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THIS Is the Most Effective Way To Pay Off Debt

The Ramsey Show

Tue Sep 19 2023



Debt Payoff Strategies:

  • The most effective way to pay off debt is by focusing on the highest interest rate debts first.
  • It is important to carefully budget for "fun money" while in Baby Step 2, and it should be a small line item or even removed altogether if necessary.
  • If choosing to keep a fun category in the budget, it should be fair, equitable, and reasonable for both spouses.
  • When staying in Baby Step 2 for a longer period of time, it may be appropriate to add back a small fun category to avoid feeling deprived.

Side Hustle Ideas:

  • Owning a travel agency can provide opportunities for extra income by having agents on your team who work part-time booking vacations and cruises.
  • Direct sales companies offer the potential for earning extra income through selling products from home or online.
  • Babysitting can be a profitable side hustle, especially by offering services for date nights or providing daycare in your own home.
  • Rover is an app that allows individuals to earn money by pet sitting or dog walking.
  • Washing school buses can be a unique side gig that offers additional income opportunities.

Evaluating Business Decisions:

  • When considering buying out a business partner or taking on significant debt, it is important to weigh the risks and benefits carefully.
  • Inherited assets like farms should be evaluated based on their potential financial return rather than sentimentality alone.
  • Selling an inherited asset can provide a substantial amount of cash that can significantly impact one's financial situation.

Taking out a loan for study abroad:

  • The caller is considering taking out a $20,000 loan to finance a semester abroad in a program called Semester at Sea.
  • He currently has about $13,000 to $14,000 saved up and expects to have around $10,000 by the spring of 2025.
  • The total cost of the program is $30,000, but he needs an additional $10,000 in cash.
  • He plans on reducing the tuition through scholarships and financial aid to bring it down to $20,000.
  • The caller wants to know if it's worth taking out a $20,000 loan for this opportunity.

Advice against taking out the loan:

  • Both Jade and Ken advise against taking out the loan because it would mean going into debt.
  • They emphasize that debt should be avoided whenever possible.
  • Taking on debt for this opportunity could have long-term consequences and impact future financial decisions.
  • Debt can become burdensome and restrict choices in the future.

Considering other options:

  • Ken suggests exploring alternatives such as delaying the semester abroad until later or finding ways to save more money before committing to the program.
  • Delaying the program until after graduation or during graduate school may provide more time to save up enough funds without going into debt.

Precedence of decision-making:

  • Jade highlights that every decision we make sets a precedent and shapes our mindset about money management.
  • Choosing not to take on debt sends a message that one is committed to avoiding debt and making responsible financial choices.

College and Student Loans:

  • The speaker regrets not stopping college because it did not align with their career as a musician
  • They believe that schools can only provide so much in terms of up-to-date knowledge and real-world experience
  • They express the importance of considering if college is necessary for one's chosen career path
  • The speaker criticizes the idea that college is the only way to success and believes it is a false notion perpetuated by society
  • They argue against taking on student loan debt, stating that it often leads to despair and financial hardship
  • They call for a reevaluation of the education system and suggest regulation to control rising tuition costs

Negative Impact of Critical Voices:

  • The speaker shares a personal story about an instructor who criticized their musical abilities during a jury exam
  • They highlight how negative voices can have long-lasting effects on individuals' self-esteem and confidence
  • The speaker encourages listeners to let go of past criticisms and not allow them to define their future potential

Choosing Alternative Paths:

  • The speakers emphasize the need to consider alternatives to traditional higher education, such as trades or entering the workforce directly after high school
  • They mention successful individuals like Kobe Bryant and Kevin Garnett who pursued non-college paths to achieve success
  • The speakers urge parents not to prioritize prestige or societal expectations when making decisions about their children's education

Motivation and Overcoming Challenges:

  • The speakers discuss the importance of perseverance and determination in pursuing goals despite setbacks or negative experiences
  • They encourage listeners to use criticism as fuel for growth rather than allowing it to discourage them
  • The speakers share personal anecdotes about overcoming challenges in their own lives, emphasizing the value of learning from real-world experiences