Drain $21,000 Of Savings To Pay Off Debt? 

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

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

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

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 ,

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.

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?

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

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.

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.

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

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 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.

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.

@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.

@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.

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 👌😂

She's only 20 and just started working there. She'll advance rapidly and it sounds like her parents are firmly behind her.

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?

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

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?

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.

In this case why pay it? they will make her monthly payment for her, if she leaves in 3 years she just has a smaller total to pay then with 0 downside.

@@mitchmyers7917 not necessarily 0 downside... have you considered the interest of her student loan and psychological impact of being in debt? Staying at one company for 3 years is also quite rare in the tech industry.

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!

Unknown Unknown I’m guessing she lives with her parents most likely because of how she worded her car situation.

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.

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! 😂😂😂

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?

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.

It sounds like she lives a distance away where it's cheaper, hence the stress factor she's placing on having a reliable car.

Thats what I thought as soon as he stated the figures... she would prob bring home around $5K.

Exactly what I said. Dave keeps giving bad advice after bad advice because the only way he knows how to get wealthy is to pay off debt. He doesn’t know anything else

@@LoveMyAbeshaWomen that's because that's what research shows

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

I am single in California and make 86k. I take home almost 2200 every two weeks. You are correct, my first check every month goes to my living expenses and second is for me.

Exactly, I was shocked, too. I know he has an emotional hatred for debt, (even if it's already being paid for), but did he really tell her to empty her savings account when her car is breaking down? I wonder if he regrets that.

@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 love Unc Dave, but there is no way I leave free money (tax free to her employer), yet taxed for her, on ANY table!!!💯

Look @ the interest her student loan is accumulating by delaying paying off student loan.

But it's better to repair than have car payments??