guarantee. If you mess up the blinds order, they will still remake it for free.
Starting point is 00:32:23 If you mismeasure it, you pick the wrong color. If it's your fault, they will still guarantee your blinds. That's pretty cool. You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use the promo code RAMSEY to get the best possible deal. Questions from Jody in Iowa. Dave, my husband and I are 53 and will be 100% debt-free in 14 months, including the mortgage. We have $750,000 and't be yours. If the primary borrower on the student loan is the student and he dies, if it is a Sallie Mae standard federally insured guaranteed loan, the loan
Starting point is 00:33:15 is forgiven. They do not come after the cosigner. If he becomes disabled permanently, the loan is forgiven. They do not come after the cosigner. So you are safe in that regard. The only thing you're not safe on is if he doesn't pay the bill and stays alive. And then they would definitely come after you as a cosigner. If your estate is that large, I would look, Jody, and consider giving him and maybe your other kids a gift, the equivalent of that, and, you know, to just pay it off
Starting point is 00:33:51 and just say I'm going to advance you part of your future inheritance and we're just going to pay it off. That's what I would look at doing. I'd want to get them out of debt because you're basically millionaires, is what you're telling me, and $50,000 is not going to kill you. Now, I don't know how many kids you got. You got 20 kids, $50,000 a piece will drain this drive. But if you got two, you could pull this off, all things being equal.
Starting point is 00:34:16 So you cannot give $50,000 without getting into gift tax in a given year. You can give $15,000, which if you are married and your son is married, you can each give the other one $15,000, which is a total of $60,000. So four checks to get an increment that's no larger than $15,000 will get you there without any gift tax. So see your tax advisor on how to structure that so you don't get yourself in trouble. But that's what I would consider doing is just paying it off. Gets the liability off of him, gets the what we call a contingent liability off of you, because if he ever gets crossways, you know, they're going to come to you. You've got the money. It's not the
Starting point is 00:35:00 end of the world. Courtney is with us. Courtney's in Miami. Hi, Courtney. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. How are you? Better than I deserve. What's up? Okay, so I have a short and sweet question for you. So I'm actually really excited to be talking to you right now because I just pulled in the bank and I'm about to walk in and make my last payment of $500 towards my one and only credit card, and then I'm completely debt-free. Way to go. Yes, so I'm really excited. So my question is, what do I do with this credit card? Do I shove it in a drawer, or do I cut it up, or do I close it? Close the account.
Starting point is 00:35:37 Okay. Yeah, that way there's nothing fraudulent can happen on it. It's just gone. Okay. And you don't accidentally use it then either right okay so that's not going because i've had a couple credit cards in the past and people said don't close it because it's going to affect your credit score and it will it'll lower your credit score but that doesn't matter get rid of it close the account you're done with debt if you're not if you're going to play footsie with this stuff you're never going to to stay out. No, no. I know, and I don't want to.
Starting point is 00:36:05 So the credit score doesn't matter, correct, if I pay cash for everything, right? Exactly. If you're not borrowing money, nobody needs your credit score. Okay. Easy enough? Simple as that. So, yeah. Yeah, that's easy enough.
Starting point is 00:36:18 I'm so excited. Thank you so much, and thank you for taking me on this journey. It's been, I've paid off so much debt, and it feels good to be five minutes away from being debt-free. I'm proud of you. How old are you? I'm 30. Way to go.
Starting point is 00:36:34 You're single? Thank you. Yeah, I'm single. First time you've ever been debt-free as an adult? Yes. Wow. How's it feel? You're getting ready to walk in here and cut the last thread yeah i love this moment this is a great moment and you're not doing it online you're walking
Starting point is 00:36:54 into the freaking branch and putting it in their face yeah i'm sitting in front of the bank right now and i cannot i'm like i'm ready to cry because this is i mean i don't have any college college loans i don't have loans my car is paid off this is, I mean, I don't have any college loans. I don't have loans. My car is paid off. I don't have a mortgage. I am so lucky to live with my dad. And so, yeah, I don't have, after this, it's all up from here, and I don't have any more debt.
Starting point is 00:37:18 What's the name of the bank? It's Wildfire Credit Union. Okay. Hey, make sure you take, like, a picture of the outside right before you walk in. Okay. Yeah. And so you can keep this memory. You want to store this because you're going to tell your grandkids this someday.
Starting point is 00:37:36 Yeah. Yeah, back in October 20, I went to Wildfire and paid it off. Right? I know. Well, and I don't ever want my kids and i wish that as i wish that as a kid in a team that i would have known what i know now and i wish that i was taught this in school and i wasn't so this is super great for me to like pass on to my kids and my grandkids just to show them you know this is not the way that you want to do things. I love it. You're a rock star, kiddo. So proud of you.
Starting point is 00:38:05 Go pay it off. Touchdown. Woo! Love it, love it, love it. All right, Viviana is with us in Arizona. Hi, Viviana. How are you? Hi, Dave.
Starting point is 00:38:17 I'm good. How are you? Better than I deserve. What's up? That's great to hear. So, Dave, I'm calling. I'm currently about $45,000 in debt, and I calling. I'm currently about $45,000 in debt and I have, I'm sorry, $40,000 in debt. I have an income of $45,000. I'm raising four kids on my own due to
Starting point is 00:38:35 dad being incarcerated. I'm just trying to figure out how to get my budget set. And if you think that every dollar, the annual one and the FPU classes are something that I should consider putting into my budget while I'm trying to get debt-free? Okay. What is the debt on? I have medical bills, a car repo, student loans, credit cards, pretty much everything. I'm normal. What are you driving? I'm currently driving a 2009 Honda but um the repo was on an older
Starting point is 00:39:08 the honda is almost paid for i pay 117 a month on that one and i have about 10 payments left gotcha okay all right good and how big is the car repo balance? It's $12,000. Okay. So it's $12,000 of your $45,000. Okay. The good news is they will settle that for $0.20 on the dollar. You can probably settle this for $2,000, $2,500. Okay. Okay, perfect.
Starting point is 00:39:37 When you get ready to get around to it, it's going to be the last thing you do, though. We've got to get to the rest of the stuff first. Okay. What do you do for a living? I'm currently a manager at a call center. And how old are your babies? I have two-year-old twins, a three-year-old, and a 17-year-old. How long has he been gone?
Starting point is 00:39:59 He's been gone two years. How long will he be gone? Five more. Yeah. That was not? Five more. Yeah. That was not a good deal. Okay. It was not. I'm just trying to get on my feet after everything that's happened.
Starting point is 00:40:13 Are you a member of a good church? I currently am not, to be honest. What city are you in? I'm in Phoenix, Arizona. Oh, great. Okay. Wonderful churches there that we have a connection with. And just as a mom raising four kids by yourself,
Starting point is 00:40:29 just having a family around you that cares about you and cares about them is a suggestion. So I would consider that. And we've got tons of people that teach the class in that area and that would love to just minister to you guys and help you while your husband's serving time and just loving on those kids for you, okay? So I think that's an important part of the equation.
Starting point is 00:40:52 Yes, being on a budget always makes you feel like you've got to raise. It always makes you look around for ways to create more income. You've got some limitations on that. You've got babies to raise, little ones. But, you know, having some people around you being on a written plan and working the process out is absolutely vital. And you certainly will have that from us as our gift. We're going to sign you up for Financial Peace University and every dollar plus right now. And we'll connect you with some of the churches there
Starting point is 00:41:20 in the area in Phoenix that are teaching this. So you can get the whole package going that way, kiddo. And you call me if you need help. I know you've got some scary times ahead of you. This is the Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.

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