Break the Paycheck-to-Paycheck Cycle

[0] from the headquarters of Ramsey Solutions.

[1] It's the Ramsey Show, where we help people build wealth, do work that they love and create actual amazing relationships.

[2] I am your host, Jade Warshaw.

[3] I am joined by fellow co -host, author, host of the Rachel Cruz Show.

[4] My host, or co -host today, Rachel Cruz.

[5] Rachel has been a little minute since we've been on here together.

[6] I know.

[7] Since before, 2023.

[8] That's right.

[9] It was last year.

[10] That's crazy.

[11] But give us a call.

[12] The numbers, triple -8 -8 -25 -2 -2 -5.

[13] We'd be honored to take your call in this new year.

[14] So let's go straight to the phone lines where we've got Donovan in Atlanta, Georgia.

[15] What's going on, Donovan?

[16] Hey, so I have probably $50 ,000 in student debt and rather another six or seven in consumer debt split between a credit card and like a small car payment that we needed.

[17] And I'm looking to go to grad school for clinical mental health counseling.

[18] Okay.

[19] But obviously, I don't want to go further into student debt to do that.

[20] Right.

[21] So how would you recommend I do that while also doing the baby steps and trying to get out of debt?

[22] Well, I do think that the first thought here is, is going to grad school going to have the return on investment that you're looking for?

[23] Because it doesn't always.

[24] So that'd be the first thing that I'm thinking about.

[25] And then two, yeah, you don't want to continue to go into debt.

[26] You already have $50 ,000.

[27] in student loan debt.

[28] So if you decide that it does return on investment, what would it look like for you to pay your way and what does it actually cost?

[29] Okay.

[30] Yeah, so, yeah.

[31] Donovan, how old are you?

[32] I'm 24, and I have a child and a wife.

[33] Okay, wonderful.

[34] And what are you doing now for work?

[35] I work at a local college, and like it gives me free rent, But are you able to do the grad school program there and get a discount?

[36] I am, but it's not accredited.

[37] So it would be very low ROI versus getting to a different one.

[38] I hear you.

[39] What is the change in like salary -wise and like option -wise, how does that change for you getting your graduate degree?

[40] I think it would double my potential earning.

[41] But also I would pay the grad program would probably be equal to the amount that I would get raise for.

[42] Which is what?

[43] It would be about 30 ,000 of a raise if I got my degree, and I would make $30 ,000 more dollars.

[44] And how long is the program?

[45] Like, how long would it take you to go through that?

[46] About two and a half years.

[47] Okay.

[48] And how much are you making now, Donovan?

[49] $30 ,000, but I don't pay any rent.

[50] Okay.

[51] And your wife, does she make anything?

[52] Is she working?

[53] 26.

[54] Okay, so 30 and 60.

[55] Okay.

[56] So, yeah, y 'all are about $56 ,000.

[57] Okay.

[58] Donovan, here's my advice.

[59] I feel like sometimes the advice I just know you're not going to like it.

[60] I feel like that's going to be it.

[61] Honestly, if I was in your situation and I had a wife, I had a kid, I had a dream out there.

[62] For you, it is to go to grad school.

[63] For some people, it's to start their own business.

[64] You can fill in the blank on what that is.

[65] To me, you have to take care of the necessary things financially and start on, we always say the firm financial foundation where financially you are not in a shaky place.

[66] But when you have debt, Donovan, you're in a shaky place.

[67] key place.

[68] You owe someone something.

[69] If something were to happen, you have to pay this debt back.

[70] But when you don't owe anyone anything, there is a level of freedom there.

[71] There's a less stress.

[72] There's options.

[73] You don't feel this urgency that, oh my gosh, I have to do this, this is this.

[74] And that starts to limit your options just mentally.

[75] So if I were you, I would work really hard.

[76] I would be working nights.

[77] I would work some weekends.

[78] I'd have your wife pick up an extra.

[79] I mean, I would do whatever you could to get rid of this $56 ,000, which is going to take a lot.

[80] But you don't have rent.

[81] There's some expenses you don't have.

[82] But it may take a year or two to do that.

[83] And then I would save up some money on the side to be saving for to be able to cash flow grad school.

[84] Because what's going to happen, Donovan, I'm telling you, you're just 26, okay?

[85] Or 24.

[86] And I know it feels like I know what I want to do.

[87] I need to keep pressing forward in this.

[88] But when you just have some patience and you wait, even if it's, even if it's three years, okay?

[89] And I know that's not, that is not fun.

[90] But you get to be 27 -year -old Donovan and you're either saying, get me this degree.

[91] I know this is exactly what I want to do.

[92] I have the money for it.

[93] I'm not putting myself in a bad place financially to do it.

[94] We're doing it wise in a wise way.

[95] And I start this path and I make 30 grand more.

[96] It all happens.

[97] And it's great.

[98] Or 27 -year -old Donovan wakes up and he's like, golly, things are shifting.

[99] another baby on the way.

[100] We actually want to move back home.

[101] Like, you know what I need?

[102] Like, things start happening in life that may cause you to make different decisions.

[103] And so if I were you, I think the safest, wisest route is to slow down, get this debt paid off and then save up and go through grad school.

[104] Listen, I'm right there with you.

[105] I don't think that you're going effectively, because he said he was trying to do the baby steps.

[106] And I don't think you can effectively do both because we're talking about a lot of money, $30 ,000, $15 ,000 a year.

[107] That's what you would have been putting towards the baby steps.

[108] And do you see what I'm saying?

[109] Yeah.

[110] And something tells me, you know, you say, hey, I have the ability to double my income.

[111] It's $30 ,000.

[112] You and your wife together can make $15 ,000.

[113] That's $1 ,000 extra dollars a month between the two of you.

[114] If you make an extra thousand and she makes an extra thousand, that's $12 ,000 a month between the two of you.

[115] Put that to, I mean, you're almost there.

[116] Does that make sense?

[117] Like, you can literally do that with any of these side hustles.

[118] Which is not going to be forever, Donovan.

[119] And again, and that advice would be if somebody called and they wanted to go and be a photographer full time and travel the world, I would say, I would clean this up first, get some money to be able to cash flow that dream.

[120] Like, it's one of those things that just has to be in the right order.

[121] And what happens on a minute, when it's not in the right order, we get the call at 27 -year -old Donovan and there's a, you know, something happens and your wife has to stay home.

[122] You don't have the money.

[123] You're in the middle of grad school.

[124] You want to be able to finish, but you can't.

[125] You have all this other consumer debt.

[126] like it starts to just really really intensify and if you can just slow down and have some options I just think that that's the wisest way that's a really good point and sorry donovan we're we're like overloading you but the other I mean the more we talk about it the more things just keep raising themselves in my mind as like a possible thought and there's another part to this where when you've got a lot of you know you're juggling a lot of things you got a lot of balls in the air you do feel the stress to to complete it because of it's it's a lot, right?

[127] If you try going to school and you're doing this debt thing, at some point you're going to hit a fatigue, whether it's a mental fatigue or a financial fatigue, and then the option of debt feels even more enticing because it's like, this is a quick fix.

[128] If we can, hey, we're just going to take out 10 ,000 in student loans and then we'll be able to pay, like, that starts whispering to you.

[129] And I really don't want that.

[130] And Donovan, if you have, oh, sorry, Jade.

[131] No, that's okay.

[132] I was done.

[133] And if you have, you know, a credible job at a college now, I would look at the option and would be totally okay.

[134] If you guys found another college you could work for that has a grad program that is credible and you could go that way and get a discount and maybe speed this up more.

[135] So maybe it's even a change of job because you're in a great line of work to be able to get some kind of perk when it comes to higher education.

[136] So I would even do that.

[137] See if the school will pay for it.

[138] If you and your wife move in, Dr. John Deloney, they did that.

[139] They lived in the dorm.

[140] yes and he went through school and all i mean that's what they did and so i i would look at some other options that could fast forward this plan too for you donovan uh but slow and steady it's always the way to go i know that's right and take advantage of the fact that he's not paying rent like that's great that's the biggest line item on everybody's budget so to be able to take that money and quickly you know put it towards a debt snowball come on somebody love it donovan you're making the right move this is the ramsie show This is The Ramsey Show.

[141] My name today is Jade Warshot, joined by Rachel Cruz.

[142] The phone lines are open, so give us a call.

[143] The number is triple 8, 8255 -2 -2 -5.

[144] The name changed sometimes, Jane.

[145] Man, listen, it must be because my mind is not it right in this moment.

[146] We're here.

[147] It's Friday.

[148] We've been on Christmas break, man. I know.

[149] It's been a hard one to gear back up towards.

[150] And let's be honest, we had a tax meeting before this.

[151] We did.

[152] So my mind is like waking up.

[153] All right.

[154] Let's go to the phone lines, Rachel, because I need a, I need a call right now.

[155] Let's go to Caitlin.

[156] She's in New York, New York.

[157] What's going on in your world, Caitlin?

[158] Hi, great to be talking to you.

[159] I have an interesting question.

[160] I'm looking for guidance in how to approach moving to the next step with someone I'm in a relationship with.

[161] And they're maybe not on the same page with me financially.

[162] We're very happy, but I'm sensing.

[163] that there's a lot of guilt and embarrassment around their finances.

[164] What he has divulged is not the best news.

[165] And so, you know, I'm personally not where I would like to be financially, but I'm very actively working towards my goals.

[166] My question is, you know, what advice do you have in approaching him in the right way, but also like still getting the information that I need to know, which is like, can he change his habits?

[167] Does he actually want to?

[168] I love this conversation.

[169] So what is the information, like, has he told you his numbers as far as, like, what he earns his debt?

[170] Like, has he been open to that extent?

[171] Yes.

[172] Not very, you know, enthusiastically, I guess I could say.

[173] Sure.

[174] Again, like, I think there's a lot of maybe, you know, embarrassment or just sort of not super enthusiastic to.

[175] share what he has so far but yes and i think that's normal by the way yeah a hundred percent i mean that it was interesting i was the one to first come forward and say like hey i you know we've been together for so long i'd like to move to the next step but like i'm almost three years oh so yeah and um you know i would love to move to the next step and move in with him or you know move our lives forward in that way.

[176] And I have personally, you know, a lot of debt and student loans.

[177] And so I wanted to be upfront with him with like what my situation is and what I'm working towards.

[178] Um, but I didn't get the same amount of information from him.

[179] So I figured it maybe wasn't good.

[180] And after some, you know, follow up conversations, that is, that is correct.

[181] So what he has shared is like his income.

[182] Okay.

[183] Um, he has, he's taken out a loan on his 401K.

[184] Um, That was one thing that was, like, a bit concerning to me. Sure.

[185] And then, you know, in terms of saving.

[186] How recently did he take out that loan?

[187] I believe a few years ago, within the last five years.

[188] Okay.

[189] What I'm getting at is I think you do have to be delicate with this conversation because, I mean, you've got your own financial mess over here that you admit, like, listen, I've got debt.

[190] I've got a mess to clean up.

[191] And so he does too.

[192] So when you bring up that conversation, it's almost like, Like, you've got to be, it is surrounded by like fear and shame and guilt and all of those things.

[193] So it's almost like you being very forthcoming with what you've done.

[194] And I did this.

[195] And here's what my plan is going forward.

[196] And I'd probably start asking questions around his philosophy with money and with debt.

[197] And you can kind of open that with like, listen, I don't have to tell you, you know, I have this debt.

[198] And I've just kind of, I think I'm done with debt.

[199] Like I don't I think I'm going to borrow money anymore.

[200] I've started listening to, you know, I don't know how much you guys share as far as what you're into and podcasts and things like that.

[201] But I think it'd be hard to be dating someone that you've been with for three years and they don't kind of have a bead on what your, you know, what your interests are, whether it be hobbies or finance or whatever.

[202] So it seems like it could be pretty organic to bring up the conversation of, hey, you know that podcast I've been listening to.

[203] I'm really like starting to get into it and maybe asking him more generalized money philosophy questions first as opposed to what do you plan on doing with this 401k loan kind of thing does that make sense yeah and Caitlin I would always and I always want to know someone's um motivation behind why they did what they did because for some people and we find this all the time doing what we do you know there's a just there is a lot of just ignorance people don't know and so it's like oh this is an option to take out a loan I mean I guess like they've never even heard of another way, how to live.

[204] And so there is something to be said about once they have some information, kind of what Jade's saying, then be able to say, okay, so what does this look like now?

[205] Because the truth is, I'm like, I mean, Caitlin, I would still be in a relationship with somebody if they had student loan debt.

[206] But the key is that they want out and they don't want debt to be part of their life.

[207] It's a value system thing.

[208] Do you know what I'm saying?

[209] So like, to me it's, you know, Winston, like when we were dating, he, he, like, had a credit card, and his philosophy was like, oh, I'm going to use all the rents and all the utilities on the credit card.

[210] And then, and I'm like, well, I can't.

[211] Like, I literally can't.

[212] Yeah, I can't.

[213] It's not allowed.

[214] And to him, he was like, okay, so my, my philosophy shifts to, we just pay cash and we don't have a credit score and we don't need a credit score.

[215] And okay.

[216] Like, it all just kind of made sense.

[217] Do does that make sense?

[218] And I know we were young and you're probably way more set in your ways, Caitlin, and so is your boyfriend.

[219] But the point is, it is a value system conversation at that point.

[220] What do we value?

[221] And out of your value system is where money becomes a tool.

[222] Because money is just a tool.

[223] It's just a tool to live your life.

[224] And you want to be able to live your life in a pretty similar way or you're going to continue to, or you will, but heads if you guys continue a relationship and open up the store.

[225] So for me, that would be my number one.

[226] And I think the empathy route, like what Jade is saying is so true.

[227] Because you're not perfect.

[228] I'm not perfect.

[229] Jade's not perfect.

[230] None of us are.

[231] But I think the key is like, like, hey, you know, and maybe he is probably feeling a lot of guilt and shame.

[232] And the truth is, Caitlin, he's probably not happy with where he is financially.

[233] Right.

[234] So then it's like, okay, so we have to do something different.

[235] And do you want to do this together?

[236] Not combining money.

[237] But hey, should we start this journey?

[238] We each have our own debt snowball.

[239] Like, what does this look like to become free and talk about your why?

[240] Caitlin, why do you want to be debt free?

[241] Is debt, you know, are you losing sleep at night?

[242] Is it stressful?

[243] Do you have to stay in a job you hate because of it.

[244] Like, it's those kind of conversations to have.

[245] It's not just, like what Jade said, the 401K loan.

[246] You know, there's so much under that, too.

[247] To be clear, Caitlin and Rachel, I think you would agree with this.

[248] These are, this is a series of conversations over time.

[249] Maybe some relationships you can have that one conversation.

[250] It's like, all right, we, we, it's settled.

[251] But I mean, I can tell you with Sam and I, these conversations were months.

[252] And, like, depending on the level of guilt that's there or shame these are conversations that you're just looking for a little bit of forward movement with each with each conversation like hey he seemed a little bit more open this time or hey he seemed like he divulged a little bit more this time when I brought it up he didn't go you know like you're looking for that little um those little steps forward that you're like okay their mind is open and I can see that he's trying his best but if you're seeing no forward movement, if it truly doesn't look like, like, look, he's not interested.

[253] I bring this up and every time it's like, you know, okay, you know, but does that make sense?

[254] It may not be something that you get done in two date night dinners.

[255] You know what I'm saying?

[256] For sure.

[257] And definitely I haven't been met with like a resistance to talk about it and it's progressing.

[258] So that's like really great to hear that it is something that has to take time.

[259] I just wanted to like hear your perspective because I'm only still understanding how much of like the psychology of my behaviors has led me to this and exactly what you just said of like it's a value conversation where I just want to make sure I ask the right questions and we have the right conversations to like make sure we're on the same page like we do look at money the same way and you know if we were to move forward with making financial decisions together like do we have the right tools to kind of.

[260] to explore, like, what our thoughts are together.

[261] Totally.

[262] Yes.

[263] Yeah, and Caitlin, just, and know this too, because I'm such the spender in our marriage.

[264] My husband's the saver.

[265] Winston has, like, four spreadsheets in Excel and every dollar.

[266] He has all this stuff.

[267] And I don't.

[268] Even though I do this for a living, he is way more of that nerd.

[269] So also hear me say, he, there may be a sense of him that is just naturally a free spirit, and that is who he is, too.

[270] Like, I don't want everyone to think that everyone has to be obsessed with money and can't wait to talk about 401.

[271] 1Ks all the time and it's so exciting about the new tax code like like that may not be exciting to everyone and that's okay too so i think it's it's the bigger value system that together in a relationship we are moving in the same direction with our lives and you could plug in you know family you could plug in spirituality you can plug in all this stuff and it's just a healthy balanced relationship and money is a piece of that i love that it is important though to know when you hit your non -negotiable mark let me just throw that out there oh this is the ramsie show is sponsored by BetterHelp.

[272] Hey good folks, the back -to -school madness is upon us.

[273] It's hitting us right now.

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[292] dot com slash deloni all right everybody you're listening to the rameses show i'm your co -host jade warshaw joined by rachel cruz and during the break we were talking about non -negotiables and so many of us face this whether you are dating someone and you know you have to bring up those conversations rachel about money about you know religious views possibly political views like there's all these tough conversations to have and when do you know when you're dating somebody when you get to that point that's like okay this is i've hit my point right like we talked to somebody who was in a relationship for three years and it's like okay maybe now's the time to start looking at this talking about this but it's hard to know especially if you might see a little bit of progress and you're like yes yes this is progress maybe we're going on the right direction but what would you say rachel is let's let's let's let's call out some red flags of if you see this this might be pump the brakes money wise I was like I don't know if I'm not a marriage therapist I don't know if I'm talking about finances Yes I would say I always pump the breaks with people that feel like they have all the answers like when it's this idea that like I I don't have any more learning to do like I'm kind of just stuck in my this is it I'm good and you're like you don't want to grow or stretch or like hear something different like to me in life right now that feels so prideful so with money and we get this call a lot with people that as we're talking about non -negotiables so I guess there's a little bit on the other side of this but this idea that you know we we talk and they're like well you know he just tells me like he didn't want to talk about it he's not going to talk about or she don't she won't even she won't even enter the discussion I'm like that's exhausting like that's exhausting so you can have your non -negotiables but be but be humble about it it's the spirit that you bring to it.

[293] well let me be devil's advocate because there's somebody listening in their car and they're like listen I'm the one who my spouse keeps talking to me about Ramsey this Ramsey that and whenever I try to tell her my views on why I want to keep my mortgage payment and invested instead she's so close -minded like she doesn't want to hear she feels like she's found this plan and that's it like there's no like let's talk about it from that point of view.

[294] If I'm her I would be like okay so talk me through that.

[295] Let's run some numbers.

[296] Let's look.

[297] Let's have a conversation.

[298] Right?

[299] Not just you telling him, well, this is what it is.

[300] This is what you should be doing.

[301] It's this like preachy mentality.

[302] Yeah.

[303] Being willing to listen.

[304] Very much so.

[305] And ask questions.

[306] And ask questions.

[307] Be curious.

[308] Like that whole spirit as a person, I think is really important.

[309] But when you're so closed off and you don't even want a conversation, that to me is the big.

[310] That's exhausting.

[311] Like, you know, that would be a red flag for me. They won't even, they won't even talk about it.

[312] They avoid it.

[313] you know all the stuff and you're just like oh man yeah i think that's a red flag i think if you're talking about the future like say you're dating and you're talking about okay like when we get married you know what are your views on combining money that like maybe they maybe they've been very open about their money up until this point and you're like yes everything's going good but then when you start thinking about okay when we get married how is this going to work because my thoughts are that we would combine our money and kind of have our goals together and if they're saying oh really because I've worked really hard for my savings and that for me would be tough would be tough and a non -negotiable I think it's a non -negotiable but there's part I'm not going to lie there's part of me that wonders if there could be a journey there over time yep yeah so these are you know these are tough conversations but I I would urge people to start having them early if there's one thing that I can say that I kind of feel like I learned in my marriage is we didn't talk about that dating like yes our dating time was very fun and not a lot of like we I mean we talked about heavy stuff but somehow the financial stuff just wasn't really in there and then after the fact it was like oh wait a minute luckily there were certain things that we just naturally aligned on thank goodness yeah but yeah have those conversations yeah and I would say debt would be one of those I mean it would be really tough to marry somebody and they're like hey I want to go you know 500 ,000 dollars in debt to do real estate and I'll be like oh no I can't do that I can't do that that it's like that would stress that would be because then you live as the spouse in the stressful state 24 -7 you know yeah in investment I'm saying not just primary home but it's like I because I see these people on Instagram TikTok and they're all about real estate investment leverage to their eyeballs yes and I just watched that I'm like oh my gosh that would be so hard that would be a tough that would be a tough marriage for that is because on the one hand and I mean even if it's not real estate even if it's just one person like I have this business goal or this aspiration I want to open a restaurant whatever it is But their viewpoint is, I go into debt to do this.

[314] And if you're the spouse who says, hey, I don't feel comfortable with debt, I don't like debt.

[315] And they view that as you're not supporting my dream or you're not, you know what I'm saying?

[316] Like, you don't believe in me. You don't believe this is going to work and we'll be able to pay it off.

[317] That right there, that's a very tough conversation to have.

[318] Now, don't get me wrong.

[319] I still stand my ground because I feel like, I'm not like, can we do it over time?

[320] Is there a way to not leverage debt?

[321] Yes, yes.

[322] Oh, goodness.

[323] All good things to talk about.

[324] it's hard and messy good stuff all right let's go to the phone lines where we've got anna in Houston Texas what's going on Anna Anna hello how are you guys doing doing good how are you sorry I said your name wrong it's Anna right you're okay it is Anna mm -hmm so I have a question and I'm hoping that y 'all can kind of help me out because I've been thinking about it for a little while I am expecting to get a raise here soon within the next maybe two months at work, and it's about, I'm hoping, like, 20 ,000 extra a year.

[325] I'm not certain, though, if I should save that amount every year or use it to pay off my student loan debt.

[326] That's awesome.

[327] I have about $65 ,000 of student loan debt that I just accrued here recently, going back to school to get my master's.

[328] And it's just me and my kids.

[329] I don't get child support.

[330] How many kids?

[331] And I have three.

[332] My son is 19 though now.

[333] And so he wants to go to school.

[334] That's a whole other situation and meeting a little bit of money for that.

[335] But I guess my question is just should I save that extra 20 a year?

[336] for me and my kids just like for security type stuff or should I just use it all to pay off this student loan debt?

[337] Because I don't want it to go from $65 ,000 to $200 ,000.

[338] Of course.

[339] And that's a great way of thinking.

[340] Number one, congratulations on the raise.

[341] That's excellent.

[342] So if you're kind of new to the Ramsey show, we teach everything kind of through a series of baby steps, right?

[343] There's these seven baby steps that you can take that build on each other.

[344] to ultimately get you to this place of financial peace, right?

[345] And so the advice that I'm going to give you is based on that.

[346] So the first thing that we want to kind of create this secure platform for you is you just need $1 ,000 saved, right?

[347] So if you can just out of that $20 ,000 raise or out of your bank account or whatever you have of money now, if you can just set $1 ,000 aside and just, okay, I've got that there.

[348] And then the second baby step is, yeah, you pay off your debt.

[349] because when you pay off debt, you're eliminating that risk.

[350] You're eliminating that financial uncertainty that's in your life.

[351] And that's usually the point of stress that people feel is, oh, my gosh, I've got to make these payments or these debt collectors are calling me or my payment is due, right?

[352] That's usually the source of stress that people feel when it relates to their money.

[353] So in your case, I would say, if you've got this extra money, congratulations, let's put it to whatever baby step you're on so that you can keep going in the right direction.

[354] to get to that ultimate financial piece.

[355] And it sounds like in your case you would be on Baby Step 2 where you are paying off the debt.

[356] Anna, how much do you make in your job now?

[357] So I make about $4 ,000 a month.

[358] It's about $60 ,000 a year.

[359] Okay.

[360] And then with the $20 ,000 will come, so that'll be about $80?

[361] Mm -hmm.

[362] Okay, great.

[363] And I already, I have the emergency fund and I even have about $30 ,000 in a CD account, but I put up whenever I sold my house last year.

[364] So I have that saved.

[365] That's great.

[366] I mean, I would put, it's going to make you nervous, but I would put that towards your debt.

[367] And that will take a huge chunk out of this debt.

[368] And you're going to make great money.

[369] I mean, you're going to make $80 ,000.

[370] So you'll have $35 ,000 left.

[371] I mean, you could pay this off in 18, 24 months.

[372] Yeah.

[373] And honestly, when that CD majority, I'd probably put that on the debt, too, and knock it out.

[374] $65 ,000, I would do that.

[375] And then once the debt is gone, I'd save back up that money.

[376] And I'd just keep it in a high yield to where it's, like, very liquid.

[377] But, yeah, listen, I'm proud of you.

[378] I think that you're doing all the right things.

[379] You've got good instincts and good intuitions.

[380] Yes, you're doing great.

[381] Taking great care of your family.

[382] This is the Ramsey show.

[383] I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable.

[384] Yeah, and what's so hard is I feel like one of those, especially, the ones that I'm like, oh, it's terrible.

[385] People that call in and their spouse has passed away suddenly, and they don't have life insurance.

[386] When you have to think through, how am I going to pay my bills?

[387] I'm going to eat next week.

[388] Yeah, in the middle of all that grief.

[389] Like, it's just, it is.

[390] It's terrible.

[391] So life insurance is the one thing, especially as a mom with three little kids that I'm, like, so big on for people to get because it's inexpensive.

[392] Zander is the place that Winston and I actually get all of our life insurance.

[393] And it doesn't cost much because Xander shops among a gazillion different companies.

[394] It doesn't cost much.

[395] You just have to admit that someday you're not going to be here.

[396] You've got to say it out loud and you've got to say, I'm going to say, I love you to my family by taking care of them and taking the time to put this stuff in place.

[397] The cost of stinking pizza.

[398] To get a free quote, call 800 -356 -4282.

[399] That's 800 -356 -4282 or go to zander .com.

[400] You're listening to The Ramsey Show.

[401] Give us a call.

[402] The number is triple -8 -8 -25 -2 -2 -25.

[403] And we would love to hear from you.

[404] It's a new year.

[405] You probably have goals.

[406] You probably have questions.

[407] And Rachel, we are here to answer those.

[408] We have a live stream coming up, guys, January 11th.

[409] That's a Thursday night, okay?

[410] It's at 7 p .m. It's completely free.

[411] Yes.

[412] All right.

[413] It's going to be myself, Rachel Cruz, John Deloney, George Camel, and the goat.

[414] Dave Ramsey.

[415] We're all going to be there.

[416] And we're going to be teaching you how to break the money cycle.

[417] All right.

[418] We're breaking this talk.

[419] toxic cycle.

[420] It's actually called Break the Cycle live stream.

[421] And it's our biggest one yet, Chage.

[422] Yes.

[423] The registration is crazy.

[424] Yes, over 200 ,000 people have registered.

[425] So yeah, come join us.

[426] We just had a meeting about it yesterday.

[427] Yes, that's right.

[428] And it's going to be really great, you guys.

[429] We're going to talk a lot about navigating money, anxiety, bad money habits that keep you stuck, some practical tips on what to do to start this new year off.

[430] So I hope you join us.

[431] Not to mention if you register, you get entered to win $1 ,000.

[432] And we're doing 10 separate winners.

[433] So there's a good chance that you could win $1 ,000.

[434] And that's some nice money.

[435] That's just a sign up, you know?

[436] All day.

[437] All day.

[438] Give me some free money.

[439] I know.

[440] That's right.

[441] All right.

[442] Let's go straight to the phone lines with Joey in Washington, D .C. What's going on, Joey?

[443] Hey, how are you all doing?

[444] Doing good.

[445] So I'm looking for some advice.

[446] So I'm looking to kind of invest and save money as an 18 -year -old going into trying to pay cash for college, as well as trying to get more, like, I get better paying jobs.

[447] And it's just kind of like where I should start and where I should look as far as investing goes.

[448] So do you have money, Joey, for college?

[449] Yes.

[450] So I actually, this is like I'm starting my first semester in college.

[451] And so I've paid cash for this semester upcoming, as well as having a part -time job.

[452] So it's just kind of what I need to do to continue because I really don't want to go into debt.

[453] And so it's kind of what I need to do to stay out of debt and be able to kind of set myself up.

[454] Yeah.

[455] Well, it's a great question.

[456] Well, in your stage, Joey, I probably would not advise investing right now.

[457] If I were you, I would just open up a high yield savings account and I would put as much cash in there as possible and get through college making sure that you can cash flow it.

[458] because what I don't want to happen is you go and open up, you know, a vanguard account puts some money in and the market goes down and you need cash for school and it's not there.

[459] And you're like, oh, geez, you know, I lost some of that money.

[460] And so you want to be able to, when you invest, it's a really long -term play.

[461] So for something big, a big expense like college, I would want you to go through it completely and just know, hey, I have money.

[462] I'm able to cash for this.

[463] And then when you graduate and you get a job, I would build up an emergency fund of 36 months of expenses, and then I would look to invest.

[464] And when you're investing, you want to do 15 % of your income into retirement.

[465] And so that's your 401k at work for the job you'll get when you graduate, to your Roth IRA, open that up.

[466] So, yeah, I would honestly not advise you to invest right now just because college is such a big expense.

[467] I don't want to make sure you get through it debt -free.

[468] Okay.

[469] So I should not be, like even into retirement, anything I bet.

[470] I shouldn't be worrying about that until, like, kind of after I get.

[471] out of college and I graduate college.

[472] Yeah.

[473] And what's hard, Joey, is I'm like, you know, and we even show a graph here at Ramsey that says if you're 18 and you start investing what it can be, because compound interest is, it's an amazing thing.

[474] But I don't, again, want your money stuck in an investment if you really do need it for college.

[475] So this idea that if you just wait four years, it's not going to be the end of the world at all.

[476] Like you will be, you will be fine starting to invest in retirement at 22 years old.

[477] Yes, definitely.

[478] You will be plenty fine.

[479] You will retire a millionaire.

[480] Everything will be fine.

[481] But I would.

[482] again, make sure that you get through college debt -free.

[483] But I appreciate the call and just the stop process, Joey, of that because investing is so important for our future, but also not going into debt is as important.

[484] So 100%.

[485] Awesome.

[486] Thank you for the call, Joey.

[487] Well, let's keep it going and let's go to Kat in Los Angeles.

[488] What's going on, Kat?

[489] Hi there.

[490] Hey, how are you?

[491] I'm good.

[492] How are you?

[493] Doing good.

[494] How can we help today?

[495] My question is about tithing.

[496] My husband and I've been married for 26 years, and we've tithed 10 % since day one.

[497] Like, that's never been a problem for us.

[498] I think the problem part, if anything, has been like the 10 % saving.

[499] Like, we've never done that.

[500] But we own our own business, and we're the only two employees.

[501] And for the past few years, we decided we should tie the 10 % off of our gross income from our business.

[502] And we've definitely done that at the expense of putting money into savings, which I'm so, I love.

[503] love giving.

[504] I think it's important.

[505] But the last few years after COVID, we lost some clients.

[506] We, you know, we're making way less than our usual income.

[507] And so basically now we're looking at our budget for 2024.

[508] And we really want to live the way that God wants us to live.

[509] And I mean, we've always tied, like I said, but, but we're wondering, like, would it be wrong to tie the 10 % in our personal income rather than our business income?

[510] Listen.

[511] And I really, really don't want to do the wrong thing, right?

[512] I sort of feel like talking you're the same we're like hold up hold up you feel too much guilt breathe cat you're good yeah you are good you're fine okay you're fine first off you're giving you're giving like which is puts you in a very small category and you're giving 10 % which is good i mean i mean obviously if you're a christian person listening you're used to that kind of talk it's like okay yeah i give my tithe right you're not a christian person listening that's what a lot of christian people practice is they give 10 % to their local church.

[513] And when you were telling your story, I was like, oh, that sounds like me and Sam, you know, when we first started our business, we were the only employees.

[514] And I will be honest, like for us at the stage in our life, we wanted to give that extra.

[515] And we gave 10 % of the gross of our business.

[516] And I mean, you can't out give God.

[517] And so we saw the fruit from that.

[518] But as we continued on and things changed, we were like, okay, like we now give 10 % of our gross payroll like what we take of the business like what we take home just like anybody else would right like if you work for Walgreens you get your check and you tie off of what you receive right and the gross amount of what you receive typically and I don't even want to get like Rachel too funky fresh on the grosser the net it's like just give I think the point of all of this and I think the heart behind why God has instructed that why he encourages giving is because what it does to us like what giving what that does is it opens our hands it moves us on the spectrum from being selfish just thinking about ourselves to selfless looking up for others and others needs when we give and what we give to is really important because it's it's transforming you know a community or a place or an organization like like that's that that's the heart behind it that's the motivation it's not this tip for tat gross or net business or like that's not that's not why god wants us to give it's not that legalistic it's not that granular it it is the position and the posture of our hearts and that's what he's looking for because he knows when we give that selflessness starts to occur and you have a richer life i'm not talking about money i'm talking about you have a richer relationship with your spouse because as you're giving you're becoming selfless and you become more of that in your marriage as a parent as a friend as an employee i mean like it affects you as an entire human being when giving as a part of a habit of your life.

[519] So that's my philosophy of why God has called us to that.

[520] And it's a beautiful thing.

[521] And it's something that regardless if you are, you know, a person that is spiritual or in the evangelical, you know, Christian space or not giving, regardless of where you land spiritually, we always encourage, because that will do that, whether you believe in a God or not.

[522] Yeah.

[523] So for Kat, I really, I appreciate your diligence and, you know, wanting to do the right thing, like you said, but I think you are doing the right thing.

[524] Yeah.

[525] I think it's the posture of your heart.

[526] So I would not get been out of shape.

[527] And I do think, Kat, you will feel something from the Holy Spirit that may say, tie on your business.

[528] And Katz and be obedient to that.

[529] But he also may say, you're okay.

[530] And what we teach is tithing on the income you bring in, like what Jada is saying.

[531] So that's where we always advise people, give on your income.

[532] But he may, you know.

[533] He might encourage you to do something else.

[534] We gave, you know, $100 to the Sonic guy, because I just feel like we felt what we do.

[535] Yeah.

[536] So like, you can't mess this up, Pat.

[537] Yeah, that's right.

[538] That's right.

[539] You can't mess it up.

[540] If you feel, the only way you can mess it up is if you start doing things out of obligation or you feel contention or you feel like.

[541] God loves a cheerful giver.

[542] There's something in it of that joy.

[543] So I don't, yeah, we don't want to rob you of that.

[544] Oh, I like that question, though.

[545] Pat, I appreciate you though.

[546] I really do.

[547] That's a good one.

[548] I think a lot of people feel that.

[549] And you can get very, like you said, granular is a great way.

[550] You're like looking, oh my gosh, I was 10 cents short, you know, like, what's this going to mean when I get to the pearly gates?

[551] Nothing.

[552] I mean, come on now.

[553] Guys, this has been such a great hour.

[554] Thanks for your calls.

[555] We'll be here.

[556] Next hour, give us a call.

[557] This is The Ramsey Show.

[558] Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships.

[559] I'm your host, Jade Warshaw, joined by your other host, Rachel, Cruz.

[560] We'll be taking your calls all hours.

[561] So give us a call.

[562] The numbers, triple 8, 825, 5225.

[563] We'll talk about whatever it is that's on your mind, especially in this new year.

[564] I'm sure you've got so much that you're trying to accomplish.

[565] This is the season of setting goals, right?

[566] And I'm sure so many of you have money goals, financial goals.

[567] You're trying to save money.

[568] You're trying to get out of debt.

[569] You're trying to start the new habit of budgeting.

[570] And if that's you, we've got the perfect encouragement for you.

[571] Because we're about to get into.

[572] We're about to get into to the time, Rachel, that people already start moonwalking, right?

[573] I know.

[574] Y 'all are already moonwalking.

[575] And I'm like, wait a minute, it's only the fifth.

[576] So you need some encouragement.

[577] And we've got that for you, January 11th.

[578] Write this down, like George Strait said, January 11th, this is Thursday.

[579] All right, 7 p .m. We're doing a free live stream event.

[580] And it's actually live.

[581] It's not pre -recorded like some of these folks are doing.

[582] It's actually live.

[583] And we're going to be giving you the tools you need to break the cycle.

[584] And y 'all know what I'm talking about.

[585] There's been a debt cycle.

[586] There's been a paycheck to paycheck cycle.

[587] And you're ready to get free.

[588] And you're like, Jade, Rachel, how do we do this?

[589] Help me. We're here to help.

[590] It's free, guys.

[591] You can register at ramsysolutions .com slash break the cycle.

[592] And when you register, you can enter to win a $1 ,000 giveaway.

[593] We're giving that giveaway away to 10 different winners.

[594] So be sure to do that.

[595] That's the break the cycle live stream, January 11th at 7 p .m. Be there or be square, as they say.

[596] Let's go to Atlanta where we have pay.

[597] on the phone line.

[598] What's going on it?

[599] Paige.

[600] Hi.

[601] First of all, I just want to say thank you for taking my call.

[602] I feel very blessed to get to speak to you both today.

[603] My question is, so I have the Every Dollar app and the Baby Steps app on my phone.

[604] And so I'm on step number two, the Debt Snowball.

[605] And my situation is kind of unique.

[606] And that my, I'm only 26 years old and my mom is disabled and my dependent now.

[607] She got really sick a couple years ago.

[608] And we finally kind of got out out of the craziness of the last couple of years into like a zone where I feel very fortunate to be now where her health is better.

[609] She lives with me and not in a facility, which that was a lot of money.

[610] and, you know, she's not doing hospital trips and things like that anymore, fortunately, hopefully, fingers crossed.

[611] But with that, you know, she has debt, I have debt, so my plan, I'm trying to tackle kind of both of our debts, and I manage both of our finances.

[612] I mean, we live together.

[613] We basically share finances and manage medical, everything, basically.

[614] Um, so, you know, I put all the debts into the baby steps app where, and put like the money that we can put on a monthly basis towards the debt.

[615] And we can pay a little currently because she's got some insurance, um, policies as well as her retirement right now for the next two and a half years.

[616] Um, we can put like $2 ,600 to $3 ,000 a month towards our debt, which kind of totals like $90 ,000.

[617] Um, and that's a combination of her credit card debt, her medical debt, my credit card debt, my student loans, and my car.

[618] So how does it break down between the two of you?

[619] I'm just curious.

[620] I know, number one, you're a hero.

[621] Like, it's admirable that you're doing this and you've honestly essentially put your life on hold to help your mom and you're seeing more than willing to combine your debts.

[622] Like, that's not normal and, like, good on you for choosing that.

[623] But I am curious because you are two separate people.

[624] And so I just, I do want to know out of the 90 ,000 of debt, what's yours and what's hers?

[625] So I have $25 ,000 with Sally Mae for private loan for student loan.

[626] $7 ,700 in federal loans.

[627] My car is $26 ,000.

[628] I just got that.

[629] one knew this last summer that's a whole other story and I have like seven or eight thousand in credit cards and then as far as I know my mom has $30 ,000 in credit cards 18 on one card about seven other about you know 7700 on another we fortunately have had one card like I don't know what the proper word is but like like pardon us or whatever and just alleviated it just charged it off yeah and we wrote it on the taxes and all that stuff so we had one car do that because my dad had you know her ex -husband he's an attorney and um he had been helping me try to alleviate some of her debt was just like hardship type yeah you know as far as yeah because i mean basically when she got sick i was on the under the oppression that she managed her money well and she had a lot of money in savings.

[630] That's at least what the situation was when my parents got divorced when I was eight.

[631] Something happened and she had a higher loan on the house 12 years after purchasing the house higher than what she bought it for.

[632] But now she's now the only debt she has is the $30 ,000 in credit cards.

[633] And it's mostly the credit card.

[634] Is it medical or is that separate?

[635] That's all the credit card that she had once I got into her account.

[636] And then what's the medical debt she carries?

[637] So that I have like, I have $1 ,000 that I know of.

[638] We've fortunately been able to get the hospital wanted to do $16 ,000.

[639] We did the financial thing and they wrote that off.

[640] Yeah.

[641] Okay.

[642] So for time, for time, let me get into this.

[643] The car, that's the first thing I'm looking at because what's your take home pay?

[644] or what do you make per year?

[645] I think about $40 ,000 a year.

[646] Okay.

[647] If you really want to move through this, I would consider getting out of this car and getting into something cheaper.

[648] You just got it.

[649] You should be able to sell it, kind of break even, and take some cash and buy something cheaper, $5 ,000 or $6 ,000.

[650] I would do that because I think it's worth it for you to move quickly on this.

[651] I'm a little bit inclined for you to have two separate snowballs here.

[652] And for your mom to have her money and you put your mom's money at her debt and you put your money on your debt.

[653] And you're the, you're just the one stewarding all of it and making it all happen.

[654] Yes.

[655] But I don't want you combining them and combining the money because you are two separate people with your names on two separate sets of bills.

[656] And at the end of the day, even though you've combined your lives in many ways, you're still two separate people and you're not married.

[657] And page, and the truth is too, you know, this is not to be harsh on you, but you know, you've got $8 ,000 in credit card debt, you've taken out of car.

[658] Your behavior and habits are one way.

[659] And when you feel the weight of, oh, gosh, it's not going to be an insurance policy that's going to be paying off my debt.

[660] I have to do this.

[661] That changes your behavior page.

[662] And that's what we're all about here is your behavior has to change.

[663] And by you doing the work and paying off that debt, that's going to cause the behavior change.

[664] So I want you guys to be cutting up these credit cards.

[665] I want you to be selling the car.

[666] You guys really have to clean this up.

[667] You're in a dire situation of like there's a lot of mess here.

[668] But you can get it cleaned up.

[669] You really, really can, but you have to change the way you've been viewing it.

[670] And so, Paige, you're doing an amazing job, taking care of your mom.

[671] Absolutely incredible.

[672] But your money habits and where this is led has gotten you guys in that spot.

[673] So that has to change.

[674] That has to change today.

[675] Cut up the cards.

[676] This is the Ramsey Show.

[677] You're listening to the Ramsey Show.

[678] I'm Jade Warshall, your host, joined by Rachel Cruz, and we are taking your calls all hour long.

[679] The number is triple -8 -8 -25 -2 -2 -5.

[680] Give us a call, and we'll chop it up with you.

[681] You know, we're always looking at what the what's going on in finance what's going on on social media what's going on in the news and what the trends are because this is what people are talking about and we want to be talking about what y 'all are talking about and what's important to you guys and so um i saw initially an article come across my email that was talking about this and then there's tictox and it kind of started popping off a little bit so it's like we need to talk about this and it's essentially um rachel this idea that if you make $74 ,000 a year.

[682] Gen Z doesn't think that that's middle class.

[683] They don't think, they don't agree with that.

[684] And so I don't want to say much more.

[685] I want you guys to watch this and decide for yourself and then we will discuss.

[686] Gen Z doesn't agree that $74 ,000 is middle class.

[687] No kidding.

[688] It's not even close.

[689] Check this out.

[690] If you take $74 ,000 for a Gen Z or let's say they have a bachelor's degree in their 25 years old.

[691] First of all, $74 ,000 is much higher than the average income.

[692] Most Gen Ziers are probably making anywhere from 40 to 50, maybe 60, but let's use 74.

[693] The take home after taxes 401K and health insurance is $4 ,300.

[694] The average college monthly payment on a loan is about $500.

[695] You're down to $3 ,800.

[696] Let's say this person is financially responsible, decides to split a two -bedroom apartment in a medium -sized city like Orlando so that their payment is $1 ,200 apiece, $200 for utilities, so $1 ,400.

[697] Now, unless they're going to have Lucky Charms and Peter Butter and Jelly, their groceries are going to cost about $600 if they're trying to get chicken, beef, and some healthy stuff.

[698] You have a $400 car payment, $200 insurance, $150 for gas, $100 for a cell phone, leaves you with $950.

[699] This is no savings, investment, no emergency fund.

[700] Let's give them at least $300 to go on a couple dates or to hang out with their friends for the month so they can enjoy life a little bit.

[701] They're left with only $650.

[702] A bachelor's degree, $74K salary, you are splitting a two -bedroom apartment with a friend and only have $650 left a month.

[703] It would take you years to save up to $30 ,000 that you would need for a down payment on a house.

[704] with the closing cost, but even if you could get that down payment saved, you would still need to make $120 ,000 a year to be considered for a $400 ,000 loan.

[705] The middle class, the goalpost has been moved from $70k to $120 ,000 in just the past two years.

[706] Okay, okay.

[707] I got some thoughts, Rachel Cruz.

[708] I did too.

[709] You go, Jay.

[710] Number one, when my guy said, only $650 left, there were a couple of things that are screaming at me. A, only $650 ,000.

[711] $150 left.

[712] I think that if you're just starting out, you're in your 20s.

[713] I'm like, yeah, that's that you're 22 years old and you have $650 ,000 left over.

[714] Come on, somebody.

[715] Number two.

[716] That's good.

[717] Then I'm like, okay, I'm just getting into $300 on fund money.

[718] Again, that's a lot of money.

[719] Like, that ain't bad.

[720] Can I be 100 % real talk?

[721] Yeah, go on my budget right now.

[722] Yeah.

[723] Where it says Jade fund money, it's $300.

[724] And I'm telling you, I make more of the $74 ,000 a year.

[725] So, okay.

[726] Okay.

[727] And then, so then add in, which is normal, I get.

[728] But what if you decided to get an extra job and pay off this debt, you would free up a car payment.

[729] $400.

[730] And free up $500 student loans.

[731] So it's $900.

[732] $600 for groceries for a single person.

[733] I think you can do it at $500.

[734] So that's an extra $100 that you take out.

[735] So there's an extra $1 ,600 extra extra.

[736] Yeah.

[737] I think we're okay.

[738] I think this is an expectation conversation.

[739] Yes.

[740] Yes.

[741] And we're not going to make $74 ,000 forever, ever, amen.

[742] No. Or $40 ,000 forever and ever an amen or whatever it is.

[743] Right.

[744] As you get older and you work, you will be making more money over your lifetime.

[745] That is true.

[746] I just, this really rubbed me the wrong way, Rachel.

[747] I just, I think that like what you said, this is all expectation.

[748] And it's kind of tunnel vision and getting.

[749] caught in the now.

[750] You know, it's like you're looking at everything that you're seeing on social media and you're creating this bar of what you should have.

[751] You're even looking at maybe what friends and family members have.

[752] Like so many people, they come out of their parents' house and you've been living in this environment where there's nicer cars.

[753] The home is larger.

[754] And you immediately kind of feel like, oh, yeah, I'm supposed to have that too.

[755] And I'm like, listen, these things take time.

[756] It took time for our parents to get where they are.

[757] if that's what you're comparing it to yeah and and we'll say this i'll say this number one has life changed yeah over time yes absolutely is stuff more expensive real estate being one yes yes like we are not denying that like course it is it is more expensive but the problem i have with it is is honest it's kind of it's kind of his attitude of like oh mark oh my versus saying well i have 650 what can i do now to better my life with that what do we you don't mean to there's an attitude shift as well of how you view this.

[758] You can view it like Eeyore or you can view it like, this is an opportunity.

[759] So what am I going to do?

[760] What am I going to do different?

[761] How am I going to pay off debt so I can free up an extra $1 ,000 a month?

[762] Yes.

[763] What am I, what are, what's my opportunity here to do?

[764] What if I invested $300 of the $350 every month from $22 to, you know, run those numbers?

[765] Like, like, find the opportunity in it.

[766] I agree.

[767] Versus this like, well, well, well, you're all screwed.

[768] We're all just screwed.

[769] I don't know what we're going to do.

[770] You know, and you're just like, oh, my gosh.

[771] Like, yeah, they're approaching it from the wrong angle.

[772] It's just like, yeah, that drives me crazy.

[773] I agree.

[774] It's like, oh, must be nice.

[775] Like, you're looking at it and like you said, he's, he's, he's, he's, that's a lot of money.

[776] That's where I'm like, listen, I'm standing on business.

[777] That's $650 is a lot of money.

[778] And here's real talk.

[779] What we, what we do on the show is talk to real people every single day for three hours a day.

[780] People are in the red.

[781] They don't have $650 left over.

[782] And that's what I'm saying.

[783] mindset if you if it's almost like he's solving the wrong problem or focusing on the wrong thing and not just him because there's he he's speaking for yeah yeah totally hundreds totally you know thousands and maybe millions of people who feel this way but if you're like you said if you're looking at 650 dollars that's not enough and you're looking at um 400 dollars and he's not addressing that and he's not addressing the student loan it's just this is the way it is there's nothing that's going to change you're looking at the wrong piece of the puzzle you've got to look at I was listening to somebody today that was saying that healthy people, whether it's in a relationship or just you as yourself, you always look at something and go, okay, what am I contributing to this?

[784] Like if there's a problem, it's very easy to point out there and say it's because of that, that, that, that and that.

[785] But when you're healthy and have this area of maturity, you're always looking at and going, what can I own in this situation?

[786] And if you're finding yourself, even if it's not a $74 ,000 budget that we're looking at, if you're looking at your own finances and you just find yourself feeling trapped, blaming your job, blaming the fact that you have student loans, blaming your spouse.

[787] You have to stop for a moment and go, okay, wait a minute, what am I contributing to the situation?

[788] Because here's the guarantee.

[789] If there is something that you're complaining about in life, I don't care what it is.

[790] At this point, I'm beyond money.

[791] If there's something that you're complaining about, I guarantee, I bet your bottom dollar, there's something that you are doing that's contributing, even if it's slightly, that you can tweak to make your situation better.

[792] And if you start to turn a dial up on that and start focusing on that, that's going to point to another thing that you can change.

[793] And you start focusing on that and that points to another thing.

[794] So it really goes back to that idea of whatever you're looking for.

[795] That's what you find.

[796] So if you're looking for problems, all you find is problems.

[797] If you look for solutions, you're going to start to see even if it's so small.

[798] Like Rachel, you just went through all of this.

[799] Like, okay, like what would happen if you paid off your car?

[800] What would happen if you paid off your student loan?

[801] What would happen?

[802] and start asking yourself those questions, what can you contribute?

[803] Listen, it's a whole different equation at that point.

[804] I know.

[805] And I do wonder, you mentioned it earlier, but expectations, and this is something I always wrestle with.

[806] And it almost could be just subconscious of what we just naturally expect in our world, because we're so exposed to everyone's lifestyle.

[807] I mean, whether it's like reality TV or social media, Instagram, TikTok, like you see into people's lives more than any other time in history.

[808] Yeah.

[809] And you start to see a glimpse.

[810] and you start to expect what you see.

[811] You become numb to it almost.

[812] And it's like, oh, this is normal.

[813] And if I don't have that, I'm not normal.

[814] I was talking to my mother -in -law at Christmas, and she was like, oh, my God.

[815] You know, she just made a comment how all they did with their little kids at the time, they just all played in the driveway and all the cul -de -sack would get together in terms.

[816] Now I'm like, there's memberships to things.

[817] Like, there's all this stuff that's normal.

[818] But I'm like, that wasn't, that doesn't have to be normal.

[819] Yeah.

[820] So it's just this, like, subconscious expectation.

[821] We have to reevaluate all the time.

[822] And I think it's really important to keep us grounded in it because you can just float off into this world, spend a lot of money that's unnecessary, and complain into a TikTok video.

[823] That's a word, Rachel.

[824] That's a word right there.

[825] Check out your expectations.

[826] Figure out what's motivating you.

[827] Is it the money or is it an emotion that you're seeking out?

[828] This is The Ramsey Show.

[829] You're listening to The Ramsey Show.

[830] I am your host, Jade Warshaw, joined by your other host, Rachel Cruz, and we are with you today.

[831] So give us a call, the numbers, triple eight.

[832] 8255 -225.

[833] We will call, we will take your call and answer your questions.

[834] Today's question of the day is sponsored by Neighborly, your hub for home services.

[835] Now you can find expert local help.

[836] You can schedule appointments and get special offers exclusively in the Neighborly app.

[837] So download the Neighborly app now and get started on your home repairs, maintenance, and home improvements done.

[838] Today's question comes from Ryan and Arizona.

[839] My wife and I have been using the envelope system for over 15 years.

[840] and debt -free for almost that long.

[841] Awesome.

[842] My wife takes care of the finances, but we make decisions together and trust each other.

[843] The issue I have is at the beginning of each month, the envelopes still get the same amount of money they did.

[844] When we started 15 years ago, he should talk to the TikTok guy that we were.

[845] I can't convince my wife to increase it.

[846] Is it part of your budgeting system to increase the amount in the envelopes as the cost of things goes up?

[847] Please help.

[848] Oh, Ryan, yes.

[849] tell your wife to put some more money in those envelopes.

[850] If y 'all have it, which I'm assuming you do, it's been 15 years.

[851] Yes.

[852] I mean, what we say is once you're out of debt, you have the ability now with your income to do more with the three things you can always do with money.

[853] Be giving more, be saving more, and you can be spending more.

[854] So increasing your lifestyle, I would do it by percentage points.

[855] So you guys, yeah, I mean, up everything by 10%, 15 % for a little bit, right?

[856] And just feel that.

[857] now I also will say we were just talking about our personal line items in the break because the TikTok video we just talked about in the last segment and I have not increased some of ours dramatically we've increased our out to eat our groceries some with everything kind of going on and adding more kids but ours is not dramatically it's not dramatically different it really isn't like I look at I spend more on clothes like maybe by again by small percentages and so I think that's what you want to work in.

[858] Yeah, I'm thinking about what you're saying and I'm thinking about this question.

[859] And, you know, I'm with you.

[860] I reluctantly raised our grocery budget, you know, when inflation got crazy.

[861] I tried to stick to the old numbers and finally I remember coming home and being like, listen, it doesn't work.

[862] I got to raise this item.

[863] And so I do remember doing that.

[864] I think if it's, when it's gradual, like, I think what she's trying to avoid here is lifestyle creep?

[865] Yeah.

[866] Or, well, let me go back.

[867] Your girl needs to loosen the purse strings.

[868] I think she's just super tight.

[869] But I think most people, what their hesitation is is they're trying to avoid lifestyle creep.

[870] Yes, yes.

[871] And that's a good conversation to have because when you start earning more and you're like, okay, I'm doing better.

[872] I'm out of debt.

[873] Like, I've done all the things.

[874] Sometimes there is still that guilt that you face of, can I really spin this?

[875] Like, can I really do this for myself?

[876] And I'm going to go with as long as you're taking care of business, the answer is yes.

[877] Sure.

[878] I mean, yes, absolutely.

[879] And you want to be able to enjoy your life.

[880] And I think that's part of it too.

[881] So increasing it.

[882] But increasing the other areas too.

[883] Be increasing your giving and saving.

[884] But doing all three with extra money is is really important.

[885] So yeah, Brian.

[886] Yeah.

[887] Probably more.

[888] After 15 years up up it a little bit.

[889] And I want to, I want to hit one more thing on that because with spouses, be willing to like your spouse can be into something that you're not into and they want to spend some money on something that you would never spend money on sure and it's like I feel like that's when it gets a little difficult it's like hey we're making this money now I love I'm really into this and you know my husband would be like why would you ever like do you know what I'm saying like I remember being on here with Dave and we were talking about wine or something and he was like a $300 bottle of wine I'm like I would never like I spend I spend $999 on wine Dave like I could he was like oh go get yourself a bottle I was like I can't I, like, I physically can't do it.

[890] Like, there's certain stuff that I just, yes.

[891] I can't, I can't do it, Captain.

[892] I can't do it.

[893] Don't make me. Please don't make me too.

[894] Oh, gosh, I got to go to the phone lines.

[895] This is Kennedy in Pittsburgh, PA.

[896] What's going on, Kennedy?

[897] Hi, ladies.

[898] Thanks so much for taking my call.

[899] You're welcome.

[900] I have a couple things.

[901] My husband and I've been married for almost 34 years, and, you know, we've worked hard our entire life to build what we have built.

[902] And we're kind of at a crossroads on a few.

[903] things.

[904] And we have 17 rental properties that we have acquired.

[905] They're all paid for.

[906] Wow.

[907] All right job, Kennedy.

[908] This is the question I have.

[909] You know, you would think, you know, we want to retire eventually.

[910] We've never taken vacations.

[911] We've never been extravagant with things.

[912] We have no debt whatsoever.

[913] This is what we're across us because we were envisioning us when we retire, you know, all of our rental income, which just over 200 a year would just keep us afloat and not have to dip into what we've built over the years.

[914] Now, I'm noticing that the rental income is just not growing like it should.

[915] And so we're trying to decide if we should sell the properties, which are probably worth around 3 .2 to 3 .5 million in total, and just put the money, you know, away and earn the interest off of it because, you know, just in property taxes alone, like I just wrote a check for almost $50 ,000 just recently for property taxes on some of the property.

[916] And so I'm just trying to make, you know, and if one, if an air condition goes out or, you know, I mean, things just add up.

[917] And it's like that account doesn't build like I think it should build.

[918] Why haven't the rent, why hasn't the rent gone up?

[919] Well, I do go up on the rent.

[920] Now, I will say I am terrible because I manage them all.

[921] I am.

[922] I'm a very sweet landlord.

[923] I don't go up like I should, especially if they've been if there's a lot of longevity with my tenant.

[924] You know, so I know there's room for growth on that.

[925] But it just, I just feel like, you know, the expenses, you know, if we just were drawing interest, we could probably draw the same amount in interest every year than what we would be actually bringing in.

[926] I don't think you should feel guilty about, you know, you're in a real estate business essentially and I don't think you should feel guilty about passing along the cost of business to the customer and for you as a landlord there are prices that increase and some of that you do pass along and I don't think you should feel guilt in that now if you're still interested in selling I you know I have my thoughts on this Rachel you know far more about real estate than I do so you take no not really um yeah that's where and I don't want to sound cold -hearted but where you've chosen to put your money and in your investments is in real estate and real estate involves people.

[927] So when you have a big heart like you, Kennedy, and you see it like that, you're not going to get the same return financially when you don't raise rents, right?

[928] I mean, that's just the, that's the mathematical fact.

[929] So my question to you would be if it's less hassle, less work, and you're going to get a bigger return somewhere else, then yeah, I would probably highly consider that.

[930] Or if you say no real estate is my end game, it is my business, in a sense.

[931] It's my investment because I want a percentage of what I, you know, I've bought this.

[932] This is the rental.

[933] I mean, the rent basically is your income.

[934] It's what you're making.

[935] And your income has to stay at market value.

[936] And if that's how you run it, then I think we're having a different conversation.

[937] But it doesn't sound like you necessarily want to run it like that.

[938] Well, you know, the rental property, are just a side, you know, I have my own business and my husband's also an executive for a company.

[939] So we both still work.

[940] How much do y 'all make a year of those, of that?

[941] Without, okay, we're at 800 a year.

[942] Okay.

[943] Without the rental income.

[944] And so, the rental income was just.

[945] Okay.

[946] Is it a hassle for you, Kennedy?

[947] Like, are you to the point in life or you're like, I don't want to deal with 18 tenants and I would rather talk my - It is a hassle.

[948] Okay.

[949] So if that's it, I think real estate has to be a passion.

[950] And for some people, they love the diversity.

[951] They love getting a property, getting a good price at the front end.

[952] And they're doing that.

[953] I mean, it is part in their blood.

[954] That would be Dave.

[955] If he was sitting here, he loves it.

[956] But if it's a hassle for you, yeah.

[957] And if it's a hassle for you and you don't love it, you don't need to be in it, in my opinion.

[958] There may be a level, though, Kennedy, that you keep maybe five of these or something just for the diversification aspect.

[959] So I think having real estate as part of it.

[960] of your overall, especially where you guys are financially, would be smart.

[961] So maybe you sell half of them, cut the expenses in half, pick your half that you love, keep those for a few more years.

[962] And then if you look up Kennedy and you're still miserable managing these, sell them.

[963] Yeah.

[964] I mean, like, this is, this is the joy of your, like, you want joy in your life.

[965] And if it's sucking the joy out of your life, don't do it.

[966] The great thing is they've got choices.

[967] Yes, yes.

[968] That's what I love in conversations like this is she has choices.

[969] She's not like chained to one option.

[970] But when you are paying, look at the taxes, like you need to look at the entire picture, too, if you decide to sell these.

[971] That's a very, very good point.

[972] This is The Ramsey Show.

[973] You are listening to The Ramsey Show.

[974] I'm Jade Warshaw, joined by Rachel Cruz.

[975] Hey, if you like this show, consider liking and subscribing wherever it is that you listen, whether it's on YouTube or your favorite podcast app, when you like and subscribe and share, it helps in so many ways.

[976] Number one, it helps other people find this and use this message and find these resources and hopefully change their life.

[977] And obviously, it helps us on our end because it helps us in the algorithms.

[978] There are a couple of weeks ago, Rachel, we were number one.

[979] Yes.

[980] In podcasting on Spotify, which that list is always changing.

[981] And in my heart, we're still number one.

[982] And an Apple.

[983] I looked it up on this podcast, yeah.

[984] Yes, I love it.

[985] And that's really all because of you guys.

[986] So keep liking, keep subscribing and keep sharing in the new year.

[987] We're so, so grateful.

[988] All right, let's take it to the phone lines.

[989] We got Victoria and Austin, Texas.

[990] What's going on?

[991] on, Victoria.

[992] Hey, you guys.

[993] How are you?

[994] Great.

[995] How are you?

[996] I'm doing great.

[997] So my question was, what financial steps should I take as a college student with around, I would say, $15 ,000 in savings, considering I have no assets, a small school loan of about $1 ,300, and a credit score of $6 .93.

[998] And then this is like a two -part question.

[999] I also wanted to know, like, any college, or not college advice, any advice you guys have for young adults, especially first -gen, college grads on managing finances, and, you know, setting myself up for success and building wealth and what not to do as well.

[1000] Man, you're so smart.

[1001] Like, I'm so proud of you.

[1002] First generation college grad, asking all the right questions.

[1003] It's so, so, so good.

[1004] Yeah, I mean, I'll throw my two cents in, and I'm sure Rachel has plenty to say.

[1005] I think you're thinking the right way.

[1006] Number one, you're out of school, you're graduated.

[1007] Do you plan on going back to school, or is this it?

[1008] Like, are you going into your career now?

[1009] I have one more semester left, and I graduate.

[1010] in May. And then I plan to go straight into my career, but hopefully down the line, I want to go to grad school for like MBA.

[1011] Okay.

[1012] Cool.

[1013] Yeah, my first thing is like, let's get through this final semester.

[1014] Let's graduate with the degree.

[1015] Let's get you into a stable job, like in your field.

[1016] And then, yeah, I'd probably start looking at this and going, okay, first things first, I want to get out of debt.

[1017] You don't have a whole ton.

[1018] I mean, 13 ,000 student loans.

[1019] So my first things first, I'd be like, the baby steps.

[1020] And so I'm going to, you know, keep $1 ,000 set aside.

[1021] And then the rest that you have, the $14 ,000, I'd pay off your student loan immediately coming out of school.

[1022] That'd be my first order of business.

[1023] And that leaves you with $2 ,000.

[1024] And then I'd just start saving up.

[1025] You know, I'd be like, all right, once you're, you know, stable, does that make sense?

[1026] Because you're going to graduate.

[1027] You're probably, I don't know if you already have a place.

[1028] Are you living on your own?

[1029] Are you to be home for the first semester, I mean, not the first semester, for the rest of the year.

[1030] And then I want to work remote.

[1031] And then that job will probably transfer me to a different location.

[1032] Yeah.

[1033] Then that's perfect.

[1034] You're at home for a year.

[1035] You're paying off this debt immediately.

[1036] But then during that year, you're saving up a bunch of money so that when you're ready to strike out on your own, this drop sends you somewhere.

[1037] You can get your own place or maybe it's a place with roommates.

[1038] And so you've really just set yourself up.

[1039] You've got no debt.

[1040] You've got three to six months of expenses and you've got money in order to get a place for yourself.

[1041] And I don't mean buy a place.

[1042] I mean like rent a place, but you know, you have that margin in your life.

[1043] How does that sound?

[1044] That sounds great.

[1045] Thank you guys.

[1046] Yeah.

[1047] And Victoria, I think, you know, long term, I think one of the best things that you can do from as a young person kind of moving into this adulthood and money is be proactive.

[1048] I think one of the worst things that people can do with their money is they become apathetic they're almost reactive to life or they don't really care of that much i mean they're just kind of floating they lose a lot of time and they end up losing a lot of money and so if you are just proactive with your income and you budget every month you know where your money's going you avoid debt like the plague you just say you just draw a hard light in the sand and victoria just is a person that doesn't go into debt i don't go into debt and you can avoid paying interests and you can avoid being owned by the banks and you are your income is completely free.

[1049] You invest early, invest in, you know, and save up for a good down payment on a home later, you know, maybe two, three years down the road.

[1050] And you do that wisely.

[1051] And you're investing early and you do all of these things.

[1052] Over time, Victoria, you're going to be great.

[1053] You're going to do just fine.

[1054] But I think your attitude towards money, it has to be proactive.

[1055] You have to own the fact that you have to be the one in control.

[1056] And you learn this early, Victoria and I still feel like I learn it even in my mid 30s.

[1057] It's kind of this like reality like swoosh that happens for me where I'm like, oh, it's up to me. Yeah.

[1058] Like I, no one's, no one's making my annual doctor visit.

[1059] Like I have to take care of myself.

[1060] Like, and now I have kids and I have to take care of them and no one's advocating for them.

[1061] I have to be the one to speak, you know, so it's just, it's this idea that you really are in charge of your life and that removes a lot of, you know, victim mentality.

[1062] I think that removes a lot of expecting someone else to take care of you.

[1063] and to fix stuff for you, when you just kind of own it, Victoria, from the front end, that's going to do a lot.

[1064] It really is.

[1065] It's going to do a lot for your money.

[1066] So there's a lot of tactical things.

[1067] Yeah, and if you stay on the line, Victoria, Austin will pick up.

[1068] And I would love to give you one of my books, Know Yourself, Know Your Money, which lays out the baby steps within it, but also understanding why you handle money the way you do.

[1069] And you already have tendencies around money, Victoria.

[1070] You already have habits around money that you may not even realize, but understanding your why, why you handle money the way you do, when you can learn that early on, you can create great money habits for the future, kind of what we're talking about on this call.

[1071] So I appreciate you calling in because, man, it's so big.

[1072] And all you, Gen Z years out there, there's a lot of them that have been listening and finding us on TikTok in all the places.

[1073] But for real, you guys, I'm like, you know, when you listen to this show or you follow Ramsey and our advice, you know, we kind of get in the corner of the, old school way of thinking.

[1074] Yeah.

[1075] But I'm telling you day in and day out, this is the way to do it.

[1076] It really is.

[1077] So whether you are Victoria and you're 21 years old about to finish college or you're 61, wherever you are, be proactive in this stuff, you guys, and follow the baby steps and do it because it works.

[1078] It works mathematically.

[1079] It works in so many ways.

[1080] I like what you're saying, Rachel.

[1081] And honestly, it's reminding me earlier, we were in a meeting together.

[1082] And Dr. John Deloney, one of the Ramsey personalities, is.

[1083] was mentioning how kind of the way it culture is and society is definitely wants us to go into kind of hands off mentality.

[1084] And I just can farm this out to them and they'll take care of it and I can take my hands off here and I can automate this and automate that.

[1085] And there is part of that where your mind kind of goes to sleep on having it front of mind.

[1086] Does that make sense?

[1087] Yes.

[1088] And there is part of that that going through life, there has been seasons where I've been like, you want to know what?

[1089] like this might sound stupid but there's been seasons where like you're giving you can automate it right and it's like all right i can set it and forget it and it's not part of my day to day and it's like oh before you look up it's like i've been giving the same amount for two years right right but then there's those moments where it's like you know what i'm going to take that off automation and i'm going to be actively part of this each month yes to where i know okay how does how am i feeling what is my involvement in this even like paying bills um there's certain bills that i'm like You know, I don't want to, like, back in the day, there was like, I don't want to automate that.

[1090] Like, I want to see, I want to feel the money going out.

[1091] I want to know and I want it to register in my brain that I just made a payment.

[1092] Like, there's something to that.

[1093] Being an active participant.

[1094] Yes.

[1095] You're actively participating and you're not just putting it on the shelf.

[1096] You're not just letting someone else handle it.

[1097] Yeah.

[1098] Does that make sense?

[1099] Oh, it's such a good conversation, Rachel.

[1100] Yeah.

[1101] I love it.

[1102] But the proactiveness is huge around this.

[1103] Yeah, I like that.

[1104] Listen, I don't know.

[1105] Do you want to take.

[1106] try to take this next call.

[1107] Can we do it?

[1108] All right, let's do it.

[1109] Jacob in San Francisco.

[1110] What's going on in your world?

[1111] Hello.

[1112] So I have a kind of a situation going on where I just got a $7 ,000 dental bill and I have like a pretty substantial savings.

[1113] I'm pretty young too.

[1114] I'm like 23 years old.

[1115] Okay.

[1116] And my situation is basically this.

[1117] So I have two options.

[1118] Either I could just pay it all at once up front and just get rid of it.

[1119] Yep.

[1120] Or I have a high interest savings account so far.

[1121] It's like 5%.

[1122] And I They offered me to take out, like, an interest -free loan over 28 months.

[1123] Why?

[1124] No. I got to cut you off.

[1125] No, it just paid off.

[1126] Reach into your savings and paid off.

[1127] Okay.

[1128] Let it be done.

[1129] Like, if I had that money sitting over those two years, it would actually like accrue.

[1130] No. It's a $7 ,000 dental bill that you have the cash to pay off.

[1131] Don't complicate it.

[1132] I know.

[1133] We try to finagle numbers like that, Jacob, and try to figure out what works in our favor all of this.

[1134] but the truth is when you don't have a debt hanging over your head, you make different decisions in life.

[1135] There's a freedom there, and that it's not hanging around and you're not trying to play the math game.

[1136] So, yes, pay it off, be done with it, and be grateful, my gosh, that you have the money to do that, Jacob, that's amazing.

[1137] You're diligent and incredible.

[1138] So just, yep, set it, forget it, and then go and invest and make money that way.

[1139] Love it, love it.

[1140] Listen, a dental bill is not going to be the thing that breaks you free financially on the interest.

[1141] I love it.

[1142] This is The Ramsey Show.

[1143] Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships.

[1144] I am your host, Jade Warshaw.

[1145] I am joined by author and host of the Rachel Cruz show, Rachel Cruz.

[1146] We will be taking your calls all hours, so give us a call.

[1147] Phone lines are open.

[1148] The number is triple eight, eight to five, two, two, five.

[1149] We'll talk about your life, your money, relationships and money, kids and money, whatever.

[1150] Whatever it is that is on your mind, we would like to talk about that with you and hopefully help you with that.

[1151] So let's go straight to the phone lines where we have Hunter and Philadelphia, Pennsylvania.

[1152] What's going on?

[1153] Hey, guys.

[1154] How are you doing?

[1155] We're doing good.

[1156] How can we hope?

[1157] Yes, it's more of the question of like, what would you do in my shoes?

[1158] Basically, my wife is in school for 18 more months, and we will be renting until she finishes just based on proximity and commutability and things like that.

[1159] At the end of that, we know we'll stay in the area for like five to seven years.

[1160] We're thinking of buying, but we never wanted to time the market to buy necessarily.

[1161] But we know it will be a short term, you know, five to seven year home.

[1162] We just don't know if maybe like buying with that short term in mind is a smart thing since we know we'll be moving back to Virginia at that point.

[1163] Or if we should just continue renting, keep playing money away for more equity in the house down the road.

[1164] That's interesting.

[1165] where are you guys at financially, Hunter?

[1166] Do you guys have, would you be in a spot in 18 months to be able to buy a home, have a good downpayment, letting the mortgage be no more, like have you guys run the numbers?

[1167] Like, would you be able to do that financially?

[1168] Absolutely.

[1169] Yeah.

[1170] So we definitely have the down payment.

[1171] And, you know, in 18 more months, it'll just be, you know, we could own a more expensive house.

[1172] Not necessarily we're doing that.

[1173] But financially, we are stable in that sense for sure.

[1174] Yeah.

[1175] I mean, I probably would buy.

[1176] If it's going to be five to seven years, I would.

[1177] I would.

[1178] I would.

[1179] If it's going to be five to seven years, I'm.

[1180] I I would.

[1181] I would.

[1182] And the fact of the matter is, like, if you want to make God laugh, tell them your plans.

[1183] Like, that's the kind of way I feel.

[1184] Like, I think it's good to have a plan, but you never know.

[1185] You might get in the area and decide to stay.

[1186] Like, I just feel like there's a lot of factors in a seven -year window.

[1187] And for that reason, I wouldn't rent the entire time.

[1188] Yeah.

[1189] That makes sense.

[1190] Yep.

[1191] Go ahead and buy.

[1192] But again, under making sure, yeah, you're debt -free.

[1193] You got a good down payment, emergency fund.

[1194] All the things.

[1195] Check all those boxes.

[1196] We give you the thumbs up to do it.

[1197] it.

[1198] Love it.

[1199] Because I really do think, you know, when you look over the scope of time with real estate, it's going to go up, right?

[1200] I know there's been downtimes.

[1201] I know all the things, but over the scope of at least five to seven years, you're going to see a return on that.

[1202] And so, and then you can use that as equity when you go buy home and he goes and leaves and goes to Virginia.

[1203] Yeah, I agree.

[1204] Seven years also, it's just a long time to lose out on.

[1205] Yeah, but yes.

[1206] Like not that renting is losing out, but it's just if you don't have to.

[1207] That's right.

[1208] If you have the ability to buy, and you have that time?

[1209] If it was 18 months, I'd say, no, don't have, don't mess with that.

[1210] Yeah, absolutely.

[1211] But five years, I would.

[1212] Very good question.

[1213] Thanks for the question, Hunter.

[1214] Let's go on to Newark, New Jersey, where we're talking to Mike.

[1215] What's going on, Mike?

[1216] Hey, Jane, Rachel, I'll take my call.

[1217] You're welcome.

[1218] How can we help?

[1219] So my wife and I are going to combine our finances as soon as this weekend.

[1220] Nice.

[1221] And we're just trying to figure out how to split our money between either a high -yield savings account or a generic bank savings.

[1222] account when our goal is to save 20 % for a down payment.

[1223] Okay, cool.

[1224] I'm happy that you guys are starting to combine your finances.

[1225] Are you newly married or is this just something you decided to do because you think it's the right thing to do?

[1226] So we're married about a year and we're just finally fully committing into it.

[1227] Awesome.

[1228] So you're interested in buying a house.

[1229] You're saving up for the 20 % down payment.

[1230] Where is the best place to put this money, right?

[1231] Yes.

[1232] I mean, I'd probably put, I'd put it in a high -yield savings account.

[1233] That's what I would do.

[1234] Um, Yeah, you're going to make more interest on a high -yield savings.

[1235] And usually some of the best ones I've found, Mike, Jade, I don't know what you've found, but usually it's like an online bank.

[1236] Yeah, like my husband and I, we have one.

[1237] We use ally bank for, oh, there you go, for our high -yield savings.

[1238] So a traditional savings account, you're not going to make as much interest.

[1239] You may have more flexibility to get money out when needed with that.

[1240] High -yield, you're not able to use it like a standard checking, right?

[1241] There's a limited number of transactions.

[1242] but you don't want that.

[1243] Yeah, and you're not using it for that.

[1244] You're using it to save up for a down payment.

[1245] You're not going to touch the money once it's in.

[1246] So those are the kind of the big, you know, obvious differences in it.

[1247] So yeah, you're, and right now, Mike, I'm like the high yield savings.

[1248] When the interest went up.

[1249] Okay.

[1250] With the fed with the debt, it also went up with the savings.

[1251] And so we did.

[1252] We found some good, some great rates with high yield savings.

[1253] So yeah, that's that's the, uh, the route I would take for sure.

[1254] I love it.

[1255] Does that answer your question?

[1256] So you wouldn't put anything in a generic bank savings account, just put it all on, how are you?

[1257] Yeah, I put it on.

[1258] I put it all there.

[1259] But if you have, Mike, you know, for like an emergency fund and that kind of thing, I would have separate line items within that account to know, hey, this is our emergency funds.

[1260] We're not touching this.

[1261] This is our dump for our down payment.

[1262] So even if you want a two different accounts or within the same account, we have line items in that.

[1263] Yeah, this is not an ad for ally by any means.

[1264] but I do use ally and they have buckets there so you can you could either I mean you could make another account if you wanted to but honestly you can just put them in different buckets yeah and you can see it that way honestly I think with that it depends on your temperament and because some people like there is a stage in my life where I definitely mentally would have done better with a separate account for savings for this versus that yep so whatever you think will work better for you and your wife all right Awesome.

[1265] Yeah.

[1266] I saw Ally have the buckets and that just seemed like the easiest way to do it.

[1267] Yeah.

[1268] And I mean, some people like Marcus, like there's different banks.

[1269] Like people have different preference.

[1270] So don't see this as an ad.

[1271] Like do your research, figure out the one that you like, but definitely I would veer towards an online.

[1272] Yeah.

[1273] Yield savings account.

[1274] Hope that answers your question.

[1275] Rachel, I think there's a lot that you can talk about when it comes when it comes to savings because a lot of people struggle with saving money, whether it's for a on payment, emergency fund, or just in general, they've never built that muscle of savings because it really is a muscle that you build over time.

[1276] And I always, these are, we can go through a couple of tips that I think will help people.

[1277] I definitely think that if you have savings, you need to put it in a separate location like we just talked about.

[1278] Versus a checking.

[1279] Yes.

[1280] Yes.

[1281] It can't be grouped all in there together and you just mentally know like, well, this is my savings.

[1282] Like that's number one.

[1283] You're three to six months.

[1284] I think that.

[1285] I think that.

[1286] you know once you get that to a place keep that separate from any other savings whether it's through buckets or depending on your mentality like we talked about in a completely different location um i think another great way to save like if you're just if it's tough for you that's one thing that i would automate we talked earlier in other segments about not automating savings is something that i would set up like once you kind of know what your budget is it's like all right this automatically comes out of my paycheck the day that i get paid like don't mess around Yeah.

[1287] Don't mess around and, you know, put it for a couple days later because before you know what, that money's going to be gone.

[1288] So that'd be my thing too.

[1289] And thing three, these are not in any particular order, by the way, but you've got a budget for savings.

[1290] Yes.

[1291] You have to know that you have the margin for it and prioritize against it.

[1292] Right.

[1293] That's right.

[1294] Prioritize against it.

[1295] Yeah.

[1296] If you have a, you know, you want to hit a certain amount for a down payment in two years, you have to back out and say, okay, how much do we have to save per month?

[1297] And that's going to affect our budget.

[1298] That's right.

[1299] So you kind of plan it out that way.

[1300] But it is.

[1301] I like the automation factor in it, I think, is really good because it creates the discipline.

[1302] But the budgeting aspect is so key because if you don't budget and you do an automated transfer for savings, and then something comes up before you know, you're pulling that savings right back out.

[1303] And nothing, Rachel, is more frustrating than that wheel of saving and spending.

[1304] Saving and spending.

[1305] So budget for your savings.

[1306] That's so good.

[1307] This is The Ramsey Show.

[1308] You're listening to The Ramsey Show.

[1309] I'm Jade Warshall, your host, joined by your other host.

[1310] host, Rachel Cruz.

[1311] We're taking your calls about life and money.

[1312] So give us a call.

[1313] The number is 88 -825 -5 -2 -2 -25, and we will be here for you.

[1314] It's the new year.

[1315] I'm wondering what your goals are.

[1316] If you're anything like the rest of the population, it's probably one or two things, money or health, right?

[1317] It's like you're on a cleanse, you're on a diet, and you're trying to get this budget in order.

[1318] If that's you, I've got two things for you to consider.

[1319] Number one, we have a wonderful resource coming up here on January 11th.

[1320] It is a break the cycle free live stream.

[1321] All right.

[1322] So you can register for free.

[1323] It's January 11th at 7 p .m. And we're going to give you practical steps on how to get your money on point and in check.

[1324] If you're one of these people who you're like, man, no matter what, I feel like I just can't get ahead.

[1325] I feel like I'm living paycheck to paycheck.

[1326] This really is for you.

[1327] All of us are teaming up and we are just hitting you with a one.

[1328] two punch of money knowledge to get you through the new year and beyond.

[1329] Okay.

[1330] So I want you to sign up and register for that.

[1331] Next thing is in order to get prepped for that, because you're going to get some information you're going to learn about every dollar.

[1332] You're going to learn so much.

[1333] And then after that, I want you to mark your calendar because January 31st, I'm going to be doing a webinar, basically going over again what you learned at the live stream.

[1334] So those are two dates I want you to remember January 11th, January 31st.

[1335] Go January 11th.

[1336] It's free.

[1337] get the, get the knowledge, right?

[1338] Get the game and then come again January 31st and I will re -up you on the knowledge and you'll keep going forward.

[1339] And you need that because, Rachel, goals is not easy.

[1340] Like you have to keep, you have to keep at it.

[1341] Like I posted on social media, I think it was today I posted.

[1342] When you set these goals, right, it's like you're all excited.

[1343] It's January 1st.

[1344] He's like, I write it down.

[1345] I'm like all excited about it.

[1346] And then the resistance starts coming, and you're like, oh, I didn't know it was going to be like that.

[1347] Like, and the thing is, the resistance doesn't, like, if you set a money goal, you're like, all right, this year, I'm paying off my debt.

[1348] Whenever I have extra money, I'm throwing it on my debt.

[1349] And then suddenly it's like your car breaks down.

[1350] Suddenly, like, you know, something happens crazy in the kitchen.

[1351] The blender flies off and the knife flies and it breaks the window.

[1352] Now you got to pay for the window.

[1353] Like, it's like all these things start happening.

[1354] And it's all trying to get you off pace.

[1355] Yes.

[1356] And when that happens, I just, I want to encourage everybody to zoom out for a second.

[1357] because I feel like so many people have hit that wall where it's like, is it going to be worth it?

[1358] Like I told myself, I was going to bring my lunch and it's just, it's such a hassle and you already want to give up.

[1359] You've just got to zoom out for a moment and go, okay, this is resistance.

[1360] And I knew that this was going to happen.

[1361] This is not a bad thing.

[1362] It doesn't mean that I should stop.

[1363] Matter of fact, the way I view it is if you're getting hit with that, it means you're really creating friction.

[1364] And that's good.

[1365] Because if you want change, you cannot change without creating friction.

[1366] in your life, right?

[1367] You're doing something completely different.

[1368] You're going on a new pathway, and there is going to be resistance.

[1369] So embrace that.

[1370] Stop for a moment and go, okay, that's what that was.

[1371] Like, now I know that's what that was.

[1372] I can go forward and don't let it stop you.

[1373] That's my encouragement for the day of now.

[1374] Let's get to the phone lines where we've got Carrie in San Francisco, California.

[1375] Hi, how are you?

[1376] Thank you for taking my call.

[1377] You're welcome.

[1378] Thanks for calling us.

[1379] How can we help?

[1380] Well, essentially, I would like to retire.

[1381] I'm planning.

[1382] on retiring in October.

[1383] I'm a teacher.

[1384] And I'm getting nervous just financially if I'll be able to do it.

[1385] So I just wanted some reassurance.

[1386] I think I'm going to be fine, but I just need a little reassurance.

[1387] Okay.

[1388] So let's kind of look at your numbers here.

[1389] Number one, are you working with any sort of professional, or is it just you looking at your accounts, evaluating it on your own?

[1390] I do have somebody who manages my Roth and IRA, my portfolio.

[1391] And what are they saying to you?

[1392] He says I'm totally fine.

[1393] Okay.

[1394] Well, that's good.

[1395] That gives me a little bit of, but let's kind of, let's make sure you understand it.

[1396] So how much do you have set aside in your nest egg?

[1397] I have 350 right now.

[1398] Okay.

[1399] And what about?

[1400] And then I have, I have 80, well, I have 80 ,000 in a high old.

[1401] yielding savings.

[1402] Okay.

[1403] And that's just because me, I've been stockpiling since I paid off my house.

[1404] Okay.

[1405] And I also have a travel fund.

[1406] Yeah.

[1407] And I have a travel fund.

[1408] That's like it's $30 ,000 and it's another high yielding.

[1409] And that's the one I was planning on, you know, when I want to travel, I could just go into there and get it.

[1410] I love that.

[1411] And so if you were to retire in October, how, what percentage are you pulling off of your nest egg?

[1412] and what is that equal to per year?

[1413] Oh, well, I'm not sure if I'll even have to pull out any.

[1414] I'm assuming I met with the retirement people and I'll be getting about 1 ,800 a month.

[1415] And from that, I also have another 1 ,200 that I get monthly from another retirement through a divorce.

[1416] Okay, so none of that is the 350 ,000 that you talked about.

[1417] no no that's just what i'll be getting from my retirement through work and um yeah that's what i'll be bringing in yeah like if if if that 3 000 is enough for you to live your life and do everything you want to do and you're not i i have no objections your honor yeah yeah i mean okay okay yeah it's exciting it's a big question carry because i don't want to direct you wrong like it's like you yeah you know retiring so i do want to make sure that that you are talking to somebody that's looking at your actual accounts and the historical data of what they've done.

[1418] I mean, like, yeah, they're looking at the whole picture.

[1419] But for you calling us in a two -minute radio.

[1420] Yeah, that's a good point, Rachel, yes.

[1421] Yeah, I mean, it all seems to pan out, Carrie, you've done a really great job and your living expenses.

[1422] You don't have a mortgage.

[1423] Do you have anyone or anything that you're responsible for financially?

[1424] Is it just you?

[1425] No, I don't.

[1426] Okay.

[1427] Yeah.

[1428] So $3 ,000 is enough for you, Carrie.

[1429] plenty of months to month and you have a travel funds over here you got $80 ,000 stack to it yeah uh how much is in that divorce the the one that's paying you $1 ,200 the one from the divorce you said how much is in that what's the nest egg um I just I'm going to get $1 ,200 for life for life okay yeah and then there's the $1 ,800 now are you getting any social security no I will be but it's minimal you know but and I'm and I'm only six and I'll only be 60, so it's not, like, I don't think I can draw on Social Security for quite a while.

[1430] But, yes, there is some available there.

[1431] And I also know I won't be paying into my Roth because that's what my guy told me. He's a security, but you'll also be having $800 that you pay every month for your Roth, you know, that you won't be paying once you retire.

[1432] That's right, because you're not drawing an income, like you're not working anymore.

[1433] Now the $1 ,800 that you're getting, what's that nest egg, or is that continuous as well?

[1434] That's for life as well.

[1435] That's just through my work.

[1436] Is that just a pension as a teacher?

[1437] Yeah.

[1438] Yes, I'm a teacher.

[1439] Okay.

[1440] Yeah.

[1441] That's great, Carrie.

[1442] Yeah, I mean, from right now, yeah, that all maps out.

[1443] Yeah, that's great.

[1444] That's exciting.

[1445] Congratulations.

[1446] Thank you.

[1447] All right, good.

[1448] Oh, I feel a little better.

[1449] Thank you so much.

[1450] feel great you've done wonderfully okay great awesome yes you have a new year happy new year thank you so much for the call you know there's so many people jade that oh they want that they want that story and yeah and here's what i love about carrie too is i'm like she is there's a level of contentment in her did you hear that she's like i have some money that's set aside for travel yeah but i can live on three grand i'm great i'm great and the 350 that she saved up i'm like that's a lot of money to stock away throughout her life for retirement and you know you hear people and they're like oh i have to have x amount you know all of this and i'm like there's just a beauty in listening to carrie as she walks through those numbers and i'm like yeah she's done it she did everything right yes she let them take the money out for her pension but then she continued to put hers away in the raw which is what we teach um i love that she's got the 80k sage which honestly is above and beyond what she might need for an emergency fund but i love that she has it like that's wonderful absolutely And for me, I think the biggest thing, her mortgage is paid off.

[1451] Yes, you didn't have a mortgage.

[1452] No mortgage.

[1453] There's no, like, bills, yeah.

[1454] And that's why she can be like, yeah, $3 ,000.

[1455] I'm good on that.

[1456] Yeah, I'm great.

[1457] I mean, it's awesome.

[1458] That's what people have to challenge yourself.

[1459] And in San Francisco, California.

[1460] I'm like, you know, she's in Northern California.

[1461] Like, as a teacher, y 'all, I mean, did you just hear all of that?

[1462] Like, yeah.

[1463] It's great.

[1464] A teacher in Northern California.

[1465] Like, yeah, I feel like we need to marinate on that for a second, Rachel, because that's such.

[1466] Because I bet with her house, she's close to being an everyday millionaire.

[1467] 100%.

[1468] Yeah.

[1469] Yeah, we didn't even ask her that.

[1470] We should have asked her that, Jane.

[1471] Carrie, we're going to just dream for you.

[1472] She's an everyday millionaire.

[1473] But for those of you listening, start dreaming.

[1474] It's January.

[1475] Start dreaming what would your life be like if one day you paid your mortgage off, right?

[1476] Most of us are paying a couple thousand dollars a month for our mortgage.

[1477] That's the biggest line item.

[1478] How would your life change?

[1479] This is The Ramsey Show.

[1480] You're listening to The Ramsey Show.

[1481] I'm Jade Warshaw.

[1482] This is Rachel Cruz to my right.

[1483] We're taking your calls all afternoon.

[1484] So give us a call.

[1485] The number is triple 8, 825, 5225.

[1486] I'm excited to be here taking your calls in the new year.

[1487] So whatever it is, that's on your mind.

[1488] I know you've got goals.

[1489] I know there's things that you're aspiring to.

[1490] You're probably starting to have those difficult conversations with your spouse.

[1491] You're starting to budget.

[1492] You're starting to take your lunch, all those things.

[1493] It makes you feel some type of way.

[1494] So we're here to help.

[1495] So give us a call.

[1496] We've got Annalise, who's on the phone line in Phoenix, Arizona.

[1497] What's going on, Annalise?

[1498] Hi.

[1499] So my husband and I are dual income, no kids, and we're looking to have kids in like three -ish years.

[1500] And we just bought a house.

[1501] And so we're trying to figure out for the next three years, we know we're going to have more financial flexibility than when we do have kids.

[1502] And so we're trying to figure out because we're young, whether to focus a lot of our attention on chipping away at our mortgage or saving for retirement.

[1503] Since we live mostly off just his income, we have almost all of my income to put somewhere.

[1504] Awesome.

[1505] That's great.

[1506] That is great.

[1507] I think that's a great way to be thinking because it is true when you have kids, life changes, and things do get more expensive.

[1508] And so there comes the question, put the extra money on the mortgage or onto retirement.

[1509] So the answer that I'll give you is just kind of filtered through the framework that we use here at Ramsey Solutions.

[1510] How familiar are you with the baby steps?

[1511] Pretty familiar.

[1512] We have zero debt.

[1513] We have six months of living expenses saved up.

[1514] So we have like all of those, I'm pretty sure we have all the baby steps done.

[1515] Perfect.

[1516] So then it's just really, we're getting to a technicality, right?

[1517] So for all intents and purposes, you're on baby step four, five, and six, right?

[1518] So baby step four for new listeners is putting 15 % into retirement.

[1519] Baby step five is you're putting aside some amount of money that you decide for your kids college and you're putting it in a non -prepaid 529 or ESA account.

[1520] and then baby step six is you're also simultaneously putting extra money on your mortgage.

[1521] Now here's the thing, baby steps four or five and six, if they all apply to you, you do them simultaneously.

[1522] So are you already at the 15 % mark on your investing?

[1523] Yes, my husband put 15 % of his paycheck and I put 20 % of mine.

[1524] Okay, so you want to be at 15 % for your household.

[1525] That's the goal.

[1526] And once you get to 15 % Because remember, we're doing these simultaneously.

[1527] Anything above 15 % at this point, you need to be thinking about baby step five and baby step six.

[1528] Because you are saying, okay, now if you want to wait until you have kids to do baby step five, yeah, that's totally fine.

[1529] I wouldn't put, I would not put money aside for future children that I do not have yet.

[1530] Yes, that's right.

[1531] And then for you, now you're to baby step six.

[1532] So the extra money right now, you're putting on baby step six, which is paying off your home.

[1533] Now, and this is for you and anybody listening, once you pay up, off your home, then you can go ham on the investing.

[1534] Like, you can start investing way beyond 15%.

[1535] That's the beauty of how this plan works is you are going to have that extra money to just get crazy.

[1536] And that's where things like go off the rails.

[1537] So my question with that would be, we're super young.

[1538] I'm 22.

[1539] And so I have heard the advice that investing in your retirement younger is going to do better.

[1540] And since we just got our mortgage, it's probably going to be a little.

[1541] while for us to fully pay it off, would you recommend putting more than 15 % because we're so young or no matter what, 15 % and then pay off the half?

[1542] I would still do it the same way because you're going to be fine.

[1543] You're going to be fine.

[1544] And you're creating diversification, which is really important.

[1545] 15 % number one is so much more than average.

[1546] Like most people invest right up to their match.

[1547] Most people do it while they have debt.

[1548] So the fact that you're debt free, you're at 15%.

[1549] And I'm sure, by the way, if you have a match, the matches.

[1550] not included in the 15%.

[1551] So if you or your husband has some sort of your match, make sure you're still of your own money putting 15%.

[1552] And then, like I said, with this extra money, yeah, you guys are young.

[1553] And that's part of the beauty of this equation for you because not only are you going to grow compound interest over time because you are actively investing, you're going to have your home paid off over time.

[1554] It's just going to offer you so many options because you're going to have wealth on two sides.

[1555] And then once you pay your home off, like I said, you're off to the races.

[1556] And you're just going to be blown away by how this works for you.

[1557] Yeah.

[1558] Because Annalise, let me say this.

[1559] Honolice, just to paint a picture for you.

[1560] Yeah, that 15 % of your income into retirement and then everything else goes to the house is what I would do.

[1561] And because you are so young, you pay it off early.

[1562] And then what's wild is you're going to be one of these people that stands on the debt -free screen stage.

[1563] And you have your house paid off.

[1564] And you guys are in your 30s.

[1565] And then you go in invest like crazy because then you'll move on to baby step seven which is save and be you know or invest and be extremely generous so you will then bump up that 15 % probably with investing and do more if you guys want like you just have so many options but having a paid for a house and investing 15 % like that's the ultimate goal which you guys are working towards which you could have which is just crazy how much you guys make a year I'm just curious um we make roughly combined close to like 88.

[1566] Okay.

[1567] How much is your house?

[1568] Our house, we have 305 on the loan.

[1569] Okay.

[1570] Yeah.

[1571] I love that.

[1572] So yeah, you guys are going to get this paid off and it's going to be great.

[1573] And then you can bump up other investing if you want after that.

[1574] Well, let's kind of, let's kind of reframe this in your mind on a lease because I do think that sometimes people view, okay, I've got my retirement investing and then I've got my house.

[1575] They're both investments.

[1576] Yeah, that's a good point.

[1577] They're both investment vehicles.

[1578] I don't want you to think that a 401k or a Roth IRA investment is more important or a better investment than a home.

[1579] Like there's a reason that real estate is a big choice for people to put their money because the rate on return is very, you can count on it.

[1580] You know what I'm saying?

[1581] We say all the time.

[1582] Like if you, if you're owning a property for three to five years, five years or more, you are going to see a return.

[1583] Like that's what we've seen over time.

[1584] The same way we talk about the S &P 500, we know like over time you can expect, you know, a 10 to 12 percent rate of return annualized over the course of, you know, X amount of years.

[1585] So that's, I think that's really important for people listening to understand.

[1586] These are both great investment vehicles.

[1587] That's why we say do them simultaneously, not do this one first and then reach over here and do that one.

[1588] So that's something worth pointing out.

[1589] Thank you so much for the call.

[1590] I like it.

[1591] Yeah.

[1592] That's a good conversation.

[1593] All right.

[1594] And the younger people are that are calling, it is, it's amazing.

[1595] I'm like, Jay, like, we, I feel like we've had so many calls of young people doing this stuff early, you guys.

[1596] And I'm like, and it's just an encouragement to you listening out there, again, regardless of age, but man, there is something to be said about these principles and doing them in the right order and being diligent about it.

[1597] It just, it proves in your favor, always.

[1598] It will yield in your favor.

[1599] Yeah, but I mean, we do have to call out, like there is that tension between, we know, like she said, like obviously, the longer that you're in the market, compound interest has a longer time to work for you.

[1600] And obviously, the more money you invest, the more money there's there.

[1601] But it is that tension between if you work the plan and do it the correct way, yeah, like you're pushing pause on some things to push play on other things.

[1602] But ultimately, like it all works out together.

[1603] You know, and so many people are worried like, well, if I pay off my debt, then I'm waiting to invest.

[1604] And I know you guys say pause investing while you're paying off debt.

[1605] Jade, I'm going to miss out, you know, three years.

[1606] And I can't stress enough to people listening that you will make it up.

[1607] Like the way this is designed, you will make up for the time.

[1608] As long as you stick to the plan.

[1609] Like if you like lollygag or if you like take this but leave that and you don't, this is a plan to be worked as the plan is written.

[1610] and I can't stress that enough if you say, oh, I'm working the Dave Ramsey plan, but you're just, you know, messing around with this debt and kind of being willy -nilly on it, and it takes you six years.

[1611] Yeah, and you miss out on retirement.

[1612] You're missing out.

[1613] That's right.

[1614] That's right.

[1615] So you've got to walk it the way it goes.

[1616] You know, if you say, oh, like I talked to somebody the other day, they're like, oh, Jedda, I'm working the Ramsey plan.

[1617] I'm not investing yet, but I just really want to get my house paid off.

[1618] Yeah.

[1619] I'm like, listen, I'm glad you want to get your house paid off, but you need to be investing.

[1620] Yes.

[1621] Yes.

[1622] So follow the plan as written.

[1623] if you want the results that we're always talking about.

[1624] Yeah, there's an order.

[1625] Yeah, it's the order for the reason.

[1626] But yeah, like on Elise, who just called, I'm like, she's at the perfect position to do it.

[1627] And it's going to be amazing.

[1628] We're debt and money doesn't have to be the thing that controls you, that you really do control it.

[1629] So being proactive in that sense.

[1630] It's great.

[1631] I love that.

[1632] And then I always like to remind people who think that it's too late or it's too late to start or maybe there's no hope.

[1633] I'm like, listen, look at, look at me right here.

[1634] I didn't start investing until my 30s, and I'm blown away.

[1635] Like, I'm blown away by the numbers I see by just being diligent and working the plan.

[1636] So if you're out there, you feel like you got a late start.

[1637] It's not too late.

[1638] Just keep doing what you know to do.

[1639] And in the right time, you will reap a harvest if you don't give up.

[1640] This is The Ramsey Show.

[1641] You are listening to The Ramsey Show.

[1642] Thank you for listening.

[1643] I am your host, Jade Warshaw, joined by Rachel Cruz.

[1644] We've been taking your calls, and now we've got the scripture.

[1645] and quote of the day.

[1646] James 117 says every good and perfect gift is from above, coming down from the Father of Heavenly Lights, who does not change like shifting shadows.

[1647] Love that one of my favorite verses.

[1648] And our quote of the day, I feel like you should read this, Rachel, because you're a true Swifty.

[1649] I feel like Taylor Swift quote, no matter what happens in life, be good to people.

[1650] Being good to people is a wonderful legacy to leave behind.

[1651] He Swift.

[1652] See, there you go.

[1653] What a, what a a gal what a gal she was uh at the chiefs game handing out hundred dollar bills to the staff and everyone yes that's pretty awesome she like crazy she like tipped insane bonuses to all of her uh yep truck drivers and stuff for her tour and yeah i'm about that way i believe i believe she's generous i you know what i'm going to stay in front of all the world uh i think i need to understand more about taylor so i've never been on the the t swift train oh come on i'll i got to get with the times i'll share my seat with you on the training is it's a it's a fun ride yeah help me get on because i i don't i haven't i don't get it and i need to get it because i feel like i know i think she just speaks what we've all felt in life is that what it is it's her song i think it's her well like her songwriting like she just she sings i should say yes and writes i think just what we all thought i don't know that's good i'm a i'm a i'm a 14 year old at heart what's your favorite what's your favorite t swift song oh gosh jade just hit me with one shoot give me a few notes um yeah oh I'm not going to sing.

[1654] I'm just kidding.

[1655] That's going to be my question.

[1656] The lover album might be my favorite.

[1657] That's going to be my question to all the callers moving forward.

[1658] All right.

[1659] Let's go to Peter and Manchester, New Hampshire.

[1660] What's going on, Peter?

[1661] Hey, thanks for taking the call.

[1662] So I am about $9 ,920 in credit card debt and $19 ,638 in 87 in student loan debt.

[1663] for a combined total of around $30 ,000 plus or minus.

[1664] That's right.

[1665] A little under that.

[1666] And so I was wanting to know how can I get out of debt and then what should I do after I'm out of debt?

[1667] I have no emergency fund.

[1668] So I don't know where to start.

[1669] Good.

[1670] Well, you came to the right place.

[1671] I'm happy that you're here.

[1672] Okay.

[1673] So let's start by getting some particulars.

[1674] How much do you earn every month?

[1675] What do you take home?

[1676] About $874 after taxes.

[1677] I'm a student employee at my university I currently attend.

[1678] Okay.

[1679] What year of college are you in?

[1680] I'm a sophomore.

[1681] Okay.

[1682] So you're in school full -time?

[1683] Yes.

[1684] If I wasn't, I wouldn't be able to stay in the housing.

[1685] And since my parents passed away when I was 11 years old, I'd be homeless on the streets.

[1686] Oh, gosh.

[1687] Oh, gosh, Peter.

[1688] Oh, I'm so sorry.

[1689] That's tough.

[1690] Oh, goodness.

[1691] How old are you now?

[1692] I'm making it.

[1693] I'm 21 years old.

[1694] Wow.

[1695] Way to go.

[1696] Wow.

[1697] So you went through college.

[1698] I just want to make sure I get this.

[1699] Are you still a student there or you're working there and living there?

[1700] You're still a student.

[1701] I'm still a student.

[1702] Okay.

[1703] Sophomore.

[1704] Oh, I'm sorry.

[1705] I hear you.

[1706] So, okay.

[1707] I want to address two sides of this.

[1708] So I get the feeling of, I understand being in college and being a debt because that was me. um however i i don't want you to get too hung up on this because your student loan is technically technically not due yet right it becomes due uh six months after you graduate um at least it used to i think that's still accurate um it's still in so while your student uh my understanding is per FAFSA which it's all all of them are federal loans right so i won't have to go into repayment until six months after I graduated.

[1709] Right.

[1710] So, and I'm guessing they're subsidized, so they're not gaining interest right now.

[1711] Yep.

[1712] I do have two unsubsidized loans with the max interest on both around 5 .38%.

[1713] Okay.

[1714] Yeah, and I know that it sucks that it's accruing interest on the two unsubsidized loans, but I wouldn't let that get to me right now.

[1715] Now your credit cards, you don't want those to go into default.

[1716] So I would work to make sure I'm paying minimum payments on those.

[1717] If you can get a little extra, that's fine.

[1718] But my main focus for you is focusing on school and focusing on graduating without any more debt.

[1719] Is that fair enough?

[1720] Yes.

[1721] And Peter, can I ask what caused all the credit card debt?

[1722] So I needed, I was a little worried I wasn't going to be able to afford college anymore.

[1723] So I kind of panicked and purchased a bunch of emergency supplies in case I ended up on the streets again.

[1724] And so that's the majority of the debt.

[1725] I also purchased a bicycle to get to and from a job site.

[1726] When I was homeless after I left the Marine Corps, after I was medically discharged, I was able to use a bike to go to and from my campsite and my job.

[1727] Okay.

[1728] So I was kind of planning ahead, and I planned too far ahead.

[1729] Okay.

[1730] Which is understandable.

[1731] understandable.

[1732] Yeah, yeah, yeah.

[1733] Totally.

[1734] But yeah, with Jade, what she was saying, though, I think is key.

[1735] We don't want to obviously go deeper into that and we don't want to default in that.

[1736] And so, is there any other time, Peter, that you can look at throughout your week that maybe you could do one more thing on the side to bring in some income?

[1737] Currently, I'm also in the Army ROTC at my college.

[1738] So I just got a medical.

[1739] waiver approved to reenlist or rejoin the military.

[1740] Okay.

[1741] And so in about four months or so, I'll be getting an ROTC stipend in addition to a scholarship that should actually reduce the overall cost of my overall college experience by about half because I'll no longer have to account for room and board.

[1742] So, yeah, it's really good.

[1743] And then in addition to getting the $420 monthly stipend, from the United States Army.

[1744] I'll also be working an additional on -campus job that pays around 17 an hour.

[1745] Okay.

[1746] How many hours?

[1747] For about 20 hours a week.

[1748] And then my current job I work that Nets me after taxes, $874 per month, is a work study job.

[1749] So it is a mandatory required minimum of $12 an hour for a maximum of 20 hours a week.

[1750] Okay, so here's the equation we're trying to solve for.

[1751] I like that you're getting into it.

[1752] You're finding money.

[1753] The equation we've got to solve for is can you pay for tuition and cash?

[1754] How much does it cost?

[1755] Because I don't want you, I mean, you've got $19 ,638 of student loans.

[1756] And my guess is that's because you've gotten student loans for each semester this far.

[1757] So we've got to look at going forward, are you able to, make this work and what does it look like going forward.

[1758] Does that make sense?

[1759] Yep.

[1760] So what, what, what do you need to, how much is school cost?

[1761] So my current semester, I was looking over my bill.

[1762] It's around $25 ,000 per semester.

[1763] 25 ,000 per semester.

[1764] Where are you going to school, Peter?

[1765] I'm going to Southern New Hampshire University.

[1766] Okay.

[1767] Is that a, is it public, private?

[1768] I don't know.

[1769] It's, I believe it's private.

[1770] Okay.

[1771] Private nonprofit, though.

[1772] That feels expensive.

[1773] It's also because I'm an out -of -stater, so I was in D .C., but unfortunately, it was really unsafe for me to continue living in D .C. while I was homeless.

[1774] I was involved.

[1775] I was shocked.

[1776] So I didn't feel safe going to school or living in Washington, D .C. anymore.

[1777] okay and okay um you how old are you again tell me your age again um 21 21 years old okay and what's your degree going to be in it's going to be in justice studies with a minor in sociology i'm going to say something difficult um and it just it just is what it is you're choosing an expensive route here for school you're at a private university and you're at an out of state private university.

[1778] And you still have two and a half years left.

[1779] And you've got two and a half years left.

[1780] And I don't like that for you because with the money that you said, I don't see a pathway for you to pay for this.

[1781] So something's going to have to change.

[1782] And I know that you've suffered a trauma.

[1783] So it's very hard for me to sit here and be the one to say, hey, listen, go back to D .C. I'll be honest with you.

[1784] If you're in D .C., I don't know.

[1785] Like, can you go to any school and can you get into Maryland or can you get into Virginia?

[1786] Does it count?

[1787] Because I'm obviously District of Columbia is a small area.

[1788] So are there, do the surrounding states count at all?

[1789] You need to really look into this and start evaluating your options.

[1790] Is there anything you can do?

[1791] Is it an online school?

[1792] Is there something you can do that you can get that degree, go slowly?

[1793] You cannot go into any more debt.

[1794] That's got to be off the table.

[1795] I know you've been through a lot, but we've got to start thinking about this.

[1796] This is the Ramsey show.

[1797] Hey folks, Dave here.

[1798] You want to hear even more life -changing content from Ramsey?

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