The Ramsey Show - App - You Can Reset Your Life During This Crisis (Hour 3)

Episode Date: April 15, 2020

Rachel Cruze, Home Buying, Career, Debt, Taxes 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 

🎵 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. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Joining me this hour, Rachel Cruz, Ramsey Personality, number one bestselling author,

answering your questions as we go through the hour. So you jump in with questions for Rachel and me, and we'll help you out any way we possibly can. If you haven't heard, there is a site we put up about three weeks ago, DaveRamsey.com slash hope. It is a full, it is a one-stop shop for all the free and super cheap stuff we made available to you to get through this time of crisis. Digital things you can do from home, books to read at deals.

Unbelievable. For instance, we have been running, and it won't be running much longer, I don't believe. It looks like we're probably going to shut it down next week or two. This Financial Peace University, we're allowing you to have a 14-day free trial. A lot of you were at home for 14 days or now maybe more in some cases. And, you know, during the corona crisis here and the shutdowns and the loss of jobs, we just wanted you to have access to the entire Financial Peace University curriculum. The nine lessons are there.

The high school, not the high school, I'm sorry, the community groups are there that you can get in. You can get into the Every Dollar Plus. It's all in there on a 14-day free trial. The world's best budgeting app, in other words, it's all there. Be sure and check it out. This is the first time we've done this in 30 years to allow you to have a free trial to this premium product. And you can get that at DaveRamsey.com slash hope. Also at DaveRamsey.com slash hope. Rachel, we're running

all of your books on sale for $10. All of my books on sale for $10. Ken Coleman, Chris Hogan's bestsellers. Ken Coleman's number one bestseller, Proximity Principal, Anthony O'Neill's number one bestseller, Debt-Free Degree, and Love Your Life, Not Theirs is your latest number one bestseller, Smart Money, Smart Kids that we did together. All of these books and many other things are on there at a special for $10 right now, and you can load up as many as you want. And we are shipping on a timely basis. Amazon has apparently deemed books to be nonessential,

and they're pushing things that are essential out in their delivery because they're getting slammed with delivery. So their books are taking, you know, two, three weeks to get there in some cases, according to their site anyway. And so if you want to get these things right now, they're $10. DaveRamsey.com slash hope. And that's a full selection. I don't know how many number ones that is, but that's a lot of number one bestselling books for $10.

Yeah, and just books obviously that have great content. That's why they got to be number one. But really to help you with your money, your career, no matter where you are, that this stuff, yeah, it's here to help you. And I mean, we can't stress it enough, but if you're in quarantine, I mean, binge, binge this instead of Netflix, right? I mean, go, go watch FPU, do the videos, see it, see the content, use it. It's, there's a lot of somewhat downtime that we have. I mean, if you're home with kids and everything, it gets a little bit more difficult, but the time that we do have at home use it wisely because hopefully it'll be over sooner than later i mean there's a restart that happens to your life and

you could come out of the gate fast on some things from some of these materials and that's the interesting part about this whole covet 19 and quarantine is when we're talking about this at a dinner um my husband and I were over dinner at that. What could we take with us out of this learning experience with us into back to normal life? What are things that we can learn that we've learned about ourselves and all that? And I think with people and their money, people are either learning, oh, wow, we did this stuff right. We got out of debt. We have our emergency fund. And all of this is just an inconvenience. It's not an absolute crisis.

But people that are still in debt, you don't have an emergency fund. Maybe you've lost a job. You feel the crunch. Like you feel the crisis looming. And take this as a time to say, hey, you know what? I'm going to take this urgency and I'm going to do something different. When all of this is said and done, I'm actually going to go, yeah, and do something with my money that sets us up well, because it really reveals maybe the lack of planning that you've

had in your life. And that's not to shame you, but that's to say, hey, use that as motivation. Yeah, this is time to change it. And some of you lost your job, and it's a good thing, because you didn't like it anyway. Yeah. And so you can get- It's forcing you to change. You can get the proximity principle book and say, okay, I'm going to do this Ken Coleman

thing. I'm going to go find something I love and that I'm fulfilled in and I make more money. It's a forced reset for a lot of people in a lot of areas. Just check DaveRamsey.com slash hope. There's stuff there for your teens at home. You want high school curriculums there at a deal. There's stuff for these books at $10. The 14-day free trial for Financial Peace University.

Be sure and check all of that. Grace is with us in Illinois. Hi, Grace. Welcome to the Dave Ramsey Show. Hi, Rachel. Hi, Dave. Thank you for taking my call. Sure.

How can we help? I am 32 years old. I am not married, and I just finished my full emergency fund, so I'm super excited about that. I am currently renting an apartment, and my parents are encouraging me to save up and buy a house or a condo sometime by the end of the year. But I'm nervous about doing that because I don't know what my life will look like in five years. Like to me, buying a house is something long-term, and since I don't know what my life will look like if I'm married or whatever, I don't want to be stuck with a house and have to sell it really fast. So my question is, do you see a problem with continuing to rent for a while

and just start investing into my 401k now, or should I take my parents' advice and buy something as soon as possible? If you bought something, why do you perceive that you would be stuck with it or have to sell it quickly? Why would you have to do that? You're in good financial shape. You could sell it slowly. Yeah.

Well, right now I'm thinking for myself right so if i um if i were to get married within the next couple years or so i i would think that if i wanted to move to a bigger house or whatnot if i wanted to start a family then that would be kind of pressuring to to sell fast yeah it wouldn't be fast it would just be that we would have to sell. But, I mean, it wouldn't be like you'd have to sell it within 30 days or you're going to be foreclosed on or something. You would just put it up for sale. Right, right.

So you don't want to buy something then that wouldn't be marketable. You want to buy something that you have a good feeling that it would sell easily when you get ready to resell it. Okay, so you do agree that I should, instead of just continuing to rent for a while, I should buy something. I should be setting up to buy something. Under those circumstances, the circumstances being that you buy something that is going to be easy to sell when you get ready to move to the next transition in your life.

Now, you mentioned getting married in two years. Are you in a relationship that's indicating that, or are you just thinking that might happen out there somewhere? I'm just thinking I'm not in a relationship. Okay. Yeah. I don't know. Rachel?

Yeah, I probably would. I mean, I think investing in real estate is a great option, and again, you're in good financial shape, and just like you were saying david just sell it if you choose to move it or maybe if you do get married y'all decide to live there don't buy something weird you know buy something that's kind of uh generic that a lot of people might buy that doesn't take a unique buyer to buy it it's easy to, in other words. For most of us, health care costs seem to increase every year, and saving money on health insurance feels more and more out of reach. For example, take the Olcheski family from LaGrange, Texas.

Jeff and Cherise had just celebrated the birth of a new baby boy. Shortly after, they had a health scare involving one of their kids that was completely unexpected. With today's health care climate, this could have bankrupted them. But thanks to Christian Health Care Ministries, the Olcheskis were spared from a ton of medical bills. As members of Christian Health Care Ministries, they're part of a group of believers who financially and spiritually support each other.

CHM is the original health cost sharing ministry and is a Better Business Bureau accredited charity. It's biblical, affordable, and it's shared nearly $97,000 to help the Olcheskis. To be a part of Christian Healthcare Ministries, visit chministries.org. That's chministries.org. CHM is a proud sponsor of Dave Ramsey Live Events. chministries.org. thanks for joining us america we're glad you're here this is the dave ramsey show our question of the day comes from blinds.com they have a 100 satisfaction guarantee that means even if you

goof up when you're measuring or you and you get the wrong size blind or you uh you know you pick the wrong color any of that they will still replace your blind for free even if that was your fault you get free samples free shipping and with the new promos they run every month you'll save even more. Use the promo code RAMSY to get the best deal. Today's question is from Kimberly in Minnesota. Dave, my husband and I are on Baby Steps 5 and 6, which is saving for the kids' college and paying off their house. We're 38 years old.

We're wondering if we should temporarily use extra money we'd been paying towards our mortgage to instead invest more into our kids' college fund, also into our retirement, more than 15%, since stocks are on sale. Since the stock market's down, it's a good buy. Rachel? Yeah, I would definitely recommend, depending on the age of your kids, that, you know, to put that money in the kids' college. But, again, that's all dependent upon the age of your kids. But I always just continued on the baby steps. You wouldn't need more than 15% of your income going into retirement.

Just keep that steady. And then if your kids are school age, then yeah. Yeah, I mean, if you can dump a little extra into the college that you're buying these at good buys right now, I'll go with that. But I would not increase the amount going into retirement. extra into the college that you're buying these at good buys right now i'll go with that but i would not increase the amount going into retirement and i would just throw the rest of it at your home mortgage now i think that's a good time to kind of back up and recap rachel there's a whole bunch of things we put this out on our social and um it's got a lot of traction because people were looking for this some do's and don'ts during this time.

You wouldn't do any of that if you currently have lost your job or you're about to or you're furloughed or something like that. So if you've lost your job or you're furloughed or your income is not stable right now during Corona, do pause your debt snowball. Do stop everything and work the four walls right that's right okay do make the minimum payments on your debt uh do cut out all unnecessary spending uh you know do pile up cash you you are not working the baby steps if you are in an income crisis right now because of this. You're not saving money. You're not investing money.

You're just piling up cash. And that would go, I would say, I would extend that even to not based on fear, but if your company has told you, hey, in two weeks we're going to have to lay your division off. Like if you know it's coming. Yeah, not vague fear. Not vague fear. That's a specific. But if you have a specific, yes.

That's a fact. Exactly, exactly. That's not an illogical fear. That would apply to you as well, yeah. Yeah, just generally worried is not what we're talking about. If you're generally worried but you have stable incomes are the facts, like we've used the example, maybe he drives for FedEx and she's a teacher, right, that kind of a thing. Yes, yes.

Then I would go that route. And in that case, your income's stable. Well, you do keep working the baby steps. You do pay a thing. Yes. Then I would go that route. And in that case, your income stable. Well, you do keep working the baby steps. You do pay your bills on time. You do use your stimulus money to help you crush your goals. You do. You do not pause your debt snowball. You do not cash out your 401k. As a matter of fact, none of you need to cash out your 401k unless it's to avoid a bankruptcy or foreclosure. we never tell you to stop or to cash out your retirement, ever. Never do that. Don't take out a payday loan. Run as far from these snakes as you can. Stay away from those people. Any stimulus money you have, you just

work your plan with it. Any money that's coming in, you work your plan with it. And listen, you've got these forbearances on these mortgages. If there's any possible way in either case, whether you've lost your job or whether you haven't, that you can pay your mortgage, pay your mortgage. It's food first, lights and water second, mortgage is third. Because the forbearance does not mean forgiveness. It means they just put it off. You're just kicking the can down the road and they're saying well we'll wait three months and then you're going to owe all three months plus the fourth month and you're not going to have

these four payment house payments stacked up there yeah so make sure to put i mean i've been telling people to just any amount of money on any bill that you can even if you're even if you have to take some of the grace period whatever you can can put down, put down to keep current as current as possible with these bills. Yeah, there's no case in which you take some take advantage of some of these odds and ends out there like a forbearance thing or oh, your your landlord can't foreclose or can't evict you right now. In some states, they're doing that. Well, listen, that doesn't matter. None of that says you don't owe the rent. You're still piling up a problem.

And so, you know, you should not be behind on April's rent if you got laid off the second week of April. Right. you had income now you may have a problem when may comes around if you don't get some income coming in but uh keep your food first lights and water second and shelter third when you're facing these things do use your stimulus stimulus checks to uh push out. You are not, as a patriotic act, required morally to spend that money for you to stimulate the economy. These checks are for your survival and or hitting your personal household goals. That's all they are for. That's all you're supposed to be doing right now.

Heidi is on the line. Heidi is in Ohio. Hi, Heidi. How are you? Hi. Hi. Thank you for taking my call. Sure. What's up? Well, we have an 18-year-old senior in high school whose senior year has been cut short because of the recent events. So he is lucky enough, he's in the vocational program for precision machining. So he was able to attain full-time employment that was ready for him when he graduated, but they offered him to start early since he's not going to school. So he's been working full-time just for about a week now. And I'm kind of just curious as to where we go from here. Obviously he has no debt. He does have his $1,000 saved from birthday money and such.

They are going to be putting him through an apprentice program that's completely paid for, all the educational part of that. Wow. So we have an educational IRA for him, just a small one, but I'm not sure what to do with that money. And then also, how much should he spend or save for his full emergency fund with where he's at in life? And how much should he have for fund money? And should he invest at this point? Yeah, these are great questions, Heidi. How much is he making?

$15 an hour. And then every time he either passes a class or tests out of one, he'll get a pay raise. he'll top out um just over twenty dollars an hour okay and so he'll be living with you guys for the foreseeable future as he does that program yes he doesn't have any desire to move out at this point yeah for sure he's pretty young yeah yes wow well very good good for him so he stepped into one of the trades and it's going zoom zoom yes good for him. That's awesome. Yes. He has no debt.

No debt. We're going to make him pay for his insurance and cell phone bill. Yeah. Does he have a car? He has a paid-for car that he's been driving since he was 16, $1,000. We made him pay half, and he had the money at that time. And it's still running great. He's not anxious to get rid of it but eventually

he would like to upgrade yeah when he when he has 10 or 15 000 in his savings account at christmas he's going to start thinking about a car yes yeah yeah heidi i mean i would recommend him get on every dollar he needs to do a budget of what you guys what expenses now you're handing to him and making sure that he's very specific with what the income that's coming in and where exactly it's going and so just doing a budget and then since he has no debt i mean i would move him to bump up that emergency fund to get some extra cash in the bank and then beyond that then like we're saying saving up maybe to do a car um even even starting to look at retirement i mean i would start looking at when you're going to move out. Right.

You know, and that may be next year. But so if he has $20,000, $25,000 in his bank account by this time next year, minus a car that he bought sometime in there, and he should be able to do that and still have some fun, you know, because he's going to be making some serious bank here. Right. And so if I'm you, I'm going to sit down, you and your husband with him and say, we're not going to charge you rent. The only rent we're going to charge you is we're going to require you to a budget and we look over your shoulder so that you don't blow all this money.

And I don't think he's going to be the type of kid that is going to blow the money, by the way. But your only rent you have to pay us is you have to have a budget that includes giving and saving and some fun and i want you to have some goals of moving out and buying a better car in that budget in your savings category and i would just look over his shoulder and require him to do that as his rent payment. Guys, I've been saying this over and over. This is the time to capitalize on a down market because you know what else is down? Interest rates. If you have student loans and you still haven't talked to Splash Financial, do it now. The Fed just slashed interest rates, so Splash is getting their

customer really low rates. Combine that with not having to pay closing costs. This is the time to get your student loans refinanced. Everyone is asking about the interest rate waiver for federal student loans. First off, it applies only to government loans, not private loans. Also, the waiver is only temporary. So what you need to do next is connect with Splash Financial and review all your student loans. Guys, stop dabbling here and get it done. There is no money out of pocket, and you could save a lot of money. Go online to splashfinancial.com slash Ramsey

and get started to take advantage of these low rates Thanks for joining us, America. This is the Dave Ramsey Show. Open phones at 888-825-5225. Natalie is in Illinois. Hi, Natalie. Welcome to the Dave Ramsey Show. Hi, Dave.

It's an honor to speak with you and Rachel. Thank you so much. Thank you. How can we help? Well, I am on baby step two and I'm honing in on my budget since I do have extra time now. Um, and I'm wanting to pay extra on the only debt that there is in the family and that's the truck payment and also wanting to refinance to a 15 year mortgage. But with adding extra, because our payment will go up, we're finding out, I

called the Churchill Downs and the Jeffrey gentleman I spoke to said about an extra $275 to our payment. And then paying extra on the truck, we're going to need an extra, just say, $600 to get it knocked down to where we're wanting to be debt-free. So really the only other place that we can cut it is our son goes to a private school. Is that something that we should even be considering? Because I don't really know where else we would cut it. What are you paying for the school? It's over $6,000 a year. And your household income is what? About $100,000. Okay. and why do you have him in a private school in your case is it uh safety is it academics is it uh religion it's something i went to a

catholic school um just always wanted that for my son um because i did not he went to public catholic and our actually our school district is one of the top so um there's really nothing there's nothing wrong with our public school district I just this is something that I had yeah okay well I think you just gotta decide are you willing to slow down some of these other things in order for that school it's a trade-off right how much does it mean to you it doesn't sound like it's like you're like you're sometimes I talk to people about their private school, and they are – it's the most important thing to them. And it sounds like it's kind of medium to you, the way the words you're using.

Am I missing that? Yeah, medium is a good word. It means a lot, that small-knit community, you know, just all the different families. But, again, nothing, and maybe if it was where I went to grade school, I went to grade school because not only was my family Catholic, but not a great area. So this is a great area where we live. Yeah, so you don't have a problem with the quality of the school or the safety of the school as your other option.

How old is he,alie he's well he just turned six so he's in kindergarten okay so and that was my other thing is like well do i do it now because i'd hate for him to get older and then yank them you know because then in a couple years we're like okay now we are going to do it and then he's already established you know good reports the teachers and his other classmates. Yeah, definitely. Well, I think this always comes down to just a family value system, right? Kind of like what I was just saying, but it's true. I mean, it's just kind of the trade-off of, hey, we're willing to slow down the debt snowball in order to have this education. But I'll say from the pro side, you know, if he was a freshman in high school, I think that's a lot of a harder

decision because he's established this community, you know, over years. And he has four more years left. I mean, there's a lot to consider. But considering his age, that's an easier, could be an easier decision point for you guys. Right. And it's split. You know, Dad's like, well, if I went to public, I'm fine. I go, well, I went to Catholic, and I really like the Catholic school system. Well, I don't think it's a slam-dunk decision from the outside looking in.

I think it's you and your husband sit down and look at it and go, is this getting us what we want and what is more important to us? And it's not that you're putting the truck payment ahead of the kid. That's not what we're saying because the kid is not in jeopardy here. The only question is, is the Catholic education versus the public education. And again, you and your husband had two different experiences, so you've got two different views on that. So I don't think there's a wrong answer.

But the beautiful part about the thing is you're having the discussion, you're doing it on purpose, and you're putting the possibility on the table and weighing it out against your other goals. And I think you just put it on the scale and say, in your mind, prayerfully, thoughtfully, in your husband's mind, prayerfully, thoughtfully, does it tip the scales and put him into public? Honestly, we went through this at our house. We put our kids in a – now, the school system we were living in at the time was not was not good

uh and but we wanted our kids in a christian school and we were driving them 45 minutes across town and barely making the tuition it was expensive it was more expensive than what you're paying uh and uh you went there as a kindergarten right kindergarten yeah and denise went there for two years and we made the decision to move partially based on that sold our house and rented in a good school district that we were comfortable in where we still live to this day that was an excellent public school district like you're talking about. And so Rachel grew up, as a result, 98% of your schooling was public for that reason. But it's excellent public schools. That's right, yeah.

That you were in. And so it made the decision that much easier. And we dropped, man, that was a long time ago. And it was more money than she's spending now, even back then. We dropped that out of our budget and it allowed us to do some things. And you guys never looked back. It didn't destroy your Christian walk because of that decision. No, no.

And I would say the same for college discussion as well. I know we've had people call in and they want the Christian education with college, and that's great if you can afford it, you know, back to that same discussion. But, yeah, your faith isn't going to be absolutely absolutely 100 rattled because you went to a public school so we're we're testing if it is it's probably going to be rattled in a anyways that's fair yeah that is fair that's fair because faith is probably uh the influence on that's more from home than it is school and it should be anyway uh that's mom and dad doing their job so good good question it's a good discussion thank you for joining us with that.

Adam is with us. Adam is in West Virginia. Hi, Adam. How are you? Doing well. Thanks for taking my call, Dave and Rachel. Sure. How can we help?

So I'm 24 years old. I currently have a $5,000 emergency fund, and I graduated from college two years ago with $40,000 in student loan debt. Since then, I've currently had a stable full-time job and have been contributing to my employer's 401k account, which they match. And since then, I have about $15,000 in it. And my question for you all is, should I be taking advantage of the CARE Act, which allows individuals to access their 401K funds penalty-free to pay off a portion of my student loan debt, or would it be more advantageous to keep it in my retirement account

and leave it to the power of compounding interest? I would leave it in there because I don't cash out retirement except to avoid bankruptcy or foreclosure, and you're not facing either. I would stop adding to it. Stop investing and tear into the student loan. Baby step two is a student loan, and you need to attack that with a vengeance. You need to tighten up your budget, get on extra jobs,

do anything you can do to attack that student loan. But, no, I would not cash out your 401K unless it's to avoid a bankruptcy or a foreclosure. And I know they dangled that carrot there, but, dude, that's a bad plan. Understood. Yeah, I was just playing with all my options that are available at this time and just kind of trying to really focus on how can I lower that level of debt. And that was just one thing that I was curious about.

Yeah, the way you can lower it is attack it with a vengeance. And part of that emergency fund that you have, I mean, we talk about getting $1,000, throw the rest of that at the debt, and that will put a huge debt in it already. Yeah, anything you've got that is non-retirement savings above $1,000, baby step one is save $1,000. Anything beyond that goes on your debt and you list your debts smallest to largest pay them off in that order that's baby

step two we call that the debt snowball everything but your house debt and i just attack it with a vengeance and uh if you've got a good steady job right now stop all your temporarily stop all your investing all your saving beyond a thousand dollars and throw every spare dollar you can find in your budgets get on that every dollar go to every dollar and download the app and and really let's ring every drop out of this budget and when you do a budget it you can find more money to put on the debt oh yeah people say they feel like they got a raise when they did a budget. So find it. That's how it feels. This is The Dave Ramsey Show. Be more intentional with your time and money.

Sign up for e-meals and let them do the thinking for you. They have a shopping list generator that makes it incredibly easy. You can have your meals organized and planned for the week and have your groceries waiting for you when you get to the store. The average customer saves $2,000 a year and two hours a week. Get a free two-week trial at emails.com. Our scripture of the day, 1 Thessalonians 4, 11 and 12. And to aspire to live quietly and to mind your own affairs. And to work with your hands as we instructed you so that you may walk properly before outsiders and be dependent on no

one sam ewing said hard work spotlights the character of people some turn up their sleeves some turn up their noses and some don't turn up at all that's pretty good oh hard work hard work it's a good thing well folks got some good news as you know the irs has moved uh the tax filing deadline it was april 15th today it is now july 15th good news if you owe taxes because you got an extra 90 days to budget for it get them built up and hold on to your own money before you have to send it to them. And you can focus on your four walls, food and utilities, shelter, transportation, the important stuff, and then make sure your tax bill's ready.

If you're wondering about your federal income taxes, we are suggesting you go to DaveRamsey.com and take the quiz. It's free. DaveRamsey.com and take the quiz. It's free. DaveRamsey.com slash tax quiz. What we're trying to help you determine is, do you need a tax professional? Do you have a complicated return? Is it going to be worth your money to pay someone to do your taxes? Or do you need to just do some basic software and get it done quick and easy. And we'll help you figure that out, and we've got solutions for you on either side of that. Go to DaveRamsey.com slash tax quiz. Kelly is with us.

Kelly is in Washington. Hi, Kelly. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Hi, Rachel. I have a question. I just got your into the Dave Ramsey

life here. And, uh, and, uh, I have stopped my 401k and I was putting almost $900 a month into my 401. Right. And I have about 280 before 285 before the start stock market thing went down. Okay. Is that the right thing to do? And then it snowballed at this time since the stocks are so low? Yeah, it doesn't matter whether they're low or whether they're high. If you are trying to get out of debt in baby step two, you temporarily, it's a temporary thing, you're going to miss out on the fact that the stock market's on sale right now because you're going to work on your debts instead.

And that's what I would do if I personally woke up in your shoes. And it's the stuff we did way back when we went broke and had to work our way out of the mess, you know. And so it's not like this is something that's there. But the thing is you're always going to have stock market ups and always going to have stock market downs, and you're going to ride those with your 280 and with the money you put in after you do get out of debt. But the power of focus, focusing on the debt, ends up being, in the long haul,

more mathematically important than the little bit of goodbye you would get with your $900 right now. Right. I mean, this is setting you up for the long term of that getting out of debt. And like you said, when everything is pointed at one thing, it's amazing how quickly you can accomplish that. When your verse is trying to spread everything out and you're trying to do 18 different things, literally just focusing on this one thing of just paying off debt, you're going to to do it faster and that money is going to come back to you from your income you're going to be able to have that your full income to work with and build up that emergency funds and then get back because yeah i always hate the word stopping your 401k i like pausing it because it sounds like okay good you're going to press you're going to press play eventually

but just pause it for a short term while you're getting out of debt and getting that emergency fund yeah and it's it's for a math nerd like me it's difficult to not buy if i'm in your shoes while uh while the market's down it's difficult to not get your company match for a year or a year and a half while you get your debts cleaned up but for the rest of your life then you will never have to pause it again because you will never be up against the wall. And so that's the thing is the data points that the millionaires had this slow and steady, and they never quit because they never had to quit investing because there was never a pinch. They were always able to keep doing that because they didn't have any debt, because they had the emergency fund in place. And that slow and steady that we're setting you up for

by doing this, but man, it is hard to hold your nose and do this for a year and a half or two years or whatever the period of time is it's going to take you to knock the debt out. I can relate to the emotions, but do it anyway. Sarah is with us. Sarah is in Arizona. Hi, Sarah. Welcome to the Dave Ramsey Show. What's up?

Hi, guys. First, I have to say thank you so much. I worked your plan. We were completely out of debt, completely. Awesome. And I was able to say thank you so much. I worked your plan. We were completely out of debt, completely. Awesome. I was able to quit my job. Awesome. Congratulations. That's so great. I do want to go back to work and I actually planned on being back to work by now. But that's just not going to work out for now. And that's okay for us because we have enough savings to sit on for now. My question is about our mortgage because

the rates are so low. January of last year, we were able to refinance into a 15-year mortgage. My husband will actually retire in 15 years, so that worked out great for us. But now we're getting a bunch of offers for 10-year mortgages. I'm not currently working. It would push our budget so that we wouldn't be putting any money away in savings at all. But we would have the house paid off five years faster, which is thousands of dollars of savings. We wouldn't be able to put money into our savings account until I get another job. Your savings account. Do you have an emergency fund done?

Yeah, the emergency fund is done. You mean you're investing in your 401k that's what you wouldn't have any money for when you say savings when you say put money in savings account what do you mean what are you saving for well just because it's extra money and we just got so used to not spending money that now we have extra money and it just it's put into savings and our portfolio to be invested okay are you putting 15 of your income into retirement yes no i'm not putting anything away no i'm saying your household your household income are you putting 15 of your household income into retirement no okay you need to be doing that

before you pay extra on your mortgage okay that's okay that's baby that's one thing i didn't think about when i quit my job is i'm not putting anything away for retirement well no no there's not a you there's a we and it's your household income which right now is your husband's income, are we saving 15% of our household income into retirement? That's baby step four. You need to do that first after you're out of debt and have your emergency fund before you move on to saving for kids' college and before you pay extra on the mortgage.

And so it sounds like you need to beef that up and that's going to prohibit you from doing the 10 year. But a 15 year is fine. And as your incomes come back up and you go back to work or don't go back to work, you're going to find money and you're going to end up paying that 15 year off by 10 anyway. And that's how it's probably going to work out. It usually does. Yeah, that's what I was thinking. Eventually, considering even just hearing you, Sarah, I'm like, oh, yeah, you're going to pay that off even if it is a 15 or a 10 probably earlier. But the fact that it would stretch you guys so thin, I would just stick with the 15-year mortgage and obviously, yeah, do the investing. And any side money you have, the way she was talking about savings, too, it could have been for they have extra money maybe for a vacation or maybe they're saving up some extra on the side for replacing a car. Like if all that's there, then that's good.

But remember to focus on that 15% going into your retirement because that's going to be key later down the road. Yeah, that's going to be your best plan. Hey, good question. We appreciate you joining us and hanging out. Open phones this hour. Remember that Dr. John Deloney is going to be on with us, Dr. D, the new Ramsey personality, talking about your relational IQ, your relationship with yourself, your relationship with others,

the things you're dealing with with anxiety and fear out there right now. Maybe you've got people that are misbehaving in your life due to them being afraid right now, something like that. You've got questions for him. You can email me, and I'll help you get those questions answered this coming Friday. Dave on air at DaveRamsey.com. Dave on air at DaveRamsey.com. Rachel Cruz, thanks for hanging out with us today.

Thanks for having me on. That puts this hour of the Dave Ramsey Show in the books. Thanks to James Childs, our producer, Zach Bennett, our associate producer and phone screener. I am Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of these uncertain times, Ramsey Solutions wants to give you some hope. For the very first time ever, we're giving you Financial Peace University free for 14 days. Go to DaveRamsey.com slash hope so you can watch from home. Dental insurance is great if somebody else is paying for it, but if you're footing the bill,

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