Your Income Is a Key Ingredient to Building Wealth

[0] From the headquarters of Ramsey Solutions, this is The Ramsey Show.

[1] It's where we help you the people.

[2] That's right.

[3] We help you win in your life, specifically in your money, in your work, and in your relationships.

[4] I'm Ken Coleman.

[5] Jade Warshaw joins me this hour of the phone number to jump in because it is your show, America, is AAA 825 -5 -2 -25.

[6] That's AAA 825 -5 -2 -25.

[7] The fabulous Jade Warshaw, ready to go.

[8] Go warmed up.

[9] Did you do voice exercises in the green room?

[10] There she is.

[11] Pitch perfect as always.

[12] She'll take your money questions.

[13] I'll jump in.

[14] And then, hey, you've got some work questions, some mindset stuff.

[15] Hey, I'm struggling here.

[16] I feel like I've got a lid on me professionally, which has affected me financially.

[17] Any of those work -related questions I'll take on.

[18] And Jade Wade's ways in as well.

[19] So let's go to the Big Apples where we start.

[20] Julie is waiting on us.

[21] Julie, how can we help today?

[22] Hi, guys.

[23] How are you?

[24] I'm taking my call.

[25] Yeah, you bet.

[26] So I'm calling.

[27] I've been listening to your podcast like probably over the last year and then since 2024 I've really been like obsessed with it and looking into it every single day.

[28] That's awesome.

[29] I think I need to call it.

[30] So I'm calling because I feel like my husband and I have the baby steps like all out of order.

[31] Okay.

[32] We have debt.

[33] We have credit card debt.

[34] We have car payments.

[35] We have a mortgage.

[36] and we have student loans, but I feel like we have savings to pay off our credit card debt, but I'm just nervous that if we pay it off, we're going to, like, plummet our savings, and then if there is an emergency, it's been hard since we bought our house to build our savings back up.

[37] So I'm just like, I like having that cushion.

[38] We have like about 30, a little over 30 ,000 in our savings.

[39] Okay.

[40] And about 13 ,000 in credit card debt.

[41] Okay.

[42] So I'm like, we could just pay that off right now.

[43] yeah but i'm nervous to just like see it plummet and then we have other payments too yes right yeah there's um you know that that emotional feeling is normal because you're used to seeing a pile of money in your account you log in you're used to seeing it and there's part of that it's giving you a truly a false sense of security right because if you do the math which you don't have to do much you can do the math and see well that 30 000 is not actually your 30 000 it belongs to Capital One and the car company and Sally May or, you know, Nabion or whoever holds your student loan.

[44] And you're just keeping it from them.

[45] That's not actually your money.

[46] And so when you put it that way and you start to realize, listen, the debt that I owe, that's the real, that's the real scary thing.

[47] That's the risk that I've created in my life.

[48] And until I give them the money that I owe them, they're not going to stop coming after me. And so the real question then is, what's scarier to have these companies relentlessly coming after you for money or to just give them the money that you owe them and get on with your life.

[49] Right?

[50] So right.

[51] Yeah.

[52] Back to your point of kind of, I feel like we're doing the baby steps out of order.

[53] That means you know the right order.

[54] And there's, there's a reason for that.

[55] And I want to take a moment and explain the reason.

[56] And security.

[57] Yeah, but I think if you understand the reason underneath it, it'll make a lot more sense.

[58] And this is for anybody listening.

[59] It's not just we don't do it like this because it has a nice ring to it right we do it like this because it truly does work um so when you do the first thing you have the thousand dollars of security you know let's debunk that that is supposed to make you feel a little bit shaky so if you were to take that 30 ,000 and apply it to dead and only or in this case take 29 ,000 apply it to debt and keep a thousand there that is going to make you feel uncomfortable and it should so I want to validate that feeling the hope is that you go okay I can't live like this forever.

[60] Let me tackle Baby Step 2, which is paying off all that debt besides your mortgage.

[61] And so that should like kind of a fire underneath you to like, let's keep going, let's go as quickly as possible.

[62] And the funny thing is, okay, so your credit card payments, how much do you pay every month to credit cards?

[63] So this month we actually put like a large concrete.

[64] It's like through like six grand towards it.

[65] Okay, okay.

[66] Okay, six grand.

[67] How much do you pay towards your car notes every month?

[68] about a thousand for both of our cars okay how much do you pay towards student loans every month a thousand okay so that's eight thousand dollars i don't have any but it's my husband but look look at what i'm doing here in three months in three and a half months you'll have the 30 thousand dollars back once you pay off this debt that's how quickly you'll resave this money because all of that money is going out the door and payments but when you have it back you'll save lightning speed like you'll you'll save so much faster then you'll be able to start investing a full percentage into retirement so there's a way that this works because the thing is if you don't pay off this debt it's going to linger on right and that's the thing like with our interest rate and everything I feel like yeah we're just wasting money and you're not going to be able to do the things that most people say they want to do I'm sure you want to have um I'm sure you want to have a nice retirement I want to I'm sure you if you have kids you're going to want to save for their college you're not going to have the When I mentioned the baby steps are out of order Like we have a retirement for our daughter We have a college savings for her We have we're tithing to our church And I'm also like is it wise to tithe?

[69] Yes When I have debt Yes I know it's more like a spiritual heart thing But well no Yes it is But it's also a principle of giving When you give you receive When you have an open hand Money goes out and money comes in So even if you're not a Christian person And it is a great principle to just live by.

[70] So I would continue to tithe at the minimum 10%, like 10%.

[71] I would continue to do that.

[72] I would pause all other investing for the time being.

[73] Again, the baby steps.

[74] It works for a reason because here's the thing.

[75] Let's pretend.

[76] Let's say that you say, I'm going to keep investing my money.

[77] And I'm going to use this $30 ,000, though, and I'm going to pay off some of this debt.

[78] You're already out of order because you're continuing to investing, to invest, which means you're paying off your debt slower, which means it's going to take you longer to get out of debt.

[79] And if you happen to have a major emergency, do you want to know what people do?

[80] They look at their 401k and they go, oh, well, maybe I can use that money.

[81] As opposed to when you only have a thousand dollars saved, baby, you get what is known as creative and you start coming up with ideas and you do everything you can because you've removed that false safety net from under you and now it's just you and your money.

[82] But when you do it the right way, you're out of debt, you start investing, and then your investments are actually your investments.

[83] You don't touch them.

[84] They stay there.

[85] They grow.

[86] They compound interest like they're supposed to.

[87] And now you're doing things the right way.

[88] So there really is all sorts of structural components in building this house the right way.

[89] Julie, how much time will it take to get out of debt if you do this?

[90] You use this $29 ,000 or whatever the situation.

[91] is Jay's walking you through this.

[92] How much, when are you going to get done?

[93] If you've used the savings now to eliminate debt, what's your payoff date?

[94] Well, I could pay it like today.

[95] That's my point.

[96] I know.

[97] I know.

[98] So then what about the rest of it?

[99] You still have.

[100] Yeah, we still have the other stuff.

[101] How much is the other stuff?

[102] So how long do you anticipate it would take?

[103] You guys are making large chunks, which is good.

[104] But we're running out of time.

[105] Just give me a ballpark.

[106] Okay.

[107] How long before we pay it all off if we liquidate?

[108] the savings.

[109] I would have to sit down and like really do the math.

[110] Well, we know for sure you got $8 ,000 a month.

[111] So my guess is you could probably strike that up to $10 ,000 a month.

[112] We make about 12 ,000 a month.

[113] Okay.

[114] Listen.

[115] So here's the point.

[116] Here's why I'm asking.

[117] You have got to map that out today.

[118] Like as soon as this call is done.

[119] What's the payoff date once we use most of that 30?

[120] And when you get the picture, the vision of how quickly your life changes and you get ahead like Jay just laid out.

[121] This is a no -brainer.

[122] It's nothing to be insecure about.

[123] This is the Ramsey show.

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[130] That's netsuite .com slash Ramsey.

[131] Welcome back to the Ramsey show.

[132] Thrill that you're with us, America.

[133] The phone number to jump in is AAA 8255 -2 -25.

[134] We're going to talk about your money.

[135] We'll talk about your work.

[136] We'll talk about your relationships.

[137] All three of those areas are intricately connected.

[138] And when you're not winning in one, we tend to see that you may not be winning in others.

[139] And if you're in a four -alarm fire in any of those areas, we're here to help as well.

[140] Jade Warshaw joins me. I'm Ken Coleman.

[141] We're Ramsey Personalities.

[142] We are your host today.

[143] AAA 825 -5 -225.

[144] Julian is up next in New York City.

[145] Julian, how can we help?

[146] Hi, thank you for taking my call.

[147] You got.

[148] My question right now, I am around 20 years old.

[149] I am 20 years old in college, and I'm currently making around $20 ,000 to $25 ,000 a month.

[150] And my boss wanted to give me a pretty big bonus for basically hitting a pretty big benchmark in sales around $1 .5 million.

[151] And he wanted to give me a $50 ,000 bonus to put towards any gift.

[152] He didn't just want to give it to me cash, and he wanted to essentially help me buy a new car.

[153] And I'm 20.

[154] I'm in college.

[155] And realistically, financially, it wouldn't make a really big dent for me to put an extra, you know, 10 to 20 into a car and potentially get like a $60 ,000 to $70 ,000 car.

[156] And I was wondering if it wasn't, you know, a stupid financial decision, do you think that would be potentially a good decision for me to make, you know, given that I'm, I'm 20.

[157] And it wouldn't hurt me financially.

[158] You have no debt or any debt at all?

[159] No debt, nothing.

[160] No debt.

[161] No debt.

[162] No debt.

[163] No debt.

[164] Correct.

[165] And he's going to put, he's going to give you 50 towards a car.

[166] And so if you buy a $50 ,000 car, you don't pay a nickel.

[167] If you buy a $70 ,000 car, you pay $20, and you've already got $200 plus in the bank.

[168] Am I hearing all this right?

[169] Yes, exactly.

[170] I know it's out a bit crazy, but what's your, what's your, what's your, what's your, what's your, what's your, why'd you call us to ask us about this?

[171] Well, I was just wondering because I think that I'm relatively mature for my age, and I guess going back to school, I'm taking a semester off, and I'm going back to school in August in the fall, and I was just wondering, you know, given that I've worked so hard for the last few years, I feel that I deserve it, and I'm excited to drive around in a nice car, not have to drive around in the Subaru, but I don't know, I guess other people kind of seeing that.

[172] I don't want to look like the kind of person, like my parents bought me a really nice car, you know what I mean?

[173] I understand what you're saying, but if I I'm in your shoes.

[174] I don't give a crap what anybody thinks about the car I'm driving, especially if it was a gift.

[175] And if it were me, unless I'm missing something, the guy's going to give you 50 ,000 if he will not give it to you as a bonus, he's going, I'm doing it this way, then the rules are the rules.

[176] And you're busting it, you're killing it.

[177] Unless I'm missing something.

[178] But if it were me, I wouldn't get $70 ,000 car.

[179] I'd get a $50 ,000 car and not pay a nickel.

[180] I'd take the free car.

[181] I wouldn't put any extra money into that.

[182] But let me also say, if you can listen to this program, Dave talks about the ratio.

[183] Jade can break that down when we talk about ratio to what you make.

[184] So for you to spend 20 on top of the 50 based on what you make and what you've got in the bank, it's a no -brainer.

[185] So if your concern is I'm worried about what others are going to say because I'm young and I'm driving a nice car around, first of all, I don't give a crap what they think.

[186] And secondly, you've got a legitimate story.

[187] You're not a trust fund baby.

[188] There's nothing of you'd be ashamed of.

[189] You've worked really hard to get to this point where you're making incredible money, young man. You've been frugal.

[190] You have no debt.

[191] Man, I'd say enjoy this bonus.

[192] I have a question, though.

[193] I have a couple questions.

[194] You mentioned going back to school.

[195] What does that mean for your income when you go back to school?

[196] Well, surprisingly, I've actually been able to balance this pretty well with school.

[197] I just want to finish getting the degree I think that it's valuable.

[198] And my parents are very thankful with their pay.

[199] for it.

[200] You're doing this while in school, correct?

[201] Correct.

[202] Yeah, he's making this money while in school.

[203] When you said going back to school in August, it made it seem like you were gone for a while or hadn't finished.

[204] I may take a bit of a pay cup, but realistically, I'll still be able to make a pretty decent amount.

[205] Yeah, you're crushing it.

[206] That's crazy.

[207] Listen, you're 20 years old.

[208] I want to know, what do you sell?

[209] Can you tell us?

[210] Yeah, so I work with influencers online who have very big audiences like anywhere from 200 ,000 to a million followers online.

[211] And I basically help sell and market products to those, to basically their audience, whether it's real estate or make money online coaching, anything like that, fitness coaching.

[212] That's awesome.

[213] And market, yeah.

[214] Yeah, this is a no -brainer.

[215] That's excellent.

[216] This is no -brainer.

[217] Get the car.

[218] Hey, how much of your own money are you going to add with?

[219] it, or are you just going to take the $50 ,000 and get a $50 ,000 car?

[220] I'm thinking if I decide to get a car, I'll just get the car I really want, and if that ends up being $70 ,000, I'll put an extra 20.

[221] If it ends up being $50 ,000, I'll just be smart.

[222] That's great.

[223] And who cares what other haters think?

[224] They're drinking on that haterade.

[225] You worked hard for this.

[226] Yeah, that's fantastic.

[227] I love that story.

[228] You don't get that call very often.

[229] That's why I ask all the questions.

[230] I want to make sure I got all the facts, but that was pretty straightforward.

[231] Way to go, young man. All right, let's go to Andrea in San Antonio, Texas.

[232] Andrea, how can we help?

[233] Hi, thanks for taking my call.

[234] Sure.

[235] What's up?

[236] My husband and I don't know what we should do regarding a house.

[237] We have been trying to sell since last June.

[238] There are three builders in the neighborhood building homes and apartments.

[239] There are several streets of brand new homes for sale.

[240] The builders have their own financing companies.

[241] So on top of having lowered the prices of the new homes for sale, they are also offering lower interest rates to potential buyers.

[242] We don't think this scenario will change in 2024.

[243] The expenses for this home total about $1 ,100 per month.

[244] My husband has been unemployed for seven months now, and I just got a part -time job.

[245] So with my part -time job, I'm guessing, that our income is going to be about $5 ,000 a month starting this month.

[246] Okay.

[247] So we're nervous because we've been digging into our savings for several months now.

[248] My husband is a software engineer, so we thought that he was going to be able to find another job quickly, but it's been seven months and he hasn't found a job.

[249] Help me understand the timeline a little bit better and what caused you to move in the first place.

[250] So you had this house and you moved.

[251] Did you move far away?

[252] Are you in the same state?

[253] Help me understand a little bit more.

[254] We are about 30 minutes from this house.

[255] Okay.

[256] We downsized.

[257] Our kids grew up, left, joined the military.

[258] The house was too big for us.

[259] And you bought another house?

[260] Yes.

[261] Both houses are paid for.

[262] Both houses are paid for?

[263] Yes.

[264] Then why, why did you say, so the 1 ,11, what is that like taxes and insurance?

[265] Yes.

[266] Yes, taxes, insurance, utilities.

[267] So you've got two paid for homes.

[268] You're not able to rent it?

[269] Well, that's the issue with the location.

[270] It is something like a dormitory city.

[271] Okay.

[272] And it has lots of new homes, but traffic is really bad to get there.

[273] We only had two complaints from potential buyers.

[274] One was that there was no bathtub in the master bathroom, and the other was the location.

[275] They thought it was too far and there are no grocery stores.

[276] Yeah, but you said builders are in there building around you right and left?

[277] That means it's a good location.

[278] Lower the price.

[279] Do you have a good real estate agent?

[280] I do.

[281] It's one recommended by Dave.

[282] We think he's really good.

[283] It's the second time we work with him.

[284] We really don't think the problem is the real estate agent.

[285] We think it's the competition.

[286] Yeah, which is why Ken is saying lower the price.

[287] He's not saying take a like a drastic plummet, but go go little by little until you can really pinpoint what the value of this property is.

[288] Let me point out another problem, though, because you're telling me the problem is this and this and that.

[289] I'm seeing what bothers, let me tell you what's bothering me about this situation.

[290] I see someone with two paid for homes, which I think that's great.

[291] You bought two homes in cash.

[292] $1 ,100 shouldn't be breaking your world right now.

[293] And I think it's because you guys' income is so low.

[294] And I know your husband's looking for work.

[295] You guys got to get that income up.

[296] That's the biggest fire that you need to put out right now.

[297] Because when you're earning the right amount of money, suddenly this $1 ,100 on two properties that you own, you're going to start to look at that as a blessing instead of a burden.

[298] And right now it's a burden because your husband is not working full time.

[299] Yeah, this is, he's been seven months.

[300] I don't know what the seven months is.

[301] We're running out of time.

[302] but you don't need a part -time job.

[303] You need two or you need a full -time job until you figure out how to sell this house.

[304] You don't need two houses either.

[305] So you guys are close, but this is just some hustle right now in a couple different areas.

[306] Thanks for the call.

[307] This is The Ransy Show.

[308] We'll be right back.

[309] Hey, when you go against what society thinks is, quote, normal, like avoiding debt, for example, it might seem weird at first, and that is totally okay.

[310] We want you to be weird if that means doing things intention including how you spend your health care dollars.

[311] And one way to be intentional is with Christian health care ministries.

[312] CHM isn't health insurance.

[313] They're a health cost -sharing ministry that's helped hundreds of thousands of families like yours take care of health care costs without sacrificing their freedom.

[314] Find out more and join at CHministries .org slash budget.

[315] That's CHministries .org slash budget.

[316] Welcome back to the Ramsey Show, America, thrilled that you are with us.

[317] It's where we help you win in your money and your work and in your relationships.

[318] I'm Ken Coleman.

[319] Jade Warshaugh joins me this hour.

[320] The phone number is 3 ,8 -825 -2 -25, and Jade across the studio, through the glass, on the debt -free stage.

[321] In the lobby are some folks, and that means we've got a debt -free screen coming your way.

[322] Gary and Melissa, welcome.

[323] Thanks, thanks.

[324] All right.

[325] Where are you guys from?

[326] from Bell Point, Minnesota.

[327] Bell Point, Minnesota.

[328] Is that near Minneapolis?

[329] Just south Minneapolis.

[330] Okay, good.

[331] Boy, are you just excited to see the sun this time of year?

[332] Yep.

[333] There it is.

[334] All right, so all this way to do a debt -free scream.

[335] Very exciting.

[336] So let's hear the numbers.

[337] How much debt did you pay off?

[338] And how long?

[339] We paid up $165 ,000 over 47 months.

[340] All right.

[341] Wow.

[342] And what was your range of income?

[343] We started about a 160 and ended at about 200.

[344] Oh, what led to the bump and pay?

[345] We just leaned into our careers.

[346] We both earned promotions and stuck to it.

[347] What do you mean by promotions?

[348] They were, he moved from a factory position to a safety manager, and I just kind of took different roles at my current company.

[349] And what are you doing?

[350] I'm a client relationship manager.

[351] Okay, fantastic.

[352] That is awesome.

[353] All right.

[354] What was all this debt?

[355] What did the 165 get comprised of?

[356] By the time we finally got down to just writing everything out, we had a helock that we had been leaning on we had a car and then we had a credit card that we were just kind of paying off every month so that was probably the smallest and easiest one to pay off okay so pretty good size helock yeah it was about 40 ,000 yeah we used it to remodel our basement and then kind of kept it and kept it going okay all right so tell us 47 months ago what happens what was the catalytic moment to lead you on this journey yeah so he was going back to school it was his last semester and we had found we were kind of we were trying to cash flow it but we'd get a little short so we'd pull a little bit out of the he lock we were getting kind of sloppy and as last semester came up and the the tuition payment was going to be doing we finally said this is it we're doing it we had about two and a half months before that was due and we did it and that was kind of our our biggest victory as we got started that's awesome so you're funding education out of the heat lock a little bit yeah cash flowing it but then we were kind of filling the gas We were just being sloppy.

[357] There was no reason for it.

[358] So what was kind of like, you hit the moment of like, listen, we're not going to do this anymore.

[359] We're going to start paying cash.

[360] What, how did you find Ramsey?

[361] Like, how did you find like this is the way we're going to do it going forward?

[362] Yeah.

[363] We knew about it before that.

[364] We just weren't following it.

[365] We kind of thought we were doing good on our on our path.

[366] You know, we were kind of budgeting.

[367] But then it was just like just tired of the revolving debts.

[368] Like this year it was a HELOC.

[369] A couple years before it was a 401K loan.

[370] It just kind of things, we were just, it was a. shell game.

[371] We were just kind of moving the debt around and just got tiring.

[372] It does get tiring.

[373] So you're working the baby steps.

[374] You're getting on a budget.

[375] Is this you guys picking up extra work?

[376] Or is this like, listen, we're just tightening up on the budget.

[377] We're just getting very clean on what we're doing.

[378] Tell us about that.

[379] Yeah, it was pretty much just us tightening it up as much as we could, cutting out any unnecessary expenses.

[380] We didn't have any side hustles, but we tried to do more experience -based activities with the kids.

[381] You know, we do a lot of camping, going up to the cabin, stuff like that.

[382] So just try to cut out those unnecessary expenses.

[383] Do you do the ice fishing in Minnesota?

[384] Do you guys do that?

[385] We do.

[386] And I guess beer fishing is probably more than ice fishing.

[387] I don't want to go down the rabbit hole for the rest of the people who don't care.

[388] But you're talking about camping all that.

[389] And I heard about how you do the ice fishing.

[390] It's like a whole thing.

[391] It's like a whole experience.

[392] Everybody goes out and all that jazz.

[393] it's fun.

[394] No, I don't think it is.

[395] I'll be honest.

[396] I heard it described and I didn't think it was fun at all.

[397] But much, much love to you on that.

[398] All right, so let's talk about this.

[399] Was there a beginning point that you guys said, okay, we'd heard a little bit about this ramsie stuff.

[400] Now we're going to do it.

[401] Was it hard or was it we were on the same page?

[402] What was the beginning of that journey like when you finally said, all right, we're committing?

[403] I mean, was it hard for you or did you just roll right through it?

[404] It was a little bit of getting on the same page.

[405] We started with that first goal of getting that last tuition payment, and then from there it was adopting the budget, which I wrote out the budget on the nerd.

[406] Took him a little bit to get into the budget.

[407] But once we started rolling, then we were both fully bought in.

[408] Yeah, I was re -lucklinged at first.

[409] It was the idea of getting on that budget was a little rough.

[410] But once you saw it start to really work, that's when I brought bought in all the way.

[411] So relate to that a little bit because I know a lot of people dislike budgeting, right?

[412] They hear the word budget.

[413] They think it's a punishment.

[414] They think it's something that's holding them back.

[415] What changed that for you?

[416] Because I love talking to people who don't like budgeting and changing their minds.

[417] So the one thing that was neat is Melissa printed out this kind of like detress, debt, tetris.

[418] Uh -huh.

[419] You know, like all the little pieces equal to a certain amount of money.

[420] And we had that sitting on our refrigerator.

[421] And then every time we were paying off.

[422] any amounts.

[423] Lissa was really good at filling in those spaces.

[424] I like to fill it in.

[425] So you like to feel the milestone.

[426] Like you want to feel the milestone.

[427] You're celebrating.

[428] It's kind of a fun process.

[429] And it was a way to see that work.

[430] And we did the same thing with our house where we printed off a picture of like balloons holding up our house.

[431] And each one was a certain dollar amount.

[432] Now, wait a minute.

[433] Did you pay the house off?

[434] We did.

[435] What?

[436] Oh, you didn't tell us that.

[437] Wait a second.

[438] I was digging.

[439] That's like 160.

[440] I was trying to figure out how big was that credit card?

[441] You paid your house off?

[442] Wow.

[443] Okay, okay, okay.

[444] That makes a little more sense.

[445] Yes, we just got into it.

[446] Guys, I need you to shout that from the rooftops.

[447] Yeah, you guys are like, oh, hum.

[448] Right now, who are your biggest cheerleaders on the way?

[449] I would say we've got some family that was walking the journey along with us, and then my parents, we just like to talk money.

[450] You know, there's more that's caught than taught, and it was those conversations that just kind of came.

[451] kept us focused and motivated.

[452] Wow.

[453] That's awesome.

[454] So what's next?

[455] You got to pay for a home, no debt, life is good.

[456] What do you do?

[457] What do you do to celebrate?

[458] And don't say ice fishing.

[459] Yeah.

[460] Well, we came here.

[461] Okay.

[462] And then we've got some fun projects for the house.

[463] Now that it's all done, we've kind of, it's time to have some fun there.

[464] Yeah.

[465] And you don't have to take out of heat lock to do it.

[466] That's the best part.

[467] Speed of cash.

[468] That's so fun.

[469] All right.

[470] I see the kiddos over there.

[471] Let's bring them up.

[472] and then we're going to talk about them for a second.

[473] We've got, tell us who they are and the ages.

[474] Yeah, we've got Charlotte is 13, Kelvin is 11, and Caleb is 7.

[475] Okay, and so how quickly did you bring them into this journey, and then how involved were they in the conversations around this?

[476] Because you just said, Melissa, that you and your family talk about money, I'm guessing these kiddos have a pretty good idea about what we're about to do, yeah?

[477] Yeah, oh, yeah, they do.

[478] They listen to the podcast with us a lot of the time.

[479] we have the game at home we played that a few times you know our debt trackers were up on the fridge so they saw it the same as we did so it was really a family journey they knew kind of what the goal was and why we did things the way we did okay and no griping no complaining they were pretty good soldiers no they're pretty good that's awesome all right well this is really excited well listen before we do the screen I want to let you know we're also going to give you some gifts here one is Dave total money makeover.

[480] That's for you to give to someone else because you guys have actually done this.

[481] And then Baby Steps Millioners, Dave's latest book, and that's where you guys are headed probably pretty quickly with the income you guys have.

[482] So those are our gift to you.

[483] All right, let's do this.

[484] Is the team ready?

[485] The kiddos have they been practicing?

[486] They're old enough to, I've got to hear you guys.

[487] I don't want to hear all those different tones coming out.

[488] Let's do this thing.

[489] We've got Gary, Melissa, Charlotte, Kelvin, and Caleb, all from the Minneapolis area.

[490] paid off $165 ,000 in 47 months, starting out making 160 and ending at 200 ,000.

[491] Let's go team.

[492] Let's hear your debt -free scream.

[493] Three, two, one, we're dead free.

[494] I heard them all.

[495] I heard them all.

[496] Did you?

[497] I heard every voice.

[498] You're the professional musician.

[499] I picked up all three voices.

[500] I don't know what you call right.

[501] I heard all of them.

[502] There was no harmony, but I heard all three.

[503] Well, you're tough.

[504] You're a tough one.

[505] It's like a judge from American Idol.

[506] That's right.

[507] I would never want to do that in front of you.

[508] But this is a great example of how a family's tree, as Dave has said, for decades, changes.

[509] So very, very cool.

[510] True that.

[511] Awesome stuff.

[512] All right.

[513] Don't go anywhere.

[514] We've got to take a quick break.

[515] Jade Warshaw, Ken Coleman, with you.

[516] This is the Ramsey show.

[517] We'll be right back.

[518] 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.

[519] Yeah.

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

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

[522] When you have to think through how am I going to pay my bills in the middle next week.

[523] Yeah.

[524] In the middle of all that grief.

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

[526] It's terrible.

[527] 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.

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

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

[530] It doesn't cost much.

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

[532] 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.

[533] The cost of stinking pizza.

[534] To get a free quote, call 800 -356 -42 -82.

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

[536] Welcome back to The Ramsey Show.

[537] I'm Ken Coleman.

[538] Jade Warshot joins me the phone number for you to.

[539] jump in is AAA 825 -2 -2 -2 -5 -2 -5 -2 -5 -2 -5.

[540] We'll take your work questions, your money questions today.

[541] And don't forget, your income is your greatest wealth -building tool.

[542] And now more than ever, I'm telling you, if you're not making what you want to make, the opportunities are there.

[543] We want to help you spend that money wisely as well.

[544] 88 -825 -5 -2 -25.

[545] Let's go to Oklahoma City, Oklahoma, and that's where Jacob is.

[546] How Can we help?

[547] Hey, guys.

[548] Thanks for taking my call.

[549] Sure.

[550] What's up?

[551] So me and my fiancé are about to be out of pharmacy school in May, and it's about to be a huge 180 for making pretty much, you know, little to no money as interns, and we're about to be pharmacists.

[552] Nice.

[553] So I just don't really know where to start, I guess.

[554] I understand a little bit about budgeting and, you know, understanding where my money's going, but I just don't know 100 % where I put my money while we're saving for things.

[555] you know, getting married and, uh, what's your, what's your, what's your income's going to be individually?

[556] Give us those numbers, roughly.

[557] Individually, I expect either one of us to make 100 to 120 a year.

[558] I would say starting out would be pretty, pretty reasonable.

[559] When do you get married?

[560] Um, so we've thought about doing it this summer, but with getting license and the big test and everything, I think we're going to push it to fall, but really we want to get married, you know, as quick as possible, but not being ridiculous, you know.

[561] Any debt coming out of school?

[562] Yes.

[563] So I have about 55 ,000 in student loans, and she has about 80, so 135 total.

[564] And are you guys planning to live together?

[565] We are.

[566] We are already living together, yeah.

[567] Uh -huh, uh -huh.

[568] What other debt do you have besides the student loans?

[569] She has about, I think, 5 ,000 left on a car.

[570] Okay.

[571] A 2013 Jeddah, and then I have obviously about $2 ,500 in a ring.

[572] $2 ,500 in a ring, okay?

[573] Anything else?

[574] $2 ,500 to ring, yeah.

[575] That is all the debt that we have.

[576] Okay.

[577] So you're living together.

[578] You're not combining your money, though, right?

[579] I just want to be sure.

[580] So that's the thing.

[581] I mean, we are going to combine our money when we're married, but obviously day one, when we collect a paycheck, we will not be together.

[582] Right.

[583] I guess in a bank account, you know.

[584] Right.

[585] Okay.

[586] Here's just, this is me being your big sister for a moment.

[587] uh don't postpone the wedding out of the comfort of your living together and you're already kind of do you're doing life marriage in your case is just the piece of paper and i don't want the comfort of that to cause you to push that date even further because that piece of paper is really important for you guys protection wise so just a little note there um so you're going to be in when you graduate you're going to be making upwards of 200 to 240 000 combined uh and you guys probably won't get married till the fall.

[588] So the question is who's paying for the wedding and how much do you need to save up?

[589] That's the first question.

[590] I mean, that's a great question.

[591] And I will say it's pretty early on.

[592] I proposed like three days ago on Friday.

[593] Oh, congratulations.

[594] Okay, that's cool.

[595] Yeah, so I'm coming down from that high and I'm trying to think about all this stuff.

[596] And this stuff is obviously pile on top of me. You know, those type of questions.

[597] I think I am obviously going to be paying for the wedding.

[598] I don't really know.

[599] I've heard tradition that the father's supposed to.

[600] you know, pay, but when I shook his hand and, like, you know, talk to him and got her blessing, I never even thought about that stuff.

[601] I was fully thinking that I'm going to pay for this wedding, you know.

[602] Whoa, whoa, whoa, whoa, whoa, whoa.

[603] Okay, here's a deal.

[604] Don't assume that.

[605] Let her bring it up to Pops.

[606] Right.

[607] You're not supposed to talk to him about that anyway.

[608] You didn't do anything wrong.

[609] Just a little side note.

[610] You ask for his daughter's handed marriage, not what he's going to pay for a wedding.

[611] Yeah, let her find out.

[612] Yeah, let her dig under that one for sure.

[613] but but jade's right that's a pretty big checklist item to get yeah i think that that's really important to find out and here's the thing regardless of what they're going to add you should kind of just decide on you y 'all you two together get together and say listen what are we willing to spend uh fiancee what can you chip in and husband to be what will you chip in and that way you kind of at the very least you can know your own numbers um now let's deal with this debt because you've both got more than half a year to make some serious headway on paying off your debt.

[614] Are you earning anything while you're finishing up school?

[615] I would say the bare minimum just to get to get there.

[616] We're going to be, you know, skipping barely along.

[617] Okay.

[618] And so really not until...

[619] The pharmacy is an unpatient.

[620] Go ahead.

[621] I'm sorry?

[622] I was going to say really not until May you won't have much, even to knock out the ring or the car, $2 ,000, $5 ,000?

[623] Right.

[624] Just because it's an unpaid internship.

[625] in the last year of your pharmacy school.

[626] And really the weekend pay, you know, we make $50 to, you know, $150 a weekend, just paying groceries pretty much right now.

[627] We're in a lucky situation that we're staying in a place that my grandpa owns right now, but we're just staying in a little apartment, so.

[628] Okay.

[629] Okay.

[630] So when May comes, you're hitting the ground hard, you're saving up for this wedding.

[631] If there's anything extra, you're paying off your smallest debt, which is the ring, and she's paying off her smallest debt, which is the car.

[632] It'd be great if you guys were able to get into it.

[633] I mean, with that salary, it's possible that you can both get into this marriage and both all of you.

[634] You both only have your student loans to go.

[635] So that's what I'd aim for.

[636] And of course, like Ken said, we're having that conversation with the dad, not you, but she is, about whether they're contributing or not to the wedding.

[637] And how familiar are you with our baby steps, Jacob?

[638] I am not familiar.

[639] You know, I hear I need to get on some stuff like that.

[640] It's all good, brother.

[641] We're going to help you out.

[642] So let me just, Jay and I walk you through this really quick.

[643] So Baby Step 1 is to get $1 ,000 in a savings account.

[644] It's your rainy day.

[645] If something happens, it's only $1 ,000, it's low on purpose.

[646] That means that as soon as you guys get out of school or anything beyond your basic payments and minimum payments, you both need to establish the $1 ,000.

[647] You got it?

[648] And then you take on your baby step two is to take on your individual debts, smallest to largest, okay?

[649] Okay.

[650] Baby step three is, once you've paid off all debt, is to then accumulate three to six months of your living expenses.

[651] And baby step four is now you're going to contribute 15.

[652] You're saving 15 % of your income to retirement.

[653] Baby step five is your funding kids college, six pay off the house, seven live and give like no one else.

[654] Okay.

[655] None of those are relevant to you right now.

[656] We're going to give you the program.

[657] We're going to get you all connected here so that you guys can go through FPU on us.

[658] That's our wedding gift.

[659] Are you okay with that, Jay?

[660] I love it.

[661] But that's where you got to be right now.

[662] I mean, right out of the gate, Jade, they got to each individually tackle this until we come together, right?

[663] Let me tell you something.

[664] I'm not opposed, and this is what I would do, because you guys are going to start, you're going to start making money in May. WWJD.

[665] I need you.

[666] What I would do, I would secretly go to the courthouse and get a marriage certificate and be married on paper.

[667] And I would combine and start hitting this debt snowball in May instead of having to wait until you guys get married in the fall.

[668] And then in the fall, you just have a celebration and it's a party.

[669] But I'm like, y 'all been living together.

[670] You may as well get married.

[671] I like this.

[672] I'm going deeper.

[673] Who's on the list of the no?

[674] I think they just know.

[675] Jacob, what do you think about?

[676] This is a rather radical suggestion.

[677] This is radical.

[678] I like it, by the way.

[679] Jacob?

[680] I mean, yeah, I don't even think about that.

[681] I didn't think about that.

[682] That's why you call here.

[683] It's been three days.

[684] 100%.

[685] And by the way, that's WWJD.

[686] That's what would Jade do.

[687] Yes.

[688] Doesn't mean you have to, but I like it.

[689] The party is for the people.

[690] The paper is for.

[691] What does it allow them to do immediately?

[692] They can combine their finances and in a safe way under the cover of the law of matrimony.

[693] Jacob, what do you think your fiancé would say about this idea?

[694] Honestly, we feel, I mean, if I'm going to be honest, we feel 100 % like invested in each other.

[695] We feel like we feel like we're not lawfully married, but we feel like we're going to, we know we're going to spend our lives together.

[696] Listen, everybody thinks they're going to spend their life together.

[697] Nobody gets married and goes, I'm going to spend a couple of years with you and then I'm a peace out.

[698] No one does that.

[699] So I'm not saying that to be negative, but I am saying that to be a realist in that there is true protection under the law for those who are married.

[700] So that's why we always just suggest people do it as quickly as possible because you never ever know what's going to take place.

[701] No one ever says, yes, that was the plan all along was to get married and then we break up or to get married and then, you know, I'm not going to going to even say anything negative like that because I don't I don't believe that that's going to happen but you have to plan and be smart as though you don't know what will happen because you don't so so we need to do this shouldn't we also give them every dollar you're the every dollar queen what can we do we're giving away Dave's stuff okay I feel I feel very generous as the wedding gift we give him financial peace university sure and that or like that ramsie plus bundle that includes the every dollar I think you get several months of every dollar You get Financial Peace University.

[702] The Ramsey Plus bundle has all these wonderful coaching and so many good things in it.

[703] Jacob, it's our gift to you, buddy.

[704] You guys use everything we're giving you, begin to have the conversation now about all of this and understand the baby steps.

[705] They're going to guide you really well.

[706] Great hour, Jade.

[707] This is The Ramsey Show.

[708] Live from the headquarters of Ramsey Solutions, this is the Ramsey Show.

[709] It's where we help you win in your money, in your work, and in your relationships.

[710] Alongside the fabulous, the incomparable, Jade Warshaw, I'm Ken Coleman.

[711] Welcome aboard this hour.

[712] We're here to coach you up.

[713] We're going to have some fun.

[714] We will shoot you straight along the way.

[715] The number to jump in is AAA 825 -2 -25 -2 -2 -5 -2 -5 -2 -5 -2 -5.

[716] Kevin in Renovada starts this hour off.

[717] Kevin!

[718] Hi, thanks for taking my call.

[719] What's going on?

[720] What's going on?

[721] He didn't quite get that cue from home alone there.

[722] I got it.

[723] Oh, got it.

[724] Right over the head.

[725] That's all right, my man. How can we help you?

[726] So I am just recently found you guys.

[727] So we are just kind of starting our journey, I guess you could call it.

[728] And the main concern we have is retirement.

[729] The only retirement we have as of right now is in a LERP, a life insurance to retirement plan.

[730] and I watched a video last night from you guys that basically was talking about infinite banking and it sounded similar to what we have going and that it was a dumb idea.

[731] So I thought I would call and get some more information about it, see what you thought.

[732] Oh, my goodness.

[733] Okay, so I'm just assuming all the other things are in place.

[734] I'm assuming that you don't have debt.

[735] I'm assuming that you've got three to six months saved before we've started.

[736] whatever this path is it's not a good path but can i just make that assumption uh yes yeah we don't have any debt and we do have six months worth of cash just happened to have it i didn't know those were baby steps but now i do so that's pretty sweet um but yeah yep so how long have you been doing this about six years we signed up for us about six years ago right when my first born uh was born okay and so what did you what did you put in to start and how has it grown we i don't think we put anything we've just been paying monthly payments the cash value of it right now is 18k and we pay 400 a month so right now we're putting in 4 ,800 a year and you've been doing that for six years yes okay um i'm just gonna pull this up because i love doing this so let's pretend let's see i'm pulling up an investment calculator because what i want to want you to see is that this is a terrible investment.

[737] Fair enough?

[738] Yeah, absolutely.

[739] Because I'm just trying to understand.

[740] Give me one second.

[741] Ken, help.

[742] You'll tell a joke.

[743] You keep the conversation going.

[744] So a preacher and a rabbi walk into a bar.

[745] And, no, I'm kidding.

[746] So here's the deal.

[747] She's going to pull up the numbers.

[748] You saw the video.

[749] Did you understand why we think it's a bad idea?

[750] Yes.

[751] I think so.

[752] And again, is infinite banking and these, are they the same thing?

[753] It's very similar in the idea.

[754] Similar concepts.

[755] Yeah.

[756] Philosophy is the same.

[757] At the end of the day, insurance is insurance and retirement is retirement.

[758] You shouldn't be combining the two because they're not intended to do the same thing.

[759] Insurance is intended to remove risk that you can't handle yourself.

[760] It's not intended to make you rich or wealthy.

[761] It's intended to replace income for people who were dependent on your income of something were to happen to you.

[762] It's not there to be what builds you wealth.

[763] And I'm about to prove that here.

[764] So you said that you've been investing $400 every month for six years.

[765] That's so much.

[766] Yeah, the first few years were $300 a month.

[767] And then it stepped up.

[768] So I think the first three were $300 a month.

[769] Okay.

[770] Equing $3 ,600 a month or a year, excuse me. and then 4 ,800 for the past, you know.

[771] Sure.

[772] And your cash value that you've retained from that is 18 ,000, which, by the way, dies if you die.

[773] You do not retain cash value in these situations.

[774] So you've gotten 18 ,000 out of this.

[775] If you had just taken that money, that $400 a month and invested it in good growth stock mutual funds, heck, if you had just invested it in the S &P 500 in a just basic index fund that has a normal annualized rate of return of maybe 8%, 10 % if you're doing well in mutual funds, you would have had $40 ,000 and it would have been all yours and that's really the end of that that for me there's a lot of you know ends and outs to that conversation but just simplifying it that's the most staggering piece of information that you're going to receive from this is the fact that whatever growth you've accumulated is going to die with you how old are you I want to do one more thing I'm I'm teeing you up Jade because you're ready to punch the numbers listen I made my argument that was how old are you No, no, this is going to be more fun.

[776] You're how old?

[777] Okay.

[778] So, please 36, do 400 a month between age 36 to, let's call it 66.

[779] So 30 years.

[780] I just want you to see, Kevin, why we really prefer this type of investing.

[781] And I'm putting this at 8 %, okay?

[782] Like, you can count on that.

[783] The S &P 500, you can count on 10%.

[784] So that puts you in 30 years, if you just invested $400 a month at 8%, starting with nothing that puts you out almost six hundred thousand dollars okay yeah and that's what the projections are you know that's what we're supposed to be cashing out or have for retirement at retirement but you're not on pace at all you're you're a grossly off pace okay which we just proved with i mean we just forecasted exactly what you did the six years and it's you're not even close not to mention you more it worked not to make mention that the benefit, you don't keep the cash value.

[785] If something happened to you today, that cash value is gone.

[786] So what I would tell you to do is I'd say, all right, $400 a month, stop it today.

[787] If you can cash out of it, I'd get out of it instantly.

[788] And then I would say, from now on, I'm taking 15 % of my gross monthly income and I'm investing it in good growth stock mutual funds.

[789] And what we teach here is a mix of four growth, growth, and income, aggressive growth in international.

[790] And you could do that.

[791] Listen, if you just said, hey, I don't care about that.

[792] I would even be happy if you just invested 15 % into index funds.

[793] Anything but this is basically what I'm telling you.

[794] Okay.

[795] Because rate of return wise, you're going to far outpace this.

[796] And if you're like, let me just try to play through a scenario that I think people care about because I know people like to borrow against this money and blah, blah, blah.

[797] I would say invest that money into retirement.

[798] But if you're like, listen, I want access to it and I want to invest my investments or something like that, you put in a brokerage account to where you can get to it.

[799] All I'm saying is anything that you're doing, anything that I'm saying is better than what you're doing.

[800] What you're doing is probably the worst possible way to invest your money in an insurance product.

[801] And so, like I said, I would - The whole idea was to just recoup some of that money.

[802] money but yeah term life insurance i would i would get out of this policy i'd get term life in place first and then i'd get out of this policy you know pick up a 20 year term it's so cheap and you're going to be covered and remember the whole point of this ultimately is that we're self -insuring and so if you're walking your the baby steps as we teach by the time you're 50 or 60 you will have accumulated so much wealth because you're going to be investing from this point on 15 % into retirement you're not even going to need life insurance because you're not even going to need life because at that point, you can assume the risk.

[803] Because remember, the whole point of that was to cover the risk.

[804] Now, you'll be wealthy enough to assume that risk on yourself.

[805] And so this is how this works.

[806] This is what wealthy people do.

[807] Thanks for the call, Kevin.

[808] Trust us.

[809] You don't want to invest in insurance.

[810] Just think about that sentence.

[811] Does that make any sense?

[812] If it does, this is not the show for you.

[813] This is the reality show.

[814] Buying your first home is a big deal and sets the stage for your financial success.

[815] So, work with a mortgage advisor you trust, not just some.

[816] random website.

[817] Churchill Mortgage is Ramsey trusted because they help you avoid hidden traps and expertly guide you through every step.

[818] Learn more at Churchillmortgage .com.

[819] This is a paid advertisement.

[820] An MLS ID 1591 and MLS Consumer Access .org.

[821] Equal housing lender.

[822] 1749, Mallory Lane, Suite 100.

[823] Brentwood, Tennessee, 37027.

[824] Welcome back to the Ramsey show.

[825] I'm Ken Coleman.

[826] Jade Warshaw joins me. We're here for you, America.

[827] 8 -8 -25 -5 -2 -25.

[828] If you're new to the program, we take your money questions, we take your work -related questions, we take your relationship questions, because they kind of all blend together.

[829] In fact, it's rare that we take a call like that where there's not some work component, some relationship component.

[830] So we're here for you, America, AAA 825 -5 -2 -2 -5.

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[833] There are a lot of things you need to remember.

[834] when the weather gets cold, thankfully Neighborly has a free winter maintenance checklist that can help save you time and hassle.

[835] And a side note, if you're a moron like me, their maintenance checklist, Jade does save me thousands of dollars because they just do basic reminders to things that I don't even know about.

[836] So it's huge.

[837] Check it out at neighborly .com slash Ramsey.

[838] That's neighborly .com slash Ramsey.

[839] Today's question comes from Dalton in California.

[840] my current salary is based on pandemic consulting salaries.

[841] So if my contract is not renewed, I would likely be earning $10 to $30 less per hour than I make now.

[842] Is stability and benefits of a job of a full -time job worth the potential $50 ,000 pay cut?

[843] Probably not.

[844] I'm going to say 99 .9 % of the time not.

[845] And the reason I say that, Dalton, is because stability is the wrong word to lean on here in the first place.

[846] This is the very job where you may be taking a $10 to $30 an hour pay cut.

[847] I don't consider that stable.

[848] We're talking about a wobbly table at best.

[849] At least one of those legs is wobbling if you're potentially going to lose that kind of income.

[850] Secondly, and I've said this a million times, benefits play to our safety gland.

[851] Obviously, everybody needs and health insurance is obviously a tremendous value.

[852] However, when you start comparing insurance plans, I would always take the better job, meaning better pay, better environment, I enjoy the work, and I've got a ladder for growth, which means financial growth.

[853] I'm going to take that better opportunity over the better health care plan and whatever else the benefits are.

[854] I mean, Yeah, that makes sense.

[855] It's just, usually it's just not a huge difference.

[856] So I never give anybody advice to take a job on benefit packages alone because trust me, that's going to wear off pretty quickly.

[857] And in this case, let's say you stay at this current job that you think is stable and I think is wobbly.

[858] You take a pay cut, but you love those benefits versus let's go out and let's have a backup plan.

[859] You know, when we get on a plane, the lovely flight attendants and folks get up there and they tell us about where we go in case of an emergency landing.

[860] And I want to have that same exit pattern laid out for myself professionally.

[861] And I'm telling you, I've always practiced that.

[862] I still practice that.

[863] And so at this case, if I knew this and I'm you, Dalton, Jade, I'm immediately going, okay, where does my skill set and experience allow me to potentially land?

[864] let me start looking for options so that I got options.

[865] And the health care and the benefits usually take care of himself.

[866] So no, I would not stay, take a huge hit, which could be 50 grand.

[867] That's a big hit.

[868] That's a big hit.

[869] I would not do that.

[870] What's that called?

[871] What's that called?

[872] Because like in money, let's say you have a piece, you invested in a job opportunity or a business or property and it's failing, but you keep pouring money into it.

[873] We call it sunk cost fallacy because it's like, I come this.

[874] far I may as well keep writing out even though every all signs point to the fact that this sucks what is it called in a career when you feel the need to cling on to something that is sinking like it's it's it's losing you money it's it's it's not good what do they call that is that a word um it's not a word but I'm going to call it this phrase it means that we'd rather be miserable than uncomfortable and what that means is is I know what I'm dealing with I'm going to take a big pay cut and it's going to suck or I'm dealing with it toxic leader or I've got gossipy coworkers and I hate going in but I'm going to keep doing it because the fact that I'm miserable doesn't matter because at least I know what I'm up against and I know what I got to deal with and I got to bite a stick, hold my nose, you pick the analogy versus going I got to face my fears and step into the unknown of what else could be out there and I leave one place that I'm miserable in to go to a place where I might be.

[875] uncomfortable for a little while but ultimately better off so I think the dynamic there is what you're what you've so expertly pointed out is our comfort factor yeah uh you've seen the motivational posters who knows who said it but you know life is on the other side of comfort and and all that and that's what's going on with people will stay in a job like this with those sunk costs because they go at least I know it and you can see the fear in this question this person is rationalizing this is an otherwise very sharp individual, this dude.

[876] Yeah.

[877] And he's rationalizing, swallowing a $50 ,000 pay cut, rationalizing.

[878] Well, the benefits are good.

[879] Dalton, I'll bet you the benefits are good at other companies as well, and you don't take a $50 ,000 hit.

[880] So I think at the core of it, what do you think?

[881] I think it's fear of the unknown.

[882] Yeah, I think it's that old adage that's like the enemy of best is just fine, right?

[883] It's like, oh, this is fine.

[884] Like, my life's fine.

[885] It's good.

[886] Yeah.

[887] Goods the enemy and great.

[888] Yeah, and it's like it keeps you from getting to that best.

[889] Yeah.

[890] It's like at Home Depot where they have the good, the better, and the best quality.

[891] Yeah.

[892] The paint brush and you're like, you go with the one that is, you know it's not good quality, but you're like, well, it's not going to cost me much in the moment.

[893] So you go with that.

[894] Then you get home, you start painting and you're like, I should have just spent and got the one that was best.

[895] Interesting that you make this point because when it comes to the Ramsey show and the wine taste test, you brought in a party platter we recently tested.

[896] And I chose the good wine.

[897] Not the better wine.

[898] Well, that's a little different, Ken. I know, but I'm pointing out that you make a very good point here.

[899] Don't scrimp on the paint, scrimp on the wine.

[900] Is that what I'm hearing?

[901] I'm only learning from you.

[902] Yes, but does it have like a ring to it?

[903] Like I'm trying to get to where you're at, Ken. No, it doesn't have a ring.

[904] I don't know what I'm doing.

[905] I just thought it's interesting that you said.

[906] Maybe don't do that.

[907] you're telling me, teaching me to do the knockoff cookies and chips and the wine.

[908] Listen, quality.

[909] I'm learning all the way around.

[910] Quality over comfort.

[911] Is that good?

[912] Can we say that?

[913] We can just say the comfort place is a great place to be, but nothing grows there.

[914] Leave it at that.

[915] That's what my pastor used to say.

[916] The last 30 seconds of what I said, just go ahead and scrub it from your memory, apparently.

[917] I'm just, I'm learning.

[918] I'm learning this budgeting thing.

[919] All right.

[920] Men in black style.

[921] Well, here's the deal.

[922] It's over.

[923] I tend to lean always towards the better.

[924] always it's gonna here's here's here's where the analogy is better car so it lasts longer all these things yeah it's gonna have you're gonna have to come out of pocket you gotta save to get to get what's better yeah that's it there you I like all right let's see here uh let's go this a quick one investing question from brandy in new Orleans poor brandy she had to sit there and listen to that last minute brandy what's your question hi Ken hi jade my question is my husband and I are both 22 year public school teachers and we're about step four or five and six and we're trying to figure out are we going to we have eight percent taken out for our state pension plan they take eight percent so are we taking 15 percent on top of the eight percent are we doing seven percent to meet the eight percent and are we putting them in a 403B or are we putting in a ralph IRA okay so let me make sure I understand, the school takes 8 % of your paycheck, each of your paychecks, and puts it into the 403B, right?

[925] No, they put it into a state pension plan for our retirement.

[926] 403B is extra for us.

[927] Okay.

[928] So, and on your 403B, like, do you get to choose the investments?

[929] Like a 401K, it's got some good investment options that you get to select?

[930] We can choose the investment mix.

[931] Okay.

[932] As far as particular The stock investment or whatever No, but we can choose the mix Okay, so large crap, value, small, mid.

[933] Okay, good, good.

[934] Okay, so what I would say is For those listening, obviously we want to get to 15 % Of your gross income.

[935] So because the money, they're taking 8 % of your money You don't get to choose with that pension and it doesn't have a great rate of return So let's pretend that each of that for you guys counts instead of it counting at 8%, count it about half, and then do the rest, whatever's made up into your 403B, make sure you're choosing a good mix, growth, growth, and income, aggressive growth, and international, and you should be set.

[936] So again, instead of counting it at 8%, it counted at 4%, and do the other 11 into that 403B.

[937] All right, great stuff.

[938] Thank you for the call, and thank you both for teaching and serving in that way.

[939] This is The Ramsey Show.

[940] Welcome back to The Ramsey Show.

[941] I'm Ken Coleman.

[942] Jade Warshaw joins me, the phone number for you to jump in.

[943] is triple -8 -8 -25 -5 -2 -2 -25.

[944] That's triple -8 -8 -25 -5 -2 -2 -5.

[945] Let's go to Cincinnati, Ohio, where heaven awaits.

[946] Heaven, how can we help?

[947] Yes.

[948] So, hi, how are you doing?

[949] I mean, I'm talking to Heaven.

[950] I don't know that it gets much better than this professionally.

[951] What's your middle name?

[952] All right.

[953] Well, it's actually me, L. It's honey and Spanish.

[954] No Spanish.

[955] Okay, well, I don't.

[956] But this is great.

[957] You learn something new every day, Heaven.

[958] This is awesome.

[959] How can we help you?

[960] Well, I am 29 single with no kids, and I just heard about this show, and I'm hoping that you could give me some really good advice.

[961] I'm in about $65 ,000 in debt.

[962] I live with my mom, and I have a low -paying job.

[963] I grew up with poor financial habits, and even in moments of having.

[964] money, I didn't build wealth like I really wanted to.

[965] I just got deeper into financial debt.

[966] Now I'm feeling scared and stuck.

[967] I really don't know.

[968] I don't want to keep depending on people to loan me money for me to pay back and just stay broke.

[969] And I'm just sick of constantly being in a cycle.

[970] So if you could offer any help or anything, and I heard about the class, but I don't have $80 either.

[971] Well, let me tell you something.

[972] Let me get that out of it.

[973] away.

[974] All right.

[975] We're going to take care of that.

[976] I want to ask you really quickly about your job and possibilities before Jay takes over on the debt because she can give you the plan, okay?

[977] I'm just curious.

[978] What are you doing for a living?

[979] I work at a middle school.

[980] I'm an IA.

[981] Sure.

[982] Absolutely.

[983] Love, love, love, love our IAs.

[984] We've had some amazing IAs in our life for our kiddos, and so thank you for that work.

[985] But you've got the degree, correct?

[986] Or am I right about that?

[987] So I have my associates in psychology and I haven't finished my bachelor's because I can't pay.

[988] What do you get, what do you get paid?

[989] I get paid $779 a check.

[990] $779?

[991] You get two of those?

[992] I get two of those a month and that's after taxes and I have health insurance and whatnot.

[993] Okay.

[994] All right and I don't want to get bogged down here but this is a part of the equation.

[995] What are your opportunities if you just think about what you have done.

[996] Do you think about what is a better paying job, a path for you to where you are making $40, $50, $60 ,000 a year?

[997] Have you thought through that?

[998] Absolutely.

[999] So, okay, so what I did was sign up for to be a in -care provider and home care provider, which starts at about $25 an hour, but it also gives you flexibility and time, you know, to do other things also because I wanted to do that plus work as an IA because I love my job.

[1000] It just don't pay nothing.

[1001] Got it.

[1002] Okay.

[1003] Yeah.

[1004] So here's a deal.

[1005] And I have a juicing business.

[1006] I'm starting, but go ahead.

[1007] What business?

[1008] So I'm starting a juicing business.

[1009] Eventually I wanted to grow, but right now I'm just starting off.

[1010] I'm just selling juices from stores and stands and whatnot.

[1011] So that's also like going to be some kind of incur.

[1012] So real quick, I want to hand you over to Jay, and Jay's going to walk you through how to get out of this debt.

[1013] But I'm glad you've thought of some things.

[1014] Let me tell you this about the juicing thing.

[1015] I don't want to discourage you in any way, but that needs to be your thought.

[1016] third job right now if you have time for it and and or a second job if we go and we get a better job but i like the idea of what you have mapped out and i'm going to tell you you need to pursue that with the same abandon that you need to pursue these baby steps that jay's going to walk you through because your ability to make more money right now while living with mom is huge so you've got to treat that as life giving like i have got to make more money And if you can go get something that will allow you to keep the IA job, and that's extra money.

[1017] Great, you hear me?

[1018] But you have got to be crazy intense about making more money right now.

[1019] And then Jay's going to tell you what to do with it, all right?

[1020] Sweet.

[1021] Thank you so much.

[1022] All right.

[1023] All right.

[1024] Yes, Ken, good job.

[1025] Okay.

[1026] My two cents here is I can walk you through the baby steps.

[1027] You're not going to be able to do too too much until you get your income up, which is what Ken suggested.

[1028] And I might also offer this little piece, which is, I want you to get your income up so that you can pay your debt off.

[1029] I think that's really important.

[1030] But I think the most important move that you're going to make in all of this is moving out of your mom's house.

[1031] Because what you described to me was a cycle, and it sounds like a cycle that you're trying to break.

[1032] And it's very, very hard to break a cycle when you're literally living in the midst of it.

[1033] So it's quick, you know what I'm saying?

[1034] because you've got to deal with everybody else's mindsets too because your mom has an opinion you know auntie comes over she has an opinion everybody's got an opinion so I really want to get you in a place financially where you're able to remove yourself from that position that's going to be so so so so important because here's the thing here's what I know you start making some money you start making some headway and people see it now you're the one who's got money and now everybody's coming to you And that just adds another layer of, all right, I got to tell these folks, no. I got to tell them, you know, I'm trying to do my thing.

[1035] So just let that marinate somewhere in the back.

[1036] Your position as an IA, is it 40 hours a week or do you have a good amount of extra time?

[1037] It's 40 hours a week, but it's from 730 to 230.

[1038] Okay.

[1039] And you don't have kids.

[1040] So until you move into this home health care thing where you're doing 4 ,000 and more, I really, really want you to pick up something.

[1041] that's earning you any money and I say this to anybody listening sometimes we wait around because we're like it's not making maybe the money that I think I should be making but in this case making any money is better than not making any right so you going over and picking up um whatever it is instacart I know folks who make you know can make a thousand dollars in a weekend on instacart and that's not even including your your afternoons after school so I think that you can be double your income just by you picking up anything.

[1042] Okay.

[1043] Right.

[1044] So that's that's what we're doing as we work towards this home health care idea.

[1045] You're a 65 ,000 of debt.

[1046] Can you tell me what kind of debt it is right quick?

[1047] Um, my car, my car, I owe about $20 ,000 on that.

[1048] Okay.

[1049] And then college stuff, um, past banks, but that's, it's the college and the car.

[1050] That's most of it.

[1051] But like student loans?

[1052] Yeah.

[1053] How much?

[1054] student loan and I haven't even started paying on those but that's about 20 ,000 okay so 20 ,000 student loans I'm missing 25 because you said 65 yeah so that's just like um like there's a car an old car that I have to pay out that I really haven't started um and that's about that's about 700 I owe a bank about um a thousand um one bank about a thousand and um one bank about a thousand and A couple more banks about around that much, like around 500.

[1055] Okay.

[1056] What else?

[1057] So a couple of $500 ones, a couple of $1 ,000 ones.

[1058] Those are just little personal loans, like microloans?

[1059] Yeah.

[1060] Okay.

[1061] And then we've got the credit card for $700.

[1062] I feel like we're still missing a good chunk.

[1063] Yeah, we're still missing.

[1064] So I gave that number just based off of, I don't know.

[1065] Okay.

[1066] Just ballparking, honestly.

[1067] but the car the car in college are the most you know right what's your car payment strangeful things my car payment is 647 girl oh heaven what's the car worth oh man well she's selling it we're gonna sell it heaven are you upside down you got equity in it um i think it's upside down i'm sure it is fine but i definitely got um i i got this crappy payments because my credit stuff.

[1068] How far away from work do you?

[1069] How far away from work are you?

[1070] Not far.

[1071] About 10 minutes.

[1072] 10 minutes.

[1073] Listen, I want you out of this car.

[1074] And if you're upside down, if you call them and you find out your upside down, I want you to do anything you can do to get out of this car payment.

[1075] So let's say it's worth 20, let's say you owe 20, but it's worth 18.

[1076] You got to come up with $2 ,000 any way you can.

[1077] In any way that you can, that is legal.

[1078] Because I want you out of this car payment because $647 would be everything to you right now.

[1079] Yeah.

[1080] And you live close enough to work.

[1081] You get you a $2 ,000 car or you walk or you jog or you get one of those razor scooters.

[1082] But we're getting extreme because, listen, Ken, when you have to break these cycles, you have to go into the extreme because all of that gravitational pull is trying.

[1083] Listen, that gravitational pool will break her ankles.

[1084] So she might as well get on a razor scooter, but she's got to get free.

[1085] I condone all of it except for the razor scooter.

[1086] Get you a razor scooter.

[1087] Really?

[1088] The kids will think you're cool.

[1089] Oh, boy.

[1090] I don't know.

[1091] This is the Ramsey Show.

[1092] Welcome back, America.

[1093] You are joining the conversation about your life with you here on the Ramsey Show.

[1094] It's America's show because we're talking about things that no other show talks about.

[1095] Your money, your work, and your relationships all together.

[1096] you to win.

[1097] Triple -8.

[1098] 8 -25.

[1099] 5.

[1100] 2 -25 is the number.

[1101] The fabulous Jade Warshot joins me. I'm Ken Coleman.

[1102] I'm not fabulous.

[1103] But I'm here.

[1104] I'm all right.

[1105] I'm all right.

[1106] I'll take that.

[1107] I'm all right.

[1108] That's about as good as it gets.

[1109] I'll take it.

[1110] I got three teens.

[1111] I'm never right.

[1112] I'm being told all the time.

[1113] I'm cringe.

[1114] Oh.

[1115] My daughter likes to tell me, Dad, you're so cringe.

[1116] Oh, man. I don't know what any of that means.

[1117] Although every once in a while you teach me a word here on the show that I take home and they kind of look at me like, where did he come up with that?

[1118] And I don't reveal my source.

[1119] Tell your boys next time that you guys are having a, you know, it's you against them.

[1120] Yeah.

[1121] Be like, I'm telling you, and I'm standing on business.

[1122] Tell them you stand on business.

[1123] Stand on business.

[1124] Stand on business.

[1125] I'm standing on business.

[1126] All right, I will guarantee you to mess that up.

[1127] I can't wait to see what they say.

[1128] Yeah, yeah.

[1129] James, I'll mess that up for sure.

[1130] It'll come out completely different than that, but I'll try.

[1131] Speaking of standing on business, Kathy is joining us.

[1132] I'm confusing millions of people as we speak.

[1133] And the great part is, I have no idea what it means.

[1134] Kathy's joining us in Milwaukee.

[1135] Kathy, how can I help?

[1136] Hi, Ken. Hi, Jade.

[1137] Hey, how are you?

[1138] What's up?

[1139] I have a question on Baby Step 3, getting my larger emergency fund.

[1140] Okay.

[1141] So me and my husband are both on board.

[1142] We paid off all of our debt, and we started sinking funds.

[1143] Do I include the sinking funds, like the balance of the balance of those?

[1144] those in my three to six months?

[1145] No, because the sinking funds are going towards future needs that you know you're going to, it's just future purchases, whereas the emergency fund is strictly for emergencies.

[1146] And emergencies are things that are completely necessary, completely unavoidable, and have a urgent timeframe is what I would kind of call those three things that you're looking for it.

[1147] Something that, you know, it's, oh my goodness, you lose a job.

[1148] And so you have a little bit, you know, you don't have enough money to fully make ends meet.

[1149] So that would be you pulling a little bit maybe from your emergency fund or something that you're unable to cash flow, but it's necessary for it to happen right away.

[1150] HVAC.

[1151] HVAC, right?

[1152] And so Sinking Funds really doesn't fall into that.

[1153] Sinking funds is just a way for us to save separate money.

[1154] So in essence, in essence, you kind of have two savings accounts.

[1155] You've got your emergency fund and then you've got separate money that you're saving up for things that you just want to do in life.

[1156] Okay.

[1157] So even if it's not, like I get annual purchases that I know are going to happen that I save up for, but for example, like if I'm saving for a new car.

[1158] Right.

[1159] But see, and that's why you use this framework.

[1160] Unexpected.

[1161] Saving for a new car is not unexpected.

[1162] So that would not be emergency fund.

[1163] That would be separate savings.

[1164] Okay.

[1165] Does that kind of help you?

[1166] So, unexpected, completely necessary, and urgent time frame, are the three boxes that must be ticked.

[1167] Am I leaving anything out, Ken?

[1168] I don't think that's pretty good.

[1169] You got it, Kathy?

[1170] I think so.

[1171] Thanks for calling the show.

[1172] Appreciate it.

[1173] Really fun.

[1174] Let's go to Megan now in Salt Lake City, Utah.

[1175] Megan, how can we help?

[1176] Ken, Jade, I can't believe I'm talking to you.

[1177] Well, we feel the same way about you.

[1178] We really do.

[1179] We can't believe we're talking to me. Megan.

[1180] Yeah.

[1181] What's up?

[1182] Um, so I have a question regarding how to manage and stay within the 25 % of my take home pay, um, when my rent keeps going up every year.

[1183] It was 25 % when I moved in.

[1184] And now it has been increased to 28%.

[1185] And I'm trying to save for a house.

[1186] I'm currently in, um, Baby Step 4, but I don't know if it would be considered 3B because I have a fully funded emergency fund, but I'm not doing 15 % in retirement because I'm trying to save for a house.

[1187] How much do you have saved up?

[1188] Huh?

[1189] How much do you have saved up for your house payment, down payment?

[1190] Oh, I just got started.

[1191] I'm about 3 ,000.

[1192] Okay.

[1193] So there's a couple of things I want to address with this.

[1194] So you're telling me you've gone.

[1195] up from 25%.

[1196] And for anybody listening, our rule of thumb here is we really don't want your mortgage or your rent to be any more than 25 % of your take home pay when it starts creeping up and up, especially if you don't see a plan to be able to match it with the income and kind of smash it back down.

[1197] So that's what she's talking about.

[1198] So you're upwards to 28 % now.

[1199] It's kind of got you worried, especially with you trying to do this down payment.

[1200] Do you see a course to where you're able to up your income 3 %?

[1201] Yes.

[1202] I'm currently working a second job, and I get a raise every year that's around 5 to 7%.

[1203] Great.

[1204] And I won't get that raise until August, but I'm just kind of worried because I want to stay within the guidelines.

[1205] And I think Davis said you could go as high as 30%, but 25 is best.

[1206] And I'm just...

[1207] 25 is best.

[1208] Yeah, let's look at real numbers.

[1209] How much has your rules?

[1210] How much has your rent actually gone up?

[1211] Don't give me percentage.

[1212] When I moved in, it was $9 .50 and then he raised it, my landlord raised it to $1 ,100 this year.

[1213] And I think I factored it was about 27 or 28%.

[1214] So you go up, you go up $150.

[1215] I mean, I get it.

[1216] Like that, that sucks.

[1217] You're like, man, what?

[1218] But I love that you've got something that can cover it.

[1219] Here's a thing.

[1220] You're doing extra work.

[1221] trying to accomplish a goal, you want every cent of that money to go towards a goal.

[1222] But one of the realities of renting is you do have to deal with rent increases.

[1223] And in this case, you know, unless you say to me, Jade, and I know of a place down the street where I can rent for $8 .50, my lease is up in May and I can go do it.

[1224] Then I'm like, yes, go do it.

[1225] So you're going to have to kind of decide a couple of factors.

[1226] You're going to think to yourself, okay, how long realistically is it going to take me to save for this down payment?

[1227] Okay.

[1228] And I don't know how long you've been living in this apartment, but you can also look at historically how often and how much have they raised the rent.

[1229] If you've been living there for 10 years and they never raised the rent and this was the first time, then I'd probably be willing to wait it out a little bit.

[1230] But if you're seeing every single year, it's going up $100 and $150 and you're like, listen, Jade, I don't know if I want to wait it out.

[1231] My term is about to be or my lease is about to be up, then you've got options there.

[1232] You're not locked in, but I don't, to Ken's point, I don't want you to over freak out over the 150 unless it really starts to become a problem because here's where I'm looking.

[1233] I'm kind of looking long term around the horizon.

[1234] But on baby step four, if this is going to take you more than two years to save for your down payment, after two years, I'm going to tell you, hey, listen, you need to start putting something aside, even if it's 5 % or up to your match.

[1235] Because I don't want you pushing off retirement any longer than maybe a two, three -year window to save for this down payment.

[1236] Is that fair?

[1237] Yes.

[1238] And I am doing a 5 % match on my 401k with my employer.

[1239] Okay.

[1240] And because I put retirement off for way too long when I was in Baby Step 2.

[1241] So I don't really want to stop retirement.

[1242] And you don't have to.

[1243] Megan.

[1244] I was just wanting to.

[1245] Yes, Ken. Question.

[1246] Are you single?

[1247] I am single.

[1248] Okay.

[1249] I got to tell you, I'm kind of using the spirit animal of George Campbell, because if he were sitting here with me, he would be recommending that you have a roommate for a season.

[1250] You want to get your own home anyway.

[1251] And if you could get a roommate, now all of a sudden, this is a game changer for you.

[1252] And especially if we can go 50 -50.

[1253] I love it.

[1254] I'd consider it.

[1255] I really would.

[1256] Let's do a chant.

[1257] Roommate.

[1258] Roommate.

[1259] Now it would require a move.

[1260] What's that?

[1261] I have a studio apart.

[1262] Oh, you have a studio.

[1263] That would require a move.

[1264] That's what I'm trying to avoid.

[1265] Well, you're okay.

[1266] I don't want to move.

[1267] I understand.

[1268] But you said it, and I want to remind you, Dave has mentioned many times that these things are guidelines.

[1269] This is not you being irresponsible.

[1270] This is not you going out and getting too much rental property.

[1271] It is what it is.

[1272] If you can find a cheaper place like Jade said, great.

[1273] But right now, I think more income is your play.

[1274] This has not gone up really crazy.

[1275] you're going to get maybe a 5 to 7 % bump on your salary.

[1276] Watch your budget, the extra income between your discipline and the extra income, you're going to be okay.

[1277] Don't freak out about it.

[1278] Be watchful in your complex because if a one bedroom or a situation comes available where you can look at the numbers and go listen with a roommate, I could pack in a little bit more.

[1279] Do be watchful for that.

[1280] And I know you don't want to move, but if the moving improves your financial, situation, so much more, I'd say the ROI is worth it.

[1281] But you're okay.

[1282] You're not breaking the rules.

[1283] This is the Ramsey Show.

[1284] Live from the headquarters of Ramsey Solutions, this is the Ramsey Show.

[1285] It's where we help you win in your life, specifically in your money, in your work, and in your relationships, AAA 8 -825 -5 -2 -2 -25 is the phone number.

[1286] AAA 825 -2 -5 -2 -5.

[1287] You're one call away from some hope.

[1288] We're going to be honest with you.

[1289] We're going to have some fun as well.

[1290] Speaking of fun, the incomparable, the combustible, Jade Worshaw.

[1291] Combustible.

[1292] You can be combustible in a good way.

[1293] You're kind of like catching fire.

[1294] Bumbastic.

[1295] You're like the star of the movie.

[1296] Hunger Games.

[1297] Thank you.

[1298] Catniss.

[1299] Thank you.

[1300] You've got that.

[1301] You remember who her costume designer was?

[1302] Listen, that's better than Mr. Bumostick.

[1303] Who was her costume designer?

[1304] I don't know, Ken. The one, the only.

[1305] Speaking of Incomparable, Lenny Kravitz.

[1306] I did not know that.

[1307] Lenny Kravitz played her costume designer and to design the combustible costume.

[1308] Good to know.

[1309] But that's just speaking to your charisma and enthusiasm, which I enjoy.

[1310] It is infectious.

[1311] We're here together.

[1312] I'm Ken Coleman.

[1313] I don't know that I mentioned that.

[1314] She's Jade Warshaw.

[1315] And speaking of combustible.

[1316] Yes.

[1317] You and your amazing social media specialist have come up with some fun clips recently of the two of us.

[1318] And I feel like I'm just, I feel like I'm next to one of the big shots.

[1319] It's like I'm just one of the Supremes next to the star, you know?

[1320] I don't know.

[1321] But it's been fun.

[1322] It has been fun.

[1323] And there have been several.

[1324] So one of them, you tell me, has garnered quite the reaction.

[1325] And dare I say, is there an overwhelming amount of criticism for you?

[1326] I don't know that I would call it overwhelming.

[1327] What were you saying to me?

[1328] Okay.

[1329] So in the clip, here's what I want you guys know, we post these clips from the show on our social media.

[1330] And we, like, we're on social media.

[1331] Like, we're watching it.

[1332] we're reading the comments.

[1333] So, you know, we posted today a clip and let's just play it so you guys can see it.

[1334] Oh, okay.

[1335] Here we go.

[1336] If you have time to watch Netflix, you have time to get a side hustle.

[1337] Let me just say it like that.

[1338] Why'd you have to go and do that?

[1339] I'm just saying making us all feel guilty for sitting there and watching some Netflix.

[1340] I'm just saying do something during that time.

[1341] I have a buddy that I follow online and she does the surveys.

[1342] You know you can do the surveys.

[1343] And it's like there there is always something you can do.

[1344] to make money even if it's a little bit there's always something you can do with that extra 30 minutes here and 40 minutes there okay so there you have so i'm clearly being facetious i agree with you get after it you shouldn't be watching netflix if you're broke yeah but folks are saying different they're giving us some grief yeah somebody said while it makes sense let's not underestimate the value of rest some hobbies and doing something that also makes you happy listen yeah but not not now Like you got to get out of debt first.

[1345] Like you got to earn your rest.

[1346] You rest when you sleep.

[1347] Yeah.

[1348] Like it says let no, what does the scripture say?

[1349] No sleep to your eyes.

[1350] No slumber.

[1351] Deliver yourself like a gazelle from the hand of the hunter.

[1352] And I know that's not exactly literal, but there is a piece to when you're getting out of debt, you have to be willing to sacrifice and do things that people who aren't in debt don't have to do.

[1353] Which is me. I can watch Netflix tonight.

[1354] You know why?

[1355] because I'm not broke.

[1356] I do think that there's something to be said for working to the point of...

[1357] A couple good shows I'm into right now.

[1358] Listen.

[1359] I interrupted you.

[1360] I'm over in my own little loop.

[1361] I was just thinking about, what I got in the queue tonight?

[1362] But you make a very good point, though.

[1363] What you were saying in this clip is you don't need to be watching Netflix.

[1364] You need to be working until it's time to fall into the bed because you're exhausted.

[1365] And we all say that, you know, we all say we all say we, don't have time.

[1366] Oh, I would do it if I had time.

[1367] And I'm like, listen, you go and do a time audit and see where your time is being spent.

[1368] And I bet you.

[1369] And when I say time on it, everybody should do this practice a couple times a year.

[1370] Really journal out what you're doing from sun up to sundown all the time.

[1371] What time you woke up, what you did after that, what you did after that, and really start seeing where your time is going.

[1372] And I think that you'll be shocked at how much time you can find throughout the day.

[1373] And because here's a thing, it might not be in big blocks and you might learn like listen I need to scoot my day around so that I can create blocks of time or you might realize listen I'm I could wake up an hour and a half earlier or I could go you know I could stay up or like there stay up later there's things that you can do and I don't want to create excuses and reasons why I can't get where I need to go because ultimately and I get don't get me wrong rest is important I get it but here we're trying to motivate your butt to get out of debt.

[1374] So when I'm telling you to go pick up jobs, don't come at me with like, but Jade, we need to rest.

[1375] You'll have time to rest.

[1376] What else are they saying?

[1377] Is there anything else in there?

[1378] Let's see a little bit more.

[1379] I'd like to know some more of this person said, why did you have to go and say that, Jade?

[1380] This person said, rest and live within your means.

[1381] And I'm like, I'm talking to folks who are trying to get out of debt.

[1382] Now, what I like is what Julie 9658 said.

[1383] She said, all right, Jade, I needed this.

[1384] I hear you deleting Netflix.

[1385] That's the kind of energy I'm rocking with.

[1386] Julie 9 -5 -6 -8.

[1387] Thank you.

[1388] Very literally.

[1389] I need the person who looks at it and says, oh, this person is giving me away.

[1390] They're showing me to how to get to succeed.

[1391] I bet that's her username on Netflix.

[1392] Julie 2568?

[1393] Whatever it is.

[1394] I just think that's really funny that that's what she went with.

[1395] It just cracks me up.

[1396] I think that when...

[1397] You make a very good point.

[1398] And I agree with you, by the way.

[1399] I got to say, I don't know if sometimes people realize that I'm being facetious in that clip when I said, come on, Jade, why do you got to do that?

[1400] They know.

[1401] But come on.

[1402] I think you're right.

[1403] I think watching TV.

[1404] Let me tell you this, millionaires don't watch a lot of TV.

[1405] Multimillionaires, billionaires, they don't watch a lot of TV.

[1406] Listen, they really don't.

[1407] We can tell people, I'm going to get into it.

[1408] We can tell who said what to who.

[1409] You can tell me what Taylor Swift said to what's his guy's name?

[1410] I don't even know the guy's name.

[1411] Oh, her boyfriend?

[1412] Yeah, the football player.

[1413] This is what's wrong with America.

[1414] Everybody knows her, but we don't know who he is.

[1415] But I'm saying people can quote, my daughter walks into the living room last night and she sees the chiefs are on.

[1416] True story.

[1417] She's like, oh, is Taylor there?

[1418] That's what she said.

[1419] And I'm just like, go out of the room.

[1420] Leave the room now.

[1421] Go to your room.

[1422] I can't handle it.

[1423] His name is Travis Kelsey.

[1424] Travis Kelsey.

[1425] Folks can quote exactly what Jay -Z spent on a meal.

[1426] People can quote.

[1427] Really?

[1428] Yes, people know numbers, but they don't know their own numbers.

[1429] They can tell you exactly what somebody else's plan is and what they're doing with their money and their business, but they don't even know what's going on in the state of their own life.

[1430] And they would rather spend time gathering information and gossip about celebrities than going out and getting your own life together.

[1431] Like that's not your life.

[1432] That's fake.

[1433] Or we spend time on social media scrolling and looking at other people's lives, comparing ourselves to other people's lives.

[1434] We'll spend more time.

[1435] Hold on.

[1436] I'm about to get them, Ken. Oh, boy.

[1437] We'll spend more time looking forward.

[1438] the right lighting to take a photo, then we'll spend looking for the right side hustle.

[1439] It's a very good point.

[1440] You are 100 % correct.

[1441] I should have built you a podium.

[1442] And then here's the deal.

[1443] Then they're griping and they're exhausted and all this rest when you're what you're really exhausted from is the stress.

[1444] You're exhausted from the stress.

[1445] You can't sleep enough.

[1446] And you'll rest better when the debt's gone.

[1447] Yeah.

[1448] But you want to watch your shows.

[1449] You want to, by the way, it's not just Netflix anymore.

[1450] What is the deal?

[1451] There's 75 platforms that you've got to pay for to watch everything.

[1452] Hulu, plus, plus, plus.

[1453] Back in the day, you used to say, I got to watch my stories.

[1454] Remember that?

[1455] I don't ever remember saying that.

[1456] Oh, soap operas.

[1457] Be like, oh, my stories are on today.

[1458] She knows what I'm talking about.

[1459] My stories?

[1460] That's what they call them?

[1461] Yes.

[1462] I will say this.

[1463] For about a six -month period that I regret, James, I did watch Days of Our Lives during close to college.

[1464] Oh, I know about that.

[1465] I'm never getting that time back.

[1466] No, you're not.

[1467] All right.

[1468] The good news is we'll be back before you know it's a very quick commercial break.

[1469] Don't move.

[1470] This is The Ramsey Show.

[1471] Welcome back to The Ramsey Show.

[1472] I'm Ken Coleman, Jade Warshot joins me. We're here for you.

[1473] AAA 825 -2 -2 -25 is the phone number for you to jump in.

[1474] AAA 825 -5 -2 -25.

[1475] Let's go to Jesse now in Buffalo, New York.

[1476] Jesse, how can we help?

[1477] Hey, guys, thanks for taking my call.

[1478] I'm just trying to get some advice on how to navigate kind of the disposable income.

[1479] have at this point.

[1480] All right.

[1481] Tell us what you got that's disposable.

[1482] Well, so I pull in about 3 ,300 a month.

[1483] That's my take home.

[1484] And my current expenses, including the contributions I already have to my, like, retirement accounts.

[1485] And that's kind of the core of the question here.

[1486] So I'm pulling in 3 ,300.

[1487] I have about 2 ,500 in expenses right now.

[1488] So I have about $1 ,000 a month that I'm not really doing much with at the moment.

[1489] And you have no debt?

[1490] I have no debt.

[1491] I'm very lucky that I have no debt.

[1492] Do you have an emergency fund?

[1493] I do.

[1494] I have about $3 ,000 in a savings account.

[1495] Okay.

[1496] And are you investing at all, 401k at work, any kind of investments?

[1497] So that's really the core of the question.

[1498] I am pretty focused on investment at this point in my life.

[1499] So I have a Roth and a traditional IRA through Vanguard, and that has about $30 ,000 in it currently.

[1500] I have a 401K through my employer that I just started, so that only has about $600.

[1501] but I'm contributing $200 a pay period to that.

[1502] And then I used to work for the YMCA, which I'm not sure if you're aware, they're a great company to retire with because they match 12%.

[1503] And just for years of doing that, I have about $20 ,000 sitting there.

[1504] Great.

[1505] So how old are you?

[1506] I'm 32.

[1507] Okay, you're 32.

[1508] Good.

[1509] I'm listening to everything I hear.

[1510] It sounds good.

[1511] What's your living situation?

[1512] So I live with my partner.

[1513] we have a monthly rent of 1 ,600, and then utilities cap out about, I would say, $200 a month.

[1514] So between the two of us, we're looking at a little under $2 ,000 per month.

[1515] Okay, and you just split the rent.

[1516] Everything is just split right down the middle.

[1517] Yep, split right down the middle.

[1518] So of all the things you said, the thing that sticks out to me most first is that you only have $3 ,000 saved.

[1519] So the way we would teach is for you to have at least three to six months saved.

[1520] so that I would beef that up and I'm I shouldn't have jumped forward but do you have any other debt?

[1521] No, no, I'm very lucky I got help with my undergrad and then I didn't do grad school until I had the money for it.

[1522] Okay, excellent.

[1523] So no debt.

[1524] The next step then is to save up what would be akin to three to six months of expenses and I'm not going to lie the way I just, I love when people have six months.

[1525] So if you can get six months considering you're not technically married and you know, so you're treating your income as a single guy.

[1526] And so I do six months of savings since you're the only one who funds your lifestyle.

[1527] So that would be next.

[1528] And then I would walk with that extra thousand dollars that you have after you've beefed up your savings.

[1529] I'd walk down the additional baby steps with you.

[1530] So if you don't see saving for kids college anywhere in your near future, I'd want to make sure that you're definitely saving 15%.

[1531] So what percentage are you at at this point?

[1532] I'm putting about $500 a month into my Roth and then $200 per pay periods of $400 a month into my, the, I have a 401k through equitable.

[1533] Okay, so is that a part, just to clarify, you still have $800 in additional money, surplus even after doing those two things?

[1534] Yes, sir.

[1535] Okay.

[1536] Okay, so what percentage, because only you know your gross pay, I want you investing 15 % of your gross pay every month.

[1537] Okay.

[1538] So that's before insurance comes out.

[1539] That's before taxes.

[1540] So, you know, look on your pay stub or whatever or however you get paid and figure out what 15 % is because that's what I want you doing.

[1541] And you're going to mix it across like what you said.

[1542] If you've got a match on your 401K, invest up to that match and then go over to your Roth and try to max that out.

[1543] And if you still have money to go, come back to the 401k and try to max that out.

[1544] And for you, go ahead.

[1545] Oh, I'm so sorry.

[1546] So that's really the question I have.

[1547] So I'm on a bit of a grind and like I'm at an age right now where I've shifted focus to how do I really maximize these retirement contributions.

[1548] So I work full time.

[1549] I have like a main job of a school social worker.

[1550] But I also have two part time jobs.

[1551] And I'm actually going to be getting another job that's going to be seasonal.

[1552] So all of this to say is like really I there's a lot of my money that I can be maxed out my IRA last, my Roth out last year.

[1553] I'm playing.

[1554] I'm on track to max it out this year.

[1555] I don't think I'd be able to max out the equitable just because that's about $23 ,000 I could put into there, and I don't think I'd get there.

[1556] But the thoughts I'm having right now is I have all these different spots, and obviously it's not going to hurt me, but is there something better I could be doing with that money?

[1557] Because I have so much.

[1558] What about a house?

[1559] So that's a question.

[1560] I'm not sure what that looks like right now.

[1561] Well, not.

[1562] You don't have to.

[1563] But do you feel like at some point you're going to buy a house?

[1564] I mean, you're 32.

[1565] I would assume at some point, you want to buy a home?

[1566] Yeah, yeah, that's true.

[1567] Well, I would be, I mean, right, you don't have to know what the price of the house is down the line, but you can start saving at this point.

[1568] You're doing a really good job with investing.

[1569] If you do what Jade says, in our baby steps, we have what's called 3B, which is saving for a home.

[1570] And so right now, at your age, I would start socking away some money for a house down payment in the future.

[1571] That may be three years from now.

[1572] I don't know.

[1573] If you think it's more of a five year, like a five year or a longer play, I'd probably take whatever money that you think, listen, this might be my down payment or my home money.

[1574] And I just put in a brokerage account, invested in an index fund and let it sit.

[1575] As long as you know, it's at least a five -year play because we just see that the chances of you having a positive return on your investment is better at the five -year point than it would be at, say, the two or three -year point.

[1576] And so that's what I would do.

[1577] I would start focusing on the idea of buying a house with a super high down payment or, you know, dream a little and be like, listen, what would it look like if I, one day paid cash and bought a piece of real estate completely in cash because it seems like you're really in a money motivated mode right now and I'm not mad at that like you're like I'm really to do what it takes and technically the state you're at you could just continue to pile up investments listen maxing out a 401k maxing out a Roth IRA maxing out whatever other situation you said you had there that's all good like all that stuff is compounding over time um and if that's your goal, there's nothing wrong with that.

[1578] But I do think that, to Ken's point, real estate is going to sneak around the corner before you know it.

[1579] And if you've been paying attention to anything going on is it's harder and takes people longer to save up to buy a house than ever before.

[1580] So it might be who of you to kind of get that process started.

[1581] That way, when you're ready to buy the money, is just sitting there and you have your pick of the litter.

[1582] Okay.

[1583] Yeah.

[1584] Yeah, I think I've just been so focused on retirement because of the compounding aspect.

[1585] But then I'm wondering if, yeah, what are the other things I could be doing with that money that would be.

[1586] be beneficial and that makes a lot of sense.

[1587] You're doing a great job.

[1588] I look at repeat things.

[1589] Sometimes I wake up and I feel like I'm on track.

[1590] Sometimes I wake up.

[1591] I feel like I'm behind.

[1592] Some days I wake up, I feel like I'm ahead.

[1593] Listen, you're not.

[1594] I mean, let's think about it.

[1595] Let's do some math because I love bringing up a retirement calculator.

[1596] You said you are, and I'm just on the Ramsey Solutions retirement calculator.

[1597] You said you're 32 years old.

[1598] Let's pretend social security starts at 62.

[1599] So let's just say at 62, you decide that you're going to be done with things.

[1600] And let's pick the 401 case.

[1601] since you already have $600 in there.

[1602] And let's say that each month you're contributing, how much to your 401K?

[1603] 400.

[1604] Let's say another $400.

[1605] All right.

[1606] Let's pretend that's getting a 9 % rate of return, even though we could probably do more, just in a S &P 500.

[1607] That's just in that account alone.

[1608] If you only for the rest of the next 30 years of your life, only put $400 in that account, that account would have $741 ,000 in it.

[1609] Just that account.

[1610] And don't forget you're also maxing out Roth IRAs and you've got these other accounts through your work.

[1611] So that should give you some hope that you're going to be just fine and you've got a long, you know, you've got a long path to do a lot of great things here.

[1612] Yeah, yeah, definitely.

[1613] I think one of the catalysts for this change in mindset was setting up the equitable account and seeing my retirement year date being 2060 and just being like, well, that's really not that far away.

[1614] and getting kind of freaked out by that.

[1615] Listen, a lot happens in 30 years.

[1616] A lot happens in 30 years.

[1617] And I like that you're diversified in a lot of different accounts.

[1618] Like sometimes people think it's just one big nest egg in one account can.

[1619] And that's not the case.

[1620] I mean, you've got a lot going on here.

[1621] And you'll soon add real estate to your portfolio too.

[1622] And we've seen that most millionaires do have a paid for home as well.

[1623] So adding that to the mix is going to be very, very good for you as well.

[1624] Jesse, you're on a great path.

[1625] You don't have to freak out.

[1626] Just continue to be disciplined.

[1627] And if you haven't found someone to really help guide you, go to ramsysolutions .com and click on SmartVestor Pro.

[1628] Find some of those folks in your area.

[1629] Go interview them.

[1630] See who's the best fit for you.

[1631] Having someone to guide you and explain it and teach it to you to where you understand it, it's going to give you even more confidence.

[1632] Thanks for the call.

[1633] This is The Ramsey Show.

[1634] Welcome back to The Ramsey Show.

[1635] I'm Ken Coleman.

[1636] Jade Warsha joins me, Triple -8 -8 -25 -2 -25 is the phone number.

[1637] And this is a show built on basic baby steps that get people out of debt and allow them to live a life that they have dreamed of.

[1638] And there's no better example of that than when we have our debt -free screams.

[1639] And as I look across the studio, I see two fabulous people by the names of Joe and Kat.

[1640] And they're on the debt -free stage.

[1641] Joe Kat, welcome.

[1642] Thank you.

[1643] Glad to be here.

[1644] Where are you guys from?

[1645] We're from Floyd Knobbs, Indiana.

[1646] Okay.

[1647] Good.

[1648] All right.

[1649] And you're here to do a debt -free scream, I presume.

[1650] Right.

[1651] Fantastic.

[1652] All right.

[1653] Give us the numbers here.

[1654] Let's walk through this.

[1655] How much debt did you pay off and how long?

[1656] There was 122 ,749.

[1657] It took about 60 months.

[1658] 60 months.

[1659] And what did that income?

[1660] Well, let me first ask you, what was your range of income during that time?

[1661] $125 ,000.

[1662] Okay.

[1663] Stayed at $125 ,000.

[1664] That's very good.

[1665] What do you do for a living?

[1666] I'm a registered nurse.

[1667] Okay, great.

[1668] Fantastic.

[1669] And what was the debt comprised of, the 122, 749?

[1670] Well, it ranged from credit card debt to our house payment.

[1671] Hey, there you go.

[1672] Paid for a house.

[1673] Well, no, I think that back.

[1674] We didn't pay for our house yet.

[1675] We're still trying to pay.

[1676] Oh, okay, okay, okay.

[1677] Working through it.

[1678] So what was the 122, 749?

[1679] Some of that's what you've paid in the house or what?

[1680] Help me out.

[1681] We did pay some part of the house off.

[1682] Okay, got you.

[1683] That's great.

[1684] Mainly credit cards, and we had some student loan, parent plus student loans for our kids.

[1685] gotcha how much in student loans uh it's probably around 50 000 wow parent plus loan man you guys got out of that alive we did home repairs home repairs okay gotcha and a couple car loans and cars we had to replace okay right well take us through this journey let's start 60 months ago okay what caused you guys to get on this journey okay well we originally had attended the financial University in 1993, and probably have been in and out of debt about three times.

[1686] Okay.

[1687] But we just couldn't seem to stick with a program.

[1688] And so that many months ago, we found ourselves paycheck to paycheck, and we called our older son.

[1689] It's like, can we borrow $100 until we get paid?

[1690] We just don't have it.

[1691] And he's like, yeah, but he's like, we need to figure out what's going on with your finances because you all got to get ready to retire.

[1692] Yeah.

[1693] And so we found out at that time, we had given both our.

[1694] sons, the Financial Peace University, is wedding presents when they got married.

[1695] But my son, David, and his wife, Amelia, actually stuck with the program.

[1696] They paid off all their student loans for Vanderbilt and a muddler, and they don't have any debt at all, except their house.

[1697] That's all they're doing now, and they've, like, moved up three different houses and just their excitement.

[1698] You know, we even called my son David, David Ransy sometimes because he's just so excited.

[1699] about it.

[1700] Is this the sharp -looking young man you keep looking at here?

[1701] Yes.

[1702] Okay.

[1703] Is this also the same son that you called and asked for $100?

[1704] Yes.

[1705] So you gifted him Financial Peace University back in the day.

[1706] He did it.

[1707] He did it.

[1708] Y 'all didn't do it yet.

[1709] We didn't stick to it.

[1710] Wow.

[1711] I love it.

[1712] But you saw the fruit.

[1713] He sent us back to the class.

[1714] So then we did it again.

[1715] And then he just helped us stay with the baby steps.

[1716] And when you say like, who's our cheerleaders, there they are.

[1717] David.

[1718] Way to go.

[1719] What a good son.

[1720] And so we also had like 18 snowballs that we had to work on.

[1721] And so Amelia knows we like cats.

[1722] So she made us like a cat chart.

[1723] And we'd color in a cat when it was paid off and had a glass of wine.

[1724] Oh, very good.

[1725] That is so cute.

[1726] And then David would make progress reports for us.

[1727] And we didn't always do quite as good as he wanted us to do.

[1728] But I think we have found out what our problem was, this is the nerd.

[1729] and I'm the free spirit but the discipline and accountability is what we were lacking and that's what they helped us find and so now we finally have the real peace and it's just really awesome I think you guys have an incredible family I think that what I'm hearing is really something special and spectacular that you would be willing to hear from him because that's the hardest part we call it powdered butt syndrome it's the very the hardest part thing to do is to hear from the person who's but you powder when they were a baby.

[1730] Sorry, David.

[1731] We're talking about you like you're not here.

[1732] And I just love this.

[1733] I think it's so great.

[1734] Yeah, no, it is actually really great.

[1735] So, okay, so that's how it got started.

[1736] Right.

[1737] So your income did not change in this time.

[1738] So that means you guys just started working with what you had.

[1739] What did you do to start getting momentum?

[1740] Well, we did both work extra.

[1741] Okay.

[1742] So we did.

[1743] Okay.

[1744] I don't know what you had.

[1745] Yeah, I got a part -time job.

[1746] Okay.

[1747] Worked for about five years, I guess.

[1748] Okay.

[1749] So you did make a additional.

[1750] money beyond the 125.

[1751] Okay.

[1752] Yes.

[1753] Gotcha.

[1754] All right.

[1755] So, okay, let me clarify something because you said your son came to you and said, hey, you're getting ready to retire.

[1756] You got to clean this up.

[1757] So did you retire from your normal jobs and just pick up other work?

[1758] How did you do it?

[1759] No, I'm still working.

[1760] Okay.

[1761] I plan on to retire finally.

[1762] Yeah, he was saying you need to get ready to retire.

[1763] Oh, got it, got it, got it.

[1764] Okay.

[1765] We were on such a mess.

[1766] Yeah.

[1767] It's like, but Joe's been one to retire for the last couple of years and he's actually going to be able to retire this coming December.

[1768] Oh, right.

[1769] Way to go.

[1770] We've been working with Kevin Wells.

[1771] That's one of the David Ramsey finance.

[1772] Smart investors?

[1773] Smart investors, yes.

[1774] Okay, good.

[1775] And David kind of turned us over to him after he took us as far as we could.

[1776] So now David's got us with the plan to pay the house off and being able to do some trips and just enjoy the retirement.

[1777] So what would you tell people that are listening and watching to you right now the key to getting out of debt is.

[1778] What was it for you guys?

[1779] Well, I would say probably, gosh, I don't know, what do you think?

[1780] It's the discipline and being able to actually finally see that it's going to make a difference and not go back, because that was our problem.

[1781] We kept going back, and we just had to actually use the steps in the program.

[1782] You know, and we would just get off of them or start one credit card or do something like that, you know, and so we finally don't do that.

[1783] So can I, that's, that's interesting.

[1784] So the other times that you tried to do the baby steps, you kind of did it your way, you went over here instead of going over there.

[1785] Right.

[1786] And that caused you to go backwards.

[1787] Yes.

[1788] But when you finally submitted to, listen, this is the plan.

[1789] I want to walk the plan the way the plan goes.

[1790] That's when it.

[1791] Well, David's like, you got to get rid of all the credit cards.

[1792] I was like, no, we got to keep one.

[1793] Everybody says that.

[1794] I was just stumbling all the way.

[1795] And it's like Christmas, we got to have credit cards.

[1796] credit card vacation and it's like no no no so all this time we've not put anything on credit for Christmas or vacation saved and did all that so it felt really good very good breaking the mold we've already covered this but it bears repeating because you keep repeating it cat that David your son just kept riding this process going no yeah no no no guys no it's my private a testament though to you guys kind of swallowing your pride and saying all right i'm going to i'm going to take some encouragement wherever we get it and in this case it's your son these are the role models for us so so how does it feel what's the feeling now house is is is coming up next you're going to pay that off you're retired i mean we just really feel like we can enjoy retirement just a piece of mind and be able to travel a little bit yeah that's awesome and we mostly wanted to be on here just say no matter where you are just start now yeah that's right yeah that's a very good point i didn't want to ask you how old you are, so I'll ask Joe.

[1797] Joe, we're not going to ask Cat.

[1798] I'm a gentleman.

[1799] Joe, how are you?

[1800] I'm 66.

[1801] So it's not too late?

[1802] No, it's not.

[1803] Started at 61 if I'm doing the math right.

[1804] Wow.

[1805] Way to go.

[1806] You guys are awesome.

[1807] How about that?

[1808] Really, really great.

[1809] What a great family.

[1810] All right, so I want to call out again, David.

[1811] The son is over there with his lovely family and so very cool, and his wife and the kiddos watching and cheering.

[1812] I love that.

[1813] Let's get this ready.

[1814] Here we go.

[1815] You guys ready to go, Mom and Dad?

[1816] All right.

[1817] Here we go.

[1818] We got Joe and Kat.

[1819] and they paid off 1202 ,749 in 60 months, making 125 plus plus plus here or there and they were hustled.

[1820] Let's hear your debt -free scream.

[1821] Three, two, one, we're dead free!

[1822] There it is.

[1823] Joey Kett bringing it.

[1824] I love it.

[1825] He was 61 when they started this process.

[1826] And it's not too late.

[1827] They went out and hustled, and how about that son?

[1828] I mean, is he not nominated for a son of the year?

[1829] Son of the year.

[1830] I don't know who gives out that award, but we're going to nominate David.

[1831] He was their own Dave Ramsey, she said.

[1832] Yes, and it is possible.

[1833] Folks, this is a reminder.

[1834] It's not too late because these baby steps work.

[1835] I don't care who you are or where you're from or how old you are.

[1836] They work.

[1837] Great, great stuff.

[1838] All right.

[1839] Don't move.

[1840] More Ramsey show coming.

[1841] right up.

[1842] You're listening to The Ramsey Show.

[1843] I'm Ken Coleman.

[1844] Jade Warshaw joins me, and our scripture of the day comes from Proverbs 16 .9 in their hearts.

[1845] Humans plan their course, but the Lord establishes their steps.

[1846] Our quote today from the fantastic legend Zig Zigler, lack of direction, not lack of time is the problem.

[1847] We all have 24 -hour days.

[1848] That kind of goes with your rant about Netflix and paying off debt.

[1849] I feel like you and Zig Zigger.

[1850] He said it.

[1851] That's it.

[1852] You were channeling some Zag.

[1853] I love it.

[1854] All right, let's go to Rob, who joins us down in Milwaukee, Wisconsin.

[1855] Rob, how can we help?

[1856] Hi, thanks for taking my call.

[1857] Hopefully you can help me out here.

[1858] I think I've got a fairly straightforward question.

[1859] My wife and our income has increased drastically over the last couple of years.

[1860] We're finally getting our finances in order that we should have been doing a long time ago.

[1861] But my question is, I've got a car right now.

[1862] vehicle that I owe about 35 ,000 on.

[1863] It's worth about 27 ,000, give or take.

[1864] And I'm wondering if that's something that I should just work on paying off, or if it's something that I should try to sell and just get some pay something, you know, cash and get something that's going to be workable.

[1865] Do you have any other debt?

[1866] We've got about $6 ,000 on another vehicle that will have paid off by April.

[1867] In February here, we'll have We just have some small miscellaneous debts, a couple thousand dollars that we'll have paid off in February.

[1868] Other than that, we've got a house for them about 50 ,000 in student loans.

[1869] Oh, 50K and student loans.

[1870] Okay.

[1871] Well, you think, Jade, at first I was like, well, if your income could allow you to pay that off.

[1872] I'm wondering about his income.

[1873] Yeah, what's your income?

[1874] Total gross before bonuses, about 240 ,000.

[1875] Tell me about the bonuses.

[1876] For me, it'll be about $33 ,000 a year.

[1877] On top of that, so that's going to take you to roughly $275, roughly, a little bit below.

[1878] Listen.

[1879] Wow.

[1880] Do you like the car?

[1881] Yeah, but I've kind of grown up a little bit here and realized that it's just a car.

[1882] Well, I like that, Jade, because I'm always for selling the car.

[1883] I mean, it's up to you.

[1884] Here's the thing.

[1885] What you don't necessarily have to do, if you liked the car, I'd be like, listen, keep the car.

[1886] you can pay it off in two years or less.

[1887] Yeah, exactly.

[1888] So it's not changing anything.

[1889] Or if you're like, I don't like that car, I'm going to take the $10 ,000 hit.

[1890] I'm going to put some more cash with it.

[1891] And I'm going to buy another $25 ,000 car in cash.

[1892] I'm not mad at that either because your income allows for easily allows for it.

[1893] Your income allows you to be debt free over the course of this next year.

[1894] So there's not, none of these things are going to make or break you.

[1895] Yeah, I figured if I, if I, Got rid of the car, saved up for, you know, $12, $15 ,000 car.

[1896] I could probably do that in five or so months.

[1897] If I paid, you know, if I paid the car off, I could probably do that within the next 12 months.

[1898] I also have part of the equation, too, is late summer.

[1899] I've also got tuition bill about $17 ,000 for the three kids that I'll be paid as well.

[1900] So, yeah, I'm factoring that.

[1901] Okay.

[1902] Okay.

[1903] I think for, I think, I think all of this stuff is feasible.

[1904] I'm saying $85.

[1905] 95, $100 ,000 of debt, give or take, because you said you had a couple of other little things lying around.

[1906] I see, I see $270 ,000 of income and I go to myself, okay, 270, can you live on 170 and can you take the other hundred and pay off all this debt?

[1907] And the answer is an overwhelming yes.

[1908] And that includes the tuition, by the way.

[1909] I think, I say it all the time, and this is not directed specifically at you, Rob, but I think that when you get, get into this higher dollar earning, it gets tough because people are like, listen, I'm making a good income.

[1910] I want to be able to live the life and I want to show it.

[1911] And it gets harder to pull back because it's more visible when you pull back.

[1912] When you sell a $35 ,000 car and start driving a $12 ,000 when people see that.

[1913] And I don't think that's really a problem for you.

[1914] I feel like, I feel like you're at a place where you are ready to make those changes.

[1915] And it sounds like this higher income is relatively new, right?

[1916] Yeah, last three years or so, but our biggest problem is the income went up, all the little misleading spending went up.

[1917] Yes, exactly.

[1918] It's just money flowing out the bottom that you don't even realize.

[1919] Yeah, it's just, it can get messy.

[1920] And before you know, you're like, oh, my gosh, how are we spending?

[1921] So my prescription coming from here, because you know you have to pay off the debt, but really being on a good budget is the prescription here, because that's where you really see what you're spending.

[1922] And for anybody listening, not just you, Rob, but a budget is, it just gives you that custom organization for your money.

[1923] A budget is not a spending restriction plan.

[1924] That's not what it is.

[1925] It's just a plan for your money.

[1926] And so it allows you to see, okay, with the income of $270 ,000, being able to live on $170 ,000 is still very nice.

[1927] Yeah.

[1928] And Rob, I'm going to come back to your initial question.

[1929] And I just think that the fact that you don't like that car that much, you just didn't, I mean, when I asked you the question point blank, you're kind of like, eh.

[1930] And for that reason, because there's no emotional attachment to it, I would sell it.

[1931] And it's going to give you momentum.

[1932] It's going to, I think you're a guy who gets it now.

[1933] I think you're sick and tired of being sick and tired.

[1934] I can hear it.

[1935] And for that reason, I would pay it.

[1936] I'd pay the car off, sell it.

[1937] I'm sorry, I'd sell it and you've making enough money to where you can go do what you need to do for the second car or whatever, but that's what I would do if I were you based on how you sound.

[1938] But there's no wrong decision, whether you want to pay it off or sell it, put it in the baby steps if you're going to pay it off if you change your mind after this call.

[1939] But the way you sound, yeah, I'd probably get rid of it and it would be like a way to go, I got that mistake out of my life.

[1940] It's right.

[1941] The way I would look at that based on how you sound.

[1942] But I'm curious, is that where you are or am I projecting on you?

[1943] No, no, that's correct.

[1944] It was one of those stupid purchases that I shouldn't have done.

[1945] Then I'd get rid of it.

[1946] I'd tell you what, you know, first of all, I've made plenty of mistakes.

[1947] But I like getting rid of my mistakes and trying to remove them from my mind as much as possible.

[1948] Yeah, that car is haunting him.

[1949] So you're right.

[1950] I think it's like a ghost.

[1951] I mean, he's got enough money and he's going to knock this out either way.

[1952] Which let's talk about that right quick.

[1953] Okay, you have a house, you have a car, you're upside down on it, right?

[1954] He owes 35.

[1955] It's worth 27.

[1956] Some people face that and they're like, hey, I don't know if I can get out of this car.

[1957] Walk through what we tell people to do there because we didn't cover that.

[1958] I'd like you to do that.

[1959] So ideally, if you have some money saved, you can cover the difference between an upside down situation, meaning in this case, he's about he's about $7 ,000, $8 ,000 upside down.

[1960] If he's got that in savings, then when he goes to sell the car, he can put the $8 ,000 with it.

[1961] It's a clean deal.

[1962] But now you're carless.

[1963] So You've got to make sure you've got some money for the next car, $2 ,000, $3 ,000, $5 ,000, cash, whatever you can muster up.

[1964] Now, sometimes you may hear us say, listen, if you don't have that cash to meet the difference in between what it's worth and what you owe on it, go down to a credit union.

[1965] Go go get you alone because that's the only time we would say to take out any form of debt because you're still lowering your main amount.

[1966] Let's say he didn't have any cash.

[1967] If he went to the credit union, heck, if he even found a credit card that would give him that $8 ,000, he's still taking away the $27 ,000 of debt.

[1968] And now he only has eight, right?

[1969] So we're doing math here.

[1970] We're still going lower.

[1971] He now owes $8 ,000, not $35 ,000.

[1972] And we put that $8 ,000 in the debt snowball.

[1973] So now what was $27 ,000 is $8 ,000.

[1974] And then you continue to work, Baby Step 2.

[1975] And now the math that we did there beforehand, I told him, I said, if you're you can't pay this car off in the next two years, that's kind of a rule of thumb.

[1976] If you can't pay it off, or if it's just grossly way more than what your income is, like we say the rule of thumb is about 50%, you don't want your vehicles to be any more than 50 % of what you earn in a year as a household.

[1977] In his case, that wasn't the issue.

[1978] He made $240 ,000.

[1979] But if you're sitting in a situation, your take -home pay is $70 ,000 and you have a car that's 30 and your wife has a car that's 35, y 'all are tripping.

[1980] and tripping hard, both of y 'all need to sell those vehicles.

[1981] So that's kind of how we do it.

[1982] Am I leaving anything out?

[1983] So if you're selling it, private sale, you're going to get the best value for that.

[1984] If you're upside down, you put the car on the market, you ride a bill of sale for it.

[1985] You get your money from the credit union, put it with the money from the sale.

[1986] You're good, and now you're able to get the title, and then you're able to send that title to the person who sold the car.

[1987] Yeah.

[1988] And again, we prefer your local credit union to get.

[1989] a better rate on that 8%.

[1990] Yeah, you want a good rate on the 8 % but at the end of the day, I just want you out of this car.

[1991] You said credit card and that could be really high percentage.

[1992] It could, but to go from Owing 35 to 8, you're still walking away.

[1993] You're still walking away.

[1994] But our preference is the other and for obvious reasons.

[1995] That's right.

[1996] But that's a great explanation for how you get out of an upside down car.

[1997] Thank you, Jay.

[1998] That's really helpful.

[1999] You're welcome.

[2000] Hey, great hour.

[2001] Thanks to James Childs and the crew for keeping us on the air.

[2002] Thank you, America.

[2003] This is The Ramsey Show.

[2004] Hey folks, Dave here.

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