Which Debt Do I Need To Pay Off First?

lisa is with us in Raleigh North Carolina hi Lisa how are you good Thank You Jay for taking my call sure what's up okay so my husband and I are trying to pay off our debt he's currently the only one working because I'm stay-at-home mom and graduate student and so we've got pretty much everything paid off except for our two cars and then my student loans my student loans are pretty large and there's a good portion of them because they're graduate loans are unsubsidized so the interest is about $300 a month that just keeps accruing so we're trying to figure out where to best put our money should we be paying off our cars and then kind of roll that into the student loans or should we kind of divide that and pay the $300 a month in the accruing interest just to keep it from from accruing how much do you like the car we have one of them is 27,000 and the other one is 24 good lord and how much is your loan debt I'm embarrassed to say it's about 90,000 okay and you're at home yeah and he makes what but he just well here for a couple years he was in and out of construction with just kind of the crash of building things and stuff that didn't housing market wasn't that great he's actually just started his own business this past year so we're still trying to figure out what he's making but on average he's been able to bring home probably about 5500 a month 5500 a month yes which sounds suspiciously like 66 thousand a year okay around that yep no and you're studying what I'm in counseling I'm in my last year's on starting my clinical internship actually in May okay and you will finish that when May of 2017 it'll be a one-year okay and then what will you be making that I'm not sure I will so I still have a very small child at home and two older ones that just started school so I'll kind of be still trying to be at home and then kind of working part time but I don't have any idea really we're spending a lot of money right now as broke as you all are to get a degree you're not planning on using no I will use it I just we kind of got a surprise with our last little one so that's definitely slowing things down as far as me getting out into the workforce full-time so that's yeah I will eventually be working full-time and dealin how are you paying for the balance of this education um how we paying eventually or now anything that the finisher from here forward how are you going to pay for the finishing of your counseling degree with the remaining student loans and with my internship it's only I mean at this point I've done so it's literally just the internship it's not it's not adding any more money really to the loans it's just now that I'm done and I've done all my schooling now the loans are going to come and start have to be paid yeah yeah okay um well you've got an untenable situation the math you're giving me is scaring me to death thank you and these cars are both just insanity I don't know that was he making two hundred thousand a year before or something but yeah before it wasn't that much but before was better but the vehicle that he does have is for his new job he can't afford it he's in construction he doesn't need a $25,000 truck he just needs a truck you guys have cars you absolutely cannot afford you're going to go bankrupt I mean you're you're you are rapidly running this into the ditch you have a a low-income and you have a hundred and forty thousand dollars in debt and fifty of that is on cars there's just no way Lisa this has to change and it's not me telling you I mean the math is just screaming off the page here and it's not Dave Ramsey but me being mean to Lisa that's not the point you guys have gotten yourself into a corner and you've got to sell these cars they've got to go away quickly for you to make this a crime because your student loans are coming due mm-hmm I mean how much is your house payment um 1,100 yeah and your car payments are that much between the tears about three 350 and 430 okay so they're 800 okay and yeah four combined yeah not what I'm talking about yeah I'm talking about so yeah and then you're going to student loan that's going to be that much and more yeah and you know and there's a baby right there that wants to be fed so these cars don't fit this equation at all all right it's going to put him out of business and it's going to force you into the workplace before you're ready to go back and so they the only shot you've got to turn this thing around is get yourself a couple beaters and get these things gone for the math to work you just I don't any margin take fifty five hundred minus these figures you're giving me you see what I'm doing and and it's just there's not there's I'm not any food left I mean it's just that that's why you're calling me because you were you hadn't done the detail the math and I've done so many budgets I can do them in my sleep but you haven't done the detail math but you were feeling it in them you know in them in the mist it was sneaking up on you the dark mist was coming yeah I do for sure yeah so I think you guys can make it but you're going to make some radical decisions here you've tried to do several things at once that you could not afford to do so something's got to go and I'm trying to keep you at home in this discussion his incomes got to go up and these cars got to go away for that to happen okay I didn't for you to be able to finish this internship out and that and you know are they is it a paid internship yes it is but it's it will be at least you're not paying yeah okay yeah yeah no at least yeah at least I don't have to pay but it'll be it won't be that much okay all right cool well yeah I mean if that's what I would do if I woke up in your shoes is to turn this around that way and you guys just got to sit down and do some really tough math together and you know what is the best way though as far as if we did get rid of the cars to attack the student loan debt should we refinance that to lower the interest rate from six point eight to something lower no we're not going to get any lower than that on those but that's about what the market is and so it's not an interest rate problem it's a cash problem it's an int it's it's what we call shovel to hole ratio your shovel is your income the hole your ends the amount of debt and your shovel to hole ratio right ii is horrible it's doable when you get rid of the $50,000 where the cars start it starts to turn around then because I've got another eight hundred bucks a month to work with here so hold on we'll walk with you through this I want you to to go into the class Financial Peace University it's a nine week class I'm going to pay for it because I've been right where you are scared and didn't know what to do and I'll show you what to do and I'm going to be in Raleigh April 27th so give her two tickets to that event as well Kelly this is the Dave Ramsey show hey you guys Rachael Cruz here hope you're enjoying the Dave Ramsey show and did you know that I have my bear own YouTube channel yes that's right kind of better than the Dave Ramsey channel I'll tell them myself that I'm kidding I'm panic so subscribe and there's lots of videos about life and money so while you're at it if you want to check out a video then you can check out how to do a monthly budget it's one of the best videos out there you

Channel: The Dave Ramsey Show

Views: 1,035,148

Rating: 4.8411946 out of 5

Keywords: which debt to pay off first?, which debt to pay off first calculator, dave ramsey using 401k to pay off debt, cash out retirement to pay debt dave ramsey, dave ramsey 401k loan to pay off debt, dave ramsey cash out 401k pay debt, dave ramsey 401k to pay off debt, stop 401k contributions to pay debt dave ramsey, tithe or pay debt dave ramsey

Id: SZz_HWv9JrU

Length: 8min 37sec (517 seconds)

Published: Fri Mar 04 2016