Changing Your Money Mindset Is The First Step To Lasting Wealth

22:34That's okay. So your question is what? So I'm looking forward towards retirement, and I feel like I should have – I don't have a pension or anything, so I was thinking about investing in something that I could make money at, and I was looking at an Airbnb situation. I just wanted your opinion on those. Well, have you ever had dreams of running a tiny hotel? Yes. Really? I actually have. You love that idea of changing the sheets and dealing with all the issues and the damage and the wear and tear from the party. That excites you. Well, yeah. It doesn't – I don't know how – you're going to sound weird.

23:20I didn't think that also. I'm just kind of, I'm playing it up a little bit, but Airbnb has been marketed on social media as this like get rich quick hack and you'll make 20 grand a month if you just do this. And the truth is it's a lot of work. There's a lot of risk. There's a lot of vacancy and issues to deal with. And your money might be better off put into the stock market if you're trying to make quote passive income. This is not passive at all. No.

23:47Dave Ramsey:You're running a hotel. I know that. Yeah, I know. But I'm looking also for something to keep me busy in retirement. I'm not going to travel the world. I don't do that stuff. I guess I'm a little worried about being bored. Well, I think I'd – well, you do what you want to do. In real estate, there is a spectrum from a hassle spectrum. and along the hassle spectrum goes the income. And so the higher the hassle and the more garbage and trash and weird people you have to put up with, the higher your rent. Okay, so let me give you an example. Some of the best rate of return on real estate is owning a trailer park.

24:39Dave Ramsey:Fabulous return on investment, cash on cash. But you're running a trailer park. Hello. No. Okay. I owned a bunch of lower income property in my 20s. Some of it was weekly rentals, about as close to Airbnb as you could have in those days. But it wasn't really they move in and out weekly. It's they paid weekly because they were irresponsible. So they didn't snort it or drink their paycheck over the weekend. They gave it to me on Friday. and that way they kept a place to live. And the weekly rentals were high hassle. Friday afternoon, lining up at the door of the office, paying us their weekly rentals.

25:20Dave Ramsey:And we made seriously good money because we're renting it for 25%, 30 % more than we'd rented it for by the month. But we had a lot of hassle because of the type of clientele we were dealing with there. I mean, we're having to keep people from running prostitution and drug rings out of our houses, you know? it was a constant pain in the butt. Now, that's on one end of the spectrum. All the way over on the other end of the spectrum, you could buy a warehouse. That's called a triple net lease where they pay the utilities, they pay the taxes, they pay the insurance, and they send you a rent check that's much smaller.

25:57Dave Ramsey:But you will never do anything except look up in the mailbox and see a rent check. They do the maintenance. You don't do anything. But you don't make nearly as much return on investment in a warehouse as you do on an Airbnb. but the Airbnb will work your butt off. You turn yourself into a maid changing sheets after a bachelorette party. No, thank you. The other part I'm seeing here, Michelle. I'm going to find a different side hustle. I don't see the money to even buy the Airbnb in these numbers. Yeah, where are you going to pay? How are you going to pay for it? Oh, yeah, no, I'm not doing this right away.

26:29I'm trying to think of, you know.

26:31Dave Ramsey:Okay, I would buy some rental real estate if you want to buy some real estate and pay cash for it later on when you're ready to do this. if you did it six or seven years from now, maybe you got a million dollars your half million has turned into at that point. And maybe you put three or 400 ,000 into a rental property and that's part of your deal. And if you want something to do, just go open a small business, have a side hustle. You can solve the border without all of this. Yeah. I personally, I'm just not a fan of the Airbnb. I think it's overhyped, overdone. Well, the numbers are now showing there's an oversupply and not enough demand.

27:06Dave Ramsey:Well, in some areas, in some areas, there's been legislation come out to stop them from happening because you're no longer allow you to run a hotel in the middle of a neighborhood because it's not zoned for it. And they're stopping it in some areas. So people that bought a house, got a big old payment on it because TikTok told them to be an Airbnb landlord. Then now they're screwed. So now I'm not a fan. I'm not a fan. If somebody wants to do that, you ought to do 10 of them, and you ought to just hire four maids that work for you and three repairmen. And you plan on being over there every week and plan on have the cops on speed dial.

27:46Dave Ramsey:And then you've got your Airbnb, ready, set, go. And that's what you're dealing with. TikTok doesn't tell you that part. The neighbors are going to call you. They're going to go, hey, the freaking music over there, hello. It's cranked up again. This is not a rock venue. It's a house. You know, I mean, it's just this is the kind of stuff you don't deal with all the freaking time. Not a fan. Not a fan. I've seen a lot of these videos, Dave, and I know exactly where Michelle got this from because people send me these videos saying, what do you think about this? And it's some couple going, we retired and we don't work anymore.

28:21We just own 17 Airbnbs and here's our numbers. We make a million dollars a month and you can buy our course and we'll show you how to do it. So that's how you're making a million dollars a month. Why are you selling a course? That's the big question mark. Everyone. Well, at least I have not everyone.

28:35Dave Ramsey:And the course is only three thousand. So I'm going to sidestep my million dollar income and I'll go over here and make sure for three thousand dollars I'm distracted. This is a warning. Untrue. Untrue. Untrue. Yeah. Lied. You just lied. They're selling you a dream. A nightmare. That's it. Keep you up, Knights. Michael's in Miami. Michael, what's up? Hi, Dave. Thank you for taking my call. I have an interest in Dilemma. I'm trying to get some advice. Interesting thing is I work for a credit union, so I'm kind of thinking about what I would do. I recently moved from Jacksonville, Florida to Miami.

29:13I sold a house. It was free and clear. I didn't have any debts. And I bought a condominium here in Miami. Obviously, the lifestyle is a little bit higher, and the condo that I bought was$600 ,000. I have a mortgage right now of$154 ,000 because that's what was left after I sold my house in Jacksonville. And I'm contemplating whether or not I should pay the mortgage off with my investments, even though I would be paying taxes and capital gains on those.

29:41Dave Ramsey:A hundred percent. I do it by nightfall. Okay. I've never had anybody in a – there's people that hate Dave Ramsey for almost everything. I mean, there's entire websites devoted to hating me. No one has ever complained that paid off their mortgage because I told them to. I've never had anybody call me back and go, oh, you're just so dumb, Dave. I've never heard that. They gripe at me about everything else. The Airbnb call we just got, we'll get hate mail for days from that, from some of you people that are all twisted up about that. Okay, that's fine. Get in line. But no one ever bothers us when we tell people to pay off their mortgage, man.

30:18Dave Ramsey:I've never got anybody that said, don't do it. Dave's crazy. He doesn't know what he's talking about. I paid off my mortgage and then I went broke. It can't happen mathematically. Said no one ever. Now, the key is it sounds like he has non-retirement investments. Yep. And he can sell those. Now, hopefully it's long-term capital gains, which is going to be much lower than the short-term capital gains, taxed ordinary income. I'm sure it is. I'm sure it is. So if that's the case, do the math. You'll go, okay, it's 15 % of whatever the gain is. I'll pay 20 grand and never have a mortgage again. That's a pretty sweet deal.

30:49Dave Ramsey:The other thing is this, Michael. The fact that you asked this question on a nationally broadcast podcast with 30 million people listening in tells me you desperately want to pay it off. And you just wanted somebody to tell you to do it. Do it.

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32:54Dave Ramsey:So two years ago, for the first time, George and I did an event called Investing Essentials, and we unpacked my personal playbook on investing, and that includes why I don't invest in some things, for instance, Airbnb, like we just talked about, but other real estate that I do invest in and why and how I choose that, and other things like mutual funds and why I do those and why I don't do other things. And we get into the detail, and George is really good at unpacking some of that stuff as well. We're going to do our third one ever. We've only done it a couple times, September 1st and 2nd. It's a virtual two-night event, Investing Essentials.

33:35Dave Ramsey:It's the only place you get this information. We're going to go through the basics on investing for just a minute, and then we're going to go deep dive into this stuff. Tickets are$199. This year we're going to unpack some stuff. We were just working on it earlier today. We're going to unpack some stuff on estate planning and some stuff on legacy and a few things like that that you guys have requested because one of the things we always talk about around here, and people love to use that as their motivation, is why am I doing all these things so that I can change my family tree? And what does that mean?

34:08We're going to get into the nitty-gritty, nerdy details. If you've ever wanted Dave, you know, with the formulas and the spreadsheets, this is your chance to really nerd out and learn some things.

34:17Dave Ramsey:Nerd Dave. There we go. RamseySolutions.com slash events. Tickets are$199 September 1st and 2nd. Investing Essentials. Or you can click the link in the show notes if you're on podcast or YouTube. Lloyd's in Waco, Texas. Hi, Lloyd. How are you? Hi, Dave. I'm doing very well. Thank you for taking my call. I hope you're doing well also. We are, sir. Good, good. I'm a little bit nervous. I've never put our story out like this for anyone, but my wife was diagnosed with cancer, a rare cancer, three years ago, and we had a thriving business. I'm a lifetime entrepreneur. I've done lots of things, but we ended up about six months after we found out about her cancer, we were able to sell our business and make some really good financial deposits so that I could be away from that and spend time with her because we weren't sure at that time what we had left.

35:19Dave Ramsey:So I put the money into CDs. I put some in an Edward Jones account, and here we are three years down the road, which we're so thankful to be there, but our living expenses, we're not making the money from the investments to cover our living expenses yearly. And so I'm just wondering, is there a better place that I need to put money? Or I don't really want to go back to work and start a new business. I want to be available for her. and I'm just in this cycle of anxiety about running out of money and fear and heartbreak and sadness and just all of the above is just kind of piling me in. And I just started listening to your show about three or four days ago.

36:07Dave Ramsey:You said she was diagnosed three years ago. So how's she doing now? She's doing really well. Well, we've been through three lines of chemotherapy and fixing to start a fourth, just kind of general chemotherapy. It's nonspecific. She's had some progression, which she'll have progression, and then we'll have the fears that come with that. And then we'll go, and everything will be stable. And so that's a win for us. You know, doctors give prognosis, but that's according to them. You know, we're believers in Jesus and he can intervene at any moment. And so, you know, that's what we pray for. But the truth is, though, that as the interest rates drop, then, you know, so does the money it's accruing and then pulling money out.

37:04There's less money there to have interest on.

37:08Dave Ramsey:And so anyway, just a little bit of advice. Let me get a couple other things. What's the size of the nest egg that's left? Well, in Edward Jones, we have right at a million dollars. I had$100 ,000 in E-Trade with CoreWeave, and that's dropped to about$65 ,000. So one of my questions is, do I sell that and put that somewhere else? I have a half million in a CD at a bank going 3.4. I want to do something like that. And what is your monthly need?

37:48Our health insurance alone is about$50 ,000. And I would say our monthly needs, absolute needs, are about$120 ,000 to$140 ,000. You know, they vary depending on if we're going to use them.

38:02Dave Ramsey:You mean$120 ,000 a year? Yes, yes, yes. So you need$10 ,000 a month. Okay, so we need this$1.5 million to produce$10 ,000 a month, and it's not. Correct. Okay, all right. Well, if it was sitting in— We have no debt. We own our home. We own our land. And then in addition to that, I have a$2 million investment in the company that I sold. I reinvested with it as a larger company. Does it create revenue monthly? It does not, no. It does not. It will only pay off when that company sells. And there's no buyout provision? No. Early. You're stuck. Tell them what they do. Yes, but I do think it's a good investment.

38:54Dave Ramsey:I wasn't questioning that. I'm just trying to learn your terms. Yes, no. No, there's no buyout. So$1.5 million is what you have available to you that's not in retirement accounts? That's correct. It's not in retirement accounts. Yeah,$1.6 million, actually. Yeah, with the$100 ,000. No, it did the$100 ,000 down to$65 ,000. But yeah. All right. So if it made 10%, you'd be fine? I think so, yes. Yeah, and the S &P 500 averages more than that. And for the past five years, this averaged way more than that. This year, it's up 10 % year to date. Yes. So your investments are – that portion of your portfolio is underperforming what you need it to.

39:38Yes. Do you know what you're invested in in the Edward Jones account?

39:41Dave Ramsey:Well, I don't have it all in one. I do not. I have a copy of what it's invested in, but I didn't pull it out. As a group, this stuff is underperforming the S &P, which it should because you've got 500 in a CD, so it should be. Yes. Yeah. So if I'm you, I'm moving it more to market rates of return and conservative mutual fund investing that has long track records that's going to get the portfolio performing at a rate that doesn't burn you up. I think it'll run in perpetuation.

40:16Okay.

40:17Dave Ramsey:But the problem is you've got at least a third of it. Well, I mean, that E-Trade account sucks beyond belief. That's horrible. But nothing should be down 35 % in this world that we're in right now. So that was just a horrible thing there. But that's a side. It's a small amount. But, I mean, if that$565 ,000 plus that million at Edward Jones goes to work to the tune of 10 % a year, that's$160 ,000 a year. Correct. Yeah. And so what I want you to do is probably get a second set of eyes on this other than who you've had and go to Ramsey Solutions and click on SmartVestor for SmartVestor Pro in your area and sit down with them and with the heart of a teacher and say, I need this million five to conservatively, without taking huge amounts of risk, to produce enough to feed our family while we go through this cancer battle.

41:17Dave Ramsey:and I think you can. I think you can. And then they need to teach you, you know, what risk you are taking, what marketplace risk is there, and, you know, but if the marketplace averages 11 % and you pull off 10, it'll run hypothetically forever, right? But you don't need it to run forever because either we're going to have some healing this side of heaven or some healing in heaven, and then there's going to be a resumption of your life at that point. You're not going to be fighting this same thing 15 years from today. Would you agree with that? I do agree with that, unfortunately. Yeah, one way or the other.

41:58Dave Ramsey:No, it could be fortunately. She could get healed. Like you said, Jesus could touch her. And I hope he does. Yeah, I do too. I do too. Or he could touch her and let her sit beside him and wait on you. You know, those are the two options. That's one of those two things is going to happen, not a 15-year slog. You're in better shape than you think. You just need a clear plan of what we're going to do with this money. I'm sorry you guys are going through this. What a horrible thing. And to have to sit and do math and figure out stuff in the middle of all this emotion, wow. Yeah, sit down with a SmartVestor Pro at Ramsey Solutions.

42:30Dave Ramsey:They'll help you put together a portfolio that'll work on this. This one isn't working.

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43:59Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm Dave Ramsey, George Camel, Ramsey personality. Number one bestselling author is my co-host, Amy, is in Detroit. Hi, Amy. How are you? Good. How are you? Thanks for taking my phone call. Sure. What's up? So my overall question is mostly to do with my son. He's going to be a senior going off to college here in another year. We, my husband and I, I know we can financially cover his tuition, room, and board for college. but I fear that one, it's not teaching him financial responsibility because obviously the money comes from somewhere.

44:42But on the flip side of it, am I putting him in a massive hole when I could easily cover it? There's also a little caveat to it where I do have a bulk amount of money set aside, but was given to me by a deceased parent. And so I'm a little tied to that money, unfortunately. So I'm kind of, I go back and forth. Okay.

45:08Dave Ramsey:Well, the last part of it is up to you to figure out. There's not a Ramsey answer to you being tied emotionally to an inheritance situation. That's something you need to work through and you obviously are. We paid for our three kids college and room and board. all three of them however were financially responsible and knew how to work and um were not entitled brats they did know the value of a dollar before they went to college right if the guy's a senior and by now he hasn't learned it not paying for his college is not going to fix him it's too late well he he has a job um and we I mean, we talk to him a lot about being financially responsible.

46:00We give him an allowance, and it's not that much. And when his money ran out, I didn't just put money into his account and say, you know what I mean? How about it? He had to get a job, which he now has a job and all that good stuff. It's just a very much different upbringing than what I had to deal with. Yeah. My parents didn't have any money, so I didn't have a choice.

46:24Dave Ramsey:Yeah. Right, exactly. It wasn't like there was an option here. So with our three, we had them at the stage they were juniors and seniors operating their own checking accounts and doing a monthly budget that they lived on money that we gave them for normal teenage operations because we're still their parents and money that they earned. And we looked over their shoulder at that budget and helped them learn the skill of living on a set plan their junior and senior year of high school. So that when they went to college, we said, all right, we're writing a check for the tuition, writing a check for the dorm.

47:02Dave Ramsey:In addition to that, you're going to get this small amount for campus living and that you better have a budget for that and you better maintain that. And if you want a$200 set of shoes, this isn't going to cover it, so you're going to need to get a job while you're in college. And all three of mine at different times did do different things, either in the summers and or while they were there, and worked jobs while they were in college. So, yeah, but what that was was the fulfillment of something we'd already been working on rather than a lesson that they were learning there. They were living out the lessons that they'd already learned.

47:49Yep.

47:50Dave Ramsey:And so it didn't ruin them. All three of them are productive adults today. I think I know that he will be fine, and he's one of three. So I've got two, and that's the other thought. I've got two more kids behind him, and the money only will go so far, correct? Then we need to budget that out and just say, okay, you're going to this school. I'm paying for it, so you're going to this school. We don't need to go on a college tour because we're not going there. You don't need to traverse the country. So have you guys had those conversations thus far? He's a very smart kid. There's a very great possibility that he will get some sort of scholarship.

48:33Great. That's even better. Yeah. And, you know, my husband and I are still, we max out our 401ks. We have quite a bit in our 401ks. So I feel retirement-wise, we're fine. It's just this cash that, you know, is kind of set aside. Is it the smartest thing to do? How much is set aside for college specifically? Just like right now,$300 ,000. That's plenty. No, not for three kids, is it not? for him to get through. So if he goes to a state school, let's say, you might burn a third of that. Yes. That's reasonable. Correct. And then the next kid, hey, you're going to go to a state school and we're going to pay for it and you've got to finish in four years.

49:16Dave Ramsey:You get scholarships and work while you're there. You know, nothing wrong with all of that. That's all a good plan. But the biggest problem we run into with college students is that are with parents in this situation, Amy, is they don't ask the question that you're asking and they don't use any common sense. And they go, well, my kid told me he was going to this school that we can't afford. And I'm like, well, see, there's your problem. My kid didn't tell me stuff. I told my kid stuff and get that backwards, right? This is what you're going to do. And cause I'm paying for it. And if you want, don't want me to pay for it, then you can do a lot of stupid stuff if you want to.

49:52Dave Ramsey:But if I'm paying for it, this is what we're going to do. Cause this is what's good for you. and it's what's in the family budget and what makes good common sense and so on. You're going to study something that is actually usable. You don't need to get a degree in left-handed puppetry or German polka history. You'll end up being a barista. No, with a four-year degree. No, thank you. That's not the plan. And so no reason to go to college if you're going to do that. We can save all that money and just buy a lot of coffee for you. If you're taking the family on a vacation, you guys get to decide.

50:25The kids don't get to say, well, I want to go to Paris. Or I guess we're going to pay to go to Paris. You decide as the parent if you're paying for it. That's a good point. So there's a lot of things in life. And you give the kid carte blanche. Of course, they're going to go, well, I want to go to this school across the country that's out-of-state tuition.

50:41Dave Ramsey:Where my girlfriend is going. This is how they picked a college. Where my girlfriend is going. And three weeks after they're there, she breaks up with him. Famous last words. Yeah. Because you followed your girlfriend, a freak in Minnesota. Give me a break. Then she realized, oh, I got a lot of options. He wasn't the only girl at the dance. That's personal, Dave. It's personal. Did that come up, George? I think so. Yeah, that happened to me. Dancing's a problem. It's a rite of passage. Not the dancing part. Not the dancing. Broken up with after you chase a girl across the country. Did you really do that?

51:09I think I accidentally did. I moved south, and I had a girlfriend who was from the south. Yeah. So I think that was part of it.

51:15Dave Ramsey:You told people God told you to do it, though, right? Oh, gosh. Those are my least favorite words. After a summer camp, she breaks up with you. God told me to go to Tennessee because that's where she is. And I go, why didn't he tell me? Why was I not a part of this conversation? I feel like I should get a vote too. Oh, man. That's brutal. It's got dark real quick. Oh, it did. It went downhill fast, George. But back to the caller's question, it's not virtuous to let your kid go into student debt because you don't want them to become entitled. No. They're not going to have a better work ethic just because they went to debt.

51:49Dave Ramsey:You'll get back backwards there. That's going to take you places you don't want to go. You are giving them the right kind of advantage if you do that and they already have the character to carry. Yeah. But just involve them and go, hey, all of us have limits. We're not in Congress. So we have limits.

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54:17Dave Ramsey:Since we started this show 35 years ago and started teaching classes and doing live events and writing books, our goal has simply been this, to set you free from debt so that you can build wealth so that you can be outrageously generous, retire with dignity, and change your family tree. So what is the shortest distance between where you are and wealth? What's the fastest methodology? Is it crypto? Nope. Is it day trading? No. Is it whole life life insurance? No. And you know this if you've listened to the show more than 13 seconds. We already would have covered, is it leasing a car? No. So what are the things that cause you to build wealth?

55:14Dave Ramsey:Well, getting out of debt, being on a plan, being in agreement with your spouse, getting an emergency fund in place, and systematically investing in your 401K and getting your home paid off. And those are the baby steps that we walk you through to get there in detail. Total Money Makeover book, over 20 million copies now, outlines exactly how to do that. And for the last several years, EveryDollar, our budgeting app, has been holding your hand and helping you track the progress and follow the fastest, most efficient method to go from where you are to wealthy called the Ramsey Plan. It's personalized recommendations, coaching for your situation, and tracks your progress.

55:57Dave Ramsey:So check out EveryDollar. You can download it for free in the App Store or Google Play. Dylan is in Springfield, Illinois. Hey, Dylan, what's up? Hey, Dave. My question is, how do I have an intelligent conversation with my mom about credit and credit cards? She's a realtor. She has an 850 credit score, and she has it for a long time. and she wants me to get a credit card as soon as I turn 18. And my thing is I don't want to deal with it. I don't want to have the temptation in my pocket. So how can I have that talk with her about credit cards? Also, I own two businesses and I do not want it seeping into them.

56:44Okay.

56:48Dave Ramsey:There's not an intelligent conversation you can have with her. she has made up her mind. I agree 100%. And so the best thing to do is just not have a conversation about it. And when you're 18, just don't do it. Okay, yes, I agree with you, but... You don't have to convince her in order to not do it. Yeah, then I'm going to have to listen to it for the rest of my life. No, you don't. Shut it down. down i've got relatives that i love dearly that vote wrong that's fair and i'm not going to have a discussion with them about it because they vote wrong and they voted wrong their whole life they have a screwed up political view and they think i do and so in the name of love we don't discuss it yes sir they're not going to change i'm not going to change because i'm right so then how would i um i want to buy a house i have a good down payment saved up how would i uh without her help because obviously she wants me to go through the fico score how would i um get a mortgage then and that's not a balloon loan because i do not want to you know i do not want a balloon loan george you've done it twice yeah it's called manual underwriting.

58:10And fun fact, before the 90s, this is how all loans were underwritten. They didn't have the FICO score to make it more automated. So all you need is 12 months of on-time rental payments. So you can do that while living at home. You can do that while living on your own. You're going to need some alternative trade lines like your utility bills. So cell phone bills, insurance bills, on-time, regular payments. That's what they're looking for. And then a strong down payment and you're going to be in better shape than most people.

58:37Dave Ramsey:A steady job. Yeah, they want to show income, your tax returns. If you're self-employed and you own two businesses, you're going to have to have two years tax returns. Two years, okay. Which you have to have with a high FICO score too, by the way, self-employed. Yeah. So that doesn't affect it. But it's going to take a real person looking at all this. And you're not even 18, so you don't even need to worry about any of this, Rhett. Well, we always have this conversation, so it's always been like a back and forth. Yeah, quit having the conversation. It sounds like you're going to move out as soon as you turn 18.

59:06I'm going to try to.

59:07Dave Ramsey:She doesn't want me to, but I want to. Yeah. Yeah. You know, so you have come to the correct conclusion. She has not. And that's okay. It's all right. I got lots of friends that I, you know, one of my friends leased a car the other day and brought it over, showed it to me. How stupid is that? You know? But what did I do? You think I'm going to trash the guy? You went, cool car, man. Nice. Cool car, man. It's a nice car. And I go back in the house and I go, what in the world is he thinking? But anyway. He's not looking for advice. He's looking for some— He was looking for affirmation for his cool car.

59:37A friend to go cool car.

59:38Dave Ramsey:Yeah. I'm not going to get into how he—I mean, he did not ask. I quit asking questions. I quit answering questions people don't ask. That's wisdom. You know, it's that simple. Can you imagine? You know, you didn't ask me about who you're supposed to vote for. I won't tell you. It's okay. You know, you don't ask me about this. I'm not going to tell you. And that's the problem. She's answering questions that weren't asked. And, but yeah, so— You've decided your values. She decided hers. No one's going to change. So let's go back, though, for the sake of everybody else listening, not for Dylan, but for the sake of everybody else listening, the FICO score is an algorithm that mathematically is made up of five components, all five components, how you interact with debt.

1:00:20Dave Ramsey:The type of debt you have is one. How much debt you have is another. Whether you pay your debt on time is another. Whether you have too much debt is another. And those are the components that derive your FICO score. So 100 % of the FICO score is how you interact with debt. It's an I love debt score mathematically. And if you love debt and you continually want to go into debt, you need to build your FICO score. If you're not going to go into debt and you don't want to give the bank all your money, instead you'd rather invest it and keep it, then you don't need a FICO score. It is not a measure of your financial wisdom.

1:00:57Dave Ramsey:It is not a measure of the growing net worth. It is not a measure of your income. My grandpa could die and leave me$2 million today. My FICO score does not change one dime unless I use that to pay off some debt. It doesn't change a dime. It doesn't change one point. An 850 FICO score simply means you borrowed money like you're freaking in Congress, and you pay it back, and you love the bank so much you just play kissy face all the time with Bank of America, so you've got an 850 FICO score. So when somebody says, Dave, I have an 850 FICO score, I always look at them and go, I'm so sorry. That cost you at least$100 ,000 in interest to get there because you've been paying a lot of interest all these years.

1:01:37Dave Ramsey:No, I just paid my payments on time. What do you think the interest is, Duber? It's built into your payments. Stupid. It's the wrong game to play. It has nothing to do with your net worth, nothing to do with your income, where you're going financially. It just says I haven't been bad with debt. So you need to get a credit card so you can grow your FICO score. Why? So I can borrow money on my car so I can grow my FICO score. Why? So I can borrow money from my student loans. Why? So I can grow my FICO score so I can get a house. Why? So I can go into debt, go into debt, go into debt. It's like a dog chasing its tail.

1:02:07Dave Ramsey:And all of America has bought off on this freaking lie that the banking system has sold you. And so now you've got Samuel L. Jackson, an actor, saying, what's in your wallet? Money, because I'm not messing with you people. It's amazing how that works. It's amazing. So, you know, what's in my wallet ain't got anything to do with any of that crap. So Dylan is actually right. Oh, and by the way, George explained you can buy a house on a mortgage without a FICO score. And everything else you should be paying cash for. And you should pay off your house as fast as you can. And if you can pay cash for your house, you should pay cash for it.

1:02:44Dave Ramsey:And then you really have no reason to ever care again. Which is kind of where I've been for like 30 years. It makes me happy that you could buy the apartment complex, but they wouldn't let you rent there. That's pretty hilarious. Yeah, that is funny. Oh, Dave, we... Your FICO score, Dave, is undeterminable. You don't have a FICO score, Dave. You can't rent here. I know I can write a check and buy the whole thing, but I can't rent there because some idiot that makes$26 ,000 a year has a boss in Atlanta. You know? But I wouldn't pay to watch that interaction. It's just, I mean, this is the thing.

1:03:15Dave Ramsey:This is how dumb the system is. It's broken. It has nothing to do with your wealth. It has everything to do with how much money you have given to a bank, a car company, a credit card company, a student loan. This is where your FICO score comes from. It's kind of a measure of how debt dumb you've been. It's your debt dumb score. Rename it.

1:04:00We'll see you next time.

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1:05:27Dave Ramsey:Cindy is in Chicago. Hi, Cindy. How are you? Way better than I deserve. How are you? Just the same. What's up? Nice. I am 55 years old. I currently pay about 40 % of my take-home in rent, and I was wondering if it makes sense to get a mortgage that would be maybe$100 more than I'm spending right now. How much debt do you have? Zero, thanks to you. Good for you. I didn't pay it. You did. Congratulations. Yeah. How much you got saved for your down payment? Only$10 ,000. Oh, okay. What do you make? I make between$62 ,000 and$67 ,000 a year. And what's your career trajectory look like? Is it going to increase your income?

1:06:13It can. I almost died a few years ago. Chose to go back to waiting tables because I love it. I'm actually making more money than I was managing restaurants. but I can always go back into management. And I can also pick up extra shifts if I need some extra money. Okay. All right.

1:06:32Dave Ramsey:Well, the reason we tell folks to have a house payment or a mortgage or a rent down around 25 % of your take-home pay, not of your income, but of your take-home pay after taxes only, not 401K and not health insurance, but just after taxes, is because we want you to have the wiggle room in your budget to be able to build wealth and invest and to be able to save up and buy the next car and to be able to save up for Christmas. But if you pinch your budget with a house payment that's a high percentage of your take-home pay, people call that house poor. Economists say you squeezed out your disposable income.

1:07:11Dave Ramsey:It means the same thing, right? You just pinched yourself and you left no room. and then if something comes up, then people feel forced into debt to cover the next thing that comes up. And that's what we want to avoid. Yeah, renting right now, I know it feels like you're throwing away money, but you're buying yourself some patience and reducing your risk because home ownership has its own headaches plus all the fees if you need to buy or sell. And so I don't want you to get into this thing thinking that you're trading one bad thing for a great thing. Home ownership is great, but 43 % of your take-home pay for the foreseeable future is going to put you in an ouch.

1:07:47Dave Ramsey:That's going to put you in an ouch. I've been doing that for the last five years because I'm in the Chicago suburbs, and rent is about 40 % of my take-home. Well, I'm just telling you, mathematically, and you have$10 ,000. Well, I have$10 ,000 for a down payment, and I have a fully funded emergency fund. Okay. How much is in the emergency fund? $10 ,500. Okay. And so in four years, you came up with$20 ,000. So that's good. That's better than most people. But if you had had a more reasonable percentage of your income going, it's what we're pointing out. And you can't use the argument, I live in Chicago, math doesn't count here.

1:08:32Dave Ramsey:Math counts in Chicago. It has to math wherever you are, whether you're in Manhattan or you're in Silicon Valley or you're in Chicago or whether you're in Woodbury, Tennessee, out in the middle of nowhere. The math still has to math. You've still got to figure out something to do there. You need to pull some different levers. One might be I can't live in Chicago. I'm going to move to the suburbs if home ownership is a real dream or I'm going to make more money. Those are all things you can do. but I wouldn't go about this plan. I would not sign you up for 43%. I agree with George. I like where you are, and I think you're doing a good job overall, especially considering how you pinched yourself here.

1:09:15Dave Ramsey:I mean, you got this thing pretty tight. And so I don't want to sign up the permanent version of that without seeing some kind of income increasing or price decreasing. So I'm going to be shopping and thinking about what's my commute going to look like if I go out to an area that I can actually afford. And there are areas in the Chicagoland area that people can afford. That may not be where you want to be. I don't blame you for that, but that's there. You've got to watch out. Those Illinois property taxes will get you. Yeah, for sure. Megan's in Philadelphia. Hey, Megan, what's up? Hey, thank you so much for taking my call.

1:09:53Sure. How can we help? So I'm wondering if I should sell my car to eliminate my car debt. I am currently$36 ,000 in debt. About$10 ,500 of that is my car debt. $9 ,000 is my credit card, and the rest is student loans. But I'm wondering, I drive a 2018 Jeep Wrangler, and I have 93 ,000 miles on it. I only bought it four years ago, and I think I can get about $18 ,000 to$19 ,000 for it.

1:10:30Dave Ramsey:What do you make? What was that? What do you make? I'm an on-the-road salesperson, so I drive a lot, but I should make about$98 ,000 this year. Okay. All right. If you really tightened down your budget and lived on beans and rice and rice and beans and quit going out to eat and quit doing any vacationing and you just worked all the time, how fast could you clear up your$36 ,000 making$90 ,000 by yourself?

1:11:01So, over the last few months, I've paid a little over$10 ,000 on my credit cards. So, like$3 ,000 a month? Could you do that consistently? Yeah, exactly. I've been about$2 ,000 to$3 ,000 a month. Yeah, that'd be one year. So, less than 12 months, you'll be debt-free if you keep up this pace, which means if you like the car, keep the car. Okay, because I do really like the car, but I've been listening to you guys lately. I'm really focused on just getting rid of all this debt.

1:11:29Dave Ramsey:Yeah. Our rule of thumb is two things. One is if your car, all of your cars, anything you own vehicle with wheels and or motors or batteries, any of that stuff goes down in value. If the total of all that stuff you own that's going down in value is more than half your annual income, you have too much tied up in things that are going down. You don't have that. The second rule of thumb we use is can you be debt-free without selling the car inside of two years? You can. You can. Right. And then the third thing is do you like the car? If you want to sell the car anyway because the thing sucks, that's fine.

1:12:09Dave Ramsey:That's a different discussion. But what you're saying is do I need to do this to be financially wise? No, you don't. You keep the car and you pay it all off in a year. Okay. Okay. Yeah, because that's what I was thinking. I could kickstart just getting into my student loans and paying them off because I would like to buy a home. It will kickstart it, but it will only kickstart it by about four or five months. Okay. You'll free up that payment. And you've got to have something to drive because you drive for a living. Exactly. So you've got another problem then. So the kickstart is minimal. Would I trade four months for this?

1:12:47Dave Ramsey:No. I think you're doing such a good job already,$3 ,000 a month knocking off debt. Way to go. I would just stay on that track and, you know, just go as fast and as hard as you can go. And where your broke friends are making fun of you like you joined a cult. Right. What's your car payment? It's$490 a month. Well, here's a challenge. If you can figure out how to spend less and make more to the tune of$490, you've essentially freed up that car payment. So that's an interesting scenario. Challenge yourself to go, what can I cut out of my budget to shave off a car payment? Costco samples for dinner.

1:13:26I've seen that video. That was a pretty hilarious one. That's funny. It's the affordability crisis. This guy's going to Costco to eat from the free samples. Pretty funny stuff. Might as well get the$1.50 hot dog at that point. Yeah.

1:13:37Dave Ramsey:Just might as well just lean into it while you can. Yeah. But you know what I love about this is her willingness to sacrifice was everything. That tells me she's actually going to get out of debt. She's going to win. Five years from today, she's going to be in a completely different place financially and emotionally than she's ever been in her life because of the trajectory she set herself on three months before she called us. Yeah. And then all we did was say, keep going. Go, girl. Go, girl. It's pretty rare we tell you not to sell the car. Usually someone's fighting on us of why they won't sell it.

1:14:07And that tells me it's going to be a tough ride to get them out of debt. No pun intended. I'm willing to win. I'm going to pay a price to win, including selling this car that I love, driving a beater across the country just to get out of debt a little bit faster.

1:14:19Dave Ramsey:Yeah. That's the energy you need. That's the mentality instead of like, I'm going to keep this and I'm going to keep this. I need something reliable and nice. I want to keep that. It's got heated seats. I have to have something safe. It's the heated seats. You're killing me. And ventilated now. Even the steering wheel now is heated. I grew up where the only airbag was your mother-in-law. Oh, gosh.

1:14:44Thank you.

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1:16:44Dave Ramsey:Ramsey Show Question of the Day is brought to you by Y-Refi. If you miss your private student loan payments, it can get your budget stuck in neutral. Y-Refi helps borrowers explore fixed-rate refinancing and payments based on what you can afford so you can start moving forward again. No neutral, forward. Visit Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey might not be in all states. Today's question comes from David in Missouri. Together, my wife and I earn$85 ,000 a year, and we have been using the debt snowball to pay off debt. The only debts we have left are$35 ,000 on two cars and$85 ,000 on our mortgage.

1:17:26Would getting a$40 ,000 extension on our home loan to pay off both vehicles be a good idea? We would then put every extra dollar we have toward the principal balance. Is there something I'm overlooking or does this make sense financially? Well, you're just moving the debt around. So it's going to increase your loan payment to the tune of that$40 ,000 balance. So no, I would not do this. It feels like you did something, but you just played a little shell game.

1:17:54Dave Ramsey:Yeah, it's the same question of would I borrow on a home equity loan to pay off my cars? Well, you didn't pay them off. You moved your cars onto the home. It's like getting a HELOC to pay off your car payments. Well, now you've got a HELOC payment to deal with with variable rates. Here's what's interesting. The Bible says, out of the abundance of the heart, the mouth speaks. So sometimes if I listen to my own words, they reveal to me how stupid I'm being. Because my words are coming out of my heart, not my brain, and I go, wait a minute. So listen to this. I'm going to pay off my cars by not paying my house.

1:18:36Dave Ramsey:That's not paying off your cars. You're lying to yourself. You're just going backwards. You're moving the debt. I'm going to pay off my debt by getting a home equity loan. No, you're not. You're lying to yourself. You're going to move your debt from your credit cards to your home equity loan, which means you went and bought a stake at the restaurant on a credit card, and now you refinanced it into your home, so you're going to finance your stake over 30 years. Talk about refinancing a depreciating asset. That's long gone. David is with us in Greenville, South Carolina. Hi, David. How are you? Good.

1:19:19Dave Ramsey:How are you doing? Better than I deserve. What's up? um so recently divorced in the last three years um just kind of financially starting at zero again and um between child support support and um credit card debt that i took on in it i am i cannot find any motivation to save um money it feels kind of fruitless whether it's an expense that comes up or spend a minute to take my kids on a modest vacation. I'm trying to figure out where to start. How long were you married, David? That I had before this, 10 years. Why were you divorced? She left. We both raised our kids in Christian faith, and about two years before she left, she kind of walked away from faith, and ultimately thought she could find a better life at the end of the day.

1:20:20Dave Ramsey:And the divorce was final three years ago, right? A year and a half. Exactly. Three years ago was when she left. Can I tell you what I just heard you tell me? Yeah. This is still so fresh for you. Your heart was destroyed by this. She took it out of your chest and walked all over it. Not only did she abandon the faith that you and her had agreed to, but she abandoned the commitment that she had made to you, and you are not even close to over it. And that's why you don't have any motivation. Your heart is still broken, and you have not had any healing this side of the divorce yet. That's what I heard.

1:21:06Dave Ramsey:Am I wrong? I mean, I definitely don't disagree that there's healing that will be continual for a very long time. I think that I'm a little bit pragmatic in understanding, like accepting that this isn't what she wanted and so that part was easier to deal with. I think the kids is a big heartbreak part for me over everything. And so I think financially my money goes, and it's not making crazy. It's taking a month down when we have a weekend together. I make about 70. Okay. And how much credit card debt did you take on when she walked off from you? I took on all of our credit card debt so that I could essentially buy more time with my kids, which is 50K.

1:21:57Dave Ramsey:Well, that's a lie you told yourself. The court decides how much time you get with your kids, not whether you take on credit card debt. Well, no, I mean, we negotiated. I know. You negotiated and you lost. It wasn't because you traded$50 ,000 for your kids. That's not true. You lost the negotiation, and that's all that's true. So anyway, you took all$50 ,000 in credit card debt. You got$70 ,000 income. You got your heart trampled on, and you feel hopeless. Of course. That's normal. That just makes you a human being. I think it's going to take you a little while to get your fight back, to get your swagger back, to get your, I'm going to grit my teeth and I'm going to come out swinging and I'm going to knock this stuff out and I'm going to go have a great life.

1:22:44Dave Ramsey:The second chapter of David's life is going to be a great chapter, but you're not there yet. I hear too much sadness in your voice. Do you hear it, George? Yeah. David, this is going to be really tough until you get some healing. And it would be weird if you called in and you were like, man, I'm so motivated. I'm doing great. You went through a really difficult thing. And the financial math is hard to look at too. 50 grand in credit card debt with that interest, it is crushing to look at that. But you can start taking those little baby steps, getting on the budget, living on less than you make, even while paying the child support.

1:23:17It might take you longer than the other person.

1:23:18Dave Ramsey:Working extra, working extra, working extra. What can I sell? What am I holding on to that looks like the past that I don't need to hold on to and get this mess cleaned up. But it's going to require a level of energy that you frankly don't have right now because there's just sadness in the air. And that's not a put down. It just means you're human. You got the snot kicked out of you, man. It's like you were in a car wreck and you're still in intensive care and you're going, but I'm feeling pretty good. You know, yeah, well, not really. And so you're just still in intensive care. So if I'm you, I'm going to sit down with my pastor, with the therapist, begin to continue to talk about this, learn how to grieve this kind of major life event.

1:23:58Dave Ramsey:And the further it gets in your rearview mirror from a healing perspective, not a time perspective, from a healing perspective, the more energy and hope you will have towards the future. But it's real easy to just sit in the asset of this and play it over and over and over and over in your head like you have for the last actually two and a half years with the divorce being final one and a half years ago. So none of that's a put-down, honey. It's just meeting you where you are. I understand. I'm scared for you. I hate it for you. I'm sad for you. I'm mad with you. It's a horrible process that you and these kids have gone through.

1:24:38Dave Ramsey:However, there is a great second chapter. And what is it? When the sun comes out, his mercies are new every morning. His steadfast love is something you can count on. and got a plan for you. And it's not to bring you harm, but to bring you hope. And those are all true, very true things for you and for me. And so when Sharon and I went through that bankruptcy, I was the same way. It took me about two years to quit talking about it as if it just happened 20 minutes ago because it took me that long to get it. Replays in your mind. I had to get the filth out of my system. You ruminate on all that was.

1:25:18Dave Ramsey:You just sit in the filth, man. And when you go through a major life mess like that, and I'm like, and as soon as I started talking about the bankruptcy, like it was way in the distant past, that's when I started realizing, oh, okay. That was a different day back there. It's a different version, you know. But if you're talking about it like it happened yesterday and it was four years ago, then that tells me I'm still back there sitting in the filth. Yeah. Yeah. And that we all people that's a normal process to grieve and to go through the steps of grief and a reset of your life when you go through a tragedy that was self-imposed or otherwise.

1:25:53Dave Ramsey:In his case, otherwise, in my case, I caused it. Yeah. But it doesn't matter really where it came from. Still, you went through the car wreck, right? You still went through the time in intensive care before you could get up and walk with a walker. And then you get up and you move a little bit more and whatever metaphor we want to use. Right. But you just go into physical therapy and you eventually, in this case, you go into emotional therapy and you eventually get more and more and more healing. And you understand what part you played in it and what part they played in it. And you can't control either one.

1:26:23Dave Ramsey:They're both in the past.

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1:27:44Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. George Camel, Ramsey personality, is my co-host today. Celia is with us in Tucson. Hey, Celia, how are you? Hi, Dave. My name is Celia. I'm going to sell you something. Oh, I'm sorry. I goofed it up. I apologize. Celia. No, it's okay. It's okay. It's a really unique name. Got it. Celia. I'm great, Dave. How are you? Better than I deserve. How can we help? So I am probably going to be getting engaged next month. Long story short, I picked out my own ring and asked my boyfriend, you know, is the engagement going to be happening before September so I can kind of prepare myself?

1:28:28And he said yes. So it's either happening this month or next month. and I was originally, I actually just found you a couple of weeks ago, probably two or three weeks ago. It's been less than a month and me and my boyfriend are both on baby step two and paying off the debt. I have about$5 ,000 in medical debt, but combined our debt is about two, we've paid off $2 ,000 in the last two weeks. So we're at about$20 ,000 between the both of us. My question to you is, I was planning on going back to school in January to become an ultrasound technologist. And I still get federal financial aid. So not necessarily student loans, but actual grants and things like that since I'm a first-generation college student.

1:29:27And I have already been to some schooling. The program that I want to go to is 22 months. And so we were planning on not getting married until I was done with school. The issue is, is I don't know if all of my financial aid will cover the cost of this 22-month program. And so I don't know if I will need a student loan at some point. And so I don't really know what to do. I don't know if I should pay off all of this debt, which I don't think I'll be done with before the program starts in January. I'm not officially signed up for it yet.

1:30:10Dave Ramsey:How much do you make now? But yeah, I make about$3 ,000 a month. I'm a server. And how much does he make now? How much does he make now? He makes our combined income. No, no, you're not combined yet. How much does he make? I know. Just a little more than me, about$4 ,500 a month. I mean$4 ,500. Okay, so he makes over$50K, and you make about$36K. Right. And so you're going to have an$85 ,000 household income, and you'll have no debt or very close by January. Let's say you were married by then, as an example. Okay, just to run the math out.

1:30:56Dave Ramsey:And how old are you guys? I'm so sorry. Can you say that one more time? How old are you, too? Oh, I am 22, and he's 25. The issue is, though, is I honestly have a lot of medical issues, and one of those things is I have a progressive hearing loss disorder. So they expect that I may not be able to hear at all before I'm 30 is my prognosis. And you're held again? You cut out when you told me how old you are. 26. I'm 22. I'm 22. I'm 22. So hypothetically, you will lose your hearing in 10 years. In the next eight years. Assuming the technology and medical advances don't help you with that. Okay. Given current known knowledge.

1:31:50Dave Ramsey:Okay. And what does an MRI or X-ray technologist? Yeah, ultrasound. Ultrasound. What does an ultrasound technologist make? honestly i i should know um i i would make about this just less than a nurse um so whatever that is i'm seeing it can range 30 to 40 bucks an hour so you're talking 60 to 70 even 80 a year okay and what does this class cost um so for the full 22 month program it's just under 60 000 for books, everything. Everything is included in that$60 ,000 price. The one place so far that you've priced it. It's the only place in my town that offers this program. So I would have to go through this specific medical institution.

1:32:47What does your boyfriend do for a living? He's a general manager of a restaurant.

1:32:54Dave Ramsey:Okay. All right. Well, sometimes when I've got things jumbled up like this in my life, I always go back to the old how do you eat an elephant a bite at a time thing. And I start force ranking what's most important. So if I were in your shoes or if you were my daughter and you came and sat down and said, Dad, this is what I'm facing. I would say the most important thing in this whole discussion is the two of you get married as soon as possible and the second most important thing in the discussion is that you get out of debt and the third most important thing in the discussion and it's third it's not first the tail doesn't wag the dog is you go get this certification and you enter this career field if it means you delay the start of this school one year fine if it means you find other ways to pay for it because you find a hospital that desperately wants to sign you to a three-year contract when you finish your training and they will pay for your training uh good go get that if there's another scholarship out there by a ultrasound company that makes the machine and they want people certified so they're pushing scholarships out there for the certifications and that enables you to go in january fine but if you can't go in january because you do life well and it means you start a year later do life well first yeah for sure so you so you wouldn't you would just completely ignore the fact that I'm still getting financial aid and that would go away when I'm not going to build my life around the welfare system.

1:34:39Yeah. Yeah.

1:34:41Dave Ramsey:I'm not going to do that. I would not delay this in order to get free money. That's wrong motivation. I've never seen anyone that becomes vastly successful in their life because of a government program. I've never met anybody and I've been walking around this earth a long time I've never met a soul that said a government program made me prosperous and the chances of a Pell Grant covering 60 grand slim to none so that's the other part is the reality of it it's not do I do this for free with grants or go into student loan debt it's okay if I'm going to pause and delay we're not going into student loan debt we're paying cash for it it's off the table so that might mean it does take a year or two to save up We both work like complete crazy people, and we pile up cash.

1:35:29Dave Ramsey:And like a lot of people who are newly married in their early 20s, in order to hit a goal, you just tear it up, baby. You get her done. You get after it. That's what people do. That's why they give young people energy. Go get it. That's what I would do. No, I would not plan my wife around the Pell Grant system, for God's sakes. Thank you.

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1:37:30Dave Ramsey:Lisa is in Phoenix. Hi, Lisa. How are you? Hi, I'm doing well. How are you? Better than I deserve. What's up? Hey, I just had a quick question on I have added a new rescue dog to my household, which has now required me to get a larger vehicle. and I need to try and figure out what is a reasonable budget. What kind of dog did you get that requires a car? Well, this makes three, but he's an American Bulldog. He's 130 pounds. Goodness gracious. And how often do you haul him? That's my size. How often do you haul him? Well, we do a lot. Our family, we live on the West Coast. Our family is East Coast, Midwest.

1:38:12So we do a lot of road trips. And I've had him for about six months. and him and the other two dogs just don't, there's not a room in the back of the car, so I've been having to rent larger vehicles to go visit family. Like once every couple months.

1:38:27Dave Ramsey:Do you have children? I do not. I do not. These are basically my kids. Yeah, I can tell. I think you're the first person I ever talked to who bought a car for a dog. The dog's free. I don't think that's ever happened to me before. That's the funny part. The dog is free, but the car, that's going to cost you. Yeah. So, okay. So you're thinking about buying a car. Okay. Now, so do you have the cash to pay for the car you're thinking about? I do. I have been saving. And how much is this car? Well, I don't, well, I was budgeting like 15 to 20, but I'm finding what he fits in with the other two in enough space for luggage.

1:39:05We're going to have to go, they're turning out to be like more close to 40, which hurts my heart to have to spend that much money. But I think it's necessary. It's a$40 ,000 dog.

1:39:20Dave Ramsey:I'm so confused why it takes$40 ,000 to haul. It doesn't. You can buy a$15 ,000 version of that same exact car that you're looking at for$40 ,000. It's called Older. Anyway, so how much do you have cash to pay cash? Cash, I have like$80 ,000 in the bank. Okay. And what's your household income? I make$180 ,000. And you're single? Yes. Okay. And you want to buy a$40 ,000 car. Regardless of the reason, if you have the cash and you want to buy a$40 ,000 car, do you have any of the debt? Just my mortgage. Okay, good. If you're paying cash for a car and it's less than half your annual income and it's not brand new, unless you're a millionaire, and you want to buy the car, buy the car.

1:40:09Just buy the car? from the money, it's not a dumb decision. I just don't want to put myself in a financial...

1:40:14Dave Ramsey:It's not a dumb decision unless it's more than half your annual income and you're not paying cash for it and you have other debt and so on. Now, the thing you keep in mind and the thing that's bothering you in the back of your mind is we all know that cars go down in value like crazy and the car you're driving right now is worth what? I drive a 2013 Terrain. I've had it for 10 years. What's it worth? So it's worth like five grand. Yeah. Okay. So your$40 ,000 purchase in a few years is probably going to be worth five grand. That's what cars do. So just you're turning 40 into five over time. You'll get some use out of it, some enjoyment out of it.

1:40:58Dave Ramsey:But you make 180. You have 80 in the bank. You can afford to turn 40 into five and not go broke and really not severely limit or screw up your life in some way. It's not crazy. I would point out to you that your reason for doing this is sketchy. It's sketchy. Okay? The fact that you want to spend$40 ,000 for a rescue dog to ride to your mamas in the Midwest is sketchy. Okay? You could rent a car a whole lot of times for that. And I love that you love animals. I'm an animal lover. George is an animal lover. We love our puppies. You know, me and Bella, the 12-pound bear dog, we walk every morning.

1:41:45Dave Ramsey:I love my dog. And so all of this, we love our dogs. I'm with you on that. I get it. And, but, you know, I'll be honest. I hadn't spent$40 ,000 on Bella. Would you recommend, so that's for like a 2022 Toyota Sequoia? I just want you to reframe this and go, I want the car, and the dog can ride in it. It's just bothering me that you could spend$40 ,000 to ride a rescue dog around in. The dog could sit in a horse trailer in the back. It doesn't care. He is a horse. He's 150 pounds. She must work out. You put a saddle on that guy. Lisa's got to be ripped to be able to carry a 130-pound English bulldog.

1:42:32Dave Ramsey:Yeah, that's great dogs, too. So we love you, kiddo. We're laughing with you. You have the money. If it's what you want to do with your money, you've worked hard, go get the car. That's fine. I personally would have to reset the narrative in my head because I couldn't. It's just I need a better car. My car is old and a byproduct. One of the things I do is I enjoy loading the dogs up and going across the country. That's one of the things I enjoy doing. And that's okay. But I can't – it started with, I got to buy a car for this dog. No, I can't go there. That one – there's not – The dog needs captain chairs with ventilated seats.

1:43:09It requested that. Homeward bound.

1:43:11Dave Ramsey:Yeah. That dog is living a good life. Run along beside it. I just don't know. That dog was eating like a king to be 130 pounds as a rescue. No, they're stocky little suckers. Goodness gracious. They're good little dogs. That's impressive. I like it. That's fun. It's fun talking to you, Lisa. Thank you. Enjoy the car. Pick out something you feel good about and buy it for you. And a part of you is that you enjoy taking care of this rescue dog, and that's a good thing. That dog is living its best life with Lisa, I'll tell you that much. Got a brand new car out of the deal. Wait a minute, he goes back to the shelter and goes, hey, guys, look what I got.

1:43:47My previous owner had a much nicer car, I got to say. Oh, man, that's fun.

1:43:53Dave Ramsey:Go back for a visit. Just wheel up in the Sequoia. Look what I got, guys. Oh, man. Carter is in San Antonio. Hey, Carter, how are you? I'm good. How about yourself? Better than I deserve. How can we help? Yes, sir. So I recently graduated with my master's about six months ago. And so I'm looking at my finances now, and I'm in a pickle. I'm making some life changes to help with the repayment of loans. But I wanted to know if there's a scenario where consolidation is best. If you lower the interest rates. Yeah. What's your master's in? Because I have interest rates, health care administration. Are you working in it?

1:44:39I am, yes.

1:44:40Dave Ramsey:Good. What are you making? 105. What's your student loan debt? 147. Woo! Woo! Yeah. You overpaid for that master's, baby. All right, but we're there now. I do. Well, that also includes undergrads. And so there's a$90 ,000 program for grad school. So, but still. Yeah, you overpaid for it. Yeah. That's okay. You got it. It's in the rearview mirror. Now let's get it paid off. So you're going to be living on beans and rice and get rid of that degree cost. Yeah. Tear into it. That's true. Because there is no debt consolidation where they pay you. oh that's true there's only ones where you pay 147 000 and it goes away that's what you need to concentrate on and so your interest rate's not your problem your big butt loan is your problem and you will lose the ability to do the debt snowball because you'll just have one giant loan so you're not going to feel as much progress if you kept it separated and just attacked it what are your interest rates on these things carter oh ranging from 2.2 % to 18.25.

1:45:48Okay.

1:45:48Dave Ramsey:You can choose. How many of them are private? Five of them are. So$20 ,000 of it is private. Okay. That's probably your 18s, isn't it? Yes, correct. Well, your privates, you're probably not going to. If you can get the privates consolidated and get rid of the 18s, that's going to be fine. But I don't want to roll that 2.2 into a six. so you pick and choose and you leave the low interest rates alone and you could you don't have to roll them all together but you you do have to separate the privates from the federally insured and of the federally insured you get one time to do this and make sure every single loan you do roll in and consolidate lowers the rate don't roll the two up and the eight down to six that's not that doesn't make any sense at all Thank you.

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1:47:43That's ramsaysolutions.com slash real estate.

1:47:59Dave Ramsey:in the lobby of ramsey solutions on the debt free stage mark and tegan are with us hey guys how are you good how are you better than i deserve welcome where do you live bay city michigan it's about two hours north of Detroit. Very cool. Welcome to Nashville. Thank you. Good to have you here. And you came to do a debt-free scream. How much have you paid off? $140 ,000 in about five years. Good for you. And your range of income during that time? Started out around$65 ,000,$70 ,000 combined, and now we're up to about$120 ,000. Good for you guys. What do y 'all do for a living? I'm a court recorder for our circuit court in our Bay County area.

1:48:39Yeah.

1:48:39Dave Ramsey:And I am an on-air announcer at a local news station. Great. Very cool. Good for you guys. How fun. What kind of debt was the$140 ,000? Well, I had student loans, about$61 ,000, and then we had the mortgage as well. Oh! $79 ,000 mortgage. You have a paid off house. That's right. I'm looking at weird people. You do right. I like it. Way to go. And what's this house worth, weird people? It's around$120 ,000, $130 ,000. Yeah. Excellent. Very cool. And what do you get in Bay City, Michigan for$120 ,000? bucks? Well, it's a little two-bedroom house, one bathroom, small. About a half acre, though. Yeah.

1:49:16So you can get a bigger size house with less property, too. Yeah. And it wasn't, you know, the nicest house on the block, but Mark's pretty handy and his family's handy as well. So we were able to fix it up and make it a nice home.

1:49:26Dave Ramsey:Yeah. How long have you guys been married? Just shy of five years. Okay. So you bought it and started the process of paying off the student loans and paying off the house. Yeah. Bought a modest home with some fix-up. Get your foot in the door. And And now it's 100 % paid for. You're 100 % debt free. Yes. And you're how old? 27. Yep. 27. And you make$120 ,000 a year. Yeah. So all of you people out there who said there's an affordability crisis that you'll never be able to buy a house in America today. Mark and Tegan said, hold my beer. So look at what they did. That's pretty stinking incredible, y 'all.

1:50:00Dave Ramsey:I'm proud of you. Thank you. Thank you. Very cool. Very cool. So you're dating and talking about this apparently because it starts immediately after you're married. Tell us the story. Yeah. So basically around the time that we got engaged, I was graduating from college and I had the student loans, you know, on my shoulder. And I was like, OK, so I'm going to have to start working on paying these off. And we started to make a plan. I didn't really know what to do. I was really stressed about it, actually. And so I felt like I was just going to be carrying these with me for a really long time. and not knowing where to start.

1:50:35I was like, well, she was upset. We were in the car. We were just driving along one day, and she was pretty upset about it. And I was like, Tegan, haven't you ever heard of Dave Ramsey? And she's like, yeah. I've heard of him, but I've never listened to him. Yeah, and I grew up listening to your show on our local radio station with my dad whenever we'd be working. So I was like, oh, well, you got$60 ,000. That's nothing. We could pay that off in no time. I've heard people on this show that have paid off way more than that.

1:51:00Dave Ramsey:I've heard way worse. Yeah, yeah. I was like, this is nothing. literally hope yeah it definitely you're easily worth that yes right right most definitely and so we started making a plan to hopefully get them paid off in two years and we ended up doing that around 13 months just over a year just barely over a year yeah yep had the 60 grand so then we kind of slowed down to pay the house off and uh then the last year we're kind of like what are we doing so we're like let's just pay this off you know we literally you know why don't we do it so He turned it up to 11 at the end there. Exactly, yep.

1:51:31And we were actually cash flowing him getting a bachelor's degree as well while we were working on the house. Yep, so I got a bachelor's in personal finance now. And I work at a community college, so that helped me along the way. I got a discount for the associate's degree stuff.

1:51:46Dave Ramsey:So how many 27-year-old friends have a paid-for house? None. Not everybody. None. None. We're fortunate. Hard to not jump up and down and make a big deal about it, but it's a good idea. Did your friends know about this? Was it kind of an open? Yeah. Oh, yeah. We were very open about it, especially when I was paying off my student loans because we had to say no to a lot of things. You know, being able to go out to dinner, like, you know, all the fun events cost money. And so we had to say no to things along the way. And I think our friends were really aware of it, but they were really supportive.

1:52:17And so it would be coming over to our house and making dinner at our house. And, you know, they'd bring a dessert, you know, that kind of thing to be able to still hang out with everybody and make it happen.

1:52:25Dave Ramsey:Saving everybody money. Yeah. Very old school. We're going to eat at home together and have a community. Have a potluck. Oh, my gosh. Very old. I love it. Very old school. Good stuff. Way to go, you guys. I'm proud of you. Thank you. Thank you for everything you do, too. Your parents had to be just jumping up and down cheering you on. Oh, yeah. Oh, yeah. Absolutely. Was there anybody that looked at y 'all and said, you're crazy? Oh, yeah. Yeah. We had a low interest rate on that mortgage. Oh. We had quite a few. So everyone went, are you kidding me, dude? You can invest that instead of paying down your mortgage.

1:52:55Yeah. Yeah. Oh, I can hear them now. They all sound like that for some reason. It's always a dude. The flex that, bros. It's always a dude. I wouldn't do that if I were you. What was your rate? 2.65. Oh, my goodness. What are you going to do now? You have a 0 % rate with no payment. I don't know. I kind of liked having that payment at the first of the month, you know? Yeah, it was. Oh, yeah. You miss it? Yeah, no. Oh, this is the house. That's a great house. If you're watching on YouTube or Spotify, you can check it out.

1:53:22Dave Ramsey:Brick home. Yeah, yeah. Like I said, about a half acre of property. So what, 1960s vintage probably? Yeah. Yep, yep, 61. Yeah, that's what it looks like construction, yeah. Yep. Very cool. Solid home. Yeah, that's a great place to start. And keep a picture of that, show your grandkids and go, that's where it all started, and now you're multimillionaires. Absolutely. Yeah, that's very cool. This is where Grandpa and Grandma started this thing. And back in the day, back in 26, we paid it off. Yep. I like it. Way to go, you guys. Thank you. How's it feel to be 100 % free five years into marriage?

1:53:55Very good. Indescribable. Very good. Like when we didn't have the payment for the first month, we were both just kind of like linked in each other like, oh, this is so weird. Like we don't have to plan for it. Yeah. Yeah. And it feels great to like buy name brand foods at the grocery store and like not feel guilty going out, you know. Branding up that space in the budget was really nice because we find that we save so much quicker too, you know. So we can plan for things in the future because we're not paying for things in the past. And that's just.

1:54:19Dave Ramsey:Amen. That'll reach. That's a t-shirt right there. Yes. I like it. So good stuff. All right, what's the secret to five years of marriage being this happy and having your house paid off and everything? What do you tell people? How did you do that? I was going to say many things. We get along so well, but I feel like we both have patience for each other to be able to listen and hear each other out. And so when we're making plans for things, we can really talk things through. And that's really helpful. She's mostly right all the time, as they say. so whenever I have these big bright ideas that are off the path she'd kind of guide me back in because that was how it went a lot of the times I'm the spender she's the saver so it was we have that relationship and a lot of it's just keeping your eyes on your goals and not looking at what other people have we don't care about their goal it's not going to help me any you know just keep an eye on your own what what you have going on and and on your goals in general because you don't realize what's going on it happens so fast you know yeah yeah so you stayed out of the restaurants and you stayed out of trips.

1:55:24Dave Ramsey:You bought a modest home that you could pay for very, very quickly. Yep. And that was your stepping stone. Now you'll be able to do whatever you want to do. And so there was a level of sacrificing to win in your story. Yeah. A whole lot of what y 'all did was just, we're going to not do this so we can do this later. We're not going to do this so we can do this later. It's live like no one else so that later you can live. And you did it. You really did do that. Yeah. Yeah, we can see it in your story. That's very, very cool. I'm proud of you. Thank you. Good stuff. Very good. That's a power couple right there.

1:55:58Most people live in mediocrity for 50 years because they're unwilling to sacrifice for five. And you guys did the opposite. You went, what if we sacrifice for five so the next 50 is wide open? All the options in the world. So proud of you guys. Thank you. That's cool.

1:56:10Dave Ramsey:Mark and Teagan, Bay City, Michigan. $140 ,000 paid off. By the way, that's the house and everything. 27 years old with a paid-for house. Not only did they purchase a home, but they paid for it. Did all of this in the first five years of marriage, making 65 to 120. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah!

1:56:41I love it! Boom! That's true love right there.

1:56:46Dave Ramsey:That's as good as it gets, man. They're like a joy bomb. So fun to talk to. Look at that. They doubled their income. They bought a modest house. Median home price is$420 ,000. Everyone's up in arms. They went, all right, we don't have to buy the median home. There's homes out there we can afford. They bought a one. Well, they bought a house that's worth$120 ,000 today. Yeah. It wasn't worth that when they bought it. They fixed it up. Pretty incredible. Interesting. Hmm. Things that make you go. There's hope. Hmm.

1:57:16Thank you.

1:57:46We'll be right back.

1:57:51Dave Ramsey:Hey guys, Dave Ramsey here. Every day on this show we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

1:58:47Dave Ramsey:Our scripture of the day, Luke 6, 31, however you wish to be treated by others is how you should treat everyone else. Duke Ellington said, a problem is a chance for you to do your best. There we go. Folks, if you're buying or selling a home and you're thinking about buying real estate, the average first-time home buyer is paying$199 ,000 for their home right now. That's the average in America. That includes a million dollars in California, and that includes$60 ,000 in Bay City, Michigan. So you can kind of figure those in, and that's how you get to$199. If you wanted a trusted real estate agent in your corner that knows their stuff, if you're selling or buying, that's a good idea, by the way.

1:59:35Dave Ramsey:Not someone that got their license three weeks ago and then just said, oh, remember, we're friends. No, that's not what you need. You need somebody that's an actual professional that does like a lot of transactions and knows what the flip they're doing. A Ramsey trusted agent that we have vetted that we've done the due diligence on. You can find them for free at RamseySolutions.com slash agent. Jeff's in Sacramento, California. Hi, Jeff. How are you? I'm good, Dave. Thanks so much for taking my call. Sure. What's up? Yeah. So about 10 years ago, I had my own handyman business. My wife and I had a couple of kids at the time.

2:00:12And it was struggling. We were struggling to make ends meet month to month. God always provided, but it was hard to feel like I could get ahead with that. And at that time, my father-in-law was actually a piano tuner, a successful one. And since I grew up in a very musical family, I decided to learn the trade and do it on the side. And so I started tuning pianos on the side just to bring in a little extra each month. and it actually grew fast. And before long, it became a full-time thing for me, which I'm super thankful for. Fast forward 10 years, it's turned into a very successful business. But here's my struggle.

2:00:52When people ask me what I do for a living now, I have this embarrassment to say that I tune pianos. I don't say it with much confidence. I'm very proud of what I do. Do you make a good living? I do.

2:01:08Dave Ramsey:I make around$200 to$230 a year. Who gives a crap what people think? Yeah. You make a quarter million dollars a year. There's a lot of lawyers that don't make that. And they should be ashamed. Not you. Yes, I'm very proud of it. I think I have this stereotype of what piano tuners are in my head. I remember the countertuner coming to our house, and I— What's the stereotype? That they're broke? Yeah, yeah. They're not very successful. Yeah, yeah. And it's still that way. A lot of them, most of them— Well, I mean, it's like we live in Nashville. You know, in Nashville, Georgia and I live here, and it's like, how do you get the next country music star's attention?

2:01:57Dave Ramsey:Waiter? Yeah. It's a stereotype, right? I mean, everybody in Nashville sings except me. I'm the only one here that doesn't sing and Rachel everyone else sings I've heard Rachel try Rachel does not sing please God don't let Rachel sing but so is this in your head there's a tune in a bucket no the point is this stereotype is right stereotype is based on something if you live in LA how do you get the next actor's attention a waiter right I mean what are you doing I work I'm an extra on a commercial what does that even mean and but yeah it means your wait tables is what it means and there's nothing wrong with that You're doing that to get your career started.

2:02:33Dave Ramsey:If that's you, I'm not making fun of you. I'm just making fun of you. It's a stereotype. And that's where that comes from. It's a generalization. So the difference is, is you're highly successful. I don't know. I don't know how to tell you. There's a lot of professions like that. I'm not ashamed at all for you. I think you're awesome. So I don't want you to be. I don't know how to defend you. When people ask what I do and I have to say YouTuber, you know, there's a stereotype there. They don't know that it's popular. They think you have a cat that chases lasers. Or a guy that sells Pokemon cards and he makes$300 ,000 a year, but you go, wow, you sell Pokemon cards?

2:03:09So people are always going to have opinions. And these people probably aren't in your circle, right? The people that actually care that you love probably are so proud of you and couldn't give a rip what you do. You're more than that. So, yeah.

2:03:22Dave Ramsey:I don't know how to teach you to reframe it if it were me. Because I get where you're coming from, but I'm proud of you that you killed it. You obviously have business acumen to go with your ability to tune pianos. Pretty incredible. So maybe you reframe it by, okay, here's how I did it when I went broke. I filed bankruptcy because I was stupid and went into debt. There's a certain amount of shame that goes with that, a stereotype that goes with that. And so what I had to reframe was, okay, who cares? The people that care don't care in your case, okay, and in my case. The people that care about me don't care if I went bankrupt.

2:04:16Dave Ramsey:They care about me and my family. My kids don't care. My grandkids now don't care. My wife doesn't care. The people that are all upset about it aren't people that I care about. And so I had to reset. Who do I need? I need to impress the right people and not be worried about impressing the wrong people. Who gets a vote in this? And I can guarantee you that your father-in-law taught you the trade, right? That's right. He's proud of you, which by definition means his daughter, your wife, is. your kids are eating really well you've built an unusually high paying i would have never guessed you were going to tell me that much money on income because of the stereotype right so you know among piano tuners you are the elite well i feel like that's i that's the part that i feel like i have to share with people when i say i'm a piano tuner i want to follow it up with but just so you know I make really good money.

2:05:19Yeah, that's fine.

2:05:20Dave Ramsey:I'm probably the most highly paid piano tuner you'll ever meet. Now, if you said I run a piano tuning business, does that have a different ring to it, or I run a multi-generational piano tuning business? Yeah. That's pretty cool. Now I'm interested. Yeah. But there's nothing wrong with it if you just said I tune pianos for a living. That's incredible. Something you love to do, you get paid well to do it. I just see, I mean, I get it. You're standing around at some party and you're holding a glass. Everybody's got a glass. What do you do? I'm an engineer. What do you do? You know, what do you do?

2:05:47Dave Ramsey:It's hard for me to explain what I do to this place. I still don't know what you do. I still can't decide if I'm an author or I'm a, I was a radio guy for a while and I still am, but now I'm a YouTuber. You're a podcaster to YouTuber. I'm an old YouTuber. I think CEO of Ramsey Solutions. That's a pretty cool title. There we go. I'm the CEO of Ramsey Solutions. You're an entrepreneur. That's what all the kids say these days. I'm the CEO. I am actually, but nobody gives a rip. It's hilarious. I'll always care. I'll always care about you. No matter what you do, I'll be there. Thank you, George. And you're a great, you know, you taught me how to water ski.

2:06:24Dave Ramsey:Oh, there we go. I've got a fallback. Add that to your LinkedIn resume. The Dave Ramsey water ski class. If you can teach me how to do that, you should win a Nobel Peace Prize. I've taught people that didn't think they could float how to do that, man. That's, you know, that's the story for another day. It just goes to show that people put a lot of stake into their work and their identity. I think it's an interesting question. Yeah, no matter what it was, piano, tuner, whatever. You know, if you're a, you work in - Honestly, when I hear in Nashville that you're a musician, I automatically assume that you're an unsuccessful musician.

2:06:59Dave Ramsey:Oh, unsuccessful. I automatically assume that. Wow. And, you know, like if I hear, what do you do? I'm a songwriter. Okay. You and everybody else. Have you written anything I might have heard of? You know, now I'm starting to figure out if you really are making a living. I'm an actor. Have I seen your work? Yeah. Have I seen your work? That's good, George. I like that. Have you seen the Campbell Soup commercial? I was in that, you know. But it's, you never know. So it's interesting. It really, it's a social experiment to see what people assume based on your field. Yeah, but I think it goes back to what Deloney talks about all the time.

2:07:36Dave Ramsey:Who are you giving a vote? and, you know, it's almost humorous that I don't want you to figure it out. Yep. You know, if I'm him. Well, eventually. If I'm staying at a party going, I make three times what you do in my head. You see the house he had? Look at that car. He's a piano tuner? Who knew? How does he? He must have a trust fund. No, he's just really good at his job. Like the, what's the movie about the hit man? He said, I'm a house painter. Oh, that's good. Yeah, that's good. Yeah. Not true about the piano tuner, though. I'm just saying. That puts us our The Ramsey Show in the books. We'll be back with you before you know it.

2:08:12Dave Ramsey:In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.