The Ramsey Show - App - You Aren't a Victim of Anything Except Your Own Habits (Hour 2)

Episode Date: March 3, 2020

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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 BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. Starting off this hour is going to be Katie in Alabama. Hey, Katie, welcome to the Dave Ramsey Show. Hey, how's it going? Better than I deserve. What's up?

I have a question. My husband and I are in baby steps too, and we are trying to sell our house. It's been on the market since July. We did have a contingent contract, but it fell through in December. We relisted with new realtors in January. We've had about 30 new families come through, but no offers yet. We have dropped the price significantly, but we've been advised that some updates and upgrades might help. We're just wondering, should we pause our debt snowball to cash flow some of the upgrades and cosmetic repairs or just keep lowering the price? Why are you selling? We kind of made a dumb decision and bought way too much house a couple of years ago.

Our mortgage is about 40% of our take-home pay. So we need to get out of it. And how much is it on the market for? It is currently listed for $599. What did it start at back in the day when you first started in July? In July, we started at $695. You dropped it $100,000. Yes, and we purchased it at $695. You dropped it $100,000. Yes, and we purchased it for $640.

So we did overprice it a bit in the beginning. When did you buy it? We realized that was a big mistake. We bought it in April of 2017. Okay. Yeah, you had it overpriced. And now you've probably got it priced correctly. What updates are they suggesting and what do they cost?

Kitchen appliances. All the appliances are original to our house. It was like a 1989 house. Doing some landscaping. We need some new sod and those types of things. But the primary thing is the kitchen appliances. So you bought it two years ago, three years ago, for ago for 640 000 with those exact same things yep yes and we've done a 20 000 master bathroom renovation in the meantime as well

so um i mean you bought it for 6 as is. Right. With the existing kitchen appliances and with the current yard condition, unless the yard's gone downhill while you owned it. Yeah. No, it hasn't really. Yeah, no, we just realized we overpaid for it a bit ourselves too. It was appraised for $648,000 though, so, you, at the time, it didn't seem like too bad of an idea. So my point is that those things were not necessary for you to buy it. Correct.

And that's making me think here. So what would you spend to do those updates? Do you have a budget on that? I mean, considering kitchen appliances, just to do that, probably $5,000. What would you spend on the sod i honestly have no idea let's call it let's call it ten thousand dollars how much debt do you have left um eighty two thousand and what's your household income just um around a hundred thousand a year yeah i think you need to sell it as it is.

Just keep lowering the price. And we're pretty close to taking a loss at this point. You're already taking a loss over what you paid for it. Yeah. Yeah. What do you owe on it? Um, we owe 547 still. Yeah.

You're just barely going to get out then, huh? Mm-hmm. Okay. Mm-hmm. Well, you can't really want to do it i would rather put 10 000 in it than put 10 000 ride 10 000 as a mortgage company because i didn't do the repairs so if you want to stop and do them you can do them it's kind of on the bubble but i i i always question this because you know it's always interesting to me the realtor will jump in and take the listing and give you the pricing and then when they can't get it sold they come back later and go well you should do this it's like you know it's i always want to look at them and go won't you do your job uh and so it's freaking house you know and so there's some of that but there is some there's

some reality to their request too because you know maybe the market is not as hot as it was when you bought. You know, maybe people aren't quite as frenzied in their buying as you were. And, you know, the current environment is a little slower maybe than it was in 17. That's very possible, you know, in your area. And we've had some new construction around us, too. Yeah, that may have changed it. But I think I would set a reasonable low budget and get that done really fast, and then I would be up in my realtor's grill and go, get this thing sold. If I do this stuff, you better get it sold.

You know, now. Are you working with one of our endorsed local providers um no we are not okay all right is if the realtor you have is not selling 20 or 30 or 50 houses a year you probably have the wrong realtor that's the other thing because there's about 80 percent of the people that real estate license know how to put the stuff into the mls and put a sign in the yard and they think that's marketing. And the other 20% make all the money and sell all the houses. It's the Pareto principle, and it applies in real estate.

20% of the real estate agents in America sell 80% of the houses. And so that's who you want to be working with is someone in that category. I don't know if you are or not. If you're working with one of our ELPs, you would be because we don't let people be in our ELP program where we endorse them unless they're high octane, high producers. And that you might get a different answer from that person rather than, oh, would you fix this stuff so I can sell your house? It drives me nuts. I understand it could be true. Okay. So you may need to do it, but you need to think about too. do you have the right realtor?

That's the other question. Hey, thanks for the call. Open phones at 888-825-5225. Chase is with us in Texas. Hi, Chase. How are you? I'm fantastic. How are you?

Better than I deserve. What's up? Well, I have a question for you, a business question. I am looking at a potential business partnership with one of my competitors in town. We both run successful businesses, and we've been thinking about possibly joining forces. We're in talks right now because it would allow us to hire staff more quickly and just have a little lower risk. I know you have said in the past that you're very against partnerships, or not necessarily very against them, but what would you do in this situation?

I mean, would you grow slower? I mean, I'm just a little bit at a loss of what to do here, because I feel like we could grow much quicker if we were together. That's mythology. It won't. What could happen is one of you go to work for the other one. In other words, it's a merger, but the other one becomes the owner. And I don't care which one.

But the only ship that won't sail is a partnership. Because everything that that guy is doing wrong, he will still be doing wrong. Everything that you're doing wrong, you will still be doing wrong. And you didn't scale it by getting together. All you did was just still be doing the same stuff and so unless you guys change the way you're doing business and the way you're shaping your business which you can do by yourself anyway then your results are not going to change just merging two guys that are half butt just gives you a bigger half butt that's all it is and you know that that you've got to fix what's broken inside these

businesses for them to grow you don't merge it to fix that that's like two people that you know, you've got to fix what's broken inside these businesses for them to grow. You don't merge it to fix that. That's like two people that, you know, can't get along in life marrying. It's not a good idea. Don't do that. And I wouldn't do it. You know, if one of you wants to buy the other one out and take over and do a bunch of changes and get after it, that's a possibility. And the other one will work for you.

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These are the guys to go with. They're always running new promos, and they always use the magic word, the promo code, Ramsey. Always remember that. It'll make you money. Today's question is from Victoria in New Jersey. My husband and I are in major credit card debt, around $40,000 on multiple credit cards and don't know how to get out. We're considering consolidating all the cards onto one card and pay monthly with a 0% APR and no transfer fees. Do you think this is a good idea?

Probably not. Here's why. You are trying to fix your credit card debt with your interest rate. The interest rate is not your problem. Your problem is that you are spending everything you make instead of putting it on the debt. And so let's sit down and do a written budget. Let's cut out eating out. Let's cancel the vacation, let's stay home, turn down the cable from $300 a month to a basic package, let's sell some stuff, have a garage sale,

let's get out the scissors and cut up the credit cards so they never grow back, and let's get very, very serious as if your freaking life depended on it about putting some money on this debt. Now, if you only put $5,000 a month on this, it'll be gone in eight months. If you only put $2,500 on it, it'll be gone in 16 months. That's what matters here. The interest rate is not your problem. Your problem is you spend everything you make, and that's what you've got to fix. Now, once you're doing that, and you've

had three months of success, you list your credit cards, smallest card to largest card, and you put all the attention on the smallest card. You pay minimum payments on everything but the little one, and you attack the little one. And when you start seeing yourself having some success for the first time maybe in your entire life with money, you will get more excited, more hopeful, you will cut deeper, take more extra jobs, and the result is the math starts to work even better. Because the more money you make and the less of it you spend, the more money you have to put on the debt. And that happens when you believe.

The more you believe, the deeper you do these things, the deeper you sacrifice, the crazier you get according to your broke friends. The more you believe, the more you pour gas on the fire. And that's what paying off the little one does. It increases your hope. It increases your belief that you're actually going to win. Now, once you're doing all of that, if you wanted to go to a 0%, it'd be okay.

But let's talk about it a minute, okay? Let's say that it's 15%, okay? That's $6,000 a year. What I just described was that you were going to be out of debt in 12 to 18 months. Now, I don't know your income, so I don't know if that's going to be true, but that's what I just described. And so if you're out of debt in 12 to 18 months, this saves you $6,000. Well, if you send me $6,000, I'll keep it. That's a lot of money.

I don't care who you are. But $6,000 does not solve a $40,000 problem. Thus, the $6,000 is not the problem. And so don't get so caught up in, I did something so I don't have to do anything because I moved it over here and I got 0 percent and guess what it still didn't go away because you never really addressed the core problem which is you and you got to address the person in your mirror if I can make the guy in my mirror behave he can be skinny and rich but he likes chocolate chip cookies it's a problem it's just a problem but I know what the problem is it's not the evil chocolate chip company it's not the evil is. It's not the evil chocolate chip company. It's not the evil cookie company. It's not the evil woman that makes the chocolate chip cookies

that smells so dadgum good. It has nothing to do with those people. It's not their fault. No one taped me to the bed with duct tape and force-fed me chocolate chip cookies. I made a choice to eat them, and I have to make a choice to not eat them, or I'm going to be as big as this freaking building. And so you have to decide. And you're not a victim of anything except your own stinky habits.

Me too. Me too. I'm not indifferent. But this is how you address this issue. So this is why debt consolidation doesn't work. Debt's not the problem. It's the symptom. You're treating the symptom. You can't treat the symptom. You've got to treat the problem. The core problem is disorganization.

I'm buying crap I can't afford with money I don't have to impress people I don't even really like. I'm impulsive. I'm childish. I whine and stomp my foot and stick my lip out like I'm four years old on the cereal aisle and say, I work so hard, I deserve it. We'll call the whambulance. Seriously. Don't we all do this?

We all do it. We all act like we're four years old at times and if the four-year-old you that is not controlled by the 34-year-old emotional you then you're going to be broke your whole life that's called growing up me too i'm not any different turning 60 this year and nothing inside of me feels like it nothing inside of me feels like it. Nothing inside of me feels like anything but that little four-year-old boy if something doesn't go my way. I'm just like you. The only difference is you got to decide if I'm going to control that little brat that lives inside of me. Shut up, kid. The answer is no. I'm going to learn to delay pleasure, which is a sign of maturity.

I'm going to learn to work like no one else so that later I can work like no one else. I'm going to learn to be outrageously generous. I'm going to be disciplined. Self-control is a fruit of the Spirit. You can't say, Dave Ramsey, you changed my life because I have never stood in anybody's house and kept them from spending money. I did not change your life. I convinced you to do it. That's all I did.

I made you believe that if you did this stuff, you would win. And I'm right. If you do this stuff, you will win. And if you don't do this stuff, you won't win. It really is not rocket science. But no one's going to duct tape you to your bed and keep you from spending on that stupid credit card you've got to decide you've got to be a grown-up you've got to make the call you've got to buckle up buttercup that's what's going on here

and that's what we have to do all of us it's so hard victoria it's so hard for all of us and it's why i'm still sitting here doing this same exact show 30 years later it's the same show little less country i'm a little more polished i'm a little better at the thing i've gotten i've developed my craft a little over the year years but the debt snowball hasn't changed the budget hasn't changed the baby steps haven't changed because they didn't need to change they weren't the problem i hasn't changed the budget hasn't changed the baby steps haven't changed because they didn't need to change they weren't the problem i don't like dave ramsey no you don't like you you don't like what you're doing and i am telling you what you're doing and it's convicting your little butt and you don't like that that's what you don't like i don't take it

personal when people hate on day remsey i don't do remsey day remsey's a charlatan he rips people off yeah i rip people off i do a radio show for free kind of moronic statement is that stuff so no i don't rip anybody off i show you exactly what you can do sometimes people buy a book from me that show you exactly what you can do sometimes people go through financial peace university that convince you you can do it because you're with a whole bunch of other people doing it and you're working together with your spouse for the first time in your married life and you go be successful yeah and i charge money for that unapologetically but you can listen to this show for free you can watch youtube for free you can download the podcast for free

billions of minutes of the dave ramsey show have been watched on YouTube. That's wild when you think about it. Billions. And you know what I charged you guys for that? Zip. So it's up to you. What are you going to do? What are you going to do?

It's only $40,000. In the scope of your life, that's not much. But this is your turning point. Is you a man or is you a mouse? Is you a woman or is you a wimp? Let's get with it, kiddo. Time to grow up. Buckle up, buttercup. Get her done. This is the Dave Ramsey Show. Thank you. We'll be right back. Brandon is with us in Montana. Hi, Brandon. Welcome to the Dave Ramsey Show. Thank you. How are you? Better than I deserve. What's up?

Well, my question was, we bought a house, kind of got in some trouble, and did a remodification about 10 years ago. So it's on a 44-year loan, 4.75%. It's like a $1,000 a month payment. Wow. And my question is, yeah, so I got about 31 years left on this loan. It's only like $200 a month going to the principal. So we want to know what's best.

Do we refinance with these low rates right now and get a 15-year loan? Or do we keep what we got right now and make double payments? What's your loan balance? $175. Okay. So every 1% you would save on interest rate will save you $1,015. $1,075. Okay. So every 1% you would save on interest rate will save you $1,750. Okay. And you can get a better rate than 3.7.

So it's safe to say you'd save over $2,000 a year in interest were you to refinance. Now, if you do that, while you're at it, you might as well put it on a 15. But you don't have a 31-year loan unless you want it to be because you can pay extra on this. That's what I'm saying, yes. We were thinking about doing a first. If you want to just pay it off early, you can pay it off early. But the interest rate is a little high

and you could probably save some money by refinancing so how's your credit these days uh great okay we're uh over 800 okay so you could walk down and get a 15 year fixed rate say for 3.2 as an example that'd be one and a half percent which would save you about $2,500 a year plus, right? And if it costs you $5,000 to do that in refinance costs, which it will, then it would take you two years to get your money back and the interest saved. And while you're at it, put it on a 15-year. Can you afford the 15-year now? Yes.

Okay. And then pay that 15- year off sooner than 15 years but the only reason to refinance here is to get a is to save that two thousand five hundred dollars a year okay now are you going to be in the home at least two years yes is it going to take you at least two years to pay it off yes because it'll take you that long to break even with the closing costs versus the interest saved. You see what I'm doing? Mm-hmm. And once you break even everything after that, you're saving $2,500 or thereabouts a year until you get the thing paid off.

And that's going to be very valuable to you. So I would do that. Okay. So, yeah, we're going to refinance. But the reason is not to move from 31 to 15 you could do that by merely paying extra yeah okay the reason is we're going to save one and a half percent on our interest rate by going to churchill mortgage and getting a refi done and get a 15 year fixed rate hey question. Sounds like you're game on, man. Get after it.

All right, Ariel is with us in Texas. Hi, Ariel. How are you? Hey, Dave. How are you? Thanks for taking my call. Sure. What's up?

Okay, Dave. So I have a question. My husband and I, we just had baby two in December. We found out about you in October, and we have about 90K in debt. I haven't been working since last March. So I'm kind of preparing to go back into making money. We've been living off my husband's income about 75. And so that covers our expenses. And since we're getting rid of some payments this coming month, we'll have a little bit more to put towards our debt. But I'm debating now if I should

go back into like a corporate field, have a background in project management, et cetera. I could probably make around 70, 80K a year versus, um, I have an opportunity to partner with a gym and personal train there at work. There's a personal trainer. Well, I'll be doing a mix of building my own clientele along with leads that come into the gym, but it'll probably take me a longer bit of time to ramp up to that kind of equal level of income, you know, because I'll be having to build myself. How many personal trainers at that gym make 80K? I mean, not many of them.

How many of them? It's a small private boutique gym. How many personal trainers at any gym in your area do you know that make ADK? Probably none. I don't. It's just what I really care about, you know? And so I'm debating. Yeah, okay.

So I don't mind if you want to do it because you care about it, but don't lie to yourself. Because you just told me you're going to make 80K, and you're not. I figure after a few years with different streams of income coming in from fitness and health, maybe starting an online program, I could get there. You might build a business that does that, but one-on-one personal training has a logistical problem. You only have so many hours in the day. It's hard to charge 5x of what everybody else charges you gotta be really good to do that i mean it's unusual but some people do i mean there's not saying nobody does it but

i just don't want you i want you to do this realistically and say okay i'm gonna go live my dream the first year i'm gonna make 30 the next year I'm going to make $50,000. And then if I can build my business and have some alternative product lines, I might get it up to $80,000 or even $180,000. I don't know. That's possible. I mean, you develop some supplemental lines and you do some other stuff. Lots of people in the fitness world have done that and have made serious bank. Yeah, I just know that takes a lot more time.

Exactly. That's building a business. That's not just personal training. And so I'm okay with that, but you're not going to do that on 20 hours a week either. Yeah, I just know that takes a lot more time. Exactly. That's building a business. That's not just personal training. And so I'm okay with that, but you're not going to do that on 20 hours a week either. Mm-hmm. Okay, so what is it you're gaining? Because you're going to be working just as much as you would in corporate America.

Maybe you've got some flexibility in your times, but you're going to have to put in the hours if you're going to get the results. Agreed? Absolutely. Okay, so you're not doing this so you in the hours if you're going to get the results. Agreed? Absolutely. Okay. So you're not doing this so you can spend more time with the kids. No, it won't be that. It's more so just doing work that I feel like won't, that will energize me more so. Yeah, and that you own. And that you own.

Okay, I'm all right with that. Yes. What we're saying is for you to open your own business that has a 30,000, 50,000, 80,000 trajectory over the next three years is going to cost your family a little bit of money on the front end. Hopefully, you'll make it up on the back end, and it's going to slow down the pace at which your family gets out of debt. And if y'all are willing to do that and make that sacrifice, I'm not going to yell you for that i'll support you i'll support you and i'm not what i thought you would say yeah well i'm about you getting out of debt but you know yeah you know if you told me you could make 300 000 in corporate america i tell you to shut up and go do it for two years and get yourself out of debt and have a pile of money to open your business with, right? I'd go use that for the bank.

But the difference, the swing in this is not, over the next five years, is not that dramatic if you go ahead and build your business. But don't lie to yourself and say you're going to do enough workouts with individuals to pull 80 grand in. Do the numbers on that. Take about the number of hours in a day, how many times you'd have to do a workout, and how many clients you'd have to acquire to cause that to happen. Logistically, the math isn't going to work out for you.

The business pro forma is going to break down. You're a project manager. You know how to do that. Yes, I have. I look at it now based on the amount that they charge at this particular gym. I will be looking at anywhere from like $80 to $100 a session. So if I get about 15 clients to have about 15 sessions a week, I could make possibly that $60. Yeah, that's what I'm thinking.

But again, it still takes some time. That's what I'm thinking. And that's working a lot. That's working a lot. Yeah. Because you've got client acquisition in here too. So I have to work outside of those sessions. Yeah, you have to have – you're not only producing the widget, the actual service.

You've got to do client acquisition too. Absolutely. So what you just described is do client acquisition, too. Absolutely. So what you just described is a 40-hour week. Absolutely. Yeah, that's what I'm thinking. Okay, good. We're on the same page. You can do this.

I'm going to send you a copy of Christy Wright's book, Business Boutique, Equipping Women to Make Money Doing What They Love, and we'll help you do that. So, yeah, go with it, but let's just use lots of clear glasses, no rose-colored stuff, right? So real clear. Around here, we always use Jim Collins' phrase, the last 10% of truth, which is the ugly stuff. If you talk about the last 10% of truth, I'm not going to lie to myself. I'm not going to exaggerate this. I'm not going to try to blow hot air.

I'm just going to get her done and be realistic about my projections. Good stuff. Good stuff. Thank you for joining us. This is the Dave Ramsey Show. Thank you. Thanks for joining us, America. This is the Dave Ramsey Show. We're so glad you're with us. Katie is with us, and Katie is in Canada.

Hi, Katie. How are you? Hi. I'm great. How are you? Hi. I'm great. How are you today? Better than I deserve. What's up? Wonderful.

So I have yet another student loan question for you. Cool. Wonderful. So I have a bit of a unique situation with my student loans. I was born and raised in the United States and then moved to Canada when I got married six years ago. So unfortunately, student loans follow you no matter what country you move to. Yeah, what happens in America doesn't stay in America. Yeah. Right. So they came with me and I work for a company in Canada.

And the fun thing is, is that I have to pay exchange on top of my student loan payment. So I paid about an additional $115 a month in exchange alone. Right, just the currency exchange you're talking about. Yes, yes, because the Canadian dollar is pretty weak right now. So four years ago, my husband and I bought a home, and recently in our area the house values have shot up. So we have a fair amount of equity in our home now. So we have been discussing the idea of getting a home equity line of credit to pay off the

student loans. I'm hesitant to do this because of the exchange rate being so bad. Currently, um, it's0.36 on the dollar. So if I were to convert my whole student loan balance, which is $25,905.13, it would convert to $35,308.69 Canadian. So I guess my question is twofold. Is it a good idea to use my home equity line of credit to pay off my student loan debt, get that $615 a month off my back and into the house? And do I do it now or do I wait for the values to kind of balance out? Because I've been in Canada for five years now and it's pretty much stayed this rate the entire time. Yeah, okay. If it were an American

home equity loan, I would just say no. I do not know the standard terms with Canadian banks on Canadian home equity loans. An American home equity loan has several problems. One is it's almost always a variable rate. Two is the variable rate is just simply decided by the bank. It's not indexed to anything. And three is they often have a balloon or a call provision, which leaves you very vulnerable. Every three years, they reset the thing and you can have the whole thing called in on you and create a real mess. If that's what you've got in Canada, then don't do that. If you have a fixed rate, if there are no calls, and if the interest rate is reasonable, you may want to consider it.

Okay. The downsides, if you did do it in that perfect scenario, if the interest rate was better or as good, I wouldn't want you to go from a 6% student loan to a 12% home equity loan. Right. That'd equity loan. Right. That'd be silly. Okay. So the interest rates need to be comparable. What's your interest rate quote? Well, I've got a whole slew of them. The highest is a fund 10.75%.

But what's the one you would do? I would have to look into it. It would probably be around the 5% to 7% range, which is probably the good fixed. Not variable? No, from what I understand. And what is your student loan rate? So they vary. The highest is 10.75.

I've got some at 4.5 and some at 6.8. Okay. So depending on how that's weighted, it sounds like you would break even or maybe even save a slight amount on the interest rate. Now, then the only downside of that is it's not the exchange rate. The exchange rate doesn't bother me because it's not a dollar for dollar in value in terms of, you know, it's just if it was a peso, you know, you'd be a bazillion to one, right? So, you know, so that's not the issue. The issue is the terms of the loan and the student loan, your American student loan,

has two unique features that you're going to lose if you do this. If you die, it goes away. They forgive it. Right, right. If you get hit by a car walking across the street to the grocery store tomorrow, your husband is not going to pay this. It just goes away. Right, right.

If you become permanently disabled, it goes away. Neither of those are true with a home equity loan. Right, Right. So your husband just took this loan on, you know, for better, for worse, and sickness and health and all that kind of until death do us part. And even then he took it on. So, you know, that's the downside of this. But if your interest rates are all the same and you want to get it across the line and, you know, into your new canadian life i don't have a huge problem with that but don't go into a variable rate make sure it's not got a balloon or a call feature do a fixed rate and make sure you're not going up substantially in rate it sounds like you're not in any of those but um

you know that's the analysis that i would put on, and you just accept the fact that you're giving up those two forgiveness features when you convert this from a student loan to a home equity loan. If you're a state side, it's very difficult to find a home equity loan. You can force it at a credit union sometimes, get them to do it, but you have to hawk them into it the way I'm outlining this. But most home equity loans are crap, the structure of them, the terms of them are in America. All right, Carlin is with us in Tennessee. Hey, Carlin, how are you? Hi, I'm good. How are you? Better than I deserve. What's up?

Hi. So I just recently finished Baby Step 2. It took me me two years and I'm so very thankful for your program. Way to go. And now, thank you. And so now I'm on baby step three and I would just like some guidance on the amount because I'm not really sure. I'm a, I'm a single mom and I'm a teacher, so I don't really make a lot of money. I make about $40,000 a year. And so I just don't know, like, do I do six months? Do I do a year? Do I do three months? I don't really know.

Well, we tell people, and most financial planners agree, an emergency fund of three to six months is sufficient. So six is the most you would do. And in your case, that's $15,000 to $20 is sufficient. So six is the most you would do. And in your case, that's $15,000 to $20,000. Three to six months of expenses. What's it take for you to exist for six per month if something happens? And this is not counting summer income. You've got to cover that otherwise. Okay. But I mean, I assume you do something else in the summer or you tutor or you do something, right?

Well, I get paid. My paycheck is split for over 12 months, but I also work at a country club, too. Okay, because you don't work as a teacher in the summer. No. Okay, so that's my point. You've got other income coming in, so your income is actually higher than $40,000 then.

It is. I made about $40,000 then. It is. I made about $6,000 last year working the summer and every other weekend. Yeah. So we're talking about, you know, $50,000 a year roughly is what you're making. That's great. Good job. And so, you know, the thing is I want you to have a good substantial emergency fund, but I don't want you to have so much in there that it's just becomes your only investment program so you know let's set that around you know between 10 and 20 000 bucks

somewhere wherever that makes you comfortable because that's going to be between three and six months and if you're um you know security oriented if you've been through held in your single mom process and you don't ever want to be back to broke land again and it scares you to not have any money and all that you may want to lean on that six month side but you should never in your case i would never tell you to have more than 20 000 saved for emergencies now you start saving up for other stuff vacations cars do other investing you know the 15 of your income going into retirement of course baby step four all that, right? But for the emergency fund, the money that is in that account that you wrote on the outside of the folder, this is for emergencies only, I would limit that, in your case, to a maximum of $20,000.

Great job. You got out of debt. Way to go, kiddo. I'm so proud of you. Folks, what are your excuses for not budgeting you know i've heard them all and i think you're a bunch of bull i don't have time to make or keep up with a budget yes you do budgeting is i don't like a budget it's too constrictive why because you're constricting yourself you set the budget budgeting does not have to take a ton of time.

It does not have to be any more constrictive than you make it. No more excuses. It takes 10 minutes to do this. It's quick, it's easy, and it's free with EveryDollar. Text EVERYDOLLAR to 33789. Text EVERYDOLLAR to 33789. For the EveryDollar app, the world's best budgeting app that's free. You can now listen to the show on your smart speaker. Just tell your Alexa or Google device to play The Dave Ramsey Show or find out all the ways you can benefit at DaveRamsey.com slash smart speaker.