Drain $21,000 Of Savings To Pay Off Debt?
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- Опубликовано: 8 сен 2019
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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
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
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
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.
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
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
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 ,
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.
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?
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.
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
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.
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.
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
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.
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?
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.
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 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
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.
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.
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.
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.
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
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.
💯💯💯💯
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 👌😂
Unless she plans on moving or changing jobs, I think she should let her company pay the loan off.
*Smart company - probably did this 7 year student loan program intentionally to lower turnover rate in the competitive tech industry*
Competitive? Obviously the salary isn't competitive at all. So they pay peanuts in exchange for the student loan debt. 80k for a manager is the lowest I've seen for any manager
@@JK20239 Not sure if
project manager is the type of manager you're thinking of
@@JK20239 also I meant the industry is competitive, not her salary
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.
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.
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.
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 :)
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?
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!
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.
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.
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.
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.
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.
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.
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.
Dave, what is up with the vols? You said on one of your calls you were/are affiliated with athletic department? Tennessee needs you
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?
He’s answer the question based on A) what *he* would do and B) how the principles work ... it’s not an answer based on short-term “oh someone else can pay my bills”.
Employment, particularly in Sil Val, isn’t guaranteed for 7yrs. Smart move to pay it off yourself and build build build. It’s best for the long term, which is what financial peace is all about.
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.
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.
When he said Ruby on Rails, I was like: now you talk my language.
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.
Dave does not factor in bills. If someone is earning 80,000 a year, he thinks you can save 6,666 a month
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! 😂😂😂
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.
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.
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 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.
Many of us between 35-44yrs are hating on her for having that balance in savings.We here carrying car loans that much🤣
Invest the money ear marked for the student loans. Then when you leave, you'll have ample money to pay off the remainder.
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?
Gosh, many people think that Dave had given bad advice. I am old and I am with Dave on this because we both possess hindsight. People think that free money is better than time. Time is money. Plus, in 7 years we don't know what will happen to her or her company. Things are not always rosy. Better to pay off your debt when you have the money. Did anyone foresee how the pandemic crushed the dreams of many people? This is why whatever you can do now to ease your debt burden, do it asap. Nothing is free in this world. There is a reason why this company is giving that kind of benefit. And it is not because the company is generous.
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
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.
Where do you go to buy mutual funds ? Is it a website or a place I can go?
@Big Bubba thank you
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
Dave's advice aged well. Tech layoffs have been insane.
Lol if it wasn't Dave asking "who's us?" When she was talking about the car it would come off like a crazy dude that's into her!
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.
Can you please tell me where can I invest that amount ?
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.
$80K in Silicon Valley is like $15/hour for the rest of the country.
Are there additional stipends she can get if she doesn’t use the loan payment? I would negotiate that with the employer.
I would say take advantage of the program and if you leave the company, pay it off.
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
What an awesome company! I would have them pay the loan for 7 years.
Good show!!
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
Just keep the money to pay it off in a high interest savings account and pay it off if you get a new job.
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.
Why won’t you just ride the free tuition train until you quit? Or leave the company
thekiller500099 ya that what I was thinking. I would pretend the 20k isn't there a d start saving just in case I get fired or want to move jobs I can just use that money to pay off the student loan and have money left over.
What happens if she gets laid off in a year or a month. Now no money/80k and the debt.
@Manatti06 what are you talking about. Let’s take your situation an say in 1 year she is fired or not with the company. In your situation here’s what would happen. You’re situation she’s left with say $1000 only (puts 20k out of 21k on the debt) and 1 month later she pays off the rest of the loan. Still needs a different car which she has no money for now. Will take probably 2-3 months to save for a car then another probably 3 months ish to save for an emergency fund (might even take longer). So your situation, in 6-7 months she has a car an an emergency fund with no other money. Then for 5-6 months which is the rest of the year she saves money and invests it. My situation. She has a different car + 11-$12000 emergency fund. Today basically. Then that 6-7 months working that you spent to get a car and emergency fund in my situation she would have that 6-7 months of savings cash + a car + emergency fund + the rest of the year saving money. So let me rephrase my part a bit. In 1 year she will have a car an emergency fund, and 1 years worth of saving. She does have to pay most of the loan back but not all of it. around $3000 less on the loan which is 14% to pay, so instead of paying $21k she only has to pay $18k. Also in those 6-7 months that it takes you to get enough money for the car and emergency fund, she could invest the money that she saves each month earning her more money. Also your situation leaves her in those 1st couple of months with no money besides a $1,000. In my situation she would have around 11-12k cash right away still + money she saved up in those 1st couple of months. So obviously not paying it right away is much better. She literally saves around 14% how I came up with that, 7 years divided by 21,000 total amount equals 3k or 14%.so she saves 14% plus she can invest money earning her more money instead of having to save up for a car an emergency fund
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
I totally agree with Dave here, he's heard a gazillion of these stories and he's spot on. 7 years is WAY too long. And, what if they lay you off (nothings guaranteed). Now you still have some of the debt, and no 80k a year. At least if the debts gone and no job, the burdens gone.
I’m impressed with her achievement. Good job!
Have saved my 1k baby step 1. Have about 10k - 12k in credit card debt and 7k for a car. All credit cards are at a stage or took me to court I didn’t show and now I owe they a court order. No garnishment yet. Should I do a snowball and pay in payments or should I save then boom pay one then save and book pay another? Or should I make monthly payments in my own pay as much as I can until it’s paid off. Debt is distributed in about 3-5 different court cases.
Great advice Dave 👍🏽 Thank you for these videos
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.
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.
Dave Ramsey I love your channel 💓💓💓 I want am update on Sarah
With the amount of layoffs that occur in tech I can see how Dave's advice can help.
In Quebec, if you pay more than the minimum, you finish faster, but the students loans keep the same minimum paiement. Is it the same in the states?
No no n9 first time i disagree with dave completely. This is not like student loan fake promises where you foot the bill take all risk on their word. These people are taking the risk now by paying. She has the full amount in bank save that aside and restarted saving your emergency fund.. as they pay down principal move money from loan fund to emergency or investment. And if life happends immediately pay off student loan. This is only time ive seen dave raise risk
@Brandon Kick i understand that's why i said save the payoff to the loan in a account, if you ever have a change of heart quit, get sick, leave for another job, get married. She said they are paying the minimums which will take 7 years, because of that i would let them pay the payents and keep the money aside just in case. And restart my emergency fund. If anything happens just pay it until then let them pay it.
They are currently paying the loan, it be just like if her parents were paying the payments. Let them pay but keep the money on hand to pay off the loan if anything happends. The rest of daves advice i agree with. Now if her deal was she made the payments and after 7 years they reimbursed her i would not do it, but she was saying as long as she's there they are paying they loan. I say let them but keep the payoff money aside just incase.
Then id start over my fund from 1000 make sure all my other debts are paid save for car and go strait to babystep 3. If they dont honor their deal or i leave just pay whatever they didnt at that point. Every month your bill is less so you can move some out of the loan fund into your babysteps as it lowers.
It be crazy to not let someone pay your bill, it also be crazy to totally depend on them paying it as well. As far as bonuses go if they stiff you then leave they will stiff you if you even if they dont have a loan payment aswell. Wont hurt anything because no risk you leave you have the money aside to pay that loan instantly.
Dave start asking what kind of car they have more. We need to know which ones are no good.
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
Dave Ramsey I have been watching your videos for over a week now, I love you Dave Ramsey and I am as straight as the unemployment line.
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.
I'm in a similar situation. I get 10k towards student loans from my job that I have to renew every year. I paid off 120k, I'll let them pay the next several years
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
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.
Hold up! Waiting for debt forgiveness from a company for 7 years might be acceptable. But 10 years for PSLF is moronic?
How does that work, Dave?
Yes.cannot discharge student debt.
Gazelle intensity dictates that you throw at least 90% of that directly at your debt.
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.