Do you ever wish you could sit down and ask Dave or one of the Ramsey Personalities a few of those financial questions that keep you up at night?
I know they say I should close my credit card account—but won’t that hurt my credit score?
Renting is so expensive. Is it really that big of a deal to take out a mortgage when I’m still in Baby Step 2?
Dave and the Ramsey Personalities recently sat down for a Fox 17 News Town Hall panel at Ramsey Solutions, where they took questions from people just like you looking to take control of their money. Here’s what they had to say about some of your most pressing questions:
Q&A With Dave and the Ramsey Personalities
Tuning Out the Negativity
What are some ways or ideas to tune out negative friends or family during your journey to being debt-free? — Brianna
It may be difficult, but you have to limit your exposure and the discussion with people like that.
"A negative attitude is like a cold," Chris Hogan said. "If you’re around it, you can catch it. So don’t debate it with them. Let them know you’re not debating, you’re stating. You’re making a statement for your financial future."
Instead, surround yourself with like-minded people who will encourage and support your debt-free journey, not belittle you. When you join a Financial Peace University class, you’ll meet people who are in the same boat. You can lean on them for support and accountability as you go through the plan!
Rachel Cruze said to remind yourself, "This is my life, this is my journey, and this is my money. You’re doing this for your future, and those sacrifices are not going to be forever."
Should You Buy a House During Baby Step 2?
Is there ever a good time to pause Baby Step 2 to save and buy a house because renting is such a huge expense? — Maggie
"Don’t make a rash decision that sets your family back a decade," Dave Ramsey said. "I want you to own a house, but I don’t want the house to own you."
Baby Step 2 is when you should be getting rid of debt, and that doesn’t include tying up more of your income in a mortgage.
"I’ve never seen anyone buy a home while they were still in debt with no emergency fund and have the home turn into a blessing," Dave said. "It’s always a curse . . . and you just get stuck."
Instead, try increasing your commute outside the city. "The further you move outside any metro area. . . the cheaper it gets," Dave said. You might have a longer drive into work, but you could be living in a much more affordable area.
Emergency Fund Struggles
How can you build your emergency fund when you’re living paycheck to paycheck? — Joyce
When it’s hard enough just to make ends meet, it can seem nearly impossible to get that starter emergency fund up and running. It all comes down to being intentional and having a plan.
"You have to prioritize. So when you’re doing your budget, saving has to be at the top," Rachel said. "One of the reasons a majority of people live paycheck to paycheck is because of debt."
That’s why it’s so important to get your $1,000 emergency fund in place as quickly as possible. You might have to get an extra job for a while or cut some things from your budget—but do whatever you can to squeeze that money together fast. Once you have your emergency fund in place, you can attack your debt!
The Credit Score Myth
I know I should focus more on my credit card debt. But should I focus on my credit score rather than just worrying about the debt snowball? — Ms. Jackson
One of the biggest traps people fall into is believing their credit score reflects how well they’re doing with money.
But a high credit score doesn’t mean you’re winning with money. Not even close! Your credit score is solely built on how much debt you have, what kind of debt you have, how long you’ve had it, and how you’ve paid on it.
"It’s a big myth that you’ve got to have a great credit score to succeed," Chris Brown said. "A credit score is actually just an ’I love debt’ score."
There are also many people who think you simply have to have a credit card just to survive these days. "I love being able to say I’ve never owned one and I’m here and I survived," Chris Brown said.
A Debt-Free College Degree?
I’m the father of a 17-year-old, and we have no money to pay for college. He’s worried about how to pay for college, and he doesn’t want to go into debt. What can we do? — Jeremy
The first thing to do is sit down with your kids and set up a plan. Student loans aren’t an option, and community college might be the best route to take.
"As a parent, it’s not your job to send him to school—it’s your job to assist him while he’s in school," Anthony ONeal said.
Encourage your teen to take ownership of their future. Step away from distractions like social media and get serious. "Look up scholarships and grants every single day . . . because the key thing is he can go to college completely debt-free," Anthony said.
Have them consider taking basic classes like English and math at a community college and then transfer them to an in-state school later. And don’t forget to be careful about your school choice.
"If he gets scholarships and he can afford an in-state school, that’s great, but he doesn’t need to step over a state line," Rachel said. You could be paying two to three times more at an out-of-state school than what the same degree would cost you in your own home state!
Fight against the pressure of American culture that says kids have to go to college as soon as they graduate high school.
"College graduates are coming out of school in massive amounts of debt, and they’re having to take jobs they’re overqualified for with their very expensive, not paid for education," Ken Coleman said.
And let them know it’s okay to take a year or two off to work, save up money, and figure out what they want to study.
"He might start two years later, but he’ll come out ahead of everybody else because he won’t be in debt," Ken said.
The Educated Way to Save for College
What is the best way I can save for my child’s financial future outside of a typical savings account in their name? — AJ
If you want your money to grow in a safe space where taxes can’t touch it, look into saving for college with either an Education Savings Account (ESA) or a 529 Plan. But remember, if you’re paying off debt, hold off on putting money away for your child’s college fund just yet. As hard as that sounds, there’s a good reason for it.
"One of the best things you can do for your child is for you to be debt-free as they grow up," Chris Brown said. "So hold off saving for the kids and make sure you get out of consumer debt first."
Sometimes just opening up a simple savings account is a great start, which is one of the things Chris Hogan’s grandparents did for him that instilled an early awareness of money.
"If the kids are getting money from family for birthdays or holidays, take a look at saving 50% of that and allowing them to give and spend the other 50%," Chris Hogan said. Use it as a teaching tool to help them establish good money habits at an early age.
Contributing to Your Retirement—What’s the Right Number?
For a retirement account like a 401(k), if you have an employer who matches the amount you contribute, can you count that toward the 15% savings—or is that just a bonus? — Laura
A 401(k) is a pre-tax account you can get through working with your employer.
"We encourage people to invest 15% of their household income toward a retirement account," Hogan said. "But I wouldn’t advise you to count that match . . . You know that match is there, but don’t count it, and watch what happens. It’s going to help you establish the habit of being intentional and preparing for later. . . I promise you, you won’t regret it!”
Borrow From the 401(k)?
I was recently forced to change jobs with a 40% pay cut. I’m struggling each month, and considering taking money from my 401(k) to pay off my home and leave $250,000 in the 401(k). Is that the right move? — Martha
"Absolutely not!" Chris Hogan said. "I’m passionate about this topic because your 401(k) is money you’ve put away. A lot of people look at a 401(k) and they just see it as an account . . . don’t steal from your future while you try to deal with your present."
Chris suggests that if you’re in a similar position, look at ways you can scale back your lifestyle or bring in an extra income.
"Do whatever you have to do to protect that 401(k), but also reduce your expenses," Chris Hogan said. "Look at selling your home, downsizing, or selling a car. Reach out to your friends and network to let them know you’re on the market."
Climbing the Corporate Ladder
As an employee, what can I do to be more attractive to my current employer and employers I may be trying to seek out in the future? — Leanne
"I want somebody that cares. That shows up. That doesn’t mail it in," Dave said. "I want somebody that’s getting after it, scratching and clawing and pushing things around."
Dave brought up The Ideal Team Player, a book by Pat Lencioni, and how it describes what the best team players at work look like: "They’re hungry—they’re ambitious, they’ve got things to do and they’re pushing things around. They’re humble—it’s not all about them, they’re not arrogant . . . or self-centered. And they’re people smart—they play well with others . . . and know how to work well with others to get things done."
If you want to be promoted, start working for the job you want!
"Look for problems to solve for your leader, look for ways to take initiative," Christy Wright said. "Don’t wait for someone to knight you and say, ’You now have permission to speak up.’ . . . Perform and then you’ll get the promotion."
The Image of Success
What advice do you have for a young business professional trying to pay off their debt but also wanting to portray an image of success? How do you fake it until you can make it on a budget? — Liz
"The whole picture of success is the biggest lie our generation has been led to believe," Rachel said. Her book Love Your Life, Not Theirs is based on this very theme. "You look at our generation—even just on social media—you see your friends on Instagram and Facebook and they live this amazing life. And you’re like, ’You’re only 28! How are you going to Hawaii three times a year?’"
Unfortunately, a lot of people use debt to them help create a false image of themselves to portray to the world.
"Purge all your distractions," Anthony added. "Get off social media for a while, put your plan on paper, and pursue that plan until you’re successful."
Getting Back on Track With Finances
My wife and I started Financial Peace University and got off to a really good start, but we keep having setbacks. How do we stay motivated? — Greg
To stay focused, start dreaming about what you’ll do once you and your family are out of debt for good. And get on the same page as your spouse about that goal! What excites you most about your debt-free future? Travel? Security and peace of mind? Not living paycheck to paycheck? Whatever it is, it has to be vivid.
"Get to a place where every dollar has an opportunity for the future, not an obligation to the past," Chris Brown said.
If you need to, jump back into an FPU class! It might help you refocus on your "why" and get you motivated again.
"I always pretend in my mind . . . if I had to do this to save the life of my child, what would I do? Anything! I could do anything!" Dave said. "You’ve got to get your why. You could do anything if you get a big enough WHY."
You’ve Got Questions, FPU Has the Answers
No matter what your questions might be, Financial Peace University can help you find the answers. Dave’s nine-week class can help empower you with the ability to start making smart money decisions.
Sign up for a class to learn how to dump debt for good, save like you mean it, and begin investing for a profitable future today!