Image of podcast

When You Have No Debt You Have PEACE

The Ramsey Show

Tue Sep 12 2023



Mortgage Options:

  • Option 1: Stick with the new payment after the reset, which would lower the monthly payment by $180.
  • Option 2: Consider a mortgage recast, but this would require a $20,000 payment and only lower the monthly payment by $140. This option may not be necessary or beneficial given the goal of paying off the mortgage in two years.
  • Option 3: Use funds from a brokerage account to pay off the entire mortgage balance. This option would provide immediate peace of mind and eliminate any interest payments.

Career Advancement:

  • The caller is currently in a position where they meet all qualifications for a promotion except for having one additional year in their current role.
  • They have considered options such as waiting another year and a half, pursuing a recast on their mortgage, or using funds from their brokerage account to pay off the mortgage entirely.
  • While there is no ethical issue with selling car leases at their current job, they personally do not believe in promoting this type of financing and are considering whether they should look for other career opportunities that align more closely with their principles.

Building Wealth:

  • The importance of building wealth quickly is emphasized as it allows for greater financial freedom and reduces stress related to debt.
  • Paying off debts and reducing expenses can help accelerate wealth-building efforts.
  • Owning a home without debt provides significant peace of mind and allows individuals to make different decisions regarding their finances.

Considerations for Job Transition:

  • It is suggested that if someone does not agree with company policies or practices, it can lead to decreased engagement and potential negative effects on mental health and professional growth.
  • When personal beliefs are incompatible with job responsibilities, it may be best to seek employment elsewhere to maintain alignment between values and work.

Financial Principles:

  • Rabbi Lappin's book "Thou Shalt Prosper" is referenced, highlighting the idea that psychological compatibility with one's belief system is crucial for success in any field.
  • If someone finds their beliefs incompatible with their job responsibilities, it can be challenging to perform at a high level and find fulfillment in the work.

Leasing Cars:

  • Car leases are often pushed by dealerships due to higher profitability compared to traditional financing or outright purchases.
  • The caller acknowledges that they do not believe in promoting car leases but are currently working in an environment where this practice is encouraged.
  • It is suggested that the caller may want to consider transitioning to a different career opportunity that aligns more closely with their principles.

Family Planning:

  • The caller is considering having children and wonders if it would be wise to have a one-year salary emergency fund before starting a family.
  • It is noted that while a one-year emergency fund may not be necessary, having six months of expenses saved up can provide financial security during unexpected circumstances.

Benefits of Paying Off Mortgage:

  • Paying off the mortgage can bring a sense of peace and freedom from debt.
  • Being debt-free allows individuals to make different decisions with their money and provides a level of financial security.

Importance of Personal Beliefs:

  • The importance of aligning personal beliefs with career choices is emphasized.
  • When someone feels conflicted about promoting or participating in practices they do not believe in, it can impact their overall well-being and job satisfaction.

Overall Financial Principles:

  • Building wealth quickly through eliminating debt and reducing expenses can lead to greater financial freedom and peace of mind.
  • Making intentional decisions based on personal values and principles can help guide long-term financial success.

Ramsey Show - When You Have No Debt You Have PEACE:

  • Dave Ramsey and his team of experts answer questions on various financial topics, including joining the military, home remodels without permits, paying off student loans, buying a tiny home, investing while in debt, car lease buyouts, asking for a promotion at work, resetting adjustable-rate mortgages (ARM), emergency savings for volatile careers, selling car leases, growing business or buying a house, selling stocks to pay off debt, planning weddings while following the Baby Steps plan.

Paying Off Student Loans and Saving for Wedding/House:

  • Caller is debating whether to use their savings to pay off their house or invest it in an IRA. Dave advises paying off the house first as they won't make any money when they pay off the house but will be charged commissions if they invest with someone else. He also suggests creating a budget and working with a financial advisor who provides better advice.

Reinvesting Business Profits vs Buying Home:

  • Caller is deciding between reinvesting profits into their landscaping business or purchasing a home. Dave advises paying off the loan from his father immediately instead of reinvesting in the business. He recommends waiting until after marriage to decide on buying a home and encourages them to focus on piling up cash for emergencies and down payment.

Determining House Affordability with Low Income:

  • Caller wants to know how much house they can afford given their low income. Dave advises saving for the wedding and education first before worrying about retirement or buying a home. He suggests focusing on short-term goals and not worrying about these other aspects until after marriage and finishing education.

Retirement Savings and Affording a House:

  • Caller is unsure whether to invest in retirement or save for a wedding and house. Dave advises saving for the wedding and education first before considering retirement or buying a house. He recommends focusing on short-term goals and piling up cash while avoiding lifestyle creep.

Paying Off Debt vs Buying Dream Truck:

  • Caller has been saving to buy a new Bronco but now has enough money to pay off their house. They're torn between continuing with their plan to buy the Bronco or paying off the mortgage. Dave emphasizes that it's ultimately their decision but points out that paying off the house would provide more financial security and freedom.

Sacrificing Temporary Pleasures for Long-Term Financial Success:

  • The caller mentions the sacrifices they had to make during their debt-free journey, including giving up temporary pleasures and seeing others around them enjoy luxuries like new cars.
  • They talk about the importance of discipline and staying focused on long-term goals, even when it feels difficult or unrewarding in the moment.
  • The caller shares how they used visual tracking methods, such as placing smooth stones in hurricane lamps, to represent their progress towards paying off debt. This helped them stay motivated and involved their children in the process.

Overcoming Lifestyle Creep:

  • The couple discusses the challenge of avoiding lifestyle creep while increasing their income over time.
  • They share how they resisted the temptation to increase their spending as their income grew, instead choosing to put extra money towards debt repayment and savings.
  • They emphasize that saying "no" to immediate gratification was key to achieving financial success.

Balancing Financial Goals with Personal Interests:

  • The caller expresses his passion for cars and his desire to buy a new Bronco despite having enough money to pay off his house.
  • Dave acknowledges that personal interests are important but encourages him to consider the long-term financial benefits of paying off the mortgage first.
  • Ultimately, it is up to the caller to decide which goal aligns best with his values and priorities.

Relocating from Los Angeles County:

  • A listener asks about relocating from Los Angeles County due to dissatisfaction with quality of life issues such as school values, crime, homelessness, and societal factors.
  • The listener mentions considering states like Tennessee or Idaho but is concerned about potential income reduction.
  • The person reveals being a police officer in L.A. County with an annual income of around $140,000 to $150,000 including overtime.
  • They state that salaries in other states would be significantly less, possibly around 60% of their current income.
  • The speakers suggest looking into opportunities in other states within the same region or exploring roles like highway patrol where higher pay might be available based on experience.
  • They encourage further research on transfer possibilities, growth opportunities, and potential signing bonuses.
  • The speakers highlight the current challenges in recruiting police officers and the potential for advantageous career moves with 12 years of experience.
  • They advise considering other law enforcement fields in different states that might offer better compensation and opportunities.
  • The importance of doing thorough research to ensure a less significant pay cut than perceived is emphasized.

Conclusion:

  • The speakers reiterate that the listener should prioritize their desire to move but also explore career options to minimize income reduction.
  • They suggest looking into metro or state situations where higher pay levels may be attainable based on experience.
  • It is noted that while initial comparisons may show a larger pay cut, there are ways to mitigate this through strategic career choices. Paying Off House vs Buying a New Car:
  • The speaker discusses the choice between paying off the house or buying a new Bronco.
  • They mention that it's not a permanent choice and that both goals can be accomplished within two years.
  • The options are to buy the paid-off Bronco first and then pay off the house, or pay off the house first and save up for a new Bronco.
  • The speaker suggests that if they pay off the house first, they won't have a house payment anymore and can save aggressively for a new Bronco.
  • They advise considering which goal is more important for the next two years, as one will have to wait 18 months to two years.
  • The person expresses hesitancy in spending that much money on a vehicle and mentions driving junk cars for years.
  • The speaker reassures them that they don't have to get rid of their other classic cars and recommends keeping those while adding the new Bronco to their collection.
  • They acknowledge that it's natural to feel unsure about spending so much on a car when there's still debt remaining but emphasize that both goals can be achieved in due time.

Relocating from Los Angeles County:

  • A listener asks about relocating from Los Angeles County due to dissatisfaction with quality of life issues such as school values, crime, homelessness, and societal factors.
  • The listener mentions considering states like Tennessee or Idaho but is concerned about potential income reduction.
  • The person reveals being a police officer in L.A. County with an annual income of around $140,000 to $150,000 including overtime.
  • They state that salaries in other states would be significantly less, possibly around 60% of their current income.
  • The speakers suggest looking into opportunities in other states within the same region or exploring roles like highway patrol where higher pay might be available based on experience.
  • They encourage further research on transfer possibilities, growth opportunities, and potential signing bonuses.
  • The speakers highlight the current challenges in recruiting police officers and the potential for advantageous career moves with 12 years of experience.
  • They advise considering other law enforcement fields in different states that might offer better compensation and opportunities.
  • The importance of doing thorough research to ensure a less significant pay cut than perceived is emphasized.

Conclusion:

  • The speakers reiterate that the listener should prioritize their desire to move but also explore career options to minimize income reduction.
  • They suggest looking into metro or state situations where higher pay levels may be attainable based on experience.
  • It is noted that while initial comparisons may show a larger pay cut, there are ways to mitigate this through strategic career choices. Paying Off Student Loans and Saving for Wedding/House:
  • Caller is debating whether to use their savings to pay off their house or invest it in an IRA. Dave advises paying off the house first as they won't make any money when they pay off the house but will be charged commissions if they invest with someone else. He also suggests creating a budget and working with a financial advisor who provides better advice.

Reinvesting Business Profits vs Buying Home:

  • Caller is deciding between reinvesting profits into their landscaping business or purchasing a home. Dave advises paying off the loan from his father immediately instead of reinvesting in the business. He recommends waiting until after marriage to decide on buying a home and encourages them to focus on piling up cash for emergencies and down payment.

Determining House Affordability with Low Income:

  • Caller wants to know how much house they can afford given their low income. Dave advises saving for the wedding and education first before worrying about retirement or buying a home. He suggests focusing on short-term goals and not worrying about these other aspects until after marriage and finishing education.

Retirement Savings and Affording a House:

  • Caller is unsure whether to invest in retirement or save for a wedding and house. Dave advises saving for the wedding and education first before considering retirement or buying a house. He recommends focusing on short-term goals and piling up cash while avoiding lifestyle creep.

Sacrificing Temporary Pleasures for Long-Term Financial Success:

  • The caller mentions the sacrifices they had to make during their debt-free journey, including giving up temporary pleasures and seeing others around them enjoy luxuries like new cars.
  • They talk about the importance of discipline and staying focused on long-term goals, even when it feels difficult or unrewarding in the moment.
  • The caller shares how they used visual tracking methods, such as placing smooth stones in hurricane lamps, to represent their progress towards paying off debt. This helped them stay motivated and involved their children in the process.

Overcoming Lifestyle Creep:

  • The couple discusses the challenge of avoiding lifestyle creep while increasing their income over time.
  • They share how they resisted the temptation to increase their spending as their income grew, instead choosing to put extra money towards debt repayment and savings.
  • They emphasize that saying "no" to immediate gratification was key to achieving financial success.

Balancing Financial Goals with Personal Interests:

  • The caller expresses his passion for cars and his desire to buy a new Bronco despite having enough money to pay off his house.
  • Dave acknowledges that personal interests are important but encourages him to consider the long-term financial benefits of paying off the mortgage first.
  • Ultimately, it is up to the caller to decide which goal aligns best with his values and priorities.

Conclusion:

  • The speakers reiterate that individuals should prioritize short-term goals such as saving for weddings or education before considering retirement or buying a home.
  • They highlight the importance of discipline, sacrificing temporary pleasures, and staying focused on long-term financial success.
  • It is emphasized that making intentional decisions based on personal values and priorities can lead to greater peace of mind and financial freedom. Reinvesting Business Profits vs Buying Home:
  • Caller is deciding between reinvesting profits into their landscaping business or purchasing a home. Dave advises paying off the loan from his father immediately instead of reinvesting in the business. He recommends waiting until after marriage to decide on buying a home and encourages them to focus on piling up cash for emergencies and down payment.

Determining House Affordability with Low Income:

  • Caller wants to know how much house they can afford given their low income. Dave advises saving for the wedding and education first before worrying about retirement or buying a home. He suggests focusing on short-term goals and not worrying about these other aspects until after marriage and finishing education.

Retirement Savings and Affording a House:

  • Caller is unsure whether to invest in retirement or save for a wedding and house. Dave advises saving for the wedding and education first before considering retirement or buying a house. He recommends focusing on short-term goals and piling up cash while avoiding lifestyle creep.

Sacrificing Temporary Pleasures for Long-Term Financial Success:

  • The caller mentions the sacrifices they had to make during their debt-free journey, including giving up temporary pleasures and seeing others around them enjoy luxuries like new cars.
  • They talk about the importance of discipline and staying focused on long-term goals, even when it feels difficult or unrewarding in the moment.
  • The caller shares how they used visual tracking methods, such as placing smooth stones in hurricane lamps, to represent their progress towards paying off debt. This helped them stay motivated and involved their children in the process.

Overcoming Lifestyle Creep:

  • The couple discusses the challenge of avoiding lifestyle creep while increasing their income over time.
  • They share how they resisted the temptation to increase their spending as their income grew, instead choosing to put extra money towards debt repayment and savings.
  • They emphasize that saying "no" to immediate gratification was key to achieving financial success.

Balancing Financial Goals with Personal Interests:

  • The caller expresses his passion for cars and his desire to buy a new Bronco despite having enough money to pay off his house.
  • Dave acknowledges that personal interests are important but encourages him to consider the long-term financial benefits of paying off the mortgage first.
  • Ultimately, it is up to the caller to decide which goal aligns best with his values and priorities.

Relocating from Los Angeles County:

  • A listener asks about relocating from Los Angeles County due to dissatisfaction with quality of life issues such as school values, crime, homelessness, and societal factors.
  • The listener mentions considering states like Tennessee or Idaho but is concerned about potential income reduction.
  • The person reveals being a police officer in L.A. County with an annual income of around $140,000 to $150,000 including overtime.
  • They state that salaries in other states would be significantly less, possibly around 60% of their current income.
  • The speakers suggest looking into opportunities in other states within the same region or exploring roles like highway patrol where higher pay might be available based on experience.
  • They encourage further research on transfer possibilities, growth opportunities, and potential signing bonuses.
  • The speakers highlight the current challenges in recruiting police officers and the potential for advantageous career moves with 12 years of experience.
  • They advise considering other law enforcement fields in different states that might offer better compensation and opportunities.
  • The importance of doing thorough research to ensure a less significant pay cut than perceived is emphasized.

Conclusion:

  • The speakers reiterate that individuals should prioritize short-term goals such as saving for weddings or education before considering retirement or buying a home.
  • They highlight the importance of discipline, sacrificing temporary pleasures, and staying focused on long-term financial success.
  • It is emphasized that making intentional decisions based on personal values and priorities can lead to greater peace of mind and financial freedom. Conclusion (continued):
  • The speakers emphasize the importance of aligning financial goals with personal interests and values. It is crucial to find a balance between pursuing one's passions and making sound financial decisions.
  • They encourage listeners to consider the long-term implications of their choices, whether it's paying off debt, saving for a house, or investing in retirement.
  • The advice given throughout the podcast emphasizes the benefits of living a debt-free life, prioritizing short-term goals, and making intentional decisions that lead to financial peace and security.
  • Overall, the episode provides valuable insights into various financial topics, offering practical advice and guidance for listeners seeking to improve their financial situations.