Zachary Meredith it’s SUPER advice and she could pay a little more each month to expedite it. Don’t spend her savings cause Cash is King should she need it ASAP!
CC Libre personally.. I don’t even think I would put any additional cash in to expedite the loan pay off. If she winds up staying for 7 years. The employer pays it all off. If she puts money in now, that’s lost money in the future. Needlessly lost. If I was in her shoes, I would have my normal emergency fund and I would have a separate fund for repayment of the loan. Put that ideally in a high yield savings account to keep up with inflation and have 0 risk. If she winds up leaving her employer before the 7 years are up, she has a full fund to pay whatever amount is outstanding. The concept of having absolute 0 debt always confuses me with Mr. Ramsey. Everything should be viewed case by case. I think the advice given this video was seriously lacking an unbiased point of view.
Save 10k of your savings incase your car dies. Pay the rest towards student loans. Let your company keep paying the minimum while you save your emergency fund. Why not take their money, be ready for buying a car when needed. If you lose/change your job just pay off the student loans then
My dad taught me "debt is bondage" growing up. I think the world of Dave Ramsey and largely agree with his principles, but this one just does not make sense to me. Personally, I would park the $21K in a low risk instrument like a CD or T-Bill and ear tag it to pay off that student loan debt. If she leaves the company, pay the debt off immediately, if she stays let the company pay the student debt off and once it is paid off she can add that cash pile to her wealth building.
That's exactly what I was going to suggest. Park the $21k in a CD, proceed to baby step 3, etc, and draw down that $21k down each time the company makes a payment. If she ever leaves, she can just withdraw the whole balance and immediately pay the loan off.
U guys so lucky born and raised in countries like canada usa uk and other i came from pakistan no degree my parents don’t know English either they don’t work we still saving I THANK my ALLAH FOR THE STRENGTH AND CANADA WHAT MAKES IT HAPPEN WE PAY TAXES AND WORK HARD
Hey Dave, I’m 17 and currently a senior in high school. I found your channel several months ago and can’t stop watching! The advice you give shall serve me well as I enter my adult years. Thank you for what you do. 😌
Even that it might make more sense to let someone else pay for it ... What if she looses her job and/or get sick ? That might remove her ability to paying debt and keep her in debt. We will never know what will happen tomorrow , mind as well playing safe when it comes to money.
Regardless if you stayed at the company for 7 years or 1 year, why wouldn't you take advantage of the program offered by your company to pay off the minimum monthly payments? That's free money, money that's going toward principal. I guess I'm missing something here....
I don't understand why Dave would tell her to pay it off with her own money. I would let them pay it while I was working there. They aren't forcing her to stay if she accepts it.
He answered something similar to this for an attorney who would have his student loans forgiven if they worked for the state for 8 years. Public sector salary in his case was about half of what he could earn in a private office. In this case, if he paid off his own loans while working in the private office, he'd sooner progress through the baby steps than he would if he waited for the loan forgiveness. I think he just doesn't want her to commit to this company and have her options limited.
since the company was willing to pay every month and it would take seven years to pay off in full. I truly cannot understand who would turn down that deal to spend their own savings instead. who cares if it takes seven years for "them" to pay. if she stayed 1-3 years that is 1-3 year of free money paying off her debt without risk as she continued to increase her personal savings instead of resetting it.
@@geronimo5537 Depends on the policies of the deal. Some will make minimum payments that actually don't make any progress on the loan, and then when the number of years is up they pay off the full amount. So it's possible her loan would sit there in limbo without actually getting paid off until the full 7 years is complete.
@@geronimo5537 What if you wanted to change jobs? I wouldn't want to tie myself down to any company so they can pay MY loan, plus have a debt over my head for 7 years. I would get rid of the debt.
No, by the time that 7 years are you, she will be paying more than $20,000 because of interest. I start on the same path, then I realized I'm better off paying it off.
Liz P So why doesn’t she let the company pay for it as long as she can and then pay off the rest when she switches companies? What did she have a big savings account that she could easily do that the moment she leaves her job? It’s really simple do you want to pay $21,000 or do you not want to pay $21,000 for a debt ?
@@TheJonOrtiz I've watched so many of these I can't remember the situation now and don't want to rewatch it. Didn't she have other debt she had to pay off? Plus 7 years is a long time.
She could let her company pay the minimum payments on her student loan. Then she could match those payments each month with her payment designated to go to the principal of the loan.
Exactly what I was thinking. Buy a new (used) car and save the balance as an emergency fund, let the company pay each month and she can match it or even pay a little more. If she leaves the company before 7 years then she can pay off the balance but if she does it this way, it will get paid off much sooner.
@@Questioneverythingx I love Dave and his baby steps gave me alot of direction with my finances but aI don't always agree with everything he says and that's ok too. It's great if it works for you though! 🙂
Jesus Christ is Lord being debt free is the core of what he is saying. You can’t really do anything in his baby steps outside of getting an emergency fund set up without being debt free...
@@lizcedillo4602 No, he was waiting to hear her say "boyfriend" so that he could completely sidebar into getting married instead of the question in hand
If you’re so worried about the debt why not just keep 21,000 always in case the company change its policies set aside. I would buy car of 5 to ten and 3 to 6 and then always keep an extra loan balance
Dave approaches personal finance as being 80% behaviour. In this case its getting rid of debt as fast as possible. 7 years is a long time. Advocating for letting debt sit around for 7 years is inviting that attitude of being complacent with debt. And what if she gets let go? Now shes got no payments and all the debt. Imo just get rid of it. Better to pay it off when you can and start wealth building. She can save and start investing way sooner without the risk of debt. Problem is with stuff like this people ignore the risk of the debt sitting around and treat it like its zero risk
I just started listening to Dave and I have already learned a lot but I think this advice is terrible. Her employer is offering to pay offer her student loans, you'd take it. DUH! It's free money and that's the benefit of working for corporate. Save your money, invest it, etc. Why did she even call him with this question? The answer is obvious.
I disagree with him on this one. Gurl let them pay it off while you are working there. It's not like you are leaving the job tomorrow. Save your $ for a newer vehicle that you will need very soon and dont stay broke.
Yea but why not stay 3 years and get half the debt paid on the companies dime... by that time her savings will be way more and she only pays half her debt
I work in tech in silicon valley and plenty of people at my work have been here 7 years. In any case Arron seems right here, they pay the minimum each month, save your money and when/if you switch jobs, pay off the rest.
2:58 The moment Dave decides he’s gonna be stubborn, and justifies a broad response to a specific issue that he already knows to contain a variable that completely changes the equation. Dave, even you knew in this moment the right answer, but you chose your ego here. You even explained your ego, instead of focusing on the best advice for this situation.
Yeah I thought the same thing. In his defense he does emphasize "this is what I would do", but it's still a bad call IMO. Especially when her car is breaking down. Sheesh
This is silly advice and why I sometimes don’t agree with Dave. I don’t care how long I carry the debt... if they are paying for it, let them. If you leave, then pay it off, otherwise keep riding the wave 🌊
@@videosofinterest9227 what if she lost her job? Then she'd be very glad she didn't empty her entire savings. Btw does nobody here know that even you're unemployed you don't have to pay student loans?
Because her company's making the payments paying it off wont affect her cashflow, there is no snowball effect because paying off the loan doesn't free up those payments to devote to other priorities. I would switch baby steps 2 and 3, save a 3 month emergency fund then buy a $6-8k car. Once you've got a a fully funded 3 month emergency fund and a serviceable car save up the balance of your student loan and pay it off to get it out of your life. In about 9 months you're going to be 100% debt free, have a $6-8k car and a fully funded 3 month emergency fund but because the loan payments are being covered by your employer I'd switch the order of priorities around a little.
^This. If she pays the loan off and loses her job tomorrow, then her car breaks down the day after, she's F***ed. Paying a student loan off isn't an emergency.
Let your company keep paying your student loan and then you add an additional payment each month. That should wipe out your loan in 1/2 the time about 3.5 yrs. It speeds the process and you can still get the car and still have $$ in the bank.
JiisTube In case you realize you don’t want to work there for 7 years halfway through so you pay half of the 20,000 and let the company pay the other half
@@kmartins5604 makes no sense to me. Imagine an argument on whether or not to accept medical insurance provided from a company. One person says obviously take the benefit, another person says "if i ever quit I'll stop getting the medical insurance, so let me just not accept it and pay out of pocket myself". Either do or don't, but a third person saying "I'll pay half the cost of the medical insurance" really doesn't make any sense to me. There's no value in trying to make a compromise there.
JiisTube it’s kind of like that but depends on the person if they are going to stay all 7 years with the company and if they don’t want to be beholden to anyone. Personally I would just save money while the company pays off my loans then if and when I get sick of working there or am fired, I’d still have more than enough to pay off the debt. Dave sees the psychology of debt and how people aren’t disciplined enough to be financially secure. He also is a rip off the bandaid type of guy that works for many situations. This one is about preference there’s no one solution. Pay it all now or most of it now and be shaky for a few months and then move on to the next step OR have a lingering debt above your head that ties you to a company you may not work with for very long or enjoy that keeps you there because of the incentive of student loan payment.
Unless the company has a rule saying you must pay them back if you don’t work with them for an X amount of years then paying it off with your own money is kind of nonsense
@Nawal Ahmed They make her monthly payment, she can leave anytime with a smaller student loan. It will simply take 7 years to pay it in full. Leave in 2? cool now your student loan is 15k not 20k.
Because 7 years in a tech company is almost unheard of. Either she leaves early as is typical and will eventually have to pay some or most of the debt herself or she stays longer than she otherwise would for the "perk" of having the debt paid off by her company but likely misses out on far more profitable career advancement opportunities. It's like people who take certain jobs to be eligible for public service loan forgiveness but accept salaries far lower than the benefit of the forgiveness.
Exactly what I was thinking. If and when she decides to leave they will have paid off a portion of her student loans. I don't understand why Dave would tell her to use her own money.
If she is to pay it off why would he tell her to use her total savings to do so? Don’t ever leave yourself broke. Pay them $2000.00 a month and be done with it in less than a year. His advice is not always the best.
First time I haven’t been able to wrap my arms around Dave’s advice. I would leave the $21,000 in a money market account as a back up plan for the student loan debt and an emergency fund while I build another account for 3 to 6 months backup. Once that’s in place I would work towards purchasing a used car somewhere in the $12-$15,000 range like a Camry or Honda and pay 💰. Then get to the investing portion to build long-term wealth and at her age well that type of income growth she’s well on her way to being a multi millionaire by the time she’s in her mid 30s.
@@waflestix346 I agree but. I do think the government should get rid of student loans, especially for the people who were first generation . If I know what I know now I would not taken out any loans. I would paid off my education while I was in school. Especially when I had no bills .
@@truegrizzlesfan2292 "Student Loan Forgiveness" means higher taxes for those who are out of debt, no thing is free. The governments money they would use is your tax payer money.
@@Chief-rx5zr I am ok with higher taxes. We should all pitch in and help one another. We doing it anyway. If the government doesn't do anything which is highly likely I will still paid off my debt. As a first generation the government should paid off ppl debt.
I can't agree with paying that off. If the employer is offering free money, she should take that deal and invest the rest. She could always pay them off immediately when she decides to leave.
watching this video I feel like the only reason he said what he said is because he's obligated to say it because it would deviate from his plan. Take the money put it in a savings account even if it earns no interest then if you ever get fired or quit so you have the money to pay off the balance. Anything that was already paid off was free money. 250 a month exactly which is about 15% return. Good investment.
Moccasin144 You shouldn’t. It’s bad advice. She could simply let the company pay the debt while she works there and if she leaves just pay it off with the savings she’s been accruing. It’s really foolish considering what you can do with investing $20,000 over the seven year period if you just let the company take care of the debt and throw it in an index fund. Sometimes Dave’s debt free advice gets in the way of logic.
My rule of thumb is that if I am getting a higher rate on the savings than what I am charged on my debts, I will keep the savings (without spending them) and delay paying off the debts as much as possible. Pay off the debts immediately if you're paying more for them than you get from the savings. Which is usually always the case.
She should pay off the student loan when she’s ready to leave the job. Regardless if that’s two years or the full seven years! As long as they are paying on time why not? Keep paying off any other debt and/or save money for when the car breaks down. That company is cool for doing that. I wonder if they’re taxing her for that? Then that changes things.
I get wanting out of debt to eliminate the risk, but why not take the free money? Just open a savings account and put the balance of the loans in there, continue to let the company pay. And then if something changes or a new job offer comes up she has the the money on hand to immediately pay it off. If she pays it off she is effectively taking a pay cut...
@Anne Day That's the problem though. Dave treats everyone the same regardless of what is clearly smacking someone right in the face. A 22 year old with 21k in the bank, a clunker of a car making 80k a year obviously isn't some uncontrollable, average american. 99% of americans have already bought a 30-40K vehicle in that situation and probably has zilch in the bank at 22 years old. In her case, she sounds responsible, so I'd advise to take the free money, keep the money in the bank in case something goes wrong with the car. If you want to double up the payment? Go for it. It sounds like she's a saver, so my guess is in the next 2-3 years, should see leave that company, she'll have 40+k in the bank and only own 12-15k. If you want to drop the lump sum then, go for it. Much safer spot to be in. The downfall is it is taxable income, but that doesn't weigh enough for me to not take the (likely) 250ish free payment each month. Now, if there is something I'm missing here. Like her company holding her hostage for it. Have to pay back some of the payments if she leaves before the 7 years. Then sure. Whatever. But not everyone is like Dave. For Dave, every debt hanging over his head negatively affects his life. Other people, so long as they are responsible, can keep that debt and it not negatively affect or hurt them. I love Ramsey for most things, but I make the mathematical choice so we have some disagreements here and there. For example, never give up anything your employer is giving you, even if it counts as taxable income like this situation. Free loan payment, matched 401K, etc. I can never get a year back from my roth ira, so I'll never sacrifice maxing that out every year until I'm 59 1/2 or 62, whatever I happen to retire at. Even if it means carrying a little debt that is costing me less to hold than I'm earning in replace of it. It's a gamble, but mathematically I'm doing what's best for my situation and so should each individual. I don't think this was the right advise for her.
Save the 3 month emergency fund, spend the rest of the savings on the debt then let the company pay the rest of that.. save up for a car. Priorities in order.
Alan, I guarantee that if you asked a pool of millionaires, their advice would not match Dave’s in this case. I agree with Dave on most things, but I would always caution people not to have blind faith with any one person giving advice. No one knows everything, and even David Ramsey can make a mistake and give bad advice. This is clearly the case in on this video. Dave’s whole message is all about common sense financial decisions, and this does not pass the common sense test.
Evan Thibodeaux as a millionaire, if someone is happy to pay something off for you to help you get where you need to go, definitely have them pay for it!
If they are actually making the payment each month and not a promise to pay it in full in 7 years, even if it's only the minimum, let them make it. If she switches to a different job in 3 years then she can pay off the remaining 13k or whatever at that time. If she does stay 7 years it would be silly to have paid it off yourself when they would do it entirely for you.
Caller: "My car is breaking down" Dave: "empty your savings account to pay for something that's already being paid for" 🤯🤯 😂😂 What a shocking call. He always surprises me.
@Big Bubba What quick fix did I look for? I'm saying her savings can be first used to handle a broken down car to get to work. If you think she should empty that savings while her car is breaking down, that's an easy way for someone to get trapped into financing a car.
Everyone in the comments talking about letting the company pay. This was posted on Sept '19. So yeah, let the company pay, till the pandemic hits and everyone gets laid off. Be debt free asap. Dont play around with risk.
Let the job pay it and keep saving money. The only problem is is the company paying off the loan or just making minimum payments for seven years? If they will payoff in full, let the company do it.
Hey! This is a genuine question and maybe I am in the wrong, but as long as the loan gets paid monthly by the company, why not take care of anything else first. Paying back the debt makes total sense if you pay it yourself, but if you can have somebody else doing it for you why do it? Yeah, if you change the company, have the savings to pay it in full, but otherwise it doesn't make sense to me. Thanks for the people shading a light on my question :)
I thought this too, but they might also only be paying the minimum which goes down as you pay it off more. My minimum started at $273/month and is now down to under $100 with paying it down early.
@@maryyellen that's a valid point and I get that. However, if they would pay the minimum they would not clear it in only 7 years. For my debt (which is quite similar) paying a minimum means I'd clear it in 20 years. Again, it's just interesting to see different perspectives so thanks for telling me your experience. Wish my minimum would also go down to under $100 :)
I'd do the following: $1000 stays for emergencies, $5000 goes to a newer car, $15,000 goes to student loans. Let the company make payments for a year or two to cover the remaining couple of grand. You get everything and the benefit of using that free company money.
This is terrible advice. He basically advised her to leave free money on the table. If she ends up staying 7 years then none of that money comes out of her own pocket. If she leaves the company after a few years, at least her principal would have been lower and she could have payed it off then. Feel bad for her if she took Dave's advice on this one.
For anyone who believes that letting the company pay for that over 7 years, it's not free money. Policy can change - and we don't know the specifics of how that works, or if she will even be with the company that long. Also, it's not their responsibility to take care of her debt. That's one of the biggest things Ramsey preaches - taking responsibility for ur mess. There's an opportunity to learn here, she's got the ability to pay off her debt, her car is still running-fickle but going and her parents have helped her along the way. 7 years into the future has too many variables when it comes to having somebody else take care of what you can take care of in an instant.
It's a perk of the job, she could just save the money each month that the company pays on the loan and if she decides to change jobs she won't be any worse off. I really fail to see the logic of turning down a benefit of the job. My wife's company gives her a gym membership, it costs us nothing, its a perk of the job.
Keep $5k for your emergency fund. I never ever would have spent money replacing an engine in the car. Should have sold it off or junked it. Spend $5k on a good running second hand car. Spend $11k on the student loan and bring that balance down to $10k. Accept the company offer to help you pay off the balance, which now will be in less than half the originally perceived time. Maybe around 3 years. Save another bunch of money in that time.
I like Dave Ramsey a lot, I listen to him almost every day, but sometimes he gets too stuck in his ways. This company is essentially giving her free money by making minimum payments on her student loans, why would she spend her hard earned money to give that up? That money could be much better used elsewhere while her loans are getting paid off by someone else.
Wow actually an interesting situation for Dave to analyze. I love when it doesn't go straight back to baby steps and he hasn't to think about it a bit.
I agree with Dave on this one. By the time that 7 years is up, she'll be paying more than $20,000 because of interest. I started on the same path, but I finally decide to just pay it off.
I saw a comment that made a good point. If the deal with the company is that if she leaves before the 7 years, she has to pay back that money on the loan or the money to pay it is held until 7 years, then def pay it off. I wouldnt risk job flexibility for a $20K loan. If they are literally making payments every month on her behalf and dont want it paid back if she leaves then I absolutely do not agree with DR, let them pay as much as possible then take it on if you leave early
1redrubberball the company is paying off her student loan as part of her benefits package. She doesn’t receive it as cash and choose to do with it as she wishes. She either takes advantage of the benefit or she doesn’t. Similar to a 401k match.
Usually agree with Dave but he gave bad advice this time telling her to use nearly all savings to pay off student loan debt that the company is paying. At least let them pay the monthly while she's there. Why give up the company benefit which likely totals several thousand dollars over coming few years??
This is true. I get the point that she may not be there in the same company for the seven year haul, but it doesn't sound like she's leaving anytime soon either. Even just one year is thousands of dollar on the table. That's free money. People will go out their way to claim $10 in cash, no strings attached. And for thousands Dave tells her to ignore it?
She seems to like her job so obviously she'll be there for a while. Why not let them pay down the balance on her loans until she moves to a different company? She will still have her savings plus more so if she does decide to leave before 7 years, then she can pay the remaining balance.
I 100% agree. I feel like Dave just needs to be consistent not to loose viewers. Either that or he got some plan that is so good, he has stopped to think on a case by case basis.
Especially since she seems responsible. Some people would blow the money & not prepare but if she already saved $21k then she’s smart enough to tuck it away for later.
7 years, once you get older goes pretty quickly. I would say let the company pay. That's like not taking advantage of an employee 401K match. If she say... inherited the 21K, and isn't discipline enough to save then yeah....but she saved 21K. Keep that 21K in case you lose your job, need a newer car, or to pay on that student debt...employed or not employed
7 years is a long time but what does it hurt? I'd allow them to slow pay the loan, while putting aside what I would have paid on the loan in a separate account. That way if I ever do leave the job before 7 years I'll have the money to pay off the loan. Why let 'free' money be thrown away?
That's why patience is considered a virtue. Only a fool would leave thousands of dollars on the table to rush to pay off student loans. I mean you get to write of a nice portion of the interest anyway. I'm confused lol
Always take free money. With the money you would have paid on loan, just put in savings. At any moment you are done with the job, pay the loan off with savings. It's very possible to save a lot of money while someone else pays your bill. To me this is a no brainer but I fully respect Dave's opinion. But come on Dave it's free money lol
I would let the company pay the student loan because you will be using post tax money vs. your company paying your loan directly (tax free). Or you raise the minimum payment by going to another payment plan and let your company pay it faster
Everyone saying this is bad advice. How many of y’all are millionaires?? Yeah, so I’m gonna take the advice of the multi-millionaire who has been doing this for 30 years and helped thousands of people get out of debt and become millionaires themselves. Not paying her student loan off today makes her indebted twice over, once to the loan and once to her company. It’s insane to stay in debt for SEVEN years when you have the ability to become completely debt free instantaneously. A lot changes in seven years, she’ll make so much she won’t even think what was.
I agree with Dave, don’t wait on charity, paying yourself will make her value the money she makes more than always counting on charity to clear her student debt. Sleeping debt free is worth way more than always having her student debt in the back of her mind.
$1K is not much of an emergency fund, especially when you have an old cash car. I’d send $15K to the loans and keep the $5K, then pay the rest in payments
Nah fam...LoL Dave's suggestion sucks...rofl. I just think there are so many ways to strategize when it comes to money...Dave only seems to do one thing: the baby steps in the baby steps order...but why should free money be left sitting on the table?
At first, Dave's advice may sound counterproductive, however, the amount that the company pays toward the employee's school loans is considered taxable income to the employee so it's not really free money, particularly since the company will only pay the minimum monthly payment. Also, there may be some downsides to letting the company pay that the employee has not mentioned and or is not even aware of. Nothing is free in life.
Thank you for seeing the obvious that is eluding so many of the commentors. It is just part of her compensation package and is allowing the loan interest to continue to accrue. .
It depends on the company I know allot of companies that pay your student loan and some are good while others are bad. It depend on what that company want. Since it a tech company they want to encourage their works to continue their education. Since tech change every 2 years its important the employees keep up.
1redrubberball no it depends on the company I work for a company that paid for my school it consider one of their benefit so they take it out of their profit.
So you agree she should empty her savings account while her car is breaking down in order to pay 100% of her loans, because otherwise there's a possibility that she may have to pay up to 40% of the amount of her loans. Is that correct?
I like the advice of getting rid of debt right away. I make a really good salary, but my take home is garbage because of CA taxes, insurance, ESPP deductions, etc.
I say flip the car , get 10k or less , use the lemon as a down payment if need be or just pay it outright, and use the company to your advantage, I’m sorry I have 3 rainy day funds, each 3k or higher
Here’s why you don’t take advantage of this program: it has a hook. I work in tech. Every bonus or program comes with a “if you stay here for the full term, then we will do this otherwise you owe us the money we paid on it”. Corporate will get theirs. No matter if it is now or in 5 years when she leaves or is fired or whatever happens. There’s no such thing as “free money”. Most contribution matches aren’t vested for a couple years so you have to stay to receive employer contributions. I imagine this debt program is the same set-up. Also paying off debt will give her flexibility and she won’t be tied down to a company and will be able to negotiate higher salaries. Dave is right on this one.
80K is SO low in that area. My husband was offered a job at google a few years ago and what they pay seems like a lot until you look at the cost of living.
I think you all are missing the point that moving on with her life as a debt free person is worth more than the $250/month benefit the company is offering. When she is debt free she will feel different and more secure, she will make better life decisions, and that is worth it.
This makes no sense, she already is debt free right now on paper. By waiting to pay off the balance until she leaves this company she will be spending less money on the loan, guaranteed. All she does by paying off the loan now is throw away money, which is a bad decision. It is not worth making bad financial decisions today so that (maybe) she makes "better" decisions in the future.
I would not pay that student debt off, for what better credit, please. Its not like your credit improves when you pay off debt, its based off debt to income ratio and payment history. I would just keep saving and if my car dies than go buy a new one cash, yes new so its all under warranty go get a Toyota and keep it for twenty years. Than just double or triple your student loan pmts to not pay twice the loan with interest. To pay off debt and have a hoopty than no emergency fund even with a nice paycheck is a recipe for diaster
I agree with all except buying a new car. You can get certified with low miles for significant less, like new. All that matters is documented maintenance.
Smart move would be to see how much 6 months of your minimum payment is. Pay everything off minus that amount. In 6 months you’ll be working on your $15000 emergency fund plus $5000 for your new car. If you lose your job within those 6 months, so be it. Your student loan is the least of your worries at that time.
@@thisguymartin I'm not saying he's not, and I'm not remotely commenting on Ruby on Rails. Like I said, my reply wasn't to his point at all, just to the one phrase he uses. I recently have just realized that people are often talked about in terms of the average. I'm just saying that rather than that perspective, look at it as the bare minimum and encourage people to not be average.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@JonathanBram However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments
I would have totally played with the company money Vs deplete my entire backbone of savings. Not for the full 7 years, but I wouldn’t write a 20k check in a day, that’s for sure. If she lives at home, that’s better for emergency purposes, but still. A lot can happen in a year and you can do a lot with 20k in your back pocket.
I know it's hard to understand this advice, but it was correct. That debt will be like an anchor. Instead of moving forward unencumbered, it will weigh her down psychologically for the next 7 years.
Not if she saves the balance as many have suggested. As long as she's planning ahead for changes in employment she'll be okay. Meanwhile she'll be better off with a reliable car and a nice fat emergency fund.
I'd recommend matching their minimum payment amount with your own contribution. So if the minimum payment is $300, pay $350 on top of that. This would pay off the $21k within 3 years, which is typically when you'd start itching to change jobs anyway. This way, you keep your savings in tact and have a safety net in the unstable world that is California. Just put that $21k towards Steps 1 & 3 (I know Dave doesn't like skipping steps). Stay away from credit card debt and save up from now to buy a used car in cash. With take home pay of $4500/m, you can save for a car in 6 months. This is different from a loan forgiveness program. There's no question of whether or not loans will actually be forgiven (forgiveness program denies most applicants). If you plan on being with the company for 3 years, then take the free money for 3 years. HOWEVER, make sure you calculate the principle and interest schedule first. If they're only paying the minimum payments, how much interest will accrue? It's unlikely you'd stay at your job for 7 years and you don't want to be changing jobs 3 years from now and find you still have $18k left to pay off because interest accrued faster than the principle declined.
![Twenty One Pilots - “The Line” (from Arcane Season 2) [Official Music Video]](http://i.ytimg.com/vi/E2Rj2gQAyPA/mqdefault.jpg)
If the company is paying for the loan let them.... if you leave the company before 7 years pay off the remainder
Zachary Meredith I know right
Gordon Mcsweeny explain how it’s bad advice?
Zachary Meredith it’s SUPER advice and she could pay a little more each month to expedite it. Don’t spend her savings cause Cash is King should she need it ASAP!
CC Libre personally.. I don’t even think I would put any additional cash in to expedite the loan pay off. If she winds up staying for 7 years. The employer pays it all off. If she puts money in now, that’s lost money in the future. Needlessly lost.
If I was in her shoes, I would have my normal emergency fund and I would have a separate fund for repayment of the loan. Put that ideally in a high yield savings account to keep up with inflation and have 0 risk. If she winds up leaving her employer before the 7 years are up, she has a full fund to pay whatever amount is outstanding.
The concept of having absolute 0 debt always confuses me with Mr. Ramsey. Everything should be viewed case by case. I think the advice given this video was seriously lacking an unbiased point of view.
Then you get sued
Save 10k of your savings incase your car dies. Pay the rest towards student loans. Let your company keep paying the minimum while you save your emergency fund. Why not take their money, be ready for buying a car when needed. If you lose/change your job just pay off the student loans then
You can get reliable cars for 5k
@@tpzlol sure, but not for 1k. Why be that aggressive against a debt that someone else is paying?
@@mattarenz1195 honestly I didn't watch the video I just read your comment ;)
Cobb she makes 85k and is going to be debt free in 20 minutes. She can buy a 10k car.
@@tpzlol ,
My dad taught me "debt is bondage" growing up. I think the world of Dave Ramsey and largely agree with his principles, but this one just does not make sense to me. Personally, I would park the $21K in a low risk instrument like a CD or T-Bill and ear tag it to pay off that student loan debt. If she leaves the company, pay the debt off immediately, if she stays let the company pay the student debt off and once it is paid off she can add that cash pile to her wealth building.
That's exactly what I was going to suggest. Park the $21k in a CD, proceed to baby step 3, etc, and draw down that $21k down each time the company makes a payment. If she ever leaves, she can just withdraw the whole balance and immediately pay the loan off.
Ish
He's such zealot against debt he often will make poor financial decisions just to be debt free
What does "ear tag it" mean?
@@gabebishop821 to mark it, or, for this case, to set aside or reserve for
I wish my family taught me how to save money and work hard for it. Man it sounds amazing to have that money saved up at 22.
Really? I saved $30k in 9 months and I'm only 21 years old
@@SleepyDan wat do you do may i ask? 9 months and 30k? do you pay rent?
@@nhattran1074 yeah I pay rent, the majority of my savings come from flipping items online
U guys so lucky born and raised in countries like canada usa uk and other i came from pakistan no degree my parents don’t know English either they don’t work we still saving I THANK my ALLAH FOR THE STRENGTH AND CANADA WHAT MAKES IT HAPPEN WE PAY TAXES AND WORK HARD
@@SleepyDan yes really. Some ppl never save up that much money. You are in a great position. Don't spend it foolishly
Hey Dave, I’m 17 and currently a senior in high school. I found your channel several months ago and can’t stop watching! The advice you give shall serve me well as I enter my adult years. Thank you for what you do. 😌
Ryan McMahon call the show he doesn’t answer these you know he doesn’t use technology
You are light years ahead of most people.. keep watching!
I wish I knew this at your age.
@@Pyroo0 Same here.
Im 12 and i find myself grasped to these as well
You do not pass up free money. Let the job pay it until you stop working there while you continue to save money.
she could be 5 years in and get laid off, or have to quit for other reasons. by then she is stuck with it anyways
Yup, and she'll have had five years worth of payments made on her behalf.
Even that it might make more sense to let someone else pay for it ... What if she looses her job and/or get sick ?
That might remove her ability to paying debt and keep her in debt.
We will never know what will happen tomorrow , mind as well playing safe when it comes to money.
"Do not pass up free money" is how people get in trouble with credit cards. 2% cash back, don't pass up free money!!!!!!!
harrison wintergreen If folks can't understand the difference between credit card cash back and a company paying your student loans, that's on them.
Regardless if you stayed at the company for 7 years or 1 year, why wouldn't you take advantage of the program offered by your company to pay off the minimum monthly payments? That's free money, money that's going toward principal. I guess I'm missing something here....
I don't understand why Dave would tell her to pay it off with her own money. I would let them pay it while I was working there. They aren't forcing her to stay if she accepts it.
He answered something similar to this for an attorney who would have his student loans forgiven if they worked for the state for 8 years. Public sector salary in his case was about half of what he could earn in a private office. In this case, if he paid off his own loans while working in the private office, he'd sooner progress through the baby steps than he would if he waited for the loan forgiveness.
I think he just doesn't want her to commit to this company and have her options limited.
since the company was willing to pay every month and it would take seven years to pay off in full. I truly cannot understand who would turn down that deal to spend their own savings instead. who cares if it takes seven years for "them" to pay. if she stayed 1-3 years that is 1-3 year of free money paying off her debt without risk as she continued to increase her personal savings instead of resetting it.
@@geronimo5537 Depends on the policies of the deal. Some will make minimum payments that actually don't make any progress on the loan, and then when the number of years is up they pay off the full amount. So it's possible her loan would sit there in limbo without actually getting paid off until the full 7 years is complete.
@@geronimo5537 What if you wanted to change jobs? I wouldn't want to tie myself down to any company so they can pay MY loan, plus have a debt over my head for 7 years. I would get rid of the debt.
Take $20,000 out of savings to pay a debt the employer will pay for you?
That's insane!
7 years is still longggg time, u have to calculate it and i gotta agree with dave here 100%
No, by the time that 7 years are you, she will be paying more than $20,000 because of interest. I start on the same path, then I realized I'm better off paying it off.
She may not stay with the company, so makes sense
Liz P So why doesn’t she let the company pay for it as long as she can and then pay off the rest when she switches companies? What did she have a big savings account that she could easily do that the moment she leaves her job? It’s really simple do you want to pay $21,000 or do you not want to pay $21,000 for a debt ?
@@TheJonOrtiz I've watched so many of these I can't remember the situation now and don't want to rewatch it. Didn't she have other debt she had to pay off?
Plus 7 years is a long time.
She could let her company pay the minimum payments on her student loan. Then she could match those payments each month with her payment designated to go to the principal of the loan.
Exactly what I was thinking. Buy a new (used) car and save the balance as an emergency fund, let the company pay each month and she can match it or even pay a little more. If she leaves the company before 7 years then she can pay off the balance but if she does it this way, it will get paid off much sooner.
Jesus Christ is Lord that’s not what he teaches. Be debt free. Period.
@@Questioneverythingx I love Dave and his baby steps gave me alot of direction with my finances but aI don't always agree with everything he says and that's ok too. It's great if it works for you though! 🙂
Jesus Christ is Lord being debt free is the core of what he is saying. You can’t really do anything in his baby steps outside of getting an emergency fund set up without being debt free...
Why match the payments when the company is paying off the debt?
Immediate "Uncle Dave" mode. Lol. "Who's 'us'? " 😁
Yeah. He lost his train of thought for a sec, "...so you said you put a new engine?"😄
@@lizcedillo4602 No, he was waiting to hear her say "boyfriend" so that he could completely sidebar into getting married instead of the question in hand
@@richardgalvan4639 lol
Let the company pay for it. Shocked at Dave’s advice here.
Yes his advice was bad on this one. At the very least she maybe pay 10k of it.and they will pay off the rest In 3 years.
Im ILLmatic I guess I just don’t get it. Keep the savings and let the employer pay until they don’t.
@@jbbourbon178 I hear you. What sense does it make to turn down a wage increase. Which this really is they are covering your expenses.
If you’re so worried about the debt why not just keep 21,000 always in case the company change its policies set aside. I would buy car of 5 to ten and 3 to 6 and then always keep an extra loan balance
Dave approaches personal finance as being 80% behaviour. In this case its getting rid of debt as fast as possible. 7 years is a long time.
Advocating for letting debt sit around for 7 years is inviting that attitude of being complacent with debt.
And what if she gets let go? Now shes got no payments and all the debt.
Imo just get rid of it. Better to pay it off when you can and start wealth building. She can save and start investing way sooner without the risk of debt.
Problem is with stuff like this people ignore the risk of the debt sitting around and treat it like its zero risk
I just started listening to Dave and I have already learned a lot but I think this advice is terrible. Her employer is offering to pay offer her student loans, you'd take it. DUH! It's free money and that's the benefit of working for corporate. Save your money, invest it, etc. Why did she even call him with this question? The answer is obvious.
You are wise beyond your years!
She isn’t going to be working there in 7 years
@@rayhill5767 Then leave aside the 20k incase she leaves the company.
I disagree with him on this one. Gurl let them pay it off while you are working there. It's not like you are leaving the job tomorrow. Save your $ for a newer vehicle that you will need very soon and dont stay broke.
No tech jobs out her way are stable. Lots of people stay at a place for 2 to 3 years. 7 years at the same tech company is unheard of.
I agree 100%. 7 year program is just a way for the company to lower turnover rate
Yea but why not stay 3 years and get half the debt paid on the companies dime... by that time her savings will be way more and she only pays half her debt
I work in tech in silicon valley and plenty of people at my work have been here 7 years. In any case Arron seems right here, they pay the minimum each month, save your money and when/if you switch jobs, pay off the rest.
that is still 2-3 more years of increasing your savings and 2-3 years of free money from the company paying the debt.
@@nuggyfresh6430 I stand corrected. I still have only met or heard of people who bounce around often as a strategy to get the highest salary possible.
Man, she’s 22 and has 21k in her savings, I’m here with $400 :/ and I’m 21. It’s hard not to be envious. I make 24k a year after taxes.
big earl youll probably never have a lasting relationship with that mindset
@@saraashkir5793 TRUTH HURTS
big earl She is probably smarter and works harder than you.
2:58 The moment Dave decides he’s gonna be stubborn, and justifies a broad response to a specific issue that he already knows to contain a variable that completely changes the equation.
Dave, even you knew in this moment the right answer, but you chose your ego here. You even explained your ego, instead of focusing on the best advice for this situation.
Yeah I thought the same thing.
In his defense he does emphasize "this is what I would do", but it's still a bad call IMO. Especially when her car is breaking down. Sheesh
This is silly advice and why I sometimes don’t agree with Dave. I don’t care how long I carry the debt... if they are paying for it, let them. If you leave, then pay it off, otherwise keep riding the wave 🌊
Dude. You never know what future holds. Loses job, another emergency drains savings,,, now what? If you can pay , just pay now.
videos of interest you’re wrong... super wrong.
@@AntonDaniels hit me up in 20 years when you find out what a roller coaster life can be.
@@videosofinterest9227 I agree life is unpredictable.
@@videosofinterest9227
what if she lost her job?
Then she'd be very glad she didn't empty her entire savings.
Btw does nobody here know that even you're unemployed you don't have to pay student loans?
Because her company's making the payments paying it off wont affect her cashflow, there is no snowball effect because paying off the loan doesn't free up those payments to devote to other priorities. I would switch baby steps 2 and 3, save a 3 month emergency fund then buy a $6-8k car. Once you've got a a fully funded 3 month emergency fund and a serviceable car save up the balance of your student loan and pay it off to get it out of your life. In about 9 months you're going to be 100% debt free, have a $6-8k car and a fully funded 3 month emergency fund but because the loan payments are being covered by your employer I'd switch the order of priorities around a little.
^This. If she pays the loan off and loses her job tomorrow, then her car breaks down the day after, she's F***ed. Paying a student loan off isn't an emergency.
Unless she plans on moving or changing jobs, I think she should let her company pay the loan off.
Let your company keep paying your student loan and then you add an additional payment each month. That should wipe out your loan in 1/2 the time about 3.5 yrs. It speeds the process and you can still get the car and still have $$ in the bank.
Why make additional payments at all when the company is paying all of it?
JiisTube In case you realize you don’t want to work there for 7 years halfway through so you pay half of the 20,000 and let the company pay the other half
@@kmartins5604 makes no sense to me.
Imagine an argument on whether or not to accept medical insurance provided from a company. One person says obviously take the benefit, another person says "if i ever quit I'll stop getting the medical insurance, so let me just not accept it and pay out of pocket myself".
Either do or don't, but a third person saying "I'll pay half the cost of the medical insurance" really doesn't make any sense to me. There's no value in trying to make a compromise there.
JiisTube it’s kind of like that but depends on the person if they are going to stay all 7 years with the company and if they don’t want to be beholden to anyone. Personally I would just save money while the company pays off my loans then if and when I get sick of working there or am fired, I’d still have more than enough to pay off the debt. Dave sees the psychology of debt and how people aren’t disciplined enough to be financially secure. He also is a rip off the bandaid type of guy that works for many situations. This one is about preference there’s no one solution. Pay it all now or most of it now and be shaky for a few months and then move on to the next step OR have a lingering debt above your head that ties you to a company you may not work with for very long or enjoy that keeps you there because of the incentive of student loan payment.
but why pay off the debt if the job is gonna do it ? Just keep the 21k in the bank. If you lose your job just pay off the debt.
Unless the company has a rule saying you must pay them back if you don’t work with them for an X amount of years then paying it off with your own money is kind of nonsense
She sounds super mature for a woman who is 22. I would never guess that by how she speaks. Good for her for getting where she is already.
If I was in her situation I would just pay off the student loan today. She works a great job and makes 80k a year.
Same....
Everyone has a plan until they get punched in the face. - Mike Tyson
Marquis Patterson 80k in California is like making 20k it’s not a lot at all . Heck over 100k is not a lot anymore .
Heather Young very true
R V happened to me
Bad advice! If your employer is offering to pay off your debt, why not let them?
@Nawal Ahmed They make her monthly payment, she can leave anytime with a smaller student loan. It will simply take 7 years to pay it in full. Leave in 2? cool now your student loan is 15k not 20k.
Because 7 years in a tech company is almost unheard of. Either she leaves early as is typical and will eventually have to pay some or most of the debt herself or she stays longer than she otherwise would for the "perk" of having the debt paid off by her company but likely misses out on far more profitable career advancement opportunities. It's like people who take certain jobs to be eligible for public service loan forgiveness but accept salaries far lower than the benefit of the forgiveness.
Exactly what I was thinking. If and when she decides to leave they will have paid off a portion of her student loans. I don't understand why Dave would tell her to use her own money.
If she is to pay it off why would he tell her to use her total savings to do so? Don’t ever leave yourself broke. Pay them $2000.00 a month and be done with it in less than a year. His advice is not always the best.
Nawal Ahmed this is partially why I job hopped, jump the salary ladder faster.
First time I haven’t been able to wrap my arms around Dave’s advice. I would leave the $21,000 in a money market account as a back up plan for the student loan debt and an emergency fund while I build another account for 3 to 6 months backup. Once that’s in place I would work towards purchasing a used car somewhere in the $12-$15,000 range like a Camry or Honda and pay 💰. Then get to the investing portion to build long-term wealth and at her age well that type of income growth she’s well on her way to being a multi millionaire by the time she’s in her mid 30s.
Me: If Bernie Sanders forgives all my student loans would you still pay them off?
Dave: Absolutely.
If Bernie paid off student loan I am good
No other debt. What I am doing, I am putting all my student loan funds in savings acct.
I’d rather pay off MY student loans than everyone else’s
@@waflestix346 I agree but. I do think the government should get rid of student loans, especially for the people who were first generation . If I know what I know now I would not taken out any loans. I would paid off my education while I was in school. Especially when I had no bills .
@@truegrizzlesfan2292 "Student Loan Forgiveness" means higher taxes for those who are out of debt, no thing is free. The governments money they would use is your tax payer money.
@@Chief-rx5zr I am ok with higher taxes. We should all pitch in and help one another. We doing it anyway. If the government doesn't do anything which is highly likely I will still paid off my debt. As a first generation the government should paid off ppl debt.
85k in silicon Valley is not exactly great. It's a very expensive city to live in.
She's only 20 and just started working there. She'll advance rapidly and it sounds like her parents are firmly behind her.
Do not turn down free money from your employer. That's ridiculous.
I can't agree with paying that off. If the employer is offering free money, she should take that deal and invest the rest. She could always pay them off immediately when she decides to leave.
watching this video I feel like the only reason he said what he said is because he's obligated to say it because it would deviate from his plan. Take the money put it in a savings account even if it earns no interest then if you ever get fired or quit so you have the money to pay off the balance. Anything that was already paid off was free money. 250 a month exactly which is about 15% return. Good investment.
Exactly, park that $21K cash in a CD and ear tag it for that debt. It is always there if you need it.
💯💯💯💯
fresh out of colledge and on $80K a year with enough cash to be debt free....
No brainer, pay of the debt and continue winning at life.
Can she not pay extra payments in addition to her company making the minimum payment? Why in the heck would you leave money on the table?
Moccasin144 You shouldn’t. It’s bad advice. She could simply let the company pay the debt while she works there and if she leaves just pay it off with the savings she’s been accruing. It’s really foolish considering what you can do with investing $20,000 over the seven year period if you just let the company take care of the debt and throw it in an index fund. Sometimes Dave’s debt free advice gets in the way of logic.
25 years ago, I was offered $100K/yr to work Silicon Valley, I moved to the PHX Valley $50K
$80K is starvation wage, it's a good wage in AZ
@@haroldbalczac6431 How could you miss it, The Silicon Valley, A friend is 3 years out of college $165K in San Jose.
@@haroldbalczac6431 rent in san francisco is like 3000 a month. yeah.
My rule of thumb is that if I am getting a higher rate on the savings than what I am charged on my debts, I will keep the savings (without spending them) and delay paying off the debts as much as possible. Pay off the debts immediately if you're paying more for them than you get from the savings. Which is usually always the case.
She should pay off the student loan when she’s ready to leave the job. Regardless if that’s two years or the full seven years! As long as they are paying on time why not? Keep paying off any other debt and/or save money for when the car breaks down. That company is cool for doing that. I wonder if they’re taxing her for that? Then that changes things.
I get wanting out of debt to eliminate the risk, but why not take the free money? Just open a savings account and put the balance of the loans in there, continue to let the company pay. And then if something changes or a new job offer comes up she has the the money on hand to immediately pay it off.
If she pays it off she is effectively taking a pay cut...
@Anne Day That's the problem though. Dave treats everyone the same regardless of what is clearly smacking someone right in the face.
A 22 year old with 21k in the bank, a clunker of a car making 80k a year obviously isn't some uncontrollable, average american. 99% of americans have already bought a 30-40K vehicle in that situation and probably has zilch in the bank at 22 years old. In her case, she sounds responsible, so I'd advise to take the free money, keep the money in the bank in case something goes wrong with the car. If you want to double up the payment? Go for it. It sounds like she's a saver, so my guess is in the next 2-3 years, should see leave that company, she'll have 40+k in the bank and only own 12-15k. If you want to drop the lump sum then, go for it. Much safer spot to be in. The downfall is it is taxable income, but that doesn't weigh enough for me to not take the (likely) 250ish free payment each month.
Now, if there is something I'm missing here. Like her company holding her hostage for it. Have to pay back some of the payments if she leaves before the 7 years. Then sure. Whatever. But not everyone is like Dave. For Dave, every debt hanging over his head negatively affects his life. Other people, so long as they are responsible, can keep that debt and it not negatively affect or hurt them.
I love Ramsey for most things, but I make the mathematical choice so we have some disagreements here and there. For example, never give up anything your employer is giving you, even if it counts as taxable income like this situation. Free loan payment, matched 401K, etc. I can never get a year back from my roth ira, so I'll never sacrifice maxing that out every year until I'm 59 1/2 or 62, whatever I happen to retire at. Even if it means carrying a little debt that is costing me less to hold than I'm earning in replace of it. It's a gamble, but mathematically I'm doing what's best for my situation and so should each individual. I don't think this was the right advise for her.
@Anne Day Not to mention that in 7 years a lot of things can happen...Case in point--this global pandemic that crushed people's lives and dreams.
Save the 3 month emergency fund, spend the rest of the savings on the debt then let the company pay the rest of that.. save up for a car. Priorities in order.
I have never met the young lady but boy I feel proud of her. Well done young lady and parents. You did a good job to Dave.
So you want her to spend 20 grand of her own money When her company says they will pay it off? Nonsense
Michael Crump yes that was really stupid advice. Dave is obsessed with principles to the point of his and others detriment at times.
He's a millionaire and you're not so why would anyone listen to your advise when they can listen to him and possibly be a millionaire?
Alan, I guarantee that if you asked a pool of millionaires, their advice would not match Dave’s in this case. I agree with Dave on most things, but I would always caution people not to have blind faith with any one person giving advice. No one knows everything, and even David Ramsey can make a mistake and give bad advice. This is clearly the case in on this video. Dave’s whole message is all about common sense financial decisions, and this does not pass the common sense test.
Evan Thibodeaux as a millionaire, if someone is happy to pay something off for you to help you get where you need to go, definitely have them pay for it!
$80k in CA is like $35k 😒😒😒😒😒😒😒😒
False
Yea it is because you and most Californians keep voting for democrats.
Sadly you are right.
the doge false, take where I live for example, Diamond Bar, a home is 800k plus. She couldn’t even afford to live in the area
No Names yes let’s completely forget supply and demand and make it about politics
If they are actually making the payment each month and not a promise to pay it in full in 7 years, even if it's only the minimum, let them make it. If she switches to a different job in 3 years then she can pay off the remaining 13k or whatever at that time. If she does stay 7 years it would be silly to have paid it off yourself when they would do it entirely for you.
Mitch Myers exactly!
I would do the same thing tbh, it's free in a way
It may have strings attached. She needs to be aware.
tx2 how is that free? You have to work for it to be paid off.
@@QueenStylin Entirely possible, but we have to go off the information that was given.
Caller: "My car is breaking down"
Dave: "empty your savings account to pay for something that's already being paid for"
🤯🤯
😂😂 What a shocking call. He always surprises me.
exactly i love Dave but this was not good advice.
@Big Bubba What quick fix did I look for? I'm saying her savings can be first used to handle a broken down car to get to work. If you think she should empty that savings while her car is breaking down, that's an easy way for someone to get trapped into financing a car.
@Big Bubba okay thanks for commenting 👌😂
Everyone in the comments talking about letting the company pay. This was posted on Sept '19.
So yeah, let the company pay, till the pandemic hits and everyone gets laid off.
Be debt free asap. Dont play around with risk.
$80K in Silicon Valley is like $15/hour for the rest of the country.
I’m sorry but I do not agree with Dave with this call. Let the company pay it and put that amount in savings like you were making the payment
Let the job pay it and keep saving money. The only problem is is the company paying off the loan or just making minimum payments for seven years? If they will payoff in full, let the company do it.
Hey! This is a genuine question and maybe I am in the wrong, but as long as the loan gets paid monthly by the company, why not take care of anything else first. Paying back the debt makes total sense if you pay it yourself, but if you can have somebody else doing it for you why do it? Yeah, if you change the company, have the savings to pay it in full, but otherwise it doesn't make sense to me. Thanks for the people shading a light on my question :)
I thought this too, but they might also only be paying the minimum which goes down as you pay it off more. My minimum started at $273/month and is now down to under $100 with paying it down early.
@@maryyellen that's a valid point and I get that. However, if they would pay the minimum they would not clear it in only 7 years. For my debt (which is quite similar) paying a minimum means I'd clear it in 20 years. Again, it's just interesting to see different perspectives so thanks for telling me your experience. Wish my minimum would also go down to under $100 :)
I'd do the following: $1000 stays for emergencies, $5000 goes to a newer car, $15,000 goes to student loans. Let the company make payments for a year or two to cover the remaining couple of grand. You get everything and the benefit of using that free company money.
This is terrible advice. He basically advised her to leave free money on the table. If she ends up staying 7 years then none of that money comes out of her own pocket. If she leaves the company after a few years, at least her principal would have been lower and she could have payed it off then. Feel bad for her if she took Dave's advice on this one.
For anyone who believes that letting the company pay for that over 7 years, it's not free money. Policy can change - and we don't know the specifics of how that works, or if she will even be with the company that long.
Also, it's not their responsibility to take care of her debt. That's one of the biggest things Ramsey preaches - taking responsibility for ur mess. There's an opportunity to learn here, she's got the ability to pay off her debt, her car is still running-fickle but going and her parents have helped her along the way. 7 years into the future has too many variables when it comes to having somebody else take care of what you can take care of in an instant.
It's a perk of the job, she could just save the money each month that the company pays on the loan and if she decides to change jobs she won't be any worse off. I really fail to see the logic of turning down a benefit of the job. My wife's company gives her a gym membership, it costs us nothing, its a perk of the job.
Keep $5k for your emergency fund. I never ever would have spent money replacing an engine in the car. Should have sold it off or junked it. Spend $5k on a good running second hand car. Spend $11k on the student loan and bring that balance down to $10k. Accept the company offer to help you pay off the balance, which now will be in less than half the originally perceived time. Maybe around 3 years. Save another bunch of money in that time.
I like Dave Ramsey a lot, I listen to him almost every day, but sometimes he gets too stuck in his ways. This company is essentially giving her free money by making minimum payments on her student loans, why would she spend her hard earned money to give that up? That money could be much better used elsewhere while her loans are getting paid off by someone else.
randomocityvideos if she's smart, everything he said went in one ear and out the other
I would say take advantage of the program and if you leave the company, pay it off.
Wow actually an interesting situation for Dave to analyze. I love when it doesn't go straight back to baby steps and he hasn't to think about it a bit.
I agree with Dave on this one. By the time that 7 years is up, she'll be paying more than $20,000 because of interest. I started on the same path, but I finally decide to just pay it off.
But her company is paying for it
Why would she pay them off when her employer is going to pay them??!! That is completely stupid.
@@MP-nj1qy you make absolutely no sense.
I saw a comment that made a good point. If the deal with the company is that if she leaves before the 7 years, she has to pay back that money on the loan or the money to pay it is held until 7 years, then def pay it off. I wouldnt risk job flexibility for a $20K loan. If they are literally making payments every month on her behalf and dont want it paid back if she leaves then I absolutely do not agree with DR, let them pay as much as possible then take it on if you leave early
I would not give up free money to pay down my student loan!
It's not free money. It comes out of her pocket either way.
1redrubberball wrong
@@ThinkBlueAZ
You're not only wrong, blind, but also prefer self deception.
Believe whatever you wish!
1redrubberball the company is paying off her student loan as part of her benefits package. She doesn’t receive it as cash and choose to do with it as she wishes. She either takes advantage of the benefit or she doesn’t. Similar to a 401k match.
80k a year at 20 y/o makes me sad 😪
Yes but keep in mind where she lives and cost of living. That off sets it pretty good
Usually agree with Dave but he gave bad advice this time telling her to use nearly all savings to pay off student loan debt that the company is paying. At least let them pay the monthly while she's there. Why give up the company benefit which likely totals several thousand dollars over coming few years??
I completely agree! Horrible advice!! He is too extreme if you asked me. That advice made no sense!!🤦♀️🤦♀️
This is true. I get the point that she may not be there in the same company for the seven year haul, but it doesn't sound like she's leaving anytime soon either. Even just one year is thousands of dollar on the table. That's free money. People will go out their way to claim $10 in cash, no strings attached. And for thousands Dave tells her to ignore it?
He's telling her to turn down free money. That's like turning down the company match on your 401k.
Invest the money ear marked for the student loans. Then when you leave, you'll have ample money to pay off the remainder.
Just keep the money to pay it off in a high interest savings account and pay it off if you get a new job.
Dave does not factor in bills. If someone is earning 80,000 a year, he thinks you can save 6,666 a month
1:50 spot on Dave, 80k in the Silicon Valley, basically living as a poor. Even contractor jobs shall run at 130k+ and so.
It sounds like she lives a distance away where it's cheaper, hence the stress factor she's placing on having a reliable car.
She seems to like her job so obviously she'll be there for a while. Why not let them pay down the balance on her loans until she moves to a different company? She will still have her savings plus more so if she does decide to leave before 7 years, then she can pay the remaining balance.
Exactly my thought... Isn't that the most reasonable option?
@@altvctr I thought so. Everyone complains about the price of college and she has a chance for it to be free and wants to pay for it anyway lol 🤷♂️
I 100% agree. I feel like Dave just needs to be consistent not to loose viewers. Either that or he got some plan that is so good, he has stopped to think on a case by case basis.
Especially since she seems responsible. Some people would blow the money & not prepare but if she already saved $21k then she’s smart enough to tuck it away for later.
7 years, once you get older goes pretty quickly. I would say let the company pay. That's like not taking advantage of an employee 401K match.
If she say... inherited the 21K, and isn't discipline enough to save then yeah....but she saved 21K. Keep that 21K in case you lose your job, need a newer car, or to pay on that student debt...employed or not employed
80k/yr in Silicon Valley is poverty.
What an awesome company! I would have them pay the loan for 7 years.
7 years is a long time but what does it hurt? I'd allow them to slow pay the loan, while putting aside what I would have paid on the loan in a separate account. That way if I ever do leave the job before 7 years I'll have the money to pay off the loan. Why let 'free' money be thrown away?
I agree with you
That's why patience is considered a virtue. Only a fool would leave thousands of dollars on the table to rush to pay off student loans. I mean you get to write of a nice portion of the interest anyway. I'm confused lol
Always take free money. With the money you would have paid on loan, just put in savings. At any moment you are done with the job, pay the loan off with savings. It's very possible to save a lot of money while someone else pays your bill. To me this is a no brainer but I fully respect Dave's opinion. But come on Dave it's free money lol
I would let the company pay the student loan because you will be using post tax money vs. your company paying your loan directly (tax free). Or you raise the minimum payment by going to another payment plan and let your company pay it faster
Everyone saying this is bad advice.
How many of y’all are millionaires??
Yeah, so I’m gonna take the advice of the multi-millionaire who has been doing this for 30 years and helped thousands of people get out of debt and become millionaires themselves.
Not paying her student loan off today makes her indebted twice over, once to the loan and once to her company.
It’s insane to stay in debt for SEVEN years when you have the ability to become completely debt free instantaneously.
A lot changes in seven years, she’ll make so much she won’t even think what was.
How can she save $15000 in 3 months?!? She probably doesn't even make that much take home on a $80k salary!!
Thats what I thought as soon as he stated the figures... she would prob bring home around $5K.
I agree with Dave, don’t wait on charity, paying yourself will make her value the money she makes more than always counting on charity to clear her student debt.
Sleeping debt free is worth way more than always having her student debt in the back of her mind.
$1K is not much of an emergency fund, especially when you have an old cash car. I’d send $15K to the loans and keep the $5K, then pay the rest in payments
Dave start asking what kind of car they have more. We need to know which ones are no good.
I would pay the debt in 2 years tops. Save some many for emergencies and incidences. Dave's suggestion is BETTER.
Nah fam...LoL Dave's suggestion sucks...rofl. I just think there are so many ways to strategize when it comes to money...Dave only seems to do one thing: the baby steps in the baby steps order...but why should free money be left sitting on the table?
While you work for the company you should let them pay the loan. If you leave, pay it off with the savings you’ve been accruing.
At first, Dave's advice may sound counterproductive, however, the amount that the company pays toward the employee's school loans is considered taxable income to the employee so it's not really free money, particularly since the company will only pay the minimum monthly payment. Also, there may be some downsides to letting the company pay that the employee has not mentioned and or is not even aware of. Nothing is free in life.
Thank you for seeing the obvious that is eluding so many of the commentors. It is just part of her compensation package and is allowing the loan interest to continue to accrue. .
It depends on the company I know allot of companies that pay your student loan and some are good while others are bad. It depend on what that company want. Since it a tech company they want to encourage their works to continue their education. Since tech change every 2 years its important the employees keep up.
@@bobberry1463 Wrong! It depends on the IRS position only. It is taxable income.
1redrubberball no it depends on the company I work for a company that paid for my school it consider one of their benefit so they take it out of their profit.
So you agree she should empty her savings account while her car is breaking down in order to pay 100% of her loans,
because otherwise there's a possibility that she may have to pay up to 40% of the amount of her loans. Is that correct?
When he said Ruby on Rails, I was like: now you talk my language.
I like the advice of getting rid of debt right away. I make a really good salary, but my take home is garbage because of CA taxes, insurance, ESPP deductions, etc.
I say flip the car , get 10k or less , use the lemon as a down payment if need be or just pay it outright, and use the company to your advantage, I’m sorry I have 3 rainy day funds, each 3k or higher
Why not tell her to turn down the 401k company match while you’re at it Dave? Who is this imposter, and what did you do with Dave?
@Brandon Kick thank you someone gets it🤔 all these comments are dumb advice.
Your a smart man. There is no such thing as free money
Here’s why you don’t take advantage of this program: it has a hook. I work in tech. Every bonus or program comes with a “if you stay here for the full term, then we will do this otherwise you owe us the money we paid on it”. Corporate will get theirs. No matter if it is now or in 5 years when she leaves or is fired or whatever happens. There’s no such thing as “free money”. Most contribution matches aren’t vested for a couple years so you have to stay to receive employer contributions. I imagine this debt program is the same set-up. Also paying off debt will give her flexibility and she won’t be tied down to a company and will be able to negotiate higher salaries. Dave is right on this one.
80k in Silicon Valley, Dave goes Wonderful! 🤣🤣🤣 Maybe in TN but not in that part of Cali.
Unknown Unknown I’m guessing she lives with her parents most likely because of how she worded her car situation.
80K is SO low in that area. My husband was offered a job at google a few years ago and what they pay seems like a lot until you look at the cost of living.
I think you all are missing the point that moving on with her life as a debt free person is worth more than the $250/month benefit the company is offering. When she is debt free she will feel different and more secure, she will make better life decisions, and that is worth it.
This makes no sense, she already is debt free right now on paper. By waiting to pay off the balance until she leaves this company she will be spending less money on the loan, guaranteed. All she does by paying off the loan now is throw away money, which is a bad decision. It is not worth making bad financial decisions today so that (maybe) she makes "better" decisions in the future.
She will make better decisions if she makes this bad one?
Dave's advice aged well. Tech layoffs have been insane.
I would not pay that student debt off, for what better credit, please. Its not like your credit improves when you pay off debt, its based off debt to income ratio and payment history. I would just keep saving and if my car dies than go buy a new one cash, yes new so its all under warranty go get a Toyota and keep it for twenty years. Than just double or triple your student loan pmts to not pay twice the loan with interest. To pay off debt and have a hoopty than no emergency fund even with a nice paycheck is a recipe for diaster
I agree with all except buying a new car.
You can get certified with low miles for significant less, like new.
All that matters is documented maintenance.
Until it dies? It died and you gave it a new heart
If they're going to pay it off in seven years then let them pay it off..
@Thelondonbadger then she takes the 2 years of free payments and uses her savings to pay the balance of the loan.
@@lucasday7330 they won't pay until 7 years is up
$80,000 in the Bay Area is not that great. It’s SO expensive there.
Smart move would be to see how much 6 months of your minimum payment is. Pay everything off minus that amount. In 6 months you’ll be working on your $15000 emergency fund plus $5000 for your new car. If you lose your job within those 6 months, so be it. Your student loan is the least of your worries at that time.
Man I'm a software developer and hearing Dave talk about Ruby on rails ... I want to work for Dave lol
Dave always mentions Ruby on Rails, whenever there's a caller working in the IT😂
@Brandon Kick not your point, but rather than discouraging engineers, why not encourage them to be better than average?
@@tommygall4191 he is saying the truth. Also, ruby on rails is horrible framework now it barely got socket support
@@thisguymartin I'm not saying he's not, and I'm not remotely commenting on Ruby on Rails. Like I said, my reply wasn't to his point at all, just to the one phrase he uses. I recently have just realized that people are often talked about in terms of the average. I'm just saying that rather than that perspective, look at it as the bare minimum and encourage people to not be average.
Seriously! 😂😂😂
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@JonathanBram However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments
@@BarbaraHarper-c1p Oh please I’d love that. Thanks!
@@JonathanBram Clementina Abate Russo is her name
Lookup with her name on the webpage.
I would have totally played with the company money Vs deplete my entire backbone of savings. Not for the full 7 years, but I wouldn’t write a 20k check in a day, that’s for sure. If she lives at home, that’s better for emergency purposes, but still. A lot can happen in a year and you can do a lot with 20k in your back pocket.
I would advise her to let them pay her student loans. She can save that money if she needed the money and use her savings to get an decent car
I know it's hard to understand this advice, but it was correct. That debt will be like an anchor. Instead of moving forward unencumbered, it will weigh her down psychologically for the next 7 years.
Not if she saves the balance as many have suggested. As long as she's planning ahead for changes in employment she'll be okay. Meanwhile she'll be better off with a reliable car and a nice fat emergency fund.
With the amount of layoffs that occur in tech I can see how Dave's advice can help.
I'd recommend matching their minimum payment amount with your own contribution. So if the minimum payment is $300, pay $350 on top of that. This would pay off the $21k within 3 years, which is typically when you'd start itching to change jobs anyway.
This way, you keep your savings in tact and have a safety net in the unstable world that is California. Just put that $21k towards Steps 1 & 3 (I know Dave doesn't like skipping steps). Stay away from credit card debt and save up from now to buy a used car in cash. With take home pay of $4500/m, you can save for a car in 6 months.
This is different from a loan forgiveness program. There's no question of whether or not loans will actually be forgiven (forgiveness program denies most applicants).
If you plan on being with the company for 3 years, then take the free money for 3 years. HOWEVER, make sure you calculate the principle and interest schedule first.
If they're only paying the minimum payments, how much interest will accrue? It's unlikely you'd stay at your job for 7 years and you don't want to be changing jobs 3 years from now and find you still have $18k left to pay off because interest accrued faster than the principle declined.
Smart!
This is great advice