The Ramsey Show - App - You Don't Have to Punish Yourself to Become Debt-Free (Hour 1)

Episode Date: July 31, 2018

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Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Zach is with us in Norman, Oklahoma. Hi, Zach.

How are you? I'm doing well, Dave. How are you? Better than I deserve. What's up? Thanks for taking my call, first off. Long-time listener, first-time caller. I'm having a hard time with Baby Step 1.

I've never been good with money at all. And I know you always say personal finance is 20% knowledge, 80% behavior. I can't seem to get the behavior down. Real quick, if I could go over my numbers, I have $15,000 in debt, five on a car, five on an old credit card, two in personal loans, and three on a signature loan. And the reason I'm calling today is because I have enough money coming in from three different things that I can pretty well pay it off, but I'm afraid to spend that money on that and then get right back in the same situation. I've got a $5,000 sign-on bonus coming from work next month. The following month, I get a $2,000 Visa gift card for renewing my lease, and I have a motorcycle that my dad gave

to me that I just got an offer on for $8,000. So with those three things combined, I could completely clear my debt. But I'm afraid that if I don't do it the hard way, I'll just keep doing the same behaviors I've been doing and end up in the same situation a few months down the road. What do you have for me? Well, I mean, you're using money that's coming to you for activities that do not bring you pleasure called paying off debt. So that is hard.

Did you have to gut it out for 18 months or 36 months or something no you didn't but how old are you i'm 32 okay and you've never had control of this thing called money well i i was married for a long time i married my high school sweetheart we were married for we were together 13 years married for 10 of that. And two years ago, I went through a divorce. She was definitely the nerd, and I've always been the free spirit. And these last two years, in fact, when I was married, we were debt-free together, always had been. And these last two years, I've racked up $15,000 in debt. And I'm just ready for a change.

So financially, budget-wise, that kind of thing, she was your crutch? Absolutely. I made all the money. She managed it. Okay. All right. And divorce was hard on you? Oh, yeah.

Yeah. Okay. So emotionally, I mean. Yeah, absolutely. Yeah. A year ago, I wouldn't have even been able to make the call yeah so i'll tell you what i think was happening um i think you were grieving your broken heart and uh you're usually not your strongest when you're doing that

and that's okay um you're coming out the other side of that now the fog is starting to lift and you're going okay i got to deal with this big boy stuff on my own now and um i'm not uh at 100 power but i'm also not so weak i can i can now dial the phone you know and i think you're coming out the other side of that the worst of it anyway you'll always have a a scar on your heart from this horrible thing you've been through but um i think you know i don't i don't think you're coming out the other side of that, the worst of it anyway. You'll always have a scar on your heart from this horrible thing you've been through. But I don't think you were irresponsible is what I'm saying, like some kind of little kid that just couldn't stop their spending or some kind of little wuss or something. I think you were in a funk, and it wasn't the normal you that was spending.

And I think the normal you is stronger than you're giving you credit for. Well, thank you, Dave. Yeah, I mean, the thing that really bothers me is, you know, I'm an HVAC service technician. I've been doing that 10 years. I make decent money. My base pay is $48K a year. So you know how to work a plan on a system.

You do it every day. Sure, yeah. With overtime last year. No, no, no, no, no. You misunderstand. You misunderstand. You know how to make a series of progressive logical decisions to create an end outcome. It's what you do every day.

Yeah. Apply that same thought pattern, that same part of your brain, to working this money thing. Get the manual out. I got you. Open up the app and read the instructions for putting this thing together. I got you. is and i truly think you've got the power to do the emotional control if you didn't i would thump on you a little but i don't think that's what's going on here yeah i really think you're coming through a real real hard time um you're a guy who works works hard and brings in the bacon and uh the lady that was frying it left and your heart was broken and it just takes a little while

to come back from that if you're a normal human. I mean, if you're a psychopath, you don't care, right? But you're not that guy. And so, you know, I think you're healing is what I think is happening, and I think you're ready to go on this money stuff. Yeah. I really am. I'm sick of it.

Yeah, so pay everything off. You don't have to punish yourself to learn your lesson. Because my point is your lesson is not your personal irresponsibility. It was the result of a life process that you went through that was a downtime that you're coming out of. That's different than me talking to a guy who simply can't control his own impulses like he's freaking four years old. That ain't you, dude. If it was you, I would tell you that. Well, thanks for your perspective.

I appreciate it. So I think you're going to be fine. I would pay it all off. Download the EveryDollar app today, if you haven't got it on your phone already or on your computer, and use that as your technician's manual. You're going to lay out every dollar, every dollar. That's why we called it that. Every dollar has a name.

Every dollar has an assignment every month before the month begins. And you stick to the assignment. You don't deviate to what we know fixes the thing. I got you. You know how to fix stuff if you don't deviate from the plan. But, you know, it's just like a chef making a world-class recipe. You don't leave crap out of the recipe. The cake doesn't turn out.

You're saying I need to approach my finances like I'm operating in a professional manner. There you go. Ding, ding. You just heard me. Awesome. Light bulb just came on. You got it, dude. I would do that.

Now, I also want you to go through Financial Peace University at your local church because I want to be part of the last step of you winning. And then you call me back. You don't have to call me back when you're debt-free because you're going to be there about a week or two, it sounds like, or a month or two, it sounds like. But you call me back if you need any help. And later on when you're really doing real well financially and you run into some guy who's having a rough time, a rough cycle in his life,

you pay for him to go through financial peace. You can pay it forward, okay? Hold on. Kelly's going to pick up, and we're going to get you signed up. You're a good man. Open phones this hour. This is the Dave Ramsey Show. You call in.

We'll talk about your life and your money. Personal finance is 80% behavior. He just said it. It's 20% head knowledge. That's why relationships matter. Chance is 80% behavior. He just said it. It's 20% head knowledge. That's why relationships matter. Behind every successful man is a better woman and a surprised mother-in-law. Relationships matter.

This is the Dave Ramsey Show. We'll be right back. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive.

It's not complicated. And Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's zander.com or 800-356-4282. Thanks for joining us, America. We're glad you're here.

Audrey is with us in Pennsylvania, Lancaster to be exact. What's up, Audrey? Hello, Mr. Ramsey. How are you? Better than I deserve. How can I help? Well, I feel like you get so many questions like this. But basically, to my husband, your name is Mud.

And I am not sure why he claims that he has looked up things on YouTube that says you're just a bad person and blah, blah, blah. I've seen some of those things, too, but I really appreciate what you have to teach and how you teach it. Yeah, because if it's on YouTube, it's true. Yes. If it's on the Internet, everybody knows everything on the Internet is true. Exactly, yes. And there are so many things on the Internet that I've showed him that he's just like, well, how do you know that's true?

But then when it comes to something, you know. I don't think I can help you. Okay. I really don't. All right. Thank you for calling. Open phones at 888-825-5225. John is with us in Tampa, Florida.

Hi, John, how are you? Yes, good afternoon, Dave. Long-time listener, first-time caller. Thanks. How can I help? Yes, sir. So, Dave, this is the situation I've got. I'm out of debt, thanks to you. Back in January, I relocated from South Carolina to Tampa.

Recently sold my house last month. So I'm baby step one, two, three. I'm in baby step four, five, and six. Wow. Yes. Actually, I don't have a baby step five, so four and six is pretty much where I'm at. Good. I've got my emergency fund is fully funded at $20,000. Man, you're rocking it. Yeah. So, I mean, I got to come in and do my debt-free scream. I can't wait.

I'm coming in on October. Awesome. So the question I have, I sold my house just about a month ago, the end of June. I net $40,000. I've got that in a CD right now at 1.5%. My dilemma is that I'm now, I want to save for about two years to make a cash purchase. And what's the best, you know, I parked it in a CD, just got all that done. Cash purchase on a home? Yes.

Okay, so you're renting right now. I'm renting right now, and I plan to maybe rent for about two years, two and a half years. Okay. I'll just leave it in a CD. Here's the thing, okay? The stock market goes up, and the stock market goes down. As you know from listening to me, I love good growth stock mutual funds, and that's what I would have your 401K invested in.

But that's a long-term investment. Okay. And the number of times that a two-year window that you would actually lose money having put money in a mutual fund is way too many times to suit me. And so I'd rather you not lose money. You're not going to make any money in a CD, obviously. It's a joke, you know, but you're not going to lose any money. And the problem is if you put it in mutual funds, you know,

let's say you got $100,000 in there, and let's say on a good year you made $10,000 or $15,000 on that, okay? But you could lose $10,000 too. It's just not worth it. It's too hard to get that money in there. And on a short window like that, those dollars are too precious to lose any of them by, quote, playing the market on a short-term play. It's really a bad, a good way to lose any of them by, quote, playing the market on a short-term play. It's really a good way to lose money. So I would tell you to not do that.

Thanks for the call. Mike is with us. Mike's in Jackson, Mississippi. Hey, Mike, how are you? Mike? Did I do that wrong? All right, I'll put him on hold, see if you can find him later. Natalia is with us in Los Angeles.

Hi, Natalia, how are you? Natalia, how are you? I'm well, Mr. Ramsey. How are you doing today? Better than I deserve. How can I help? I have a real quick question for you. So my husband and I are on Baby Step 2.

We have $10,000 left. And as of right now, I'm calling because he's putting 15% of his income into a secondary retirement. So he's a year and a half away from retirement. So this doesn't include his pension amount. This is a secondary amount. And I want to know if we should put that 15% and throw it at the $10,000 or if we should keep going given that he's so close to retirement. Yeah. What's your household income? Last year we made about $85,000.

So how quick would you pay off the $10,000? You ought to pay it off in just a few months. Hopefully we're looking at six months, maybe nine months tops because I'm self-employed. Nine months is too long. So that can vary depending. Yeah, nine months is too long. That's not okay. But you ought to be able to do this in four to six months.

If you're going to do that and you want to leave it alone, given your situation, that's okay. Of course, you know our normal recommendation is to stop retirement and completely focus on baby step two. But the problem is by the time you get it stopped, you'd have to run started again because you're almost done. Exactly. Exactly. And so back when you first started getting out of debt, I would have put you on. I would have stopped it. But but you're you're within, you know, reach.

You're going to it's just going to be paperwork trading back and forth for you. And I don't want to create paperwork that doesn't do anything. The point of stopping retirement is to create complete focus on the debt and if you guys are going to keep this going you have to you have to uh go really extreme say okay we're going to keep the 15 going in but we're going to go extreme on this ten thousand dollars i mean like really extreme we've got to get rid of it like our hair's on fire. And when you do that, it's going to change the whole deal. You'll move the needle. That'll make a bunch of sense.

Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Susan's on Twitter. Do you have any tips for someone who is interviewing for a new job? I don't do a lot of personal interviews here anymore. I used to when we were smaller. I'm not very good at interviewing, but I'll give you what I know, okay?

And some people that are professionals at this may laugh at me, but the number of people that come in to do an interview that simply have not looked in the mirror at what they're wearing is amazing. And so, you know, dress for success. There was an old book when I was a kid, 18 years old. Steve Malloy, I believe, was the title, was the author. And it was dress for success. Back in those days, everybody wore a blue suit, you know, with a white starched shirt and a tie.

Nowadays, nobody does that. So I'm not suggesting you come in in a tux. That would be weird, you know, or that you come in in a suit and tie into our place. That would be weird. Nobody here wears a tie. But you need to think about what you're wearing and your grooming, your appearance, because this is your brand. You're making a sale, and the thing you're wearing and you're grooming your appearance because this is your brand you're making a sale and the thing you're selling is you and uh if you don't think first impressions matter think about what they do to you you walk up to somebody in a you know in a restaurant behind

a counter or somebody at a store behind a counter or you walk into a business and you see someone you know you immediately start making a set of assumptions i mean within a nanosecond about that person you know they're grooming their uh clothing style is not extreme and so just be you know professional professionally dressed and groomed and clean brush your teeth and comb your hair i mean and take a bath i mean really you would be surprised so i mean that that sounds stupid but you wouldn't you would be surprised no you might not be surprised so that that's the first thing the, then, is it gets a little bit more complicated, and that is smile. When you're meeting with people, shake their hand and look in their eye. Have some relational IQ.

Ask questions about the person you're talking to, about their family. Be interested in the other person. Questions about the person you're talking to, about their family. Be interested in the other person. And then the last thing is probably the biggest deal, and that is study the company that you're going to see. Read about them. Read the stuff about them on the Internet. Read the bad reviews, the good reviews.

Read all of their corporate pages so you know what businesses they do. Understand what position it is in detail that you are interviewing for. And your job in the interview, very, very quickly in the first few minutes, is to let them know how you're going to make them more than you cost them. This interview is not about what they can do for you. It's about what you can do for them. How can you add value to the organization economically in dollars that's going to be worth more than you cost? That's what's going through every interviewer's head.

It is fairly simple. This is the Dave Ramsey Show. Okay, I need you to listen to this, because one normal routine that everyone does can cause total chaos in your life. Folks, I'm talking about the simple act of using Wi-Fi. When you're on Wi-Fi anywhere in public or at home, you're at risk of hackers easily seeing every site you visit and search you're doing online. It doesn't matter if you're doing it on your cell phone or your laptop. I'm not telling you this to scare you. I don't operate in fear.

But I want you to be aware and take action. You need to download Hotspot Shield. Hotspot Shield helps keep your connection on your own Wi-Fi and any public Wi-Fi secure. 600 million people worldwide have downloaded Anchor Free's Hotspot Shield. Download it now. My listeners can save even more by going to hotspotshield.com slash Dave. That's hotspotshield.com slash Dave. You can be secure in seconds.

Download Hotspot Shield today. In the lobby of Ramsey Solutions, Chris and Colleen are with us. Hey, guys, how are you? Great, Dave. Welcome, welcome. Where do you guys live? We live in Atlanta, Georgia. Fun. Well, welcome to Nashville.

Thank you. And all the way up here to do your debt-free screen. That's right. How much have you paid off? We paid off $296,912 in 34 months. Wow. And your range of income during that time? We started at $155,000 and got up to $210,000, and now we're back down to about $185,000.

Okay. Cool. Cool. That's a lot of debt. What kind of debt was that? It was a little bit of5,000. Okay, cool, cool. That's a lot of debt. What kind of debt was that? It was a little bit of everything, Dave. Majority was student loans, about $175,000 was for my student loans, another $60,000 for Colleen's master's degree, and then $40,000 on a home renovation, $11,000 on a car, and

another $8,000 in miscellaneous credit cards. Okay, so what are your degrees in? What do you all do? I'm a teacher. I've decided to stay home with our son starting in August, and I have a master's in early childhood education. And I'm an attorney. Okay.

Engineer turned attorney. Okay. There we go. Cool. Very good. And so that's the income swing is you decide to stay home, so that drops it back down a little bit. Yes.

We're very glad about that. Good deal. Good deal. So did you sell something large or did you live on nothing? Both. We actually sold the house that we renovated, and so we wound up having $86,000 in equity in that, which we put entirely to the debt. So of the $297,000, does that include the mortgage payoff on that house?

No. No, just the equity shift. Just the equity. So we cash flowed about $202,000 of the debt. Wow. In three years, basically. Correct. Yeah.

It was 60% of our income roughly through that time went to the debt. Of your take-home. Of the take-home, yeah. Wow. Wow. So what happened 34 months ago? got married oh okay there's that we got married and we had a wonderful uh marriage counselor pre-marriage counselor that um you know brought out the issues and we had already uh we knew it was an issue actually we were living in boston at the time and before while we were engaged

and picked up dr tom stanley's millionaire next door and read that and kind of started this whole process for me and we decided that we needed to move to a little bit cheaper city so we wound up landing in atlanta with pre-marriage counselor suggesting why don't you check out dave ramsey he might be able to have some programs that will help you out. And then what happened? Chris got really excited about you. So we had Dave all the time in the house. So I agreed to Dave Ramsey Tuesdays with Financial Peace,

and I got on board pretty quickly. And after the first month, I was certain we had paid off $100,000. And I asked Chris how much was left, and he said $294,000. And I was like, oh, no. We have a long way to go. Yeah. When we sat down and did the math the first time, I calculated out about 55 months or 55 payments. And we wound up doing it in 34.

I think we ratcheted up the intensity much more than we thought we could but also the house opportunity uh was we decided i think that was a big uh a big factor in us getting to where we are right now was when we sold the house we were able to really really see the end in sight. Yes. Was it worth it? Yes. It was. And I think, you know, for us, the next step, we're expecting our second child in November. And we're also moving out of the country.

We'll be moving to Switzerland in January timeframe. Oh, my goodness. And so for us to be able to save up right now without having anything holding us back and have this opportunity and move forward is critical. It's been the best thing for us to actually make this a possibility. Wow. And speaking to the benefits as well as of the program is our relationship just getting started right away after being married. I would say working together towards something really made us a partnership in a way that I didn't imagine we could really be.

I was hopeful, but this really pushed us, and now we're saving money for Switzerland, and then in Switzerland we'll be saving money for our home. So we always have something that we're working towards and your program helped us do that to get started right away so thank you thank you I agree with what you said because I've heard it so many times that the benefits to the relationship why do you think that is why do you think you guys were pushed closer together by doing something because when I first started doing this I'm like I'm getting

you out of debt I didn't get any of your marriage you know and they kept going you changed my marriage and i'm like what why why do you think that is well we were lucky that we started right away but i think that because we were both so focused and we were both in this trench together where each day was like okay we'll have the $1 taco shells again. And just really pushing to get out of debt, this goal for us, it was really helpful. And when it was a really hard day for me and I would say, Chris, how much is left? And he would tell me and then I would say,

well, how much have we paid off? You know, that working together was just really crucial for us. And I think, you know, you say it on your radio show, if you agree on money, you agree on dreams and goals. And I think that's absolutely true. It touches every part of our life. It doesn't have to direct and overtake every part, but it absolutely is a critical factor. And if you can agree on what you're going to spend your money on, you can agree on where you're going to go. And for us, that's been true. And also I'd say, you know, we've had life happen

a few times in there. We had our first son during the middle of this, and we were able to push pause on the debt snowball and saved up $30,000 in the seven months. And to have that peace there was no very little stress between us financially uh during the pregnancy because we knew we would be fine and if anything happened needing to stay in a hospital or anything we would be it would be it would not be an issue for us and that was absolutely critical to keep the stress as low as it can be during stressful times. So what's the Switzerland gig? That's very exotic. It is. I work for a pharmaceutical company that's based in Switzerland and have an opportunity to do a job rotation.

It's basically the same job I do in Atlanta, but from the Switzerland office. And we actually just spent five weeks there. We got back last week. Oh, my gosh. So which city will you be in we'll be in Basel which is on the German French border very nice it's a wonderful country Sharon I spent a week and a half there not long ago and it's just incredible it's expensive as yes which is if if we weren't that free it wouldn't be an option because it is very expensive we will probably you, our savings rate is going to go down.

But that's okay. It's only for a year or two, and we'll be able to get through it without. You get the experience points. I mean, it's a blast. You know, train system is incredible. It's absolutely amazing. So, hey, very, very cool. Well, congratulations, you guys.

So what do you tell people the key to getting out of debt is? The key to getting out of debt. I know what I'm going to say. Well, congratulations, you guys. So what do you tell people the key to getting out of debt is? The key to getting out of debt. I know what I'm going to say. Okay, you go ahead. I think something that we very intentionally did from the beginning is changing our vocabulary of need and want. And it's a daily struggle now. And it actually causes fights between us sometimes because I'm a little bit neurotic about it. I don't use the word i if i catch myself using the word need and

it's not an actual need i will rewrite the sentence in my head and say it out loud because i think it's absolutely critical if you tell yourself something is a need when it's actually a want that's what leads you down the path to and the truth is we have almost no real needs in america i mean some people do but the vast majority of people don't. We call everything a need, but most of what we buy is a want. Yeah, and especially with a one-year-old son, it's parenthood is the need capital of the world, and there's very few actual needs. Yeah, they've got clothes, they've got food, shut up. I mean, that's a place to live and that kind of stuff. Yeah, basics, you know. So what about you, Colleen? What would you

say the secret to getting out of debt is? I think it was similar to Chris, but being able to tell myself no. And that was reevaluating that wants and needs as well. And also being able to tell friends no and family that we can't come or can't do something. All right. And he's with you, the young man. What's his name?

Yes, Anderson. And he's how old? He is 15 yeah. All right. And he's with you, the young man. What's his name? Yes. Anderson. Okay. And he's how old? He is 15 months. Yeah. All right. And there was one thing I wanted to add, which was the hope from your show, from the callers that really helped us get through this.

And also just- All right. Count it down. Let's hear your debt-free scream. I'm sorry. Okay. That's okay. Ready?

Three, two, one. We're debt free! Sorry to cut you off, but we're out of time. Well done, you guys. This is the Dave Ramsey Show. Can you believe this real estate market? Home shopping has become so competitive. There's a ton of new buyers in the market, and bidding wars are the new normal.

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Equal housing lender. 761 Old Hickory Boulevard,, Brentwood, TN 37027. Thank you for joining us, America. Jolene is with us in Texas. Hi, Jolene. How are you? I'm good. How are you? Better than I deserve. What's up? Hi. Well, about a year and a half ago, my husband and I started making payments towards filing for bankruptcy,

and we finally made our last payment this month, but then I came across one of your Facebook pages, and so we decided that maybe if we can, we'll try to pay off the debt instead. I haven't spoken to the lawyers yet, but I don't know if I should.

Have you filed? Did you actually sign the papers and they filed the bankruptcy? They have not filed anything with the courts yet. Okay. All right. Good. Okay. I'm sorry.

So go ahead then. What's your story? So we don't know if we should consolidate it or try to settle on the debt. Okay. Okay. And how much debt do you have, not counting your home? We have about $60,000, but only two of our credit cards are with the collectors right now.

Okay. And break the $60,000 down for me. What do you owe on it? What's it owed on? I have two Visa credit cards with the same bank. And they're how much? One is $20 is 30 000 those were the two that we were trying to 50 of the 60 are these two visas all right yes and what else we have a discover of 4 000 macy's of 2300 so it's all credit cards? Yes. You don't have any debt that is not credit card debt? You have a car loan?

No. No, we have two cards that are already paid in full. And you don't have a student loan? No, sir. You don't have a tax bill? No. Okay, do you own a home? No, we're renting right now.

My husband's in the military. And what's your household income? My husband brings home $3,200 a month. And that's your whole household income? Yes. Okay. All right. Well, when you file bankruptcy on this much unsecured debt,

they're going to run a mathematical formula called a means test, and they may not allow you to file a Chapter 7 bankruptcy. It may force you into a Chapter 13, which is paying payments. Have they already done that test at your attorney's office? No. Okay, so are they saying you can file a chapter seven and wipe this 100 clean yes okay does your husband have security clearance issues then um not right now but we found out that it might be an issue if we do file for bankruptcy so i don't want to

it will be an issue when he goes to try to get a security clearance or get his security clearance raised. Bankruptcy is an issue on that because they check credit. That's part of it. But also having bad, super bad credit by not paying credit card companies $60,000 that you owe them over a period of time is also going to ding up his security clearance. It's going to be the same kind of a thing. Okay. And so you're facing that. It's just a matter of how bad it is.

Bankruptcy is the worst, obviously, the thing you can get into. So $3,200. And do you have children? I have a two-year-old son and one on the way. Okay. All right. Because I'm trying to think of ways to add income to this equation you got your hands full with babies running around everywhere um but if there's anything you can do to add some income we're just with a side hustle kind of thing while you're being a mommy but you got mommy hands full for sure. Okay. Yeah, you're having trouble just paying these bills.

I get that. And making headway through $60,000 with a $3,200 income is going to take a long time. I mean, that's a five-year. I haven't made any. I'm sorry. Go ahead. I haven't made any payments towards the two visas since we started the process of filing for bankruptcy because the attorney told me not to make any more payments on it.

That would be correct. That would be what you would do. And how long has that been? It's been a year and a half. A year and a half? They must be calling you every 20 minutes. The attorney? No, the visa people.

They're probably driving you nuts, aren't they? No. Really? Yeah. At first when I stopped making payments, they were calling me, but then I told them that it's with the lawyers, and so they've been, I guess, calling them. Wow. I'm shocked calling them. Wow.

I'm shocked. Okay. Because usually they just wear you down. Well, if you've gone that long, they will either sell this debt off and or they will settle it. You can probably settle this for a quarter on the dollar on those two big ones. And so what I would do is get about the business of really tightening up your budget and let's save up three or four thousand dollars are both these with the same bank you said yeah dadgummit okay well i would save up like four thousand dollars

and offer that to them to settle the 20. i000? I want to offer you $4,000 as a settlement in full to settle the $20,000. Are they going to do that easily? No. They're going to flop on the floor and foam at the mouth and act like the world's coming to an end, call your mother names and everything else. You have to go through this whole process with them of dealing nasty human beings, okay?

But you argue with them and go back and forth. I got $4,000. I can't give it to you unless you settle this credit card and you agree to settle the twenty thousand dollar one for 25 cents on the dollar is what we're saying or 20 cents on the dollar right and um then you don't give them the four thousand dollars unless you get it in writing for settled in full and once you get a letter or an email that says in writing for settled in full. And once you get a letter or an email that says in writing that they're settling the $20,000 account in full for $4,000, then you can give them the $4,000. Do not have a checking account at that bank.

If you do, go close it because they're going to, I'm surprised they hadn't stepped on that if it's in there. No, I was advised to close it out before we started filing. Good. That was smart because they don't have any way to get at it because they can just reach over in your checking account and take money based on the credit card agreement. Now, then do the same thing with the $30,000. Save up $4,000, $5,000, $5,000, $6,000 or whatever, and then settle it. And so if for $10,000 you could settle all of this or a bunch of it and make it go away,

you would do that rather than file bankruptcy. Okay. And since it's gone on this long already, it's a year and a half since they've gotten a payment, they're ripe for a settlement. And honestly, if you change shoes and you say, okay, I'm a banker, and I'm sitting over here using common sense and math and mathematics i got a military family here with two babies making thirty two hundred dollar take home they owe me fifty thousand bucks and they can settle it for ten thousand i'm probably not getting my money they're a bankruptcy looking for a place

to happen i'm going to take the ten it's logical because you know you're a bankruptcy looking for a place to happen, I'm going to take the 10. It's logical. Because, you know, you're a bankruptcy looking for a place to happen. You really are, based on your numbers. And I'm not encouraging you to do that. I'm saying that puts you in a negotiating spot to work this through. And so we're not trying to take advantage of anybody. We're not trying to be bad people. You're broke. And if you can settle this without filing filing bankruptcy that's better than giving them nothing in bankruptcy right yeah

they come out ahead you come out ahead you did the best you could do in a horrible situation and of course you cut up the credit cards of course you get on a budget and never ever ever use a piece of plastic again the rest of your life. Plastic has ruined your life. Agreed? Yes. Okay. So you work your way through those two 50s or those two big ones. Meantime, maybe try to settle some of the little ones.

Again, have you quit paying everybody? No. I'm still making the payments on the other three. Okay. All right. Well, you can either pay them through and pay them off, or you can stop paying them and settle with them, whichever. I don't care.

In either case, they're going to get more than they're going to get from bankruptcy. Now, if I'm talking to you and you're making $10,000 a month, I'm going to tell you to just suck it up and get your dadgum bills paid, but you're broke with two little kids. And so I'm trying to tell you to do all you can do i'm stretching you to do what you can do mathematically and i know you're scared so hold on the line uh i appreciate you guys your husband serving the country and i want you two to go through financial peace university is our gift uh because i remember being scared and i

remember being broke and we'll help you so you hold on and ke remember being broke. And we'll help you. So you hold on, and Kelly will pick up, and we'll get you signed up for Financial Peace University. That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer. Blake Thompson is our senior executive producer. Kelly Daniels is our associate producer and phone screener. I am Dave Ramsey, your host, and we'll be back. Hey, it's Blake, Chief Production Officer for the show, and here's a little tip for 2018. Go download our revamped

dave ramsey show app from the app store we're always listening to your feedback and adding new features to make it even better check it out all big time extraordinary things start from ordinary things and they start from changing the ordinary habits in your day-to-day life. You see, changing these habits is the foundation of our teachings at the Smart Conferences, and I'm excited to announce this fall and winter, we're headed your way. At this event, we're going to hear from America's most sought-after experts on the topics of marriage, parenting, money, career, leadership, and personal development.

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