The Ramsey Show - App - You DO NOT Need a Credit Score To Get a Mortgage (Hour 2)

Episode Date: December 14, 2021

Retirement, Investing, Home Buying, Debt, Education As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started:  Debt Calculator: https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the 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. George Campbell, Ramsey personality, is my co-host today. Taking the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host.

George Campbell, Ramsey Personality, is my co-host today. Open phones at 888-825-5225. That's 888-825-5225. Angie in San Francisco starts off this hour. Hi, Angie. Welcome to the Ramsey Show. Hi. Thanks for taking my call. Can you hear me okay?

Absolutely. What's up? Perfect. Okay. I really appreciate you taking my call. I've been listening to you for about the last year, and so I have a question for you, Dave. My husband and I are both 47 years old. We have no debt other than our house, which will be paid off next year. But we got a really late start in life as far as just even making any money. So we have been saving 15% into our retirement since we found you. So I have, my question is, I'm wondering, I hear you say all the time to people that are younger, like, oh gosh, you're going to have so much money, you know, once your house is paid off. I'm just wondering if that's going to be

true for us at our age. Um, if I can just tell you what we have saved so far in retirement, we have a 20,000 in the emergency fund. Um, and that's just socked away. Uh, I have, um, 80,000 in a traditional IRA that was from like a, it was a job, a 401k, and I just took it, like you said, take it when you leave. So it's just sitting in an account. And I have started at my new job, a Roth, per your instructions. I've learned so much from you just in the last year. I feel like I'm almost an expert. And I have $12,000 in the Roth.

My husband has $90,000 in his retirement. And so what I'm wondering is when our house is paid off next year and we can start maxing out, like, you always say it doubles and all that, but is that really going to happen? It's just hard to picture. I've done all these retirement calculators and it's saying that we need like 2.1 million or 2.7 million to retire and it just seems like such a big number. Can you help walk me through the numbers again? Okay. How old are you? 47. We're both 47. Okay. Good. Okay.

You're going to be fine. What's your household income? It's about $200,000. Okay. All right. So you're going to be saving $30,000 a year until your house is paid for. And once it's paid for, then you'll be maxing out everything and saving even more than that, right? Mm-hmm.

Mm-hmm. Okay. Yeah. And if you say, you know, 15 years of doing that, 17 years of doing that, you're going to be just fine. That's a lot of money. Now, here's the thing about retirement calculators. You know, the thing you don't know with that is what set of assumptions the calculator

you're using is unless they're stated on the calculator okay right so there's a couple of factors that you need some of some of the some of them automatically build in a an inflation rate okay what i personally do when i'm looking at my personal wealth and growth and i I also recommend it for others, is I'm just going to save money and build wealth. And so I'm just calculating, if I make 10% on my money, this is how much I'm going to have. If I make 11%, 12% on my money in mutual funds, this is what I'm going to have. Okay? And if the real estate that I own does the same, then my net worth will be be on this trend line okay

and so if i just put in your case i put in 2500 a month thirty thousand dollars a year and i do that for 15 years and i put that in the calculator and i just put that in at what you think you're going to make in your mutual funds what the historic data tells you on that i've been able to average up around 12 on mine now that causes the internet to melt down apparently but um but i've been able to average up around 12% on mine. Now, that causes the Internet to melt down, apparently, but I've been able to personally do that. So that's what I personally do, okay? The stock market has averaged 11% since it began, okay? That's the average.

And so that's the thing you want to do. Yeah, maybe it's just hard to see because we're just getting started and it's just crawling along. But this year the market's up over 20%. Last year the market was up over 20%. Oh, the year before it was up over 20%. Next year it will not be. It's very unusual to have three consecutive 20 years in the market that's not

realistic but that's the actual facts of what has happened the dow sitting at 36 000 a day okay so you know you're you're fine in terms of rates of return and just put that in and then i say okay based on that i'm gonna have two million1 million, whatever it is, okay? Then you say, okay, what inflation rate do I want to use to say not how much money I have at that time or its purchasing power. I'm just going to say, you know, I'm 61 now. When I'm 81, I'll have X number of million dollars, okay? Then I say, all right, based on that, when I i'm 81 how much money do i think i want to

live on a year well if i can make 12 on my money as an example you can use whatever example you want to do this is the one i personally use the consumer price index for 77 years is the measure of inflation including the carter years in the 70s when we had unbelievable double-digit inflation for multiple years in a row, including that time, the average consumer price index for 77 years is 4.2%. So I use 4%. So if I make 12 on my money and I leave four in there, if I want to live off of the money, okay, I let it grow at 4% a year, it's breaking even on its purchasing power after I retire.

Does that make sense? Yeah, that's what I never understood until I started listening to you about, like, the net. So if you had a million dollars and it grows to $1,040,000 the next year, then that would purchase about what a1,000,000 would have the year before. So your principal is giving you a cost-of-living raise every year. But that's all it's doing. So I'm going to pull off the other 8% and live on it. So if I've got $1,000,000 and I leave 4% in there and I'm making 12% and I pull off 8%, you see what I did?

I didn't touch the principal. If I pull off 8% of my million dollars, that's $80,000 a year. Okay. And so if you want to live on $200,000 a year at that time, then you're going to need $2 million. I see. I see. You know how to do that. Yeah, and we only started making this recently.

I made minimum wage up until five years ago my entire life. And here's the other thing about investment calculator. Here's the other thing about all the calculations you do and I do for 20 years from today, none of them are going to turn out the way we calculated it. Right, right. None of them. Because one of the things you're assuming is I'm putting in this steady amount of money,

and you're going to put in more than that on average because now you're an investor, not a debtor. Okay? The other thing that's going to happen is inflation is not going to do exactly what we said, and rates of return are not going to do exactly what they said. And so it turns out differently. And so typically, in our experience in 30 years of working with people, is they actually end up a lot wealthier than their calculator told them they were going to be because they actually are freaking paying attention now and so that's where they end up george yeah it's incredible i love using the

investing calculator and start dreaming yeah but the some of these investment calculators got you down where you're trying to live off three percent because they're trying to figure out real rates of return post tax and all this other stuff and too many sets of assumptions in there. I saw some recent financial statistics and there was some pretty troubling news. When families were asked how long it would be before they faced financial hardship if a spouse died, nearly one-third said they'd be in trouble immediately. Another 44% said they'd be financially drained within six months. People, it does not have to be this way. Term life insurance plans are just plain cheap, and

companies have made it even easier by not requiring exams in many cases. There really is no excuse to leave your family in this situation by not having life insurance. This is why I talk about Zander Insurance every day. They're committed to protecting families with the only products that I recommend, and their team keeps the entire process simple and affordable. Go to Zander.com for quick online pricing or call 800-356-4282. This has to be a priority. If your family is in this situation, you need to get this done. Well, if you've been paying attention to the real estate market, you've noticed competition out there is crazy.

Inventory shortages, unbelievable prices, people lining up for multiple offers on everything. This is not amateur hour. You do not want to be buying or selling a house on your own trying to figure this crap out in this wild market. You need a pro to guide you through. And I don't mean somebody just got the real estate license because they're excited. I mean a pro, somebody that sells lots and lots and lots of houses. And that's why we find and vet and endorse only top real estate agents all across the country. We call them endorsed local providers or ELPs.

Our ELPs are Ramsey Trusted, meaning they have years of industry success and a track record of helping people crush their goals no matter how tough the competition is. Go to RamseySolutions.com slash agent and find a trusted real estate agent for helping you sell your house or buy your next one. RamseySolutions.com slash agent. Our question of the day comes from Blinds.com. They have a satisfaction guarantee. That means even if you mismeasure, you pick the wrong color, they'll remake your blinds for free. Free samples, free shipping, you pick the wrong color, they'll remake your

blinds for free. 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. Today's question comes from Jim in Arizona. Due to a recent divorce, my credit was ruined and retirement wiped out. I've been able to start restoring my score, currently at 640. I want to get my credit back up to over 700 so I can buy another home. I have $3,000 in debt on a vehicle payment and I'm paying off medical debt,

now under $2,000. I want to do the baby steps, but I need the debt to rebuild credit to buy a new home. Where do I start? Well, George, you would be homeless. Yeah, 100%. This is a very interesting scenario. I'm glad you're not homeless george me too how can you get a home without a credit score dave have you ever talked about this in 30 years uh the best example i can think of is

you you did it yes how did you do that george? I did it. Well, it's a fancy process called manual underwriting. It's very old-timey. They look at your real financial life, like your income. Like to see if you can actually pay the payments and stuff. Just like that. Oh, man, that's wicked. And you have to send in a few utility bills, say, hey, look, I pay things on time. I'm reliable.

You can trust me. And then they go, okay, here's a mortgage. And a lot of people, you know, I've got some flack because we did an episode on the credit score called The Dirty Truth Behind Your Credit Score. On the Fine Print Podcast. On the Fine Print Podcast. And one of the things we attacked was this idea that you need a credit score to get a mortgage. And we talked to our friend Seth over at Churchill Mortgage and he walked us through the process. And a lot of people are freaked out and go, it's so difficult, and your interest rate's going to be so much higher. No, it's not. And I can tell you from someone who's done it that none of that is true.

It's not difficult, and your interest rate's not higher. Liar! You liar person, you! That's right. So, to Jim in Arizona, this idea that, and he said it himself, but I need the debt to rebuild credit. Well, he has believed the lie, and Jim's not the liar, but he believed the lie that's out there, that people were giving you a hard time about the fine print thing, the fine print podcast,

because here's the thing. The lie is that the great provider in your life is the great God, Fico. And if you worship at the altar of the great God, Fico. And if you worship at the altar of the great God, Fico, and continue to bring him offerings of interest by paying payments on your debt repeatedly, he will raise his eyes to you. Bestoweth upon you. He will bestoweth upon you a greater score

because you have earned your way. Talk about legalism. You've earned your way. There's no grace in this. You've earned your way into the great God, Fico's presence, by borrowing lots of money and paying it back. So we borrow money. Why?

So we can pay payments. Why? So we can get a higher score. Why? So we can borrow money. Why? So we can pay payments. Why?

So we can get a higher score. Why? So we can pay payments. So we can get more debt. So it's a dog chasing its tail, building banks with bank money. And they took it from you. It's not working. No.

This is like Sisyphus just pushing up the rock every day, trying to build his score back up. And here's the thing. It goes back to the game of vacation we talked about with credit card rewards. It feels good to have a good score. You feel like this is my scoreboard for my financial life. But the true scoreboard is not having debt and having a high net worth. That's what it's about. And so to do that, Jim, here's what's going to happen. You're going to pay off your debt. And after probably six months or so, your credit score will become indeterminable. Make sure you have no debt accounts of any kind

open and active. Close them all. None. Active. They're all paid off. Even if you've got some old bad debt, go clean it up. All accounts are closed. And then your little 640 score will go poofy and disappear. And you will be a zero. You'll be incredibly invisible. I'm a zero?

And George is a zero? It's okay to be a zero. We talked about this in the podcast. On the stupid score. You're credit invisible. You want to get a zero on It's okay to be zero. We talked about this in the podcast. On the stupid score. You're credit invisible. You want to get a zero on your stupid score. Yes. And, you know, just like I was invisible to girls in high school,

you will become invisible with your credit history. That's what's going to happen. You'll disappear. No one will see you in the credit world when they look up your account. Dave, that hurt. You felt that. It's bad. I know. It's bad. It's sad. I'm married up account. Dave, that hurt. That one, you felt that. It's bad. I know.

It's bad. It's sad. It's fine. I'm married up now. I'm doing great. I'm doing much better, guys. Thank you for asking. Yeah, well, you're just a regular sex symbol now.

That's right. Oh, my gosh. Unbelievable. Back to Jim's question. Buddy, you don't need to rebuild your score. The 640 is going to go away after you've had no debt, your accounts are closed, and then you can work with a reputable mortgage company like Churchill Mortgage. There's others that do this.

People act like they're just not out there. You just can't get around without debt, son, don't you know? Oh, I hate this. The culture talking down to you. Let me tell you what happened to me. 1988, I filed bankruptcy, right? I'm 28 years old. Dumber than a rock, obviously, because i filed bankruptcy because i was an idiot

because i got too far in debt and i don't know what i'm doing i got a finance degree but i'm dumber than a rock doesn't work these days you'd be a tiktok star day so well there you go uh that me that i have no i have no response to that. So anyway, my bankruptcy attorney gave me financial advice. Now, this should give you pause to start with, right? But not me. I'm dumb enough. I took it. He said, so you need to go.

The first thing you need to do is you need to rebuild your credit after bankruptcy because a Chapter 7 bankruptcy just wipes you out, baby. I mean, your credit's just destroyed. All you got on there is all these negative things. And everything's going to be on there for seven years except your chapter seven bankruptcy which is going to be on there 10 years oh goody he goes so you need to build some positive credit immediately i'm like so how do i do that who's going to loan a bankrupt fool money now this is 1988 you know he said dude up for it. Today's version would be online, but in those days it was analog.

Go sign up and order and subscribe to every financial magazine. As soon as you do, you'll start getting pre-approved credit cards in your mailbox. Start using those, and you will rebuild your credit. What a life hack. It completely worked. Wow. I got credit cards coming out my ears in about six months after filing bankruptcy. They came in just like taking candy from a baby.

And it wasn't long after that that I woke up and realized, wait a minute, I'm doing the same stupid butt stuff that got me here in the first place, and you're a dumb boy. You just do the same dumb thing over and over again. And so we had a little plastic surgery party, and I no longer take financial advice from bankruptcy attorneys, which who's dumb enough to do that to start with? He wants you back in his office in a few years.

Apparently. I want to be a regular customer. Wow. Unbelievable. Good stuff there. But, I mean, it be a regular customer. Wow. Unbelievable. Good stuff there. But, I mean, it's the same thing. It's the same lie that if you tell a lie loud enough, often enough, and long enough, it's called propaganda. And eventually the entire culture believes the lie to where if you say the sky is blue, they say, no, it's not.

And if you say, don't jump off a building, you'll hit the sidewalk. No, lower gravity doesn't apply. But people believe this crap. Yeah. I always say. My credit was ruined, so how do I fix my ruined credit? Go get more credit. You got to get it.

I tell people, Dave, if you follow the trends, you will fall for the traps. And the credit score is one of these trends. Thank you. Took me a while to tweet that. But it's one of those things that the credit score has been this trend for so many years where we're telling 17, 18-year-olds, you got to build your credit. You got to build your credit. You're going to need it for the rest of your life.

Stop. And the problem is the parents, they believe what they're saying because they're dumb too. I was that dumb person. I just told you my dumb story. Oh, my God. We've all done dumb. Listen, if we just can't call stupid stupid, we've got a problem. Oh, wait a minute.

We've got a problem because now it's illegal to just say what's wrong. You hurt my feelings, Dave. You have them? See, there we go. There we go. I didn't know George had feelings. You've depleted all of my feelings. I thought we had a feeling-ectomy.

This is The Ramsey Show. Thank you. Thanks for joining us, America. We're glad you're here. George Campbell, Ramsey Personality, is my co-host today. This is The Ramsey Show. Stetson and Caroline are with us in Topeka, Kansas. Says on my screen, you guys are debt-free. Congratulations. Thank you.

Very cool. So how much debt have you paid off? $92,000. Wow. How long did that take? That took us about 18 months. Good for you. And your range of income during that time?

It started about $55,000 and went up to $75,000 with side hustles. Wow, cool. What kind of debt was the $92,000? It was a truck, a car, student loans, credit cards. And we had attorney's fees, medical bills, and a consolidation loan. My God, y'all were normal. That wasn't no fun, was no not at all how long you've been married 10 years no uh it'll be four in march oh you got you got you got with it i mean you made a mess fast okay or brought or brought some in or something way to go so what happened 18 months ago woke you up?

So really it started when we got married. Caroline actually only brought about $10,000 of student loans into the marriage. I was left with about $255,000 in debt. That was, and half of it wasn't mortgage debt. I was 25 years old and contemplating bankruptcy. But really, when I was deployed in 2016, about two months after I came back, I was served with divorce papers for my ex-wife, and I wasn't expecting that. And while I was gone, she left me with an extra $80,000 in debt that I had almost no knowledge about. After we got divorced, there was a lot of co-signed debt that wasn't addressed that we were still trying to get resolved. And we were also trying to sell the house from being upside down on it in a military housing market. And that was a really hard thing for us to do. Really, the first 18 months of our marriage was trying to clean up everything from my previous marriage.

And after selling the house and doing all that stuff, we were left with about $92,000 of debt that we couldn't manage. And then you got to start on your journey now after that, finally. And your journey is $92,000. Wow. Okay. So how did you get connected to us um I actually had heard of you through the minimalist uh I like I said I didn't have much debt but they would kind of bring it up every once in a while and uh it really the I had it moment was we had this brand

new baby girl with lots of medical issues. She was on $50 fortified formula and we were playing the credit card game of pay this off to use this, pay this off to use this. And there was one day we had $12 in our bank account and days away from payday. And we were basically left with, she needed more than we had. So Stetson had to pawn a couple of his guns to get us to the next payday and it was just googling and trying to find a solution and after listening to some of your YouTube videos and rants Stetson decided I'm going to sell my truck and that'll wrap up the majority of this debt and it'll give us that bigger snowball to keep going yeah wow so how much of the 92 was the truck sale it was 27 000 um but it gave us about five thousand dollars to to start

our snowball and get started on the baby steps well you got rid of a six hundred dollar payment too oh yeah absolutely i think we we did all the calculations and with insurance and gas and all that stuff it saved us about a thousand dollars a month yeah yeah i'm sure oh my gosh that's a big move wow i mean you got it got real around there didn't it oh yeah definitely did how old are you two i'm 25'm 29. Man, you guys have lived a lot of life. Yeah. Yeah. Well, thank you for your service, Stetson.

Yeah. Well done, you two. I'm proud of you. Very, very cool. So this has been a struggle. I mean, a lot of emotion and a lot of things going on here. Selling the truck, putting the old debt from the former marriage in your rearview mirror, now we've got enough in our dadgum windshield that we can't see out of it either. We get in

attack mode, jump on Google, find the Ramsey show, and here we go, right? So tell people what the key to getting out of debt is. You pay off $92,000 in 18 months, including the sale of a $27,000 pickup. Yeah, so really what I think it was, was the constant communication of the budget. And something that really helped us out was the envelope system. Okay. Yeah, that's a big deal. I mean, when you get down to just cash and you say, this is it, this is what we're doing. It makes it very, very easy to stay on track. I mean, they were willing to do anything. You got rid of the truck. You got rid of the wife. You got rid of guns. I mean, it's like a country song, man. The first wife, the starter wife. Yeah, you kept it good. That's good news. Man, I'm so proud of you guys. Did you

have any cheerleaders along the way in those 18 months? Our parents were definitely probably our biggest supporters. We had developed a church family, which was another thing that let us know we were on the right path. I think after starting your program, we decided to find a church. And the first sermon we went to, our pastors had mentioned that they followed your program. And a day later, we joined a small group, and they mentioned that they were doing the program. Oh, were you like, is this a cult? What's going on here? It's everywhere! And then to finish our journey, we decided the last three months of our journey to lead

FPU, and I'd say our co-leaders, Ryan and Lissa, definitely were the ones pushing us to finish. And then our best friends were along the journey with us, Joe and Jamie. That's awesome. Underrated. Having community in your corner, getting plugged in with a church and a small group, FPU, all of those pieces are so important.

That's awesome. A lot of transformation going on here. Well done, you guys. Very cool. Very powerful. So proud of you, heroes. Excellent, excellent job. Now that you're there, you don't have any payments.

How does that feel? It's amazing. Really freeing. I mean, after all the stuff you guys have been through, wow. I mean, there's so much pain and trauma represented by this death that's gone now. Yeah. I think what made it more freeing was we had our daughter along with us. One of the things we did was Instacart for our side hustle,

and she was in the cart with us every single time helping us put stuff on the belt and just get ready for the next order that we had to do so really just doing it for our kids and we said we were going to do baby step two before or baby step two for baby number two and we were able to do that as well so just knowing we could do it for our kids and to change that generation was probably the most freeing experience yeah but you guys are knit together in a way with each other now with this church with this community with god uh the whole transformation package you have changed your family tree so proud of y'all well done we got a copy of baby steps millionaires the book that will come out in january but we're going to send you an early release edition uh just to celebrate with you because we think that's your next chapter in your story to become baby steps millionaires you're on your way to do it i think you will

and i'll also send you a copy of the total money makeover for you to give away to somebody probably somebody out there as scared as you guys were at one point and you lead them through like you found that in financial peace university as coordinators. By the way, thank you for coordinating the class as well. Stetson and Caroline, Topeka, Kansas, $92,000. Paid off in 18 months, making $55,000 to $75,000. Sold a $27,000 truck to make that happen. Count it down. Let's hear a debt-free scream.

Three, two, one. We're debt-free! Yeah! three two one this is how it's done never gets old man i love it i love it man good times things are happening open phones at triple eight eight825-5225. Go to ramseysolutions.com slash events. If you want to be at the January 13th Nashville event with George, Rachel, Cruz, and me talking about wealth building for 2022. You ready to build some wealth? We're going to show you how. Come to this live event here in Nashville.

$15 is all it is. One night special event. Just a few tickets left. ramse this live event here in Nashville. $15 is all it is. One night special event. Just a few tickets left. RamseySolutions.com slash events. This is the Ramsey Personalities, my co-host today. Open phones at 888-825-5225. Caleb's in Oklahoma City. Hi, Caleb. What's up? How are you guys doing today? Better than we deserve. Merry Christmas.

Merry Christmas. Merry Christmas. Alright, so let's get on with my problem. I bought a car I thought I could afford back in July. I got it repoed yesterday and I leave to go to the military next month and I owe about $29,000. What should I do? Should I go and get it out of the repo and sell it, or should I just default the loan and pay the difference? Wow. How old are you?

I'm 19 years old. And you have a $29,000 car loan. Yes, sir. What was your payment? $685 a month. Yeah. And what do you make? I make a little over $2,000 a month.

That's painful. Very. So I'm happy to answer your question. Um, tell me what you learned from this experience. I learned to ask for help when i need it and uh don't buy materialistic things because you can you can buy a cheap car 15 ish thousand dollars and not have a payment on it now i'm worrying about the next step what i have to do in order to get myself out of this bind that i put myself into yeah okay um anybody tell you not to buy this car uh actually everybody but i went against everybody's

word and said you know what i can do it and here i am couldn't do it who uh told you not to buy it that you think you now can trust for advice on this type of thing my girlfriend my girlfriend's dad and both my parents yeah i'm going with your dad okay so one of the things you learn is that, you know, when there's a whole, the Bible says in the multitude of counsel, there is safety. And you had a multitude of counsel telling you not to do this. And so that's one of the lessons I learned, by the way, when I went broke, was that there is a time to go against what everybody, in quotes, says, and there is a time when everybody in your life that loves you is saying, don't do this, that it needs to give you pause. And so nowadays I gather opinions, and not only just what the opinion is. Okay, do you say not to buy it?

Now tell me why I shouldn't do this. And so I learn from the wisdom of these people around me and sometimes i choose to discount it because they're why they're telling me it doesn't make sense okay but in your case they would have said you can't afford it a six hundred dollar payment on two thousand dollars is silly a thirty thousand dollar car for 19 years old making um two thousand dollars a month is is out of control i mean these are the things they would have said to you if you'd ask why you're saying i shouldn't buy it and then you would have led you away so the trick is to not it's it's horrible to go through this it's much

more horrible to go through it two times or three times because you didn't learn your lesson that's why i wanted to ask you about that okay yes sir okay now here's what's going to happen they're going to sell the car on a repo lot and they're going to come after you for the difference it's called the deficit balance and so if they sold the car for i'll just make up a number uh nine thousand dollars they're gonna come after you for twenty thousand dollars if they sell for nineteen thousand they're gonna come after you for ten thousand you see what i'm talking about yes sir they will then settle that with you after they've been trying to collect from you and realize you are a broke young guy in the military that makes no money um they're going to realize they're not going to get that money from you. Most of the time, they don't get the deficit from the person.

They can't get it out of them because the person's broke, thus their car got repoed, okay? So they're kind of used to this, in other words, the people trying to collect from you. And so if you'll let it sit six months or more from the time they first contact you, talk to them and just go i'm broke i can't pay it and then let them just let them wallow around for about six months they'll settle for somewhere around 25 cents on the dollar so you've got about a year to save up 25 of what you think the deficit's going to be. What do you think the car is worth? $23,000-ish. It's a 2018 Ford Mustang.

If it sells for $19,000, you'll be lucky on the repo lot. So you need $3,000, $4,000, $5,000 in an account to settle this with them, and then you will have a repoed car on your credit and you will have a settled bad debt on your credit that you settled the deficit with them okay and that will do the minimal amount of damage to your pocketbook and to your credit and then you can begin to move forward and from this point forward if you want to be rich, pay cash for cars. Rich people don't take car payments out. And that's how they got rich.

Understood. Okay. George, anything you want to add? Well, it just reminded me of the verse, you know, adults devise a plan and children do what feels good. And right now I'm talking to a kid. But you're about to go serve our country, enter the military. You're an adult. And so I just want you to start making adult decisions and do what's best for your financial future. So when you come back, you can't afford a $15,000 car. Like you mentioned, you're going to save up and pay

cash for maybe a $3,000 car and upgrade it over time. And you're going to stay out of debt. You're going to have an emergency fund so that you never have to deal with this again, so that you can build wealth, so that you can be a 25-year-old guy who's married with a family who leaves an incredible legacy. So I want you to start thinking about your future and the kind of man you want to be and the kind of future you want to have. Yeah. Now, we've all done stupid stuff like this, Caleb, and so me included. I did it with zeros on the end, so we're not picking on you in that regard. The trick is to not – my goal in my life is don't do the same stupid thing twice. There's enough new stupid things to do without doing the same one twice. And so learn from it, right?

Learn from it and don't go do the same one again. And this one is about debt and about buying things against the multitude of council and um you know that takes you in the right direction that's a sad story yeah it's a harsh thing thank you for serving your country too we appreciate you i remember being 19 and thinking whatever people told me not to do i wanted to do it even more i'm still that guy i still have a challenge i mean i make most of my living going against convention right the things we teach here are perpendicular to cultural norms and beliefs that's not bad but uh but what is bad is when you have people of wisdom all around you saying don't do that don't do that don't do that and you go i'm doing it anyway you know and

man and we all done that i've done that so many times that every time it leaves a mark. Yeah. You don't do that, though. Well, I haven't done stupid with as many zeros as you have. No, few have. Very few. You're impressive in that regard. But, like you mentioned.

It was my goal to impress George today. That was it. I got up this morning. I said, I hope I can impress George today. Oh, I bet. Looked in the mirror. That's what you said. It's the first thing out of my mind.

But it's a good principle. Are you going to learn from this? What are you going to do after this is all over and you've cleaned this mess up? Are you going to make another mess? Well, it is an interesting thing to think about. What is the difference between standing against a cultural norm that is universally dumb? Like everybody says you need a credit score. So do you go get a credit score?

No, that's not what we're saying. But on the other hand, being able to take the input of wise people in the multitude of counsel, there's safety. So what you want to do is if you're taking counsel from other people, multitudes, in other words, you're going to get four or five people's input on a decision, ask them why they're saying, should I do this? No. Okay, why? And then line up their whys, and really what you're learning from is the whys. And if someone says you need a credit score, so, well, why? why well because you need to be able to get into debt well why so you can get further into debt well why so you can get further into debt well that's i'm not following that okay but if if i get logical good critical thinking skill answers

back when i ask why and they start to line up across several people then i go oh well this is starting to make sense then the wise will make you wise yeah you see what i did there i saw that that's a nice twist thank you well played george camel ramsey personality james childs in the booth along with kelly i am dave ramsey your host and we'll be back Have a friend or family member that needs a daily dose of Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes. Check out the Ramsey Call of the Day podcast

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