The Ramsey Show - App - You Don't Have to Pay $200,000 for a Law Degree! (Hour 1)

Episode Date: February 28, 2020

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Live from the headquarters of Ramsey Solutions,casting from the Dollar Car Rental Studio, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Katie starts off this hour.

Charlotte, North Carolina is calling. Hi, Katie. Welcome to the Dave Ramsey Show. Hi, how are you? Better than I deserve. What's up in your world? I have a question. So my husband and I sold a rental

house and we profited about almost $140,000. We're debt-free and we're on baby steps four, five, and six. We want to apply the profit that we made to our primary mortgage and the holder of the mortgage says they could recast our loan for $300 and we're just kind of wondering if that's worth it. It's only a matter of paperwork convenience to recast it. It does not change the interest one dime. Right. Well, so the thing that we were thinking is if they recast it and it lowered our mortgage payment the month, then we could pay more towards the principal instead of that, I guess. No, that's not the way it works.

When you reduce your mortgage, your interest is calculated on a mortgage like simple interest is calculated. So let me give you an example. Let's use a simple example. Let's say you had a 6% interest rate. That means your interest rate per month would be one-half of a percent per month. Does that sound right? Yes. Okay.

In our example, I'm using this as an example, okay? And so each month, the balance outstanding is multiplied by.05 for your half a percent, 0.0005 okay for half a percent that amount of your payment is interest all of the rest of it is principal and so when you have a lower balance more of your payment is already going towards principal okay It slides you forward in the amortization schedule, which is the same thing as running a simple interest calculation. So you don't have to recast it in order to get more of your payment going towards principal. You're only being charged interest on your outstanding balance if you have a traditional mortgage. Now, if you've got some kind of ripoff mortgage, that might be different. But if you've got a standard Fannie Mae, FHA, VA,

that's the way it's calculated. So it's not necessary to do that. The other thing is if you did recast it, I would want them to give you a higher payment, not a lower payment, than you have now. Right. Because you're planning to pay it off. Right. Our goal is like four or five years.

Yeah. And so if you want to put it on a five-year and recast it and just set that up as you're set up on a five-year, you know, it's game on. Or if you just want to leave the flexibility. If you'll keep paying it like you've been paying it, you're going to be done in five years. Okay. Whether you recast it or not. Okay. So save my $300.

As long as you're going to stay, as long as you don't mind the inconvenience mathematically of you having to kind of watch this and run some of the math I'm talking about to make sure they're doing it right, then that's fine. Yeah, I would save my $300. And as long as you're not trying to get a lower payment, because you're not, you're trying to get a higher payment. But, yeah, you're not gaining any interest savings by recasting so hey good questions an interesting discussion appreciate you calling in christine is with us in decatur illinois hi christine how are you

i'm wonderful thank you for taking my call sure what's up i have a quick question today about um i currently have a simple ira that was offered to me last year by my employer who um he's an independent insurance agent um i've been putting in there he matches at three percent we have just found out that the company that he works for, because I am his employee, now has it where I can put in $250 to start an account, a traditional, and then put money towards that with no fees since I am his employee. I'm trying to figure out which way is the best way to do it. Okay. Well, you have no fees as an employee with a simple.

A simple IRA is a 401k for small businesses the only fee is a 15 annual fee in most cases anyway unless you're ripping him off and that's charged to him you shouldn't have fees now you may have some commissions when you buy that's the thing but there's no there's no fees for operating it. Now, so this is an insurance product? What are you investing in? It is through, you mean for the traditional? No, yeah, where are you putting your money? It will be through, I think, Transamerica.

Into what? Into mutual funds. Okay. And you're picking the mutual funds? I have not done that yet. Okay. And what about the simple? Was it through Transamerica as well?

It's through Edward Jones. I'm not sure who the... And what mutual funds did you put that into? Oh, I just let them pick it. Okay. That we never do. Okay. Okay.

You always, this is your money. You're investing your money, and the match is yours instantaneously. You're automatically vested day one in a simple on your match. And so you are in charge of this money. It's your responsibility to know what it's going in and understand it. And if you can do both of these, you should be able to do both these products under the law if they're allowing you with policy to do both these products. In other words, you can do a regular IRA and your company, your small business that you work for,

can do a simple IRA. So it's like having a 401K and an IRA. You can do both. You're allowed to do both, okay, if you want to. And so you can do that. And then I suggest mutual funds across four types of mutual funds is how my personal 401K is, growth, growth and income, aggressive growth, and international with long track records that

have been open 10 15 years or longer and edward jones should have access to those unless they're shoveling you into some of their proprietary crap which don't let them do that okay okay unless they happen to have a good edward fund. They might or might not. I don't know. I don't even look at those. Right. But be careful that you don't get pushed off into a name brand something because you're dealing with, quote, name brand. That's proprietary.

Instead, you want to pick good mutual funds options, and they should have those in the simple. If it's a traditional IRA, you can pick any mutual fund out there if you have a decent broker and i don't know why you would necessarily go through them to get your traditional i don't think there would be any savings there there might be i don't know what's going on exactly here uh what their relationship is with edward jones and transamerica and all that so you you can learn about it but here's the thing you don't just carte blanche trust people. That's how you hear these football players that make $10 million and $100 million and they have nothing. It's because they just trusted people. And it's your job to manage your money.

You understand it or you don't put money in it. And you're on the track to do that. Because you called today. You're trying to understand. That's exactly what you're supposed to do. Well, well done. All right. This is the Dave Ramsey Show. Listen, there are some basic things that you should be doing to take care of your family. A roof over their head, food to eat, even if it's rice and beans, a car to get you from A to B, and term life insurance. Term life insurance is an immediate need no matter where you are in the baby steps since your family is at no greater risk than when you're in debt.

That's why I tell you to get 10 to 12 times your income in coverage to replace those lost dollars and do it with a 15 or a 20-year guaranteed level term plan so you can make sure your family is protected long term the only place i send you is to zander insurance they shop all the top insurance companies and they're committed to serving you that's why i use them and why i've recommended them for over 20 years whether you prefer to work online or you need personalized assistance, you pick your path. Go to Zander.com or call 800-356-4282. Please, please get this done. It is an absolute necessity. Laurie is in Washington, D.C.

Hi, Laurie. How are you? I'm fine today, Dave. It's very good to be on the phone with you today. You too. How can I help? Actually, I'm calling about, I'm just about 57 years old, and I'm living in a home that I've been in for about 22 years. Unfortunately, before I met you and started listening to you, I refinanced a couple times, so I made a few mistakes there. But what I'm trying to figure out now is how I can get the mortgage down from, it's about a 28-year mortgage.

I want to get it down to 15 years, of course. But I also have been contemplating how to get into a home that I would actually love to live in at this time as well as own. And so I'm trying to figure out, would it make sense for me to sell this current home to get a 15-year mortgage and to be in a home that, you know, I actually would love to live in and own at this point. Sure, as long as you can pay the 15-year mortgage. And as long as, you know, I tell people not to have a payment more than a fourth of your take-home pay, because 15 years from now, you'll be 72, and you need to pay for it before

then. Yeah. You don't want to be retired with a mortgage yeah and my lifestyle's a little um i don't know i i don't know i i'm currently a self-entrepreneur because I did leave a profession a little early in order to get into the profession that I feel is my purpose and that I love, and that's I'm a practitioner for mental health. And so I do get a pension and an annuity, but I'm also working as a private practitioner and trying to expand that. Between the two of them, what's your household income annually?

My household income, it's about $172,000. Oh, great. No, no, no, no. I'm sorry. I'm sorry. I am so wrong. I'm looking at numbers here and I'm saying the wrong things. No.

I wish it were. It's about at $72, all right well that's a hundred thousand less i'm a little down now a little disappointed but uh you're still doing good i'm kidding with you but yeah i think you uh i think you gotta buy a house you can afford and that you can get paid off before you hit retirement that's your thing and 72 includes your income plus your pension, right? That's actually the pension. I've been in private practice for, I'm almost at five years, and last year I cleared about 12K.

I made $30,000. Well, you're not good at that. Yeah. You've got to get that up. Yeah. You've got to get that up. Yeah. So I am this year. My goal is to look at how to expand. You don't have any clients. Or you're working for free.

Is that what it looks like? Yeah. $12,000 a year in Washington, D.C. is called the poverty level. If you didn't have the pension, you'd be on welfare. Exactly. I mean, if I didn't have the pension, I wouldn't be doing this. Yeah, which means that this current career is not going well. That's an understatement.

It sucks. So you have got to do some stuff in this current career to get your practice more vibrant and get some more money coming into it. You need the money. You need to get your house paid off, and you want the one you're going to buy, and you need to be able to retire. And there's nothing wrong with that. That's not being mercenary or greedy or not being unwilling to serve the culture. You want to serve the culture, go bank a bunch of money serving them and or make a bunch of money and then just stop and serve them.

But you don't have enough money to do that if you don't have this pension you know this pension is keeping you from having to address the inadequacies of these choices so far you got to change your practice you got to change your practice christian is with us in los angeles hi christian welcome to the dave ram. Hello. Thank you for taking my call. Sure. What's up? So I'm 24 years old, and I'm going to be graduating May 18th. Good.

And I read your books, and I got out of the credit card debt, and I just want to know, like, I got my full time coming up July 15th. Yay! What are you going to be doing? I know. I'm going to be working for a general contractor and just building hospitals and high-rises. Cool.

What's your degree in? Construction management? Construction engineering, yeah. Good, good. Very good. So what will you be making? $70K. Yay! Good for you. Yeah, so I just want to know, I'm going to be investing into my 401K, but do you have

like any other tips to like invest in should i open up like personal um rock ira or invest in stocks well if you read total money makeover it walks you up the baby steps and you want to be debt free you have any student loan debt no nothing, nothing. You have no debt at all? No. Way to go. How'd you do that? So my family doesn't make that much income, so I took advantage of the financial aid. Okay, but zero loans.

Good for you. Zero loans and everything, yeah. Well done. I'm proud of you, man. Thank you. Good job. Thank you. All right, so no student loan debt 25 years old making 70 grand new degree in construction engineering and here we go game on i'm going to make sure first you have your once

you're debt free that you have your emergency fund in place of three to six months of expenses and then you're going to start putting 15 only 15 of your 70 000 into 401ks with a match, especially if they have a Roth 401k, pick your four good mutual funds. If you just do that the rest of your life, you'll be wealthy if you'll stay out of debt and save 15% of your income the rest of your life. From 25 years old on, you'll be very, very, very wealthy by the time you're 55 or 65. So let's start with that. Then above that, if you want to do some other investing, I wouldn't. I'd start saving for a down payment on a house that you'll probably buy in the next three to five years, something along those lines.

So you are right on track. Very, very well done. Our question of the day comes from blinds.com. They're the number one online retailer of custom window coverings you get free samples free shipping and with the new promos they run every month you'll save even more the promo code is ramsey to get the best possible deal rafi's in california is it okay to go into two hundred thousand dollars worth of debt for law school i'll be living at home average first year salary after afterwards is ninety, with the top 10%

of the class being $160,000. And with the income of the class portion that did not graduate, but still has the $200,000 in law school debt, it's $35,000. See, debt only works when it works. If everything turns out like you thought it was going to turn out, debt always works. But if you're old, like me, you've already figured out that nothing ever turns out like you thought it was going to turn out. Not everything, nothing. Some things are better, some things are worse, but it never turns out exactly like you thought it was going to turn out. That's not how it works. So, Rafi, I do not recommend student loan debt of any kind ever for any situation.

What? You wouldn't have me go to law school? I wouldn't have you go to that law school. Have you figured out another way to get a law degree that was less expensive than that where you get some scholarships where you work, and it may take you a year longer? I don't care. But when you have a law degree and you have zero debt, now you're marketable in ways you wouldn't be marketable. And now you don't have to take a job and be abused by some law firm just to pay your student loan debt. And they do abuse first year and second year out

of law school students. They work from 90 to 100 hours a week and pay them as little as they can possibly pay them because they know you have to take a job and they know you're lucky to get into their firm because you have student loan debt hanging around your neck. And no, I'm sorry. I don't want you to do that. You can do whatever you want. You're an adult. You're allowed to make your own decisions. But you asked me, which is always a mistake because I'm going to tell you. And because I am an expert on my opinion. And I will give you that. That's what this show is about. It's helping you win. And see, a lot of this stuff, folks, it doesn't line up with some of you.

You don't think this way. And it makes you mad. I wasn't trying to make you mad. I'm just trying to help you. You don't think this way. And it makes you mad. I wasn't trying to make you mad. I'm just trying to help you. But we have a saying in the South. Don't go away mad. Just go away. If you're going to get all torqued out and twisted up, just go somewhere else. It's okay. There's 16 million people listening to the show that do want help. So if you want to be pissed off, just go be pissed off. But I'm going to tell you the truth. This is the Dave Ramsey Show. I love talking about companies that know how to do business right. You've heard of Grip6 belts, right? Well, if you haven't, it's the only belt you can get online with no holes, no flap, and no bulk.

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Hey, guys, welcome to the Dave Ramsey Show. Thank you. Hi, Dave. Thanks for having us. Good to have you. Where do you guys live? We live in Fenton, Michigan, which is just a little bit north of Ann Arbor. Oh, okay.

Cool. Welcome to Nashville. Thank you. And all the way down here to do a debt-free screen. Yes, sir. Love it. How much have you paid off? $185,000.

Woo-hoo! How long did this take? 19 months. Wow! And your range of income during that time? We were right around $300,000. Ooh, you're killing it. What do

you guys do for a living? I'm a physician assistant in the emergency department. And I'm a medical sales rep. Okay. Wow. Both of you got great careers. No wonder the income. And so what was the $185,000? It was our house. You paid off your house? Yeah. Wow. I thought you were going to say medical school loans. Okay. Wow. You paid off your house? Wow, I thought you were going to say medical school loans. Okay, wow. You paid off your house. What's your house worth? Our house is worth $700,000, Dave. And it's on a private ski link.

Oh, now you're killing me. This is our dream house. We had our other house paid off and we didn't come down to do a debt-free scream then because we just knew it wasn't where we wanted to be. And so we took out a mortgage for the second house. And let me tell you, we thought we were going to be casual about paying it off. But no, once you've been debt-free once, you want to be there as soon as possible. As soon as possible. And in 19 months, you laid

down $185,000 and got it paid off. Wow. Will you ever go back? Never. No. That was about all you wanted, was that 19 months, huh? Yeah. Funny story about that. When we first bought the second house, we were going to be casual, like Christina said. And we said, oh, we'll pay off the house in seven years. And in the meantime, we'll do a kitchen and a backyard and this type of stuff. And then we got the first mortgage payment. And we didn't like that very much. So we said, okay, four years. We'll do four years. We'll just do the kitchen and one other project.

And then we got the second mortgage payment. And we both looked at each other and we were sick to our stomachs. And all the plans went out the window. And we just laid it down and paid the house off. Now you can do whatever you want. That's exactly right. So Private Ski Lake, tell me about this. What's that mean?

Well, it's a man-made lake that is, it was designed for water skiing, so it's got a slalom course on it, a jump, there's a show team on the lake. My wife and I met on the Michigan State water ski team at college. That's our passion, and we wanted to have the slalom course in our backyard that's so sweet so you can just get up and do a run absolutely oh man our course is on the other end of the lake so it's a 35 minute boat ride to go down and run the course and so by the time you get there you're too tired to run it you know it's just like unbelievable and i'm too old and fat now but i'm still still barefoot. But, oh, my gosh, you guys. Wow, you're incredible.

That's fun. A lot of fun. That is fun. So you got all the toys in the backyard. Absolutely. And they're all paid for. Very cool. What kind of boat are you running?

Malibu Sunsetter. Yeah, that's a great boat. Very cool. Good job, guys. I'm looking at weird people. Absolutely. Living the dream, man. Touchdown.

Live like no one else. Ready to live and give like no one else. So what's the secret to getting out of debt? Because your story is different. Christina? Well, the secret, I think, is just making sure you're on the same page as your partner and being there for each other to support. Because, you know, one person is going to say, I want a kitchen today.

And the other person is going to say, you know, and just making sure that you're guiding each other back towards the goals that you have together. And that goal is usually followed best with a budget. Yeah, but it started with both of you all just going, ooh, I don't like this feeling. Yeah. I mean, you've been free. Then you go back in and you're like, ooh, there's this disgust, wasn't there? Absolutely.

Yes, very much so. And that was the same page. You both got on that same page after two mortgage payments. You're like, that's it. We're done with this. Absolutely. That changes everything. Well done.

Yeah. Our plan started, or I should say our journey, it started back in 2010, really, to pay off the first house. But the reason, the why, you have to have a why to do this. Because if not, there's not anything driving you. And it's tough. It takes a lot of discipline. The why is standing in front of us right here. I have a chronic lung condition called cystic fibrosis. And there's always a storm on my horizon. It's not easy. My health isn't great. So my why was I needed to be a provider for my kids and for my wife. In the instant that something happens and I can't work anymore, we don't need to worry about financial stresses. So my why was very clear.

There was never any questioning it so once these kids came into my life uh our lives excuse me uh it was very easy uh because um it was something personal for me i needed to knock that out so that i knew my family was taken care of should um you know my health take a nasty turn well and in the case of this story, every moment is treasured, and you've got the coolest place in the world just to have family time. That's right. You have everybody's dream in your backyard. Well, all of us

that ski, anyway. Yeah. So are these two big skiers? They're getting there. Ariana's on the show team, Cole's learning to slalom, and Cole's doing the same, so we just have a lot of fun every summer. Great, great. that's some fun stuff very cool well we're real proud of you guys who were your biggest cheerleaders outside your own family i would say uh probably parents and yeah parents were the biggest cheerleaders and a couple friends knew what we were doing

right and so they were behind us well i suspect you're already there with the value of the home and probably some 401k stuff sitting around or whatever. But we're going to give you a copy of Everyday Millionaires because at least more of those millions are the next chapter in your story anyway. Very, very well done. A great income, great family story. You guys, we're very proud of you. Thank you. Thanks so much.

Very good stuff. All right. It's Jeff and Christina. Oh, and the kids' names and ages? We have Ariana. She's 10. And Coleman, it's Jeff and Christina. Oh, and the kids' names and ages? We have Ariana. She's 10, and Coleman is just about to turn 8. All right, and Cole and Ariana, all from the Ann Arbor, Michigan area. $185,000 paid off in 19 months, making $300 a year.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Boom! Just like that. Oh, you gotta love it, man. You gotta love it. Very well done, you guys.

Very well done. Audrey is in San Antonio, Texas. Hey, Audrey, how are you? Good, how are you? Good, how are you? Better than I deserve. What's up? I am recently divorced, and I have come in to about $30,000, and I just started up my business again, my upholstery business,

and I'm in a new location, and I'm wondering if I should. I live in a travel trailer, and I'm wondering if I should. I live in a travel trailer, and I was wondering if I should buy a piece of property and try to set up an RV spot for myself on a piece of property. No. You should go rent a little cheap apartment and get your business going. How long were you married? 24 years okay and uh you have children at home no none how long how long did how long ago was the divorce

uh uh two months ago oh wow and when did you start the upholstery business i started in 1993 and it's been constant. I've done it a little bit here and there, but my longest full-time running of the upholstery business was four years out of a little hondo, Texas. Okay. So what have you been making lately in the upholstery business? How much money? This month I'm probably going to clear about $3,000.

Great. Great. Good for you. So you're getting some business in, and you're getting some production out the door. Yeah. But I'm just getting started. This is the first month in this new location. Yeah, but if you make $3,000 a month, that's a good start out of the gate.

You can get it up from there. Yeah, you're going to be all right. Yeah, I would set your $30,000 back as a safety valve for now, and let's get your career and your life stabilized. You've just gone through the equivalent of a horrible car wreck. It feels like it. And it takes a little while to heal from a horrible car wreck. And so your career is going to heal.

Your money is going to heal. Your emotions are going to heal. Your spirit is going to heal. The way you have relationships is going to heal. Your money is going to heal. Your emotions are going to heal. Your spirit is going to heal. The way you have relationships is going to heal. And let's not go buying stuff right now that you don't have to buy. Let's just set that $30,000 in a bank account. Forget it's there. Don't even use it.

Make sure you make enough to eat on and just rent you a cheap little apartment. Let's have nothing that requires more work. You've already got enough work that you're doing now. This is the Dave Ramsey Show. Try again here. Melanie is in Bakersfield, California. Hi, Melanie. Welcome to Dave Ramsey Show. Thanks, California. I'm Melanie. Welcome to Dave Ramsey Show. Thanks, Dave.

My husband and I are just starting to save for our first home. Good for you. And we were having a little debate on the best way to go about purchasing our home. Um, so my, uh, I, I told him that I've been listening to your show and that you suggest people have, uh, you know, they get a 15 year fixed rate loan. And he said, well, that doesn't make sense. Wouldn't it make more sense to get a 30 because you can start paying into your savings account sooner and then refinance into a $15. And I said, no, I think it makes more sense to save more money and put in a larger down payment and get the $15 to begin with. The CIC says that 97.3% of loans in America, including mortgage loans, are not systematically prepaid. So this idea that you're going to systematically prepay a 30 like it's a 15 almost never happens.

100% of the time, a 15-year mortgage pays off in 15 years or less. Okay. My suggestion was that we wait a little bit longer and save up a larger down payment and then apply for the 15 years. Yeah, I think we've gotten to the real root of your husband's problem. He wants to buy a house that you all can't afford. Right. Well, that's what I'm afraid of.

Yeah. That's really what it comes down to. And then he's trying to rationalize that. But I'd like to make it a little bit more comfortable. Exactly. Yeah. He's just trying to rationalize it with some intellectual gymnastics. But bottom line is you just can't afford to buy the house he wants to buy right now unless you do it in a dumb way, which is a 30-year mortgage.

And that would be dumb. So we tell people 15-year fixed rate where the payment's no more than a fourth of your take-home pay, put down a good, strong down payment, and you have your emergency fund left over after you do the down payment, and you don't have any debt when you do this. Now, you're in Bakersfield, California. You have a high cost of real estate there. So you're probably going to, on a first-time home purchase in that area, you may be moving from the area that you're in and have a bit of a commute in to get to some real estate prices that you can afford. It's a tough market because real estate, of course, in that area is very, very expensive.

But just because real estate is expensive doesn't mean you get a pass on math. Like I'm in California. No, they still do math in California. You still have to do it. And so it's tough. It's legitimately tough. But don't get into a bunch of intellectual gymnastics where you just basically are trying to figure out some way you feel cool about buying crap you can't afford. And that's what people do.

Well, I could buy it and I can invest and I can do this. You're not going to do any of that. Just take a 15-year, pay your house off. The average millionaire pays off their home in 10 to 11 years, 10 and a half years. And they become a millionaire as a result of not having a house payment and as a result of having a house that was affordable to them in the process. That's the averages. And so that's the thing to keep in mind. Chris is with us. Chris is in Memphis. Hi, Chris. How are you? Hey, Dave. Thank you so much for taking my call. And on the front end, thank you so much for what you do for everyone that calls in and even people that you talk to.

So I really appreciate it. You're very welcome. Hey, so I have two quick questions. The first one is a year ago, my wife and I got on the program, and we had $55,000 in debt. And we have that debt down to about $15,000 now in 12 months. The $15,000 will be paid off on March 16th. That is when I'll be debt-free, but I'll be left with a primary mortgage and a secondary mortgage. The secondary mortgage is $300 a month. It's $38,000, and principal off that is like $70, but it's nil. I mean, it's not very

much at all. My question is, do I need to treat that secondary mortgage as one of my baby steps to pay off in my snowball, or do I treat that as my step six where I'm going up and paying the mortgage off. We put a second mortgage in baby step two in your debt snowball if it is less than half your annual income. What's your household income? $160,000, and yes, it's definitely under half, and we're all over the place. Yeah, it's a baby step two item. Okay, awesome, awesome. Thank you so much.

And then the next question, short and to the point, the 15% investing, is that on the gross or the net? Gross. Oh, man, you're awesome. All right, Dave, thank you again so much, man. I really can't tell you how much I do appreciate everything. My wife and I, because of you, have been laser-focused. But, Dave, our lasers are armed, and they burn everything in sight that's devil-headed.

And that's all because of you, sir. Hey, you're doing it, man. Congratulations. I'm proud of you. Keep it up. Open phones at 888-825-5225. Samantha is in Salt Lake City. Hi, Samantha.

How are you? Doing well. How are you, Dave? Better than I deserve. What's up? So my husband and I, so I'm 28 years old and my husband is 30, and I run a small business, and he is in law enforcement. And so my question is on his pension, he has 10 and a half more years until he can essentially retire. So at 41, he'll be able to retire and start collecting on his pension.

Now, what they do for his pension is they take his highest three years, and they take an average of it. At that point, he'll be 20 years in, and so he'll get half of the three highest-paying years. Regardless, what we tell you to do is you guys need to be, when you're at baby step four you and him need to be putting 15 of your income not the pension doesn't count okay the pension is just gravy on the biscuit because here's the problem you don't have control over this pension you don't have control over it if if that city does a bad job

of managing money that pension could get in, and that's happened more than once. And I don't predict that. I don't know anything about Salt Lake City's pension plan being in trouble. I'm not saying that at all. But when you do Roth IRAs or you do 401Ks, that money is in your name. You choose what it's invested in, and if you leave, you take it with you as a rollover into a direct transfer rollover to an IRA. And so you've got control of not only what it's invested in, but you own it. It's not going to go broke.

Pensions, you don't control it. You don't know what they're going to do. They can manage it well. They can not manage it well. It's just out of your control. I love that he's got this great pension. That's a wonderful benefit. I'm glad that's there. But that doesn't mean you guys as a couple can't put in 15 percent of your household income into retirement investing somewhere. And I would when you're at

baby step four. I certainly would. Thanks for the call. Jeff is on Twitter. Dave, how do you feel when someone says they're going to file bankruptcy instead of doing the work? Well, a lot of times when folks file bankruptcy, it's not because they didn't have options. It's because they lost hope, and their emotional gas tank was completely run dry. And I've been there. I mean, I filed bankruptcy.

It was a disastrous mess. I was 28 years old, so it was 30 years ago, and it just gutted me. It was an awful, awful experience. And it's shame and condemnation, and I just wouldn't wish it on anybody. And so I always fight with you, not at you, but with you, I'm all I'm beside you. I'm fighting on your team so that you don't have to file. And I'm going to show you every possible option and give you hope that you can get there. Then if you still file, I'll still be your friend. You got enough shame and condemnation without me heaping it on you.

So, you know, it's like I've got some friends that are going through a divorce, and I think they could have turned it around if they would both sit down with a good counselor and they would both not be so dad-blame immature and they would both not be so dad-blame selfish. I think they could turn it around. But I think I want it for them more than they want it. would both not be so dad blame immature and they would both not be so dad blame selfish i think they could turn it around but i think i want it for them more than they want it and so am i going to be mean to them no but it's still it's i can see how they can do it so i'm kind of sad for them that's how i feel feel sad for them when they could have turned it and didn't feel sad for him. When they could have turned it and didn't, feel sad for him. That puts this hour of the Dave Ramsey Show

in the books. Hey guys, it's Blake Thompson, Chief Production Officer for the Dave Ramsey Show. This hour's up, but you'll find more on our YouTube channel, where we have over 6 million YouTube views each month. You can find debt-free screams, millionaire hour clips, Dave rants, and so much more. Go check it out.