The Ramsey Show - App - You Have Tremendous Power Over Your Future (Hour 3)

Episode Date: April 12, 2019

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Music Music 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 am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225.

That's 888-825-5225. Mike is with us in Providence, Rhode Island. Hey, Mike, welcome to the Dave Ramsey Show. Thanks for taking my call, Dave. How are you doing today? Better than I deserve. What's up? I'm just calling with a question regarding my truck.

My wife and I are debt-free besides our mortgage, and I don't know if I'm being gun-shy here or if I should go ahead and buy a newer truck or if I should fix the truck I have. It's a 2008 F-150, and I've got about 165,000 miles on it, but I've got some body rot, and I'm having a small issue with the transmission. So I think the repairs are going to be somewhere between $2,000 to $4,000, and the last I checked online with the value, the truck is worth maybe $7,000 or so.

Do you think that I should go ahead and do the repairs on the truck and try and uh get the most i can out of it or should i go ahead and start looking for a new one well the way you decide on whether it's worth fixing a car that needs repairs is you say okay if i sold the car as is what would it bring and in case, let's just use a number, okay? I'll show you how the example works, okay? You think the truck's worth seven if it was fixed up? I believe so, yes. That probably sounds about right to me.

Okay. So let's pretend there's $2,000 worth of work to be done. Now, if you can sell the truck for six now, you'd be $1,000 ahead of not doing the $2,000 worth of work. But if you can only sell it for four now, then it would be worth fixing it because you'd make an extra $1,000 by fixing it. Because four plus the two means you'd have six in it you're selling it for seven you see what i'm talking about so i do yeah my guess is um depending on what the how much of its body work and how much of the 2000 is body work and how much of it is uh transmission you said minor transmission so if the transmission is 500 and the body works 1500 my guess is this truck will probably bring six if it's worth seven fixed and that would mean i would

sell it okay and i'd take that six and my two thousand that i was getting ready to spend and buy an eight thousand dollar car or more if you had some more cash to put with it but somewhere in that range you know know, something like that. But, you know, sometimes people are calling me like with a hoopty and they're driving a car that's worth $1,500 and there's $2,000 worth of repairs to be done to that. Well, that's not going to make that car worth $2,000 more. So you don't spend $2,000 on a $2,000 car

because it doesn't cause it to go up in value that much. So instead, you sell it for whatever it's worth salvage or whatever it's worth when it's broken. And you put your 2000 with that and you move up a little bit in car. And so that's, you know, that's when a car has pretty well come to the end of its life that that equation applies. And, you know, F-150s will go longer than 165 000 miles without a doubt depending on how they've been taken care of but in your case you know you've got some body issues and you've got some transmission issues that kind of change the economics on that james is with us in tampa florida hi james welcome to the dave ramsey show hey jake hey dave thanks for taking the call. Sure. What's up? I wanted to get some advice on, so I have $43,000 in student loans, or my wife does, but it's for us.

And she's about two years away from potential student loan forgiveness, or put our funds towards, we're about $34,000 away from our mortgage to get rid of the PMI. We're still in the hole quite a bit in debt. I just want to know which one would work for me better. I would pay off the student loans as soon as possible. Okay, even though the student loan forgiveness is potentially there? You need to do some research on student loan forgiveness. It's not happening.

Yeah, that makes sense. There's like 17,000 people have made application, and 250 have had their student loans forgiven. That sounds right. It's not occurring. Okay. Yeah, I'm afraid it might be the biggest head fake that the government has ever given the American public.

So the but but, you know, I hope that changes because a whole bunch of people had that as their strategy to get out of debt. But in your case, I'm going to just get my student loans paid off. Paying off your home or paying down your home is baby step six. Paying off your student loans is baby step two. And so you're when you're working, your debt snowball, you pay off your student loans is baby step two. And so when you're working, your debts snowball. You pay off your student loans, and that's where you are. You're just down to your last one, and it's your big one. And it's kind of, you know, Mount Everest is staring you in the face,

and it's making you think maybe I need to try to do something different. Hit it. Hit it hard. Hit it often. And hit it with intensity. Spencer's in Denver. Hi, Spencer. Welcome to the Dave Ramsey Show.

Hi, Dave. Thanks for taking my call. It's a true honor to talk to you. You too. I have a question for you. I need to find out how I should protect my assets. With that being said, let me give you a little short summary of what I'm talking about. I'm a nurse.

My wife's a teacher. We both pull in about $180,000 to $200,000 a year, depending on my overtime. Great. Thank you. I am set to pay off my house, or our house, I should say, next month. And I've got two teenagers. Both are driving, and I need to find out once our house is paid off, what should we do to protect it from, you know, forbid, you know,

they get in an accident and we get sued or something tragic happens and, you know, someone comes after us or something like that. With your income and the stage you are in wealth building, it's time for you to add an umbrella policy, which is a liability policy. You can buy a million dollars extra liability coverage for around $250 in Colorado a year. And what that does is it attaches to the liability policy that's already part of your homeowners and already part of your car insurance. And it adds to the top of that. With some teenage drivers, it might run you a little bit more than $250,

but it probably won't, and I would get that liability. What that does is it just adds another million dollars to the mix in case somebody decided they were going to come after you because of a bad situation. Now, as a nurse, you've obviously got professional insurance, right? Right. Yeah, that's covering that issue. That's a separate issue.

Right. But as far as liability goes, that's the first thing I would do there. As you start building other wealth later, for instance, if you start buying properties as rental properties, real estate investments, put those in an LLC. And I put about $5 million worth of real estate in an LLC, and then I form another one. And so then, you know, you're not there yet,

but when you start buying your first rental property and that kind of thing, that's what you'll do just to keep the size of the target on your butt down. That's what you're trying to do. So I carry a big liability umbrella policy, and I separate the ownership of things out into other entities. That's a risk management strategy. As a matter of fact, I actually don't personally own anything anymore. I don't even own my cars.

I don't have anything. I'm completely broke. This is the Dave Ramsey Show. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month. You never pay data overage fees and we never turn off your data. No contracts, no hidden fees. And if you're thinking our low cost means less coverage, think again.

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Ken, just getting back in from New York City, did a Fox & Friends hit yesterday, along with a taping of a Rachel Ray episode, both to come up. Excellent job, Ken. Well, thank you. It's always fun to get to New York and talk about the work that we do here at Ramsey Solutions. Good stuff. The Proximity Principle is the new book. It comes out in May.

It is in the middle of pre-sale right now. It's $19, and you get $20 worth of bonus items if you pre-purchase it. And you need to do that at KenColeman.com or DaveRamsey.com. Check it out immediately. It is the proven strategy that will lead to the career you love. Ken will be speaking at our Entrez Leadership Summit coming up in a couple of weeks, April the 28th through May the 1st. It's completely sold out in San Diego.

The Entree Leadership Master Series is November the 3rd through the 7th. He'll be speaking there as well. And, of course, our SMART Conference coming up in Sacramento, California on November the 16th. He'll be speaking with us there as well. It's a big thing. So the book is available everywhere. The Proximity Principle walks you through how to put yourself in front of the right people. Now, we've talked about that before, but let's talk about it again because it seems so basic,

but it's kind of like some of the stuff I teach. It's like you need to hear it again. Yeah, we're hearing that as we're doing media. Even Rachel Ray said after we taped a segment yesterday, she said, this is so simple, but most people forget about this. And we chuckled together, and it's really true. You forget that you have tremendous power over your future if you are intentional. You teach that as we look at the baby steps every day and help people get financial peace.

And the same thing in doing work that matters deeply to you. If you are intentional to put yourself around people that are doing what you want to do and they're doing it successfully, you're going to have the opportunity to learn, to do, and to connect. And I want everybody who's listening in for a moment to just think, if I was going to make progress in my life and I only learned something new every day and I only did something in that field to get better at that every day, and then I connected with somebody in that field every day, would I make progress? And the answer is unequivocally, yes, you'd make progress.

And so what proximity is, is intentionality to get around people that are doing what I want to do and in places where what I want to do is happening. And here's what it does for us. As we are intentional, it becomes habitual. And when we continue to show up and put ourselves around the right people and in the right places, proximity positions us where we want to be and propels us to that ultimate goal. And that's what's huge about it.

Sometimes it is, it's just real hustle and grind. Like if you want to be an artist, you need to be around other artists. If you want to be, it is that simple. If you want to be a top salesperson and you're working in IT, you probably need to be hanging around salespeople or vice versa. I want to working in IT, you probably need to be hanging around social people, or vice versa. I want to be in IT. But other times, it's got a little bigger picture to it.

Like, if you want to be a movie star for decades, for over 100 years now, people have moved to where? Hollywood. If you want to be a country music star, you want to be in the country music business, where do you move? That's right. You get in proximity. That's it. You move to Nashville.

That's right. Music City. That's right. That's kind of the one with a little bit of stars and lights around it, but it can also just be regular, everyday stuff. That's exactly right. So in the book, we reveal five people and five places. So let's take the places, for example. You're talking about where you are is the first place. Most people feel like initially that I'm going to have to move. And as I talk about in the book and say on the show every day, you don't have to move somewhere to go somewhere all the time initially. So, for instance, let's say that you wanted to be in acting. But right now in your financial world, you're working through the baby steps, and moving to L.A. is not realistic.

Do you give up the dream? Is it impossible? No. Let me tell you why. Because there is an acting class that's available in your zip code. There are local actors who have probably at some point maybe acted on Broadwayway or done some off-broadway tours who are now doing things in your zip code and you can begin to learn from them here's another thing that you can do where you are you can go on youtube you can take a webinar you can buy a best-selling book

from somebody who has said here is the path to becoming a really good actor. So it doesn't matter what the field is or the industry is, you can begin to start the process where you are. Another place we talk about in the book is a place to practice. You at some point as you're moving along in the craft, Dave, you've got to put yourself in a low-risk place to be able to do the craft. You and I both started in radio in a low risk. I started on Saturday afternoons at two o'clock there's about four people listening to radio on saturday afternoons at two o'clock you know that one of them is the guy that was running the board and he's not even really paying attention to me and your wife's not either she wasn't she has three kids she don't want to hear me talk any more than i already do you know so you know the idea is that where can i practice the craft

where my livelihood does not depend on it and I can stink? Because you and I both have said this a hundred times. We wouldn't want anybody to hear our first radio broadcast. I wouldn't want somebody to hear the first time I spoke publicly. Because your first time is usually your worst time. And so we want to be in places where, wait a second, I got in proximity to this career. And so I started my journey two o'clock on saturday i begin to actually get to learn to do it better you know i i did it every week so i got

better and better and better and then i was making connections in the industry and so we unveil five people five places that if you're intentional dave here's what's going to happen opportunity will present itself to you. This is what the proximity principle pays off, is opportunity. All people want is a chance to live the American dream, to do what matters to them. And what proximity does, it positions us where we need to be so that we can get to where we want to be. Let's get just real simple and real tactical for a second. A guy listening right now, he's got a knack for computers. Okay.

But he doesn't know how to do programming yet. Yep. And he needs to learn programming skills in order to become a full web dev. That's right. In order to move into ruby on rails or whatever move into java whatever doesn't know how to do that yet but says i i want to do that i want to be that guy what does he do yep two quick things first thing he does is he does some basic research and he looks at where can i learn those skills so is it for your school no it doesn't have

to be. Who's teaching that? What are online opportunities where I can go and say, all right, this is what I need to learn. Ruby rails, whatever it is. I don't know any of that stuff myself, but that, okay, this is what these people are teaching this certification. And you find out how much is that going to cost? How long is it going to take? This all of a sudden takes the fear out of the unknown. He didn't know, but five minutes later, he goes, okay, this course is going to cost me X amount of dollars.

And if I take it at this pace, it's going to take me six, eight, two months, whatever. Now, the second thing he needs to do is he needs to find some people who either he knows or he looks at his friends and acquaintances and says, hey, do you know anybody who's a developer in our hometown, in this area? And he's going to find somebody. And he says, hey, will you just make a connection and say, I want to buy their lunch, and I want to pick their brain on how they became successful. Nine times out of ten, that person is going to say yes to that because we like to talk about ourselves. We really like to talk about our success. And so he takes a pencil and a pad, and he goes to school, and he says, now, listen, here's what I want to do, I think. I want you to tell me how you got there. I went and did some research the other to school and he says now listen here's what i want to do i think

i want you to tell me how you got there i went and did some research the other night and i found this out do you have a better suggestion on how i can learn it do i go the end around is there a way to do it faster cheaper you go to school on these people and they're going to tell you everything you need to know now all of a sudden with a very minimal amount of effort, you've got the knowledge of what it's going to take to actually make the transition. And you sit back and go, okay, this is my reality. I got a mortgage. I got $40,000 worth of debt, whatever your situation is. And I'm going to have to walk this thing out. And it's going to take me some time, but I can see two, three years down the road, I should be able to transition beautifully. Or I can go to work doing what I'm doing today in a company that already does that.

And maybe they'll train me. Well, they absolutely will. Just get in the door. Ken Coleman, the book is The Proximity Principle, the proven strategy that will lead you to the career you love. You can get it at KenColeman.com, DaveRamsey.com. You can call a customer. A Ramsey concierge is a 888-22-PIECE.

Ken, thanks for dropping by. Thanks, Dave. This is the Dave Ramsey Show. We'll be right back. In the lobby of Ramsey Solutions, Arnold and Jackie are with us. Hey, guys, how are you? Hey, Dave, how's it going? Welcome, welcome. Where do you all live? We live in Kansas City.

Cool. Welcome to Nashville. And here to do a debt-free screen. Yes, sir. Love it. How much have you paid off? $70,300. Way to go. And how long did. Yes, sir. Love it. How much have you paid off? $70,300. Way to go.

And how long did this take? 22 months. Whoa. And your range of income during that time? We went from $75,000 to just over $100,000. Cool. What do y'all make? I mean, what do y'all do for a living? I'm a sales engineer for Eaton Corporation. I sell electrical distribution equipment. Cool. And I'm a stay-at-home mom. Very cool. Good for you guys. So what kind of debt was the $70,300? Oh, man, it was everything. We didn't find debt we didn't like. You were normal. We were extremely normal. Lowe's credit cards, Discover credit card, 401k loan, a brand new Jeep, and then owed some money to Grandma.

Okay. Wow. I love it. Very cool. How long have you all been married? Going on eight years. Wow. That was a trick Very cool. How long have y'all been married? Going on eight years. Wow. That was a trick, wasn't it?

So what happened? No. Yeah, me and Jackie, we got that one together. Let's see if we can get him. Let's see if we can get old Arnold here. So what happened 22 months ago? Let this fuse. So I was raised by my grandparents, and they had always preached no debt.

So they've lived this their whole life, and I was like, ah, they're a couple. Are they the ones who loaned you money? Yes. We'll get into that later, though. So they raised me. I was going to college, and they said, where are you going to go to college? I said, I don't know. I've got to get a loan.

They said, absolutely not. You either pay for it or you go to the military. Like, that's your options. So I joined the Army, came back, started working. We just went dumb after that. I bought a $20,000 truck making $27,000 a year, which is really smart. So then we bought the truck, got got married did all the dumb stuff and then i got a promotion went from asheville north carolina to michigan uh pretty much doubled my pay and i started doing

real real intelligent math it's a double my pay i can double my house with a brand new house brand new car brand new everything and then i got my first w-2 from going from 27,000 and got a lot of overtime. And my W-2 was over 100,000. And I didn't have anything to show for it. We were stressed out. Two-year-old at the time. It wasn't going great. And so we said, you know, next move, if I get another promotion, you know, this can't happen anymore.

So we made the move to Fayetteville, North Carolina, got another promotion. And then we just went hard at it. We had seen your book. I think I'd asked Jackie before we had made the move to Michigan. I said, you know, do you have any books recommended? And our church library was your book, and I got it, and I brought it home and put it on my nightstand, and that's where it stayed. And then when I was in Fayetteville, North Carolina, we went to Barnes & Noble,

and I was like hey i know that bald guy it looks like me uh so i got your book went home and read it and jackie we've we've got to do this she's like you know i've been trying to tell you that she's like finally yes thank god you finally got it so that's that's what lit the fuse and that we okay 100 very cool and then you just followed the total money makeover straight through. Absolutely. Very cool. So now that you've done it, you paid off $70,300 worth of debt.

Jackie, what do you tell people the key to getting out of debt is? I think it's being content with what you had. I think you had the minimalists on your show a while back. Great guys. They are. And just being content with what God has given you so that you can bless

other people with what you have extra after you've... And it helps you stay out of debt because you're not buying things you don't need. You know.

Okay. Contentment is a big deal. Yes. Very good. Okay. What about you, Arnold? What do you tell people the key to getting out of debt is?

Credit card points. Just kidding. I'm just kidding. I just want to see your face. No. What? No, no, absolutely not. The key is just not doing stupid math. It's following the process.

You've got a process there. Do it. I know a lot of people that go, Dave's plan's good, but I'm going to do it my way. It doesn't work. Your way works. It's just live less than you make. It's stupid. That's it.

And 22 months later, you don't have any payments. Nope. How does that feel? Ridiculous. It feels amazing. Very cool. What about you, Jackie? Oh, I love it.

It's the way we grew up, and so it's just going back to where we were before. So when you finally start getting on a budget and you're content and you're tearing into this debt, who were your biggest cheerleaders? I would say my grandparents. So the reason they gave us the money at the end, Scott said, you know, Grandma, Grandpa, I've been dumb. You've been telling me I was stupid my whole marriage, and now I finally realized it.

This is my plan. This is what Dave says to do. And they were fully supportive. I'm like, you know, I owe you money, but this is where you are. Are you okay with being my debt snowball here? And they're like, yeah, absolutely. Go get at it. And then you got them cleared off, made them smile.

Absolutely. Yeah, very good. Good for you guys. Well done, you guys. Thank you. We're proud of you. Good job. How old are you two? I'm 28. Well done, you guys. Thank you. We're proud of you. Good job. How old are you two?

I'm 28 and... I'm going to be 32. Okay, good. Very cool. Love it. So $70,300 paid off in 22 months. We've got a copy of Chris Hogan's book for you. Every Day Millionaires.

That's your next chapter. You're going to be one. Awesome. You're on the way. And you've got all the parts in place and you've got a great income. You're going to be one. Awesome. You're on the way. And you've got all the parts in place, and you've got a great income. You're working together. You're doing all the stuff you're supposed to do to go win with money. And we're just proud of you around here.

Thanks for coming down to visit us. Absolutely. Thanks for having us. Arnold and Jackie, 70,300 paid off in 22 months, making 75 to 100. Count it down. Let's hear a debt-free scream. Alright. 3, 2, 1. We're debt-free!

Love it! Woo! Love it. Well done. Great job. Man, that is amazing. Fun stuff. Open phones at 888-825-5225. You jump in.

We'll talk about your life, your money. It's a free call. We'd love to hear from you. Josh is on Twitter. My wife and I are opening a new hair salon. It will have eight booths being rented. Do we need to have an LLC? Well, it doesn't hurt anything.

An LLC is mainly for liability. And if you think you might get sued, you would need to have liability insurance, and you would put your company into an LLC. So that if you're a master tenant, you're leasing the property, and then you're subleasing out the booths, you're potentially liable for stuff that happens in that booth. Somebody gets hurt, falls out of a chair, breaks their leg, whatever, all that kind of stuff.

Now, insurance would cover most of that. But if you want to make sure that the LLC is not helpful for taxes, it does add extra paperwork to operating your life. But if you wanted to, you know, just open the thing into an LLC, that's fine. It keeps everything real separate and clean. You run all your, you know, all your deposits go into that checking account. All your expenses that are business come out of that checking account. You don't get, you don't buy groceries out of your business account

you keep everything separate and get set up so for that purpose it helps you kind of have a structural way of handling things but it's not necessary to spend a bunch of money on a brand new startup idea to do an llc every time and there's all these people going around talking about all the tax breaks there's not any i mean there's not any an llc is 100 pass through uh whatever you have as a loss whatever you have as a gain it all comes through right onto your return i just finished doing my taxes and threw up this week threw up cried had a fit went into the depression and came back out all in one meeting but but i you know've got a bunch of LLCs and a bunch of them own real estate, that kind of stuff.

A lot of our companies are set up with different versions of LLCs around them and so forth. And so it's all about just risk management is the only thing they're good for. And so you don't save anything on taxes. But it's an okay idea to do that in that case. Rick's on Twitter. My wife's a stay-at-home mom but has a 401k left from her previous employer what should we do with that we always recommend

rick you get with a smart vestor pro click smart vestor at daveramsey.com and you roll any kind of retirement that you have that you can move lump sum pension iras 401k 401Ks, 403Bs. You always roll it direct transfer to an IRA. And I recommend and I personally invest in four types of growth stock mutual funds with that rollover. Growth, growth and income, aggressive growth, and international. If you're ready to do some investing like that of any kind, click SmartVestor at DaveRamsey.com. Fill in the information. It'll let you see the list of people we recommend in your area. This is the Dave Ramsey Show. our scripture that is james 125 but whoever looks intently into the perfect law that gives freedom and continues in it,

not forgetting what they've heard, but doing it, they will be blessed in what they do. My friend Stephen Furtick says, Great moves of God are usually preceded by simple acts of obedience. Matt is with us in Denver. Hey, Matt, welcome to the Dave Ramsey Show. Hey, Dave, how are you today? Better than I deserve. What's up? Good, sir. Well, I just started looking into all your stuff and started about four months ago,

paid off about $10,000 of $35,000 in debt, most of which was consumer stuff, so all my way. But back in June, I bought a house with my father as an investment, mostly for him. It's a brand-new house up here in Denver, and we rent all the bedrooms individually. The cash flows really, really well, but I'm on the mortgage. I don't know where that falls in the plan and what your recommendations are. Well, what are you going to do? What's the long-term play on the property? Long-term play is my dad's going to buy out my share of the house and take it solely on his own and probably at that point just rent it out as a whole house to a family as opposed

to room to room, which substantially cuts the cash flow. And at that point, he would refinance and get the mortgage out of your name? Exactly, yeah. Okay. And do we have a timeline on that? Probably about two years, two more years. All right. Well, what I would tell you is this.

I mean, you're sitting there with a mortgage dad on a rental property. And it sounds like you're not running the property it sounds like he's running it i manage the day-to-day oh you do okay yeah oh yeah i'm the live-in property manager basically oh you live in the property and you live in yeah i live in the master bedroom i also pay rent as part of being sort of a combo tenant manager okay all right you're paying rent and the mortgage is yours, and you're managing everything. What did he put into this? He put in the down payment was about $100,000,

and then we spent another $60,000 finishing the basement to its own apartment unit and another about $20,000 putting in the landscaping because that wasn't included with the new build. And so he put in a couple hundred grand. About 180, yeah. Okay. And why did he not put the property in his name? It's in both of our names.

And you're both on the mortgage? Yeah, we're both on the mortgage, yeah. So this was supposed to be a blessing to you. No, only sort of. I was supposed to benefit some from the monthly cash flow because I get a portion of that. I get a management fee for managing the day-to-day. And then when, you know, if we decide to sell it instead of him keeping it in his portfolio, then when we sell it or when he refinances and gets me off, then I'll take a percentage of any appreciation.

But the way things are looking... Was he unable to get the mortgage by himself? We didn't even try to get it by him. That wasn't anything we tried. So he was just trying to make sure you were hooked into the deal? Yeah. The only way that cash flow in this place makes any sense is room to room, really, at the purchase price. And that was kind of the whole goal from the get-go was we could make a whole lot more cash flow renting each room individually.

Well, here's what I would do. Here's what I would do. I would just say, Dad, I appreciate this deal, and you were helping me out by doing this deal and uh the the sooner we can move this uh off of my name and let's make other arrangements the better uh it's working right now i mean we can do it for a little while longer but we talked about originally you know maximum of two years and um you know i actually think i want a letter from the two the two of you agreeing that you're going to that he's going to refinance and get you off of this within two years.

Okay. Yeah. I don't think there's anything bad going to happen. I don't predict a bad situation. But what I do run into with these kinds of deals is you end up two years from now having one memory of it, and he has another memory, and this is how relationships get strained. And so while the deal is still fresh in everybody's mind, make sure let's have it, and let's just write it down, like a term sheet, a deal sheet.

That's all it is. It's not even a binding contract, but it's just to remind everybody what it says, that at the end of two years, he's going to refinance and put it into his name, or we're going to sell it one of the two okay but that way you're not in this situation for a decade because that was never your plan right okay that's exactly what i would do hey thanks for the call chris is with us in salt lake city hi chris how are you good dave thanks for taking my call sure how can i help hey got a question kind of curious about my options and what the future could hold. I've got a rental property that has about $60,000 in equity,

and I'm curious if I were to sell that now, use it to pay off some debts, and then help refinance my current, my primary residence to get it to a 15-year fixed, would that be better? Or is it better to maybe hold on to it as kind of a long-term investment property for retirement? Okay. How much debt do you have, not counting the real estate? Not counting real estate, we have $10,300 for a family loan that has no interest, and then we have a car loan for $17,749. Mm-hmm. Okay.

And what's your household income? About 85. Well, actually, it's more about 110 a year. Okay. Well, you ought to be able to pay off 27 fairly quickly, making 110. Would you agree? I agree, yes. Yeah, that's like a one-year plan, okay?

In 12 months, you ought to be debt-free. And so you don't need to sell the condo in order to get out of that debt. What's your personal residence mortgage balance? $340,000. Okay, and what is it worth? Probably around $410,000 right000. Okay. And what is it worth? Probably around $410 right now. Okay. And what's the interest rate on it?

$4.75. Okay. I don't think you'd refinance that mortgage. You might, but, I mean, you might be looking at saving a half a point. You might get it for four. You might save three-quarters of a point. But you don't need to refinance to get from a 30 to a 15. You just pay a 30 like a 15, and it refinances.

So, I mean, it pays off in 15. It doesn't refinance. But you can pay a 30-year mortgage off of 15 if you pay 15-year payments rather than 30-year payments. That's all I'm saying. And so you can calculate that and start working towards that after you get your debts paid off and get your emergency fund in place. I think I hear you kind of like the condo in terms of owning it and the long-term play on it.

You were just willing to sacrifice it in order to win if that was what winning looks like. Is that what I heard? Yeah, I was just, I mean, you nailed it on the head. I'm more curious if it's more beneficial to hold on to it or to do it now. I think if you'll scratch and claw and fight through the $27,000 in a year and get your emergency fund in place and then start paying your regular mortgage like a 15, then your next baby steps, what's the balance on the condo?

$121,000. Okay. Yeah. Then your next baby step in baby step six, you're working four or five and six, putting money into retirement, kids, college, or throwing money at the house. You can either throw it towards your home and get your home paid off or throw it towards that condo, get it paid off. Either one's fine.

Um, since the condo is smaller, either one's fine. If the condo was about the same amount i'd say pay your house off first but it's you know it's one third the mortgage that yours is so you could knock it off pretty quick and then when that's paid off of course that helps the cash flow and then we use all of that and point it at your house and get your house paid off i i think if you continue to make the kind of money you're making and you continue to be very diligent on clearing debts one at a time systematically like we teach, that you're going to be fine.

My estimate would be seven to ten years, you're 100% debt-free. Yes. And in that case, I'm probably holding this condo. If it's a good rental property, it's going up in value, it's easy to rent, you're not having having trouble being a landlord that kind of stuff i like real estate i i just don't want real estate to own you and and um it needs to be an ideal situation in order to hold it in these kinds of cases but this is this is ideal in that not that we're hanging around with the debt not going to buy any more until we get these debts cleaned up anything like that but i'm going to work through this get these debts cleaned up, anything like that. But I'm going to work through this, get these debts cleared.

Hey, thanks for the call. That puts us out of the Dave Ramsey Show and the books. Thanks to James Childs, our producer, Kelly Daniel, our associate producer. I am Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there is ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. This is James Childs, producer of The Dave Ramsey Show.

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