The Ramsey Show - App - You Have to Stay Positive During Your Debt-Free Journey (Hour 2)

Episode Date: January 20, 2020

Budgeting, Career, Home Buying, Retirement, Debt Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Starting off this hour is Chase in Texas. Hi, Chase. Welcome to the Dave Ramsey Show.

Mr. Ramsey, thanks for taking my call sure what's up so i currently am making 33 a year take home and i just about landed a new job that is going to boost my income by about 12k a year wow good for you what do i do with the difference in money i haven't really have i've never had to deal with the extra that that much of a job well i hate it when that happens yeah i know i mean it's a good problem to have amen good for you how old are you uh 23 what's the new job uh law enforcement oh Oh, very cool. Good for you. Very cool. So what we teach folks to do, and what I learned to do years ago back when I was in your decade, Chase, was actually to give every dollar an assignment.

Every dollar that does not have a mission written beside it, an assignment, before the month begins, tends to just freaking disappear. If you don't tell money where to go, you will always wonder where it went. And that's called a budget. Every month before the month begins, get your EveryDollar app out. Seven million people are using it now. It's free. And download that app, and you can build out your budget in about ten minutes,

regardless of what you make. And all you've got to do is give every dollar. You're using it? Yep. Okay. Then you're giving every dollar a name. Good. You're ahead of me.

Good. Then once you're doing that, then any money we can find in the budget, we apply to whatever baby step you are on. Do you have any debt? No. And I've got four months of savings right now. So my question is, I'm really not ready to consider moving out of where I am right now. It's a comfortable place. I've got plenty of time left on the lease.

Okay. So you're fine to sit there. There's no rush. I'm wondering if I should skip to setting up retirement. Yeah, you could get retirement going. I would get retirement going, and then I would do a little bit of math that says how can I save some money so that in the next three or four years I buy a house.

You don't have to buy one today, but you do want to buy one in your 20s, and you've got plenty of time to do that. So, you know, if you start putting 15% of your income into retirement, that's baby step four, which is where you are, how much can you save for retirement? I mean, for a house down payment. And so let's just make up a number. You said you got a $12,000 raise.

Let's just say you did $12,000. That's $1,000 a month going into a mutual fund for a house. In two years, you'd have $24,000. In three years, you'd have $36,000. Not counting when it goes up in value that'd be pretty nice down payment right oh absolutely and um you know you've got to manage the other parts of your life like if your car runs if the life starts running out of your car it's laying down you gotta start saving up to buy a car right you got to think about other stuff

every dollar has to have an assignment and no debt. And whatever it is you're doing, buying a house, investing for retirement, going on vacation, going on a date, whatever it is you're doing, you're paying cash for it as you go along. And the good news is you've been very wise to this point. Someone's taught you well and you've been mature beyond your years and have made good decisions to this point, now don't mess it up. You know, take this new raise and give it an assignment. It's not a chance. Some people think that whatever their new raise equals to take-home pay per month is how much their new car payment ought to be. Some people, they go spend everything they make, and if they make a little more, that

means we have to go spend it. And you're not that guy. So that tells us how wise you are and how far ahead of the game you are. Jordan's with us in Kansas. Hey, Jordan, how are you? Good, Dave. How's it going? Better than I deserve.

What's up? I was just wanting to ask you whether you thought I should sell my vehicle based on my current financial situation. Okay. What's the car worth? The car's worth about $10,000, $10,000 to $11,000, depending on whether I took it to a dealer or sell it to a private party. I owe $19,400 on it. You owe $19,400.

$13,400. Oh, $13,400. $13,400. And what do you make? Sorry. $44,000. Okay. Do you like the car?

It's mostly my wife's car um i commute probably about 50 minutes so about 50 miles to work um currently i'm driving a paid off mustang good um and i we drive i drive that to work um the reason we were thinking about selling it is because she only drives maybe once or twice a week and i feel like it's depreciating like a rock as you say um you know i was thinking about just selling and taking the $3,000 or so hit and then buying maybe a $3,000, $4,000, $5,000 car somewhere in there with cash. How long have you been married? Two years.

Okay, good, good. And what's your household income? You told me $40,000-something, right? Yeah, $45,000, $44,000, sorry. Well, the rule of thumb that we use is this um we we tell folks not to own vehicles that total up more than half your annual income yours don't okay and uh we tell folks to uh be in a situation where whatever debt you've got other than your home you get it paid off within two years you can unless there's a whole bunch of debt you've got other than your home, you get it paid off within two years.

You can, unless there's a whole bunch of debt you didn't tell me about here, and the car is not keeping you from doing it anyway. So if I'm in your situation, I'm keeping the car, and I'm going to work really, really hard to get it paid off. Because there is a federal law that sometimes they don't tell you when you get married. I learned it later in life, and I wish I had known it early. Federal law is mama gets the good car. If you violate that law, the relationship police come and knock a knot on your head.

And so I would suggest that mama gets the good car. And let's get that thing paid off. Even if she's not driving it a lot you're at work you're driving 50 miles she's got a dependable vehicle there for your young wife and your young marriage and that's uh that you guys can get paid off and keep if you told me the car was 40 000 i'd sell it in 20 seconds and if she was whining about it i'd call her a princess but that's not the situation that's nothing that's going on here this is you just trying to tighten the screws down and you're being a good man for looking at that but i'm just going to tell you i would because it's not that big a number i would in ratio to your other numbers

i would keep it and get it paid off as fast as i possibly could because you're not going to be able to move down that much in car you're still going to be able to move down that much in car. You're still going to have a $3,000 or $4,000 debt, plus you've got to buy a car. So you're not going to move your numbers that much by doing something with this. Thanks for the call. Open phones at 888-825-5225. Kristen is on Instagram. Dave, I've got my $1,000 beginner baby step one. I don't know where to keep that money. Should I keep it in my $1,000 beginner baby step one.

I don't know where to keep that money. Should I keep it in cash or in the bank? Doesn't matter. It's not going to earn anything anyway. It's $1,000. Keep it where your hands don't get on it and somebody doesn't steal it. That one lady put it in a cheap picture frame mirror that she got at Walmart, hung it in the closet, and said, in case of emergency, break glass.

Helped her keep her hands off of it, but it was handy. This is The Dave Ramsey Show. I'm going to go on a little rant here for a minute. I took a call from a father who wanted to know how to plan for the care of his special needs daughter after he dies. Why is it that parents of special needs children are so deliberate in their planning while other parents have a tendency to be sloppy? Do the needs of your family matter less if something happens to you? Oh, I'm sorry. Did I just guilt trip you into getting some term life insurance? Well, then good. Your family needs you to step up. Having the right amount of term life insurance is a matter of personal responsibility. If you want to use the new year as a reason for doing the right thing, then do it. Term life insurance is a matter of personal responsibility. If you want to use the new year as a reason for doing the right thing, then do it.

Term life insurance is something every family needs, which is why I talk about it every day. It's not complicated, it's not expensive, and you need to do this now. Zander Insurance is the only place I recommend. Visit Zander.com or call them at 800-356-4282. Please learn from other people's mistakes and get this Chelsea's with us in Kansas. Hey, Chelsea, how are you? I'm doing well, Uncle Dave. How are you? I hope you're happy and healthy. I am all of the above. How can I help?

So my husband and I just got married, and he has about 55,000 in student debt. He didn't graduate from school. When him and his first wife got married, they had a little boy, and about six months later, she was diagnosed with brain cancer. Oh, my goodness. So she ended up passing away from that, and then we met a few years later. So he didn't get to finish school, so we have that $55,000 now. And I'm just trying to figure out. I just recently got on fire for sewing and i made like when i was sewing i

kind of slowed down because things started slowing down for me um i made about maybe like five hundred dollars over three months and i'm wanting to make that like my focus i love it it's my passion um should we tackle our 55 000 in debt first or should i like make that as like a side gig are you working a regular job now i i do work part-time i am uh looking at switching to full time if possible um with my current job just to we need to get this debt out of the way and what does he make he makes right now he's he's in training, he makes $13.50 an hour. And then when he gets out of training, he processes medical claims. He'll get paid per claim.

So he has the opportunity to make up to $20 an hour, depending on how many claims he's processing. Okay. Very good. It's kind of up in the air. Good for you guys. Very cool. Well, here's the thing.

I mean, starting running your own business, as long as you're not putting money into it, it's not much of a barrier. The only trick is what could you be doing with your time to make more money than that if the goal is to get out of debt? So if you're going to pursue the sewing, you've got to make more than $500 every three months. Yeah. That's still a glorified hobby. We've got to make more than $500 every three months. Yeah. That's still a glorified hobby. We've got to make $500 a week.

Right, and then I have that. That's just like something I did on the side for, you know, I figured out. I figured out I loved it. I work part-time at a job, so I make about $800 after taxes a month with my part-time job. And then the $500 was extra that I had made over that three months. I understand. I understand. And I understand you're fired up about it.

But in terms of for it to be a job, a career, a business, $500 over three months is a long way from where it would need to be you really would want to have a model a way of making more money doing the sewing than that right and so i want you to i just want you to rethink how you're doing this what you're sewing what you're charging for it why you're in this situation because i don't want you to work as hard and make 500 over three months it's like 175 a month yeah you know that's not that doesn't move way more than that yeah you need to make that you need to make like 500 a week yeah i mean and you can do that you just got to figure out a different thing that you're sewing uh or a different process or a different number of hours or whatever it is that you're putting into this. Hold on. I'm going to send you a copy of Christy Wright's book,

Business Boutique, Equipping Women to Make Money Doing What They Love. It just sounds like exactly what we're talking about here. So she can help you with that. And be sure and check out her podcast and the Business Boutique podcast and everything as and everything as well be a big help to you but i'll send you a copy of the book hold on open phones at 888-825-5225 raquel is with us in california hi raquel how are you yes sir thank you for taking my call sure what's up i'm i'm 68 retired uh my debt, I've got debts paid. The only thing I have is a mortgage, which is $200,000 left. I'm doing a bimonthly payment on it and an extra $200,000 a month. Listening to you, I thought, well, I really need to try to get it paid off. I do have an annuity, a non-qualified PICS annuity, which is $150,000.

I always feel that's my backup liquid money if I need it. And for my emergency fund, I'm always saying that $30,000 or $24,000 to $30,000 is like emergency fund. Other than the annuity, do you have any NASH tag? I have $57,000 on a 457, which I'm in the process of putting into an IRA traditional and hopefully get that into a Roth. So I'm trying to work on that with somebody. So I'm just trying to decide that with somebody. So I just trying to decide, uh,

at my age and all that, my monthly secure social security and pension is enough for my regular bills. You know, how much is your home worth? Uh, if I, it probably would sell for three 50 and I've got a 3.5 interest, and the annuity is making $3.25. Yeah.

Well, that part's not relative to me. I do not want you to have no money and a paid-for house, which is where this would leave you. That scares me. It scares me a lot. So, no, I would not recommend that you pay it off with the situation you're in. I do think, depending on what your income is from other sources, you probably need to look at moving down. And, I mean, you're in California.

$350,000 is not exactly a mansion, okay? But I understand that. But I do want you to get to where, because that big debt, that big payment at 68 years old, and you basically sitting there with only $150,000 plus $57,000 in the $457,000, so basically $200,000 to your name, and you owe $200,000 on your house, that leaves you in a bad situation. It leaves you awfully tight. And so, no, I don't want you to pay it off and have a paid-off house and no money.

That just leaves you too thin. Don't want to do that. So I do probably, if you can't have a different plan for getting this thing paid off, depending on what your income is in the next few years. It's something where you probably do need to look at moving down so that you could get it paid off without using all of your funds. So paid off property with some nest egg is the goal at retirement. That stabilizes everything for you. Thanks for the call.

Open phones at 888-825-5225. Tim is in New Jersey. Hey, Tim, how are you? Doing good, Dave. How are you? Better than I deserve. What's up? Okay, so I just got on board the Dave Ramsey train. I got the book.

I'm about halfway through it. Getting the wife on board. We completed step one, and we are on step two. We have $26,000 in credit card debt and $15,000 left with a car payment. And I wanted to get your thoughts on cashing out my 401k that I have thus far to tackle the credit card debt and just go ahead and work on the car payment. Yeah. How much is in your 401k? I have about $29,500. Okay. And what's your householdk? Um, I have about 29, five. Okay. All right. And what's your household income?

Um, combined is about 75. Okay. All right. Well, um, I, no, I would not cash out your 401k to pay off debt unless it was to avoid a foreclosure or a bankruptcy, and that's not what you're facing. The reason is really simple. When you cash out the 401k early, you are charged a 10% penalty plus your tax rate, which right now is about a 20% tax bracket that you're in. 20 plus 10 is 30%. That means it's like saying dave i want to borrow

money at 30 interest to pay off my debts well no you would never do that i'm making sense at all and you wouldn't do that here either sorry let's get on a budget let's get to selling some stuff take an extra job get these things paid off but, I would not cash out my 401k. 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. I'm talking weightless. And the buckles come in really cool designs and are interchangeable. I

personally own a number of these belts, and they're so comfortable you forget you're wearing it. Plus, these guys have a great story. BJ Minson started Grip6 on Kickstarter from his garage in 2014 and now sells hundreds of thousands of these American-made belts to customers all over the world. As a mechanical engineer and a minimalist, BJ took his dislike for heavy, bulky leather belts that never fit right and created the perfect belt, a high-quality minimalist belt that gives the strength and support of a belt without even knowing you're wearing one. I'm really proud of these guys. Check out this month's special offers for my listeners

at grip6.com in the lobby of ramsey Solutions on the debt-free stage, Kaz and Adele are with us. Hey, guys, how are you? Hey, how you doing, Dave? How are you? Welcome, welcome to Nashville. Thank you.

And where do you live? Macomb Township, Michigan. All right, good to have you guys. And all the way to Nashville to do a debt-free screen. Yes. How much have you paid off? $84,414. Good for you. And how long did this take you?

24 months. Wow. And your range of income during that time? We started off at $70,000 and we ended up at $110,000. Wow. Nice jump. Yeah. Thank you. What do you guys do for a living? I'm a production supervisor. And I'm a quality technician. Very good. Good for you guys. What kind of debt was this? $84,000. We paid off our home. Whoa! Looking at weird people. I love it.

Very cool. So what's this house worth? About $260,000, $270,000. Wow. How old are you guys? 36 and 37. Unbelievable. And you have a paid-for house.

Yes. You are so weird. He said he would say that. So that's kind of weirdfor house. Yes. You are so weird. He said he would say that. So that's kind of weird, though. Yes, it is. How does it feel to not have a payment in the world? Free? Amazing.

Yeah, I guess. I guess. So what happened? Tell me the story. How did you get here this young? So in 2008, I heard about FPU at our church, and I started attending. And once I got on board, I came home, and I told Adele about it, and she was with it. So it made it a lot easier for her.

Just like that? Yep. So how much debt? Did you all have other debt other than the house back in 08? No, we didn't have anything else, just the house. So you were already fairly conservative. Yes. But you just said, I think we can do this.

Yep. Okay, and you went through financial peace university okay yep so then uh she joined on board and about two years ago once the kids started going to school and um adele got a job we started both working opposite shifts and then we were able to pay off our debt we worked our butts off and we did it yes we did yeah yeah you get that extra big chunk of income coming in you You look down and go, why not? Let's knock this out. Yeah. Yeah.

Very cool. Very cool. So when people find out you're like 37 years old and you have a paid for house, what do they say to you? I mean, are they just like, really? Yeah. I mean, like they found a unicorn or something. Yeah, it's hard for them to believe that we paid off our house. I think because so many people are not used to it, that they find it weird.

But I usually just turn around and we encourage them and inspire them to do the same. Yeah, of course. Absolutely. Well, you can't help but say, gosh, it's great over here. Come over on this side. It's great over here. This is awesome. It's a place to be.

Yeah. So what do you tell people the key to getting out of debt is you did it you're successful being on a budget for sure being on a budget staying positive don't look back once you're in the race just keep chugging along and um kill any negative comments that may be thrown your way or some people may tell you it's impossible you know just stay positive and you need a good reminder around you you know do whatever it takes yeah and work your butt off absolutely y'all did you put in the hours baby oh yeah i mean you turned up the heat yeah and now you work like no one else now you can work like no one else you

don't have any debt right absolutely well you just look around what am i gonna do with all this money let it be millionaires oh my god you will be that is the next that is next chapter in your story for sure well done well done so who were your biggest cheerleaders um we really didn't let a lot of people know we just kind of went along and did our own thing so how did you uh you did this in 24 months over two years and you really were putting in a lot of hours. I mean, it's nice to be standing here in the lights and the glamour and hearing Ramsey Solutions doing your debt-free screen, but there were some long weeks in this 24 months.

How did you keep track of this to stay motivated? We actually ended up making a poster where we kept track every amount that we sent in. We kept track that way, and we would look at the poster, and we're like, okay, we got this base, and now we got to go with that base. And we went all the way around, and once we got closer, it just became unbelievable. So it's just, wow, we paid off that much money in two years. I have become the cause of a lot of adults drawing stuff on poster board. I really have. I've caused a lot of sales of poster board.

I need to get my own Ramsey poster board official thing to draw your thermometer on or draw your chart on or whatever. A lot of stuff on bedroom walls, on the walls of the refrigerators around America drawn by adults because they're going, gotta try you gotta see it don't you you really do you gotta you gotta come up with something where you go there's a construction paper chain whatever it is i mean that kind of stuff you gotta do stuff like that too i gotta feel it i can't just otherwise it feels like a grind you're never gonna get out of yeah yeah and then when i was at work working those long hours i'd put my headphones on and i would listen

to you all the time so So that helped out a lot. Well, you get to hear all those other debt-free screams. Yes. And now you're encouraging someone that's at work right now. Yep. They're hearing your story right now. They're tired and it's worth it, isn't it? Yes.

Oh, yes. We did travel through a year ago and we have your picture still. You signed one of our books and we just so happened to travel from Florida back to Michigan. We stopped at your old studio. Oh, yeah. And we watched a college student do their debt-free scream. I think coming in here helps a lot. And for the people that are here, it's a great thing to hear other people do it because it

really does inspire and give you that extra push that you really need. When you see somebody else is doing their scream, it really makes you want to do yours as well. Yeah, because there's plenty of losers out there that tell you you can't do it. There's plenty of people at work or family members who ever say, you can't do that. Absolutely. Everybody's going to have a mortgage. You just don't understand.

Yes. That's only for rich people. Yep. There's always somebody running their mouth. And you've got to keep the positive stuff coming at you. And it's not just a trick, but you do become who you hang around with. So you're exactly right. Thanks for pointing that out.

Very well done. Well, congratulations. Thank you. I can tell you everybody at Ramsey is proud of you, including Dave. Thank you. Well done. Very proud of you. Good job.

Good job. We are cheering for you. You're heroes. Thank you. We've got a copy of Chris's book for you, Every Day Millionaires, number one best-selling book. Our gift to you to say congratulations. And here come the kiddos into the picture.

What are their names and ages? This is Vanessa. She is nine years old. She just had a birthday. Hi, happy birthday. She's seven and a half, and we got Jace, who's five. All right, and got the picture. Poster board held up here, ready to go.

I love it. Got the diamond, the baseball thing going. $84,414 in 24 months. All figured out right there. up here ready to go i love it got the diamond little baseball thing going 84 414 dollars in 24 months i'll figure it out right there that's exactly how you do it well done so if they've been practicing their debt-free screen yes i'll bet they have i bet they're ready to have mom and dad working less hours yes yeah you work like no one else now you can spend a lot of time you've changed your family tree so proud of you proud of you. House and everything. Cause and Adele.

Vanessa, Lindsay, and Jace from the Detroit, Michigan area. $84,414. House and everything paid off in 24 months. Count it down. Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free scream. Ready? Three, two, one. We're debt-free!

I love it! Whoop, whoop, whoop, whoop, whoop, whoop, whoop. That is how it's done. Right there, baby. It doesn't get any better than that. See, and by the way, you guys, getting out of debt is so that. You don't have any payments. Why?

So that. You've got money to invest. So that. You've got money to be outrageously generous with. So that. You can retire with dignity and change your family tree. You're not just doing this just to get out of debt. You're doing this because it is the shortest path to wealth, which puts you in a position to completely change everything.

I mean, think about this. Now they're ready to invest like crazy. That's when they need to sit down with a smart investor pro. If you want an amazing investing professional in your corner, the smart investor pros are the ones. They're the ones we endorse, and they do the stuff the way we teach, and they teach you with the heart of a teacher so you are not investing because Dave Ramsey said so or because some broker said so.

Well, my broker told me. I don't care what your broker told you. I care if you understand what's happening with your money. If you can't tell me what's happening with your money, you're not ready to invest, and you shouldn't be doing it. Now, here's the idea. You know what the next goal for them is? The pinnacle point. The pinnacle point is where you have enough money invested that the income off of your investments makes you more money than you make. Boom! That's a different place to hang out yeah oh i love that i love that one yeah check out DaveRamsey.com click on smart investor you can find someone in your area to help you get this

done congratulations to Kaz and Adele very well done fam proud of you guys this is the Dave Ramsey show. One of my favorite parts of this show is hearing your debt-free screams. You guys are our heroes. You've kicked debt to the curb and you've saved for the future. Now we want to celebrate with you. If you have lived like no one else and are currently in baby steps four through seven, well, it's time to enjoy some money. And the perfect place to do that is on board our first everno-one-else cruise in March.

That's right, just a couple of months away. But get this, it's not too late to book your cabin, so don't miss your chance. This Caribbean cruise is going to be an incredible seven days at sea on a stunning new ship with amazing experiences. I'm talking all of our Ramsey personalities and other world-class entertainers. We're stopping in the Bahamas, Puerto Rico, St. Thomas, and Turks and Caicos. It's going to be an amazing, debt-free celebration designed just for you. Don't miss the boat.

Head over to RamseyCruise.com today to reserve your room. thanks for being with us america we're so glad you're here. If you're thinking about selling your home in the spring, well, think about this. Spring sport athletes start preseason conditioning now in January and February, so they're at peak performance when their season begins later in the year. Selling your house is no different. If you want to get top dollar for your home in the hot spring market, consider New Year's as preseason conditioning for your home. Now is the time to get a home inspection. Now is the time to make the repairs and clean out the junky spare bedroom.

Now is the time to put the right real estate agent on your team who can help get your house in shape, ready to sell, and develop a marketing plan. These things do not happen in a microwave and they do not happen in 20 seconds. Now is the time to start if you want to be ready when the weather breaks to put your home on the market. So click DaveRamsey.com slash agents. Click on ELP for real estate and you'll find the endorsed local provider that is a high octane, high protein real estate agent in your area. This is not someone sits in the office and eats donuts. It's not a donut eater. This is somebody that's a producer. They get her done, baby. They get her done. That's how it works. And so you got to think about that

when you're selling your largest asset. It's not some doofus that you grew up with as a childhood thing. This is someone that is a peak performer selling your largest asset. Click Real Estate ELP and get your home sold by a pro. Up next is going to be Allie in Kentucky. Hi, Allie. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call.

Sure. What's up? So my husband and I are on Baby Step 5, and he works in the building supply industry. Uh-oh. He works for the building supply industry. Okay, wait a minute. I think that we had a technical glitch here. Let's try again.

Allie is in Kentucky. Okay, is that you, Allie? Yes. Okay, sorry. We had a little glitch down here in the studio. So anyway, your husband works in the building supply industry in what? Yes, and so we both decided that our next home, we want to build our forever home since we kind of have a unique advantage with his connections and ability to get supplies pretty low at low cost.

However, we have a difference in opinion on which way to go about building our home. I am the nerd and he's the free spirit. He wants to sell our house this spring when the market's hot, go ahead and get as much out of our house as possible. And then he wants to build a smaller, more energy efficient home on a smaller lot to kind of allow us to have some savings to help propel our savings for the new home and pay off the land and then build the house. Whereas I would rather just stay put, crack down on our budget and save up, pile up the cash that way and pay off the land before we build the house. We've got two kids, so I personally don't want to move them twice,

but he thinks it would be best to sell our house now to get the most out of it. Yeah, he's got the itch bad, and there's no indication that the real estate market a year from now is worse than it is now. So his theory is just he just wants to live on this property. He just got the itch. And the problem, I mean, you're more than just a nerd free spirit thing. This is more of Mama Bear protecting the cubs. And he's got this wild crazy scheme going and you're

trying to protect the family from that that's more what's going on in your head uh you're trying to not say that out loud so i said it um but uh here's what happens too many times in these situations the big house never gets built if you move into the little house on the land. And so I wouldn't do that. I would stay put. I'm with you. You get my vote on this. And I would just continue to save money and get yourself in a position. Your home, one year from this spring, even two years from this spring, is not going to be worth less than it's worth now. And, uh, if it is, it'd be a highly unusual real estate market.

Like historically almost never happens. Okay. So, um, you're not going to go anywhere but up in value while you're sitting there saving money. Yes, you do have a monthly mortgage payment. I assume right now, don't you? Yes, we do. That's our only payment.

Yeah, which you would not have in his scenario because you'd be living in the little property paid for, right? Right. Well, no, we would have it on the other house. The mortgage would just be much lower, a lot lower than what it is now because we would have a lot of equity out of this house to put towards the small one, the temporary one. I just don't want to move twice. So would your standard of living in the little house on the prairie. I mean, ugh. Right.

Right. Well, and I think that's his theory, too. If he was a bachelor, this might work. But he's got a wife and two kids. That's what I told you. If it was just us two, we would go hole up in a basement somewhere and make it work. But with the kids, it's just stressful to move them twice and build a barn live in the loft or something i mean people do that stuff all the time if they're trying to make this deal work but uh but kiddos being drug around and

yeah i answer questions here like what would i do if i woke up in your shoes and i would do your plan not his okay thank you one correction there are no forever homes true everyone's life changes everyone's life changes and what is your dream and meet your needs now won't be your dream and meet your needs someday so never build something that you feel like you have to stay there forever for it to be a smart decision it It can still be a very smart decision. He's got access to building. It deals on building supplies. He knows the building business.

You guys have a good, solid plan. You could build a great home on a great property that your family enjoys for a very long time. But there are very few people that spend more than 10 or 12 years in a given house. It's very unusual. Occasionally, I run into somebody who's been years in a given house. It's very unusual. Occasionally I run into somebody who's been there their whole life, but it's very unusual. Hey, thanks for the call. Open phones at 888-825-5225. Thank you for being here, America.

We appreciate you hanging out with us. Jocelyn is in North Carolina. Hi, Jocelyn. How are you? Hi, Mr. Nancy. I'm great. I hope you are. Better than I deserve. How can are you? Hi, Mr. Anthe. I'm great. I hope you are. Better than I deserve. How can I help?

Yes, sir. So I'm 50 years old. I'm in baby step six. And I refiled my house two years ago on a 15-year mortgage. I work for an organization that has a pension program, and we have a mandatory six percent contribution monthly i've been investing outside of this pension program for about four years after i got into baby step four and um so i'm a little behind on my retirement my question is do i focus solely on paying off the house or do i reduce my extra payments toward the mortgage slightly to put an extra 3% in my Roth IRA and 401K? Well, we generally tell people baby step four is 15%. Anything else you can find, we throw at the house,

and that ends up perfectly for most people. It ends up with the house being paid for before retirement, and you're getting into the retirement, you know, getting a good amount going into retirement. Now, you've got this mandatory, what did you say, 6% or 8% going into the pension, right? Six percent, yes. So what percentage of your income, including that, are you currently putting into retirement? Right now I'm doing 9%. Okay. Yeah, I would raise that to 15% at Baby Step 4.

Baby Step 4 is 15% of your household income at a minimum. And then above that, I would pay extra on the house with any other money I find in the budget or any time you get some kind of found money, a bonus or an inheritance or whatever, I throw it at the house, throw it at the house, throw it at the house, you're going to get the house paid off. I mean, you're 50, you just took out a 15-year mortgage, you're going to get it paid off if you don't do nothing but the payments by 65. Right?

So you're going to be fine. You're going to be just fine. You want to go into retirement with a good, solid nest egg in addition to the pension with a paid-for house. And, you know, we're tracking with the numbers here to do all of that. So, yeah, your gut was right. But, you know, baby step four, you weren't doing it. Baby step four is 15%.

You're doing nine. So, yeah, you need to put another six in. And the retirement savings, and at least, if not more, because that 6% that's going into that pension is probably underperforming. But that's okay. At least 15% of your income when you're in this situation, and no more than that if you're in a normal situation with no mandatory pension involved. So, hope that helps you.

That puts this hour of the Dave Ramsey Show in the books. Hey, guys, it's Blake Thompson, senior executive producer for The Dave Ramsey Show. This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave rants, debt-free screams, and the very popular Everyday Millionaire segment. Go to the Dave Ramsey Show YouTube channel and click subscribe.