r/DaveRamsey

My wife and I are expecting our first child in December and are in a bit of a tough situation with vehicle debt. Please understand that I want to do the right thing and have been trying but am in a bit of a tough spot. I understand we have made some mistakes and are at the point where we’re trying to fix it. To give the whole picture we make about $6k/mo take home currently we have no other debt besides our vehicles ($1000/mo) and our mortgage ($1650/mo). Both of our vehicles are financed, her car we owe about $12k on ($360/mo) and it’s worth about $15k, my truck was a recent purchase and we owe about $39k ($670/mo) and it’s worth about $32k (pretty upside down because it’s a recent purchase, and yes I put money down and do not have any add on’s). The total monthly payments between both vehicles is about $1k. I want my wife to be able to stay home when the baby comes but I need to get rid of these vehicle payments. If she stays home our income will decrease from $6k/mo to $4k/mo. We paid off over $20k in debt over the past year and we have about $10k in savings and as much as I would like to use it to get out of the hole with the truck I just don’t know if it’s smart to blow that much money before having a baby. What should we do? I would just pull the trigger on getting rid of both and buying 2 cash beaters but we still need reliable transportation because we live 6.5 hours from family so frequent travel is going to be happening. As of now I am just going to keep saving and figure it out as it comes but I’d like to have a game plan I just can’t make up my mind as to what to do.

Finally came across the Bible verse that Dave says all the time.

“The rich rule over the poor, and the borrower is slave to the lender.” -Proverbs 22:7

Just a little background. Loosely followed DR a couple decades ago and sold a lot of stuff to get mostly out of debt. Recently separated and trying to learn to live on Less income. Paid off most of the debt shortly before wife left. We are amicable and have come to a settlement agreement. Working on baby step 1. Should have the 1k in savings in the next few weeks. For debt. I have 720.00 on a credit card, and 34k in student loan debt. Still feeling my way around the bills only 2 months into separation. I have 2k+ in checking account at the moment, but was leaving that there until I get used to paying the bills. Wife always did the bills. I am keeping the house but will be picking up an additional 500.00 a month debt to buyout her equity. Selling and moving isn't financially viable due to the moving expenses and work needed to sell house. At cureent interest rates a workable house would cost me more than my current mortgage plus the added 500.00 Locked in at 2.5% and my adult daughter's live with me (they pay all of their own expenses and help a little with household bills) along with animals. Is it alright to start knocking down the student loan debt hard with occasional attorney fees looming, or should I focus on the emergency fund and just get rid of the credit card first. I technically have the 1k available and paid extra on the card this week. I don't want to end up without enough to cover the legal fees in the next few weeks.

I did a quick search and saw that it used to take 6 months to get to an indeterminable score but became 8 months and in Reddit here I saw 1 year or 3 years. I’m at month 10, and it’s still not indeterminable. When should I expect to get to an indeterminable score? 1 year? 2 years? 3 years?

I have about 71,000 in student loans
Min monthly payment is is 270
Car loan 12,000 (2026 Elantra) 350 min payment , but paying extra when I cab

No other debt

I net roughly 3600 a month after taxes

After rent, groceries & utilities .
I have about 2300 leftover

1680 after min payments

Should I put money in a 401(k) and then the rest toward the car loan?

I also have 5,000 in savings
10,000 in 401(k
3,000 currently on a CD , maturity date of September 2026, should I reinvest on the CD? I have earned about 500 interest in one year

After min

Background.
Last year I had my gallbladder removed, got me to my max out of pocket of $6550, spread across hospital, surgeon, and anesthesiologist. At the time I did not have enough in my HSA to pay all that off. All 3 of them had payment plans for 0% interest ranging from 12 months to 24 months. But one of them offered a 30% discount if I paid the bill all at once, and I did have enough for that so I paid it to get the 30% discount. The other 2 went on monthly payment plans for 0% interest. anesthesiologist was paid off last month. Still have about a year left with the hospital.

This year I had another medical emergency that included needing to go the emergency room and even get a CT Scan. This is also now on a monthly plan of 0% interest for the next 18 months. There was another bill from this emergency that I was able to pay off all at once and they offered me a 20% discount for paying it off all at once.

I currently have enough money in my HSA account to pay off this new hospital bill and last years hospital bill, but it would wipe out my HSA. What makes me nervous about paying this all off and wiping out my HSA is that I would not have enough money in there to make one lump sum payments when offered a big discount for paying all at once. Literally saved me thousands of dollars having enough in my HSA to pay those kinds of bills, plus money for things that cannot be done in payments like eye exams, glasses, medical specialized shoes for my wife's feet, ect.

My deductible is $4000, with $6550 max out of pocket. Except for last year and this year, all other years all our medical expenses came out of my pocket since it was under $4000. So having this HSA is important for my family.

I'm approaching retirement - and getting barraged by co-workers and friends as to how I pulled this off in a somewhat short amount of time.

After explaining my approach - and watching the life drain from their eyes - I find myself coming back to some very simple concepts that got me (and several other people I know) this far.

1. No more dumb decisions, especially financial ones. Once I got to BS3 the race was on. But along the way I started getting pretty picky about where I spent my money. Brand new toys became a thing of the past, clubs & subscriptions started to dwindle, I started driving a REAL commuter car to save gas money, and overpriced trips were cancelled. This saved me more money than I ever could have imagined at the time. And the flood gates opened!

2. My job played the largest role in wealth building (not real estate). Being gainfully employed without ever being laid off took some luck. But given the fact aerospace workers were needed everywhere it didn't take that much luck. My job allowed me to pay the bills and invest. And, yes, investing in 2009 was kind of tricky - initially.

3. Emergency fund. Murphy is alive and well - even in the year 2026! Since he's never going away, neither would the emergency fund. Roofs, car repairs, septic system repairs, siding, etc. I cringed when writing checks to cover those costs - but I never went back in debt. And I rebuilt the emergency fund - every single time.

This said, it still took me almost 19 years (to the day) to get to this point. Its not trivial, but its not impossible either - even after making some investing mistakes along the way.

Case and point: A co-worker living with her parents until she gets out of debt AND has her emergency fund in place PRIOR to moving out. To say she is NOT a brick would be an understatement. She has gotten fanatical about debt snowballing and will be throwing a debt free party right around Christmas THIS YEAR.

She is 24, will be better off when she retires than I was, and is deep diving into investing already.

Props to her. I was age 39 before I stated getting it right.

Ladies and gentlemen, GET FANATICAL!!

Don't lock yourself into a bad scenario because of debt, living in a high cost of living area, or whatever comes your way. Keep your options open, your decision making sharp, and your focus narrow.

.............and don't look back.

My husband (30M) and I (24F) bought an investment property for $65k not too long ago. We put 20% down on the property and it needed about $40k in renovations that we lumped in with the loan. Our total loan on the property is $92k at a 12% interest rate for a 12 month loan period. We currently only pay interest on the loan which is about $950/month.

Once the renovation is done the property should be worth $135-145k and would rent for about $1300/month. Our exit strategy after the renovation was to sell the property. If it sits too long, plan B was to refinance and put tenants in it.

Our church has been recommending following Dave Ramseys baby steps which means getting rid of the debt we have on this investment property. Curious how you all think Dave would tell us to do it?

1. Use our current savings (58k between our emergency fund and non-retirement brokerage account) to pay off the loan, finish the renovation, and sell as soon as possible?
2. Keep the loan for the remainder of the renovation but sell as soon as possible and pay it off?

Our plan once we get out of this is to save money so if we do another fix and flip or rental in the future we can do it completely cash. Just wondering what to do in the mean time with this one.

References of our financial situation:
- Combined gross income $250k annual
- Mortgage balance on our primary residence $583k at 6.875%
- No car payments or student debt
- 92k investment loan, 12 months @ 12%
- Contributing 15% to retirement, current retirement balance is $92k across both our accounts
- 18k in non-retirement investments
- 40k emergency fund

Long Post so please bare with me.

I’m looking for some outside financial advice because I feel like I have several major decisions that all need to happen at the same time, and I’m trying to figure out the smartest order to tackle them.

We’re a family of 7 with 5 kids, and right now I’m the only one working. I bring home about $812 per week after taxes.

We’re currently staying with family, but that situation is temporary and we need to be prepared to move around October/November. Based on what I’m seeing in our area, I’m expecting rent to be around $2,000/month, and because our credit isn't great, I'm also preparing for the possibility of a larger deposit.

Here are our current numbers:

- Income: about $812/week take-home

- Electricity: about $500/month

- Groceries: about $600/month

- Gas: about $120/week

- Phone: $160/month

- Internet: $100/month

- Current vehicle/title loan: about $726/month

- Title loan payoff: around $12,000

- Vehicle value: approximately $30,000

- Student loan payment: currently $0 until November 2027

- Car insurance quote for two vehicles: approximately $777/month

Transportation is where things get complicated.

Our main vehicle is large enough for our family, but it has the $12K title loan attached to it. We also have a 2015 Ford Fusion, but it currently isn't running. It was overheating and stopped starting, and we don't know the full extent of the repairs yet. For planning purposes, I'm assuming it could cost as much as $5,000 to completely repair it.

Even if we repair the Fusion, it doesn't fit our entire family, so we would still need access to a larger vehicle.

I've considered selling our current larger vehicle, paying off the $12K title loan, and using the remaining equity toward another vehicle. That would eliminate the $726 monthly payment, but I'm worried about trading one transportation problem for another.

At the same time, we desperately need to build up cash for moving expenses, deposits, first month's rent, emergencies, and eventually improving our credit.

My long-term goal is to become financially stable, clean up my credit, and eventually purchase a home, but right now I'm mainly focused on getting my family through the next several months without making a financial decision that sets us back even further.

If you were in this situation, what would you prioritize first?

Would you:

1. Sell the $30K vehicle, pay off the $12K title loan, and buy something cheaper?

2. Keep the larger vehicle and aggressively pay down the title loan?

3. Put money into repairing the Fusion?

4. Focus almost entirely on building a move-out/emergency fund before tackling debt?

5. Do some combination of these?

I'm especially interested in hearing from people who have had to rebuild financially on one income with a larger family. I know the numbers are tight, so I'm not looking for judgment or a magic solution. I'm trying to make the best decisions I can with the income and resources we currently have.

What would you tackle first, and what would you absolutely not do in my situation?

Big picture details:

1. 19k car debt

2. 22k in brokerage account

3. 25k in emergency fund

4. 145k gross household income

5. About 13% currently going to retirement

6. Saving for kids futures

The Car debt:

Last year we learned we were having twins. Welcoming child #3 wasnt a surprise but #4 was. It was considered a geriatric pregnancy at my wife's ripe old age of 37 (kidding). And, mixed with the twin pregnancy, we entered stork mode since this was a bit higher risk pregnancy. Rather than deplete savings to buy a car that would fit a family of six, shortly before the twins arrived, we put 10k down and borrowed 29k. Since then, we have paid off 10k in six months with leftover stork money and expect to have the other 19k paid off in less than two years on a five year loan.

The House:

We currently own a 3 bedroom 1800sq ft house with a monthly payment of $1350 a month. This is roughly 15% of our take home pay AFTER insurance and retirement, so even less if you use gross minus taxes. Space is tight at the moment but we can manage and our monthly margin is great with such a low payment. The two older kids share a bedroom and the twins share a nursery. But our immediate goal after being debt free is to upgrade to a 4 or 5 bedroom house, target price 400k. After fees, title, taxes, etc. we expect to walk away with $105k net equity if we sell our house.

The Options:

1. Move today, Liquidiate the brokerage, pay off the car/be debt free, sell the house, put 100k equity down on new house. Monthly mortgage payment would still be much higher than it currently is but we would still have *some* margin, even more so once the twins kick their $400/month formula habit in 6 months. But overall, monthly margin is semi-permanently reduced by quite a bit.

2. Stay put for 2-3 years. Save $100k and be debt free. Keep our house and put ~100k cash on the new house. The property will gross $600 and after setting aside for vacancy and maintenance, net cash flow $200-300 monthly while continuing to appreciate/build equity and keeps a cheap mortgage in our portfolio should we ever decide to downsize or help our kids out with an affordable place to live.

3. Stay put for 2-3 years. Save $100k and be debt free. Sell our house and put ~200k onto the new house. Mortgage still goes up but a much smaller amount. The cheap mortgage is permanently gone but we enter our new house half paid off and monthly margin much more intact.

4. some in-between or new scenario you all might come up with

Due to some life happening, emergency fund is gone . Back to baby step 1.

Just looking for some conversation and wondering how it went for you if you had to stop the painful step of pausing investing.

60k in Roth IRA and 44k in 401k( 10k of it is Roth )

Age 41.

How long did you pause investing to get back to the 15%+ and how did you feel about it?

My wife and I have been married for 17 years and have 2 kids. We are both 40 years old. Our combined income is $200k. We own a home worth approximately $1.4M with a remaining mortgage balance of $590k at 5.25%. We are generally new to Ramsey, and had never really considered the idea of paying off our home early. Our principal and interest payments on the debt are $3,260 with a total mortgage payment if $5,000 with taxes and insurance included.

We have a brokerage equity portfolio of about $1.1M and a retirement equity portfolio of $1.4M.

After listening to some of Dave's content we have considered selling stock from our brokerage account to pay off the mortgage early. Due to the unrealized gains in the portfolio, we would have to sell about $655k in equity from the portfolio to net the remaining mortgage balance because of capital gains taxes. All in, it looks like we would be subject to about $65k in capital gains taxes on the sale. Essentially that works out to be 29 months worth of interest expense (not total mortgage payments).

My question to the group is: would you still advocate for paying the house off early in light of the substantial tax bill that would be generated?

A few other bits of data that may be helpful:

If I dont prepay the mortgage at all, there is about $580k in remaining interest due on the life of the loan.

Our annual budget looks something like this:
Income: $200,000

Less: Taxes -$50,000
Housing: -$65,000
Retirement savings (1 401k and 2 IRA's): -$39,500

Discretionary funds: $45,500

We don't feel like we live all that lavishly and there isn't much extra at the end of each month.

I appreciate all the advice!

I’m 25,  have roughly 85k in debt and am getting kicked out of my current place. Current debts: student loans 13.5k (0%), credit cards 8k (20%), loc 7k (9%), business loan 23.5k (7%), car loan 35k (6%) 

My current income is 125k or roughly $6600 a month take home after taxes. My expenses are rent 500, car note 700, gas 400, insurance 600 business loan 400, loc/cc minimums 400, phone/inter 110, parking 50, dog supplies 80, food 300. Total expenses: $3540 

My remaining income after my expenses is $3050 a month which is normally put toward saving, paying debt off and personal expenses. But I will need to find a place by the end of September and rent near my work for a 1 bedroom is about $1800 a month or $1000 for a master bedroom.

I’ll be saving roughly $400 on gas/insurance minimum leaving the gta, but this will be offset likely by increased food cost and general house supplies. Based on rough calculations I would spend 1400 extra in expenses monthly roughly leaving me with $1650 after paying my bills each month. If I get a master bedroom I’m left with about $2450 instead. 

I had planned to go back to school for my masters soon to increase my income but I’m not sure if I should  still go or pay off debt first. Masters programs would cost roughly 15-20k and take 2-3 years but bring my income into the 150k plus range although I’d also probabaly be sacrificing some income while completing school. I know this is a lot of info but any guidance or advice is appreciated. 

My wife and I (60’s) have 0 debt, and healthy retirement fund, emergency fund etc. Kids are grown and on their own. I will likely be buying a new to me car, or maybe even brand new, in maybe 1-2 years. I can pay cash which would make Dave proud. However, I’ve heard that a cash buyer can’t get as low of a price as someone who finances the car if it’s purchased from a dealer. If I find that’s the case, wouldn’t it be best to finance the car, then pay it off within a few days or weeks? Seems like that would allow me to get the best drive out price, regardless if it’s brand new or slightly used, but also by paying it off, I would save the interest. My credit union has no pre-payment penalties. Who cares if I’m in debt for a few weeks ? I care more about getting the best price I can for whatever car I choose. Am I overlooking anything?

Update: Thanks for the insights! We will be speaking with our credit union regarding a loan instead of the mortgage broker.

Original:

My husband and I have followed DR principles our whole 14 year marriage. Last year we received an inheritance and decided with prayerful consideration to pay off our mortgage for baby step 6. It felt great. We had an extra 60k and spent several thousand dollars more on donations, home improvements and vacation and now we are at around 45k in our sinking fund. As a one-teacher income family, we have felt very blessed.

We had no intention of moving any time soon, but then a specific home that we had our eye on for a long time went on the market. It’s in the best possible location. We went to see it and love it, and it’s only about $40k more than the value of our current home. However, when talking to the mortgage broker, we realized that because we don’t have the 20% cash for a conventional loan, our path to get this house is very difficult. He said a bridge loan will only get us 75% of what our home is worth, so can’t do that. HELOC only goes up to 250k, which isn’t enough. Even if we buy contingent on selling our home, we have to take out a 100k mortgage at minimum. We don’t need that much mortgage. And even if we somehow scraped the cash for the 20% down payment, we would drain our sinking fund and then that mortgage couldn’t be paid off until 6 months, which is cost prohibitive to us.

Please be kind, we are not financial investment savvy people but have worked on the basic principles to live within our means and to pay off debt. We just feel like if we had more cash instead of it wrapped up in our house, we would be able to get this house. I don’t know if that’s true, but now I feel silly for paying off our home.
Did we totally misinterpret Dave’s advice?

I don’t know if it’s just me being a tightwad or something else but I am struggling with spending money on anything fun to do or buying things for myself. I am debt free and I budget my money. I currently make about $120k a year and my monthly fun money budget is $500. I maybe spend at most like $80-$100 in a month. I really struggle with wanting to spend money on anything for myself. Does anyone else struggle with this? If so, what advice do you have to overcome this?

What would you guys do? My husband and I are self-employed. We gross about $180,000-$220,000 depending on the year. We just bought a house that totals $460,000. We put 20% down and settle in a few weeks. We have an emergency fund of $30,000 & house repair fund of $5,000.

My husband would like to build a detached garage for his business, so we will budget & cash flow this. This is important to him, & would be helpful for his business. I agree that it’s important. I’d like to beef our emergency fund to $40,000-$50,000 since we’re both self-employed. We’d also need to save for a maternity leave if I were to get pregnant within the next year or so. What do we focus on saving for next? I’m feeling overwhelmed by it all. Any advice appreciated!

My wife has expressed interest in getting a remote job during the day, something very limited 1 to 3 hours a day. We don’t even care if it’s $15 an hour. Are there any recommendations here for a flexible job that she can have from home. We have a four month old and two elementary kids will be at school.

Thanks

Wife and I started following Dave’s baby steps 20 years ago. Now we are mid 40s, everything paid for as of 3 years ago, kids college done. Cash flow is huge and money is just piling up. We take some nice trips, but after 20 years of aggressively pursuing financial independence we still struggle spending money!

There’s a twinge of guilt for spending too much money on things we enjoy. I was about to write a check for a sweet golf cart, but found myself not able to justify it, even though it doesn’t affect our bottom line at all.

I know this is a great problem to have, just wondering if anyone else has experienced this?

Me and my wife (25) are 42,000 in debt (13,000 car loan/29,000) student loan debt. We are paying 1,500 a month in rent in our apartment. We are wanting to move to NC into our first home. The loan would be 150,000 or about 1,000 a month. Is this a good idea or should we wait?

(Edit) We make about 3700 a month. We get that home insurance would be about the same price we pay for rent now. We would both have jobs once we moved there paying roughly the same we get paid right now. We wouldnt be moving for another 6 months.