Living a No-Debt Lifestyle Will Give You Peace

[0] headquarters of Ramsey Solutions.

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

[2] I'm your host, Jade Warshaw, joined by George Campbell, author of Breaking Free from Broke.

[3] It's good to be with you today, George.

[4] It's been a while, Jade.

[5] It's going to be a fun show.

[6] We're taking your calls.

[7] Give us a call.

[8] The number is AAA -825 -5 -2 -25, and we are here to give you the hookup.

[9] We'll chop it up with you.

[10] Let's go straight to the phone lines where we've got Terrell in Berkeley, California.

[11] What's going on, Terrell?

[12] Hey, how are you doing?

[13] Doing good.

[14] Did I get your name right?

[15] Yes, Terrell is the name.

[16] Let's go.

[17] How can we help?

[18] I'm just calling for a little bit of advice on buying a car.

[19] Right now, I've been saving some money to buy a car.

[20] And I just want to make the best decision of either buying a used car or one that is pre -owned.

[21] And I'm actually in the motion of trying to own a house.

[22] And I've been buying used cars for approximately a couple of years now to save money.

[23] And so I won't have a big overhead on cars or paying a car note.

[24] So I'm just trying to see exactly what's the right decision to make.

[25] So you've been in the process.

[26] You've currently bought used cars.

[27] Have you been purchasing them in cash?

[28] Yes, cash.

[29] Good.

[30] That's very, very good.

[31] So are you considering, it sounds like you're considering two things, either continuing to do that or possibly buying a brand new car or taking on a car note?

[32] Yes, yes.

[33] So what's driving you to upgrading car?

[34] No pun intended.

[35] Actually, my car just broke down after four years, and I'm just tired of the fact of, you know, having to spend money on mechanical issues with buying a used car.

[36] And I just want to buy something that's more prolonged buying a vehicle that I know that I can and trust for a couple of years so that I don't have to worry about any car issues.

[37] Yeah.

[38] In the past, how much have you spent on a used vehicle?

[39] Like, what's your vehicle worth now or when you bought it?

[40] My vehicle that I bought was $2 ,200.

[41] Okay.

[42] And it lasted me four years after just a couple of mechanical problems.

[43] That's pretty good.

[44] That's not bad at all.

[45] How much money do you have right now in cash?

[46] In cash, actually I saved up around $80 ,000.

[47] Wow.

[48] And I say, yes.

[49] Do you have any debt?

[50] No, no debt.

[51] Wow.

[52] I always watch you guys show about learning not to get in debt.

[53] I have no debt at all.

[54] What do you earn a year?

[55] I'm going to earn approximately this year I made $94 ,000.

[56] Doing what?

[57] What's your job?

[58] I actually do sewer maintenance.

[59] Okay.

[60] Listen, Terrell, I'm proud of you.

[61] You've been buying cash cars.

[62] You've been staying out of debt.

[63] You've managed to save $80 ,000.

[64] dollars.

[65] Here's the thing.

[66] When we tell people to buy cars and cash, it is a way of life, right?

[67] You draw that line in the sand.

[68] You say, I'm not borrowing money anymore.

[69] However, the idea of driving a hoopty for life is not really it, is it, George?

[70] Like, we want you to slowly but surely upgrade your car with cash.

[71] I don't want you driving a $2 ,200 car when you're making $94 ,000 a year and you have no debt.

[72] Like, it's time to move on up.

[73] All right.

[74] Yeah, it's time to upgrade.

[75] That doesn't mean go to the nearest dealership and find the shiniest newest car on the lot.

[76] That's right.

[77] So what's your net worth right now?

[78] My net worth in all and on total, I will say that it's around the 80 ,000 mark or plus.

[79] Okay.

[80] I'd rather us focus on that as the scoreboard instead of your credit score.

[81] Because you're about to, I'm sure you said you had a great credit score, right?

[82] Yes.

[83] And you know what?

[84] The dealership, the salesperson is like, I'm about to get Terrell with this car payment.

[85] I know right.

[86] Can't wait.

[87] I'm going to tell them how great of a job.

[88] he did with his debt management score.

[89] So I'm going to ignore the credit score, and we're going to look at your income and also tell you that the time to buy a new car, brand new, is when you're a net worth millionaire.

[90] Exactly.

[91] Because you buy a $40 ,000 car, bro, that's half of your net worth right now.

[92] Like, that hurts my brain.

[93] So there's a time and a place to do it.

[94] Excuse me, I've seen a car approximately for about $15 ,000, and I was going to put half of the payment down and try to slowly either make payments, But you have $15 ,000.

[95] You have $15 ,000 cash money that you can go into that dealership.

[96] You can buy $15 ,000 or $20 ,000 car, walk out, own it free and clear, and not owe anybody anything.

[97] Because here's, I don't think you realize how well you're set up, Terrell.

[98] George just outlined it.

[99] You're in a situation that you don't need anything from anybody.

[100] And credit scores are for people who think they need something from somebody.

[101] Like credit cards are designed for people who think, I can't.

[102] can't do this myself, I've got to borrow the money.

[103] You've already completely just bashed through that.

[104] You cut out the middle man. You already cut that out.

[105] Exactly.

[106] And so at this point, the only thing that you have to do is continue to live the life you're living.

[107] And when you start thinking about the time to buy real estate, start putting aside the same money, the same way you started saving that 80 ,000 is the same thing you're going to do when it's time to buy a house.

[108] And that's really, Terrell, you've already knocked out one of the two kingpins of the no credit lifestyle the car because so many people think you can't buy a car in cash and continue to buy cars in cash you've already crushed that like you got it and the next thing is the house and so for you that's after you get through this car thing the house is your next big goal and you'll save that down payment and you'll be able to buy that with the zero credit score as well so in your situation it's better to have a zero credit score no credit score right which means you're not messing around with debt at all than to try to play this game and maybe if I take out a little bit on my car and pay that for a while or maybe if I pick up this little credit card here.

[109] It's a game that you have already decided I'm not playing.

[110] Like, you've already changed the game in your life.

[111] So don't go back and try to play a loser's game because you're already a winner.

[112] Fair enough?

[113] Okay.

[114] Yes, that's fair enough.

[115] What kind of car are you looking at?

[116] I was looking at a Honda Accord.

[117] Yes.

[118] Okay.

[119] This guy.

[120] This guy.

[121] Like low maintenance, Honda Accord or Toyota Cameron.

[122] Listen, come on with the camera.

[123] There we go.

[124] These are the reliable cars we're talking.

[125] talking about.

[126] That thing will outlive me. And so I'm going to go with one of those.

[127] You can find them for 15 or 20 grand.

[128] You're going to walk in there.

[129] You don't have to walk in with a briefcase of cash.

[130] You just say, hey, I'm looking for the out -the -door price.

[131] That's what you asked for.

[132] And then you're going to get a pre -purchase inspection to make sure there's no mechanical issues.

[133] And what happened right there is someone else paid the depreciation on that vehicle for you when you buy a used car.

[134] Someone else took the hit because they paid $38 ,000 MSRP.

[135] And Terrell got it for 15 ,000.

[136] Come on.

[137] That's a deal.

[138] Because new cars depreciate much faster than used cars.

[139] They go down in value, Terrell.

[140] Get this, 60 % in the first five years.

[141] Okay.

[142] And so by buying used, you're being a really smart consumer.

[143] And one day, you'll be driving a brand new car when you've got a million dollar net worth.

[144] And if you want an accord, you just walk on the lot and you choose that accord.

[145] If you want something fancier, you've earned the right to do it.

[146] And so this is going to help you build wealth by making these decisions now.

[147] Terrell, how old are you?

[148] Yes, sir.

[149] I'm 33.

[150] Come on, 33 years old.

[151] Killing it.

[152] I'm proud of you.

[153] Very, very good.

[154] It's so hard living in the Bay Area due to the fact that, you know, the cost of living is so high.

[155] We have a lot of high interest rate of buying vehicles and buying homes.

[156] So that's why I've just been really just trying to save as much money as possible because my first goal was to buy home.

[157] Yeah.

[158] And, you know, that's why I've been buying used vehicles to try to keep saving up to buy home.

[159] You're doing everything right.

[160] You're doing everything right.

[161] Keep doing that.

[162] Stay out of debt.

[163] Practice of life, staying out of debt.

[164] You know, you're doing the right thing.

[165] You've saved up the money to buy a much nicer car in cash.

[166] And that's what ultimately we want for you.

[167] You're not driving a hoopty for life.

[168] You're upgrading.

[169] And with your income, you can definitely easily afford to pay $15 ,000, $20 ,000 for a used car.

[170] And he's not trying to impress anyone.

[171] He's impressing future Terrell.

[172] I like that.

[173] This is The Ramsey Show.

[174] what society thinks is, quote, normal, like avoiding debt, for example, it might seem weird at first, and that is totally okay.

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

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

[177] CHM isn't health insurance.

[178] 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.

[179] Find out more and join at c .hministries .org slash budget.

[180] That's c .h ministries .org slash budget.

[181] You are listening to The Ramsey Show.

[182] I'm your host, J .D. Warshot.

[183] Next to me is George Camel, host of the YouTube show, the George Camel Show.

[184] Also, author of the book Breaking Free from Broke, which is out now in the wild, George.

[185] It's been so fun to see it arrive at people's homes and the reviews have been just wonderful.

[186] People are changing their lives, Jade.

[187] From 17 to 51, cutting up credit cards, ditching the credit score.

[188] I love it.

[189] Very encouraging.

[190] You love to see it.

[191] Love it.

[192] So if you haven't gotten a copy, be sure to get your copy.

[193] I've got mine.

[194] Let's take a call.

[195] Let's go to Molly, who's in Boston, Massachusetts.

[196] What's going on, Molly?

[197] Hi, thanks for having me. So my husband passed away four years ago.

[198] Sorry about that.

[199] And thank you.

[200] So I have benefits from his death.

[201] So I live very comfortably on the income that I have.

[202] However, I'm getting a couple one -time payments that I don't quite know what to do with it.

[203] It's a substantial amount of money.

[204] And I don't know, like, I lost a lot of money in the crash in 2008 through my 401K and stuff.

[205] So I'm a little leery to do that.

[206] Well, you only lost it if you pulled it out.

[207] Did you pull it out?

[208] I did.

[209] Okay.

[210] Okay.

[211] We'll consider that as we move forward, but keep talking.

[212] Okay.

[213] So, like I said, I live comfortably on what I have.

[214] When I take vacations, I prepay my credit card with my guesstimated, you know, what it's going to cost.

[215] Okay.

[216] So that I don't actually incur debt, but I feel it's safer than using my debit card.

[217] and you can't rent a car with, you know, a debit card, so.

[218] Okay, we'll talk about that too.

[219] Okay.

[220] So I have these two lump sums coming in, and I don't really know what to do with them.

[221] And my bank offers a 5 .5 % interest on CDs.

[222] Mm -hmm.

[223] So I've considered, like, every two weeks putting in a substantial amount of money so that if I need it.

[224] How much are these single payments going to be?

[225] And how many of them do you think?

[226] you'll get?

[227] Um, the total for the two are 550 ,000.

[228] Okay, 550 ,000.

[229] Wow, for two, and you're getting it two times.

[230] Okay.

[231] Um, no, it's a total one, that'll be one time.

[232] That's the total of the two.

[233] Oh, got it.

[234] Okay.

[235] So they're, they'll give you 225 for one and 225 for the other, whatever, or whatever it is, 275.

[236] Okay.

[237] So, let me ask you a few questions now just to put it all together.

[238] So do you have any other debt?

[239] Like, do you have any debt?

[240] Like, do you have any debt?

[241] on the books, do you have a mortgage?

[242] Can you tell me a little bit more about your financial situation as far as income and debt?

[243] Okay, so I did purchase a house last May, and I purchased it for 429.

[244] I put 115 ,000 down on it.

[245] Okay.

[246] So my mortgage payment now is $2 ,500 a month.

[247] Okay.

[248] No other debt.

[249] No other debt.

[250] cars paid for I'm driving a 16 year old truck okay now other than this 555 that's coming um do you have any other money saved um I do not um just because I just bought the house and had to furnish it and everything um but my monthly income is um 7200 okay so you bring about 70, 700 home every month.

[251] And what about children?

[252] Out of the house.

[253] Okay.

[254] Okay.

[255] So George jumping at any time.

[256] So I'm looking at this situation and I'm filtering it through our teaching here at Ramsey.

[257] I don't know how familiar you are with it, but we view everything through seven baby steps.

[258] And these baby steps are what we feel are the fastest path to wealth with the most amount of peace, least amount of stress.

[259] All right.

[260] So that's everything I'm talking to you is going to be through.

[261] through that.

[262] So with you, it's great because I just recalculated because I actually bring in $7 ,400 a month.

[263] Oh, excellent.

[264] Love it.

[265] Love the increase.

[266] Okay.

[267] So with you, because you don't have any debt, that's excellent.

[268] It's kind of jumping us to the third baby step, which is making sure you have three to six months saved.

[269] So if it were me and I woke up in your shoes, that would be my first thing that I'm going to gun for.

[270] I'd think, okay, what do I need?

[271] What would constitute six months of expenses for me?

[272] And I would work at getting those saved.

[273] When are you getting that first payment?

[274] Within a couple months.

[275] Okay.

[276] So between now and then, I'm going to use my income and I'm going to start to build up that three to six months of savings.

[277] So that's thing one that I'm focused on is how can I get six months of savings?

[278] Thing number two that I'm going to focus on in your case, just because I think everybody needs a budget, is I'm going to start a budget.

[279] The budget we recommend here is every dollar, and you're going to want that going forward now that you've got this house.

[280] You've just got this new life in front of you.

[281] with new expenses and new money and a new relational situation.

[282] It's just a whole new life for you, and having a budget is going to give you a lot of peace month to month of how you're spending your money.

[283] Okay, so that's thing one and thing two.

[284] Now, I'm looking at this money, and George is going to talk to you more about the investing side of things because I think that's worth noting.

[285] But as we've talked about saving and budgeting, I want to go back to what you said earlier about your credit card and it being safe versus a debit card.

[286] if I were you, I would think really seriously about cutting up my credit cards and deciding that I'm going to live a debt -free lifestyle because for you, it's easier than ever.

[287] And you don't need the credit card.

[288] You don't need it.

[289] You got money in the bank.

[290] And so as far as you're worried more about safety, it sounds like.

[291] Yeah, I've had my debit card compromised several times and I found that it's easier if that happens when you're traveling to have your credit cards because it's not your credit cards.

[292] real money.

[293] It's their money.

[294] And I found that it gets resolved a lot quicker.

[295] And, you know, so that just makes me nervous because if I, let's time I'm traveling and I'm using my debit card and it gets compromised, then I'm stuck.

[296] I've never, I can vouch for this.

[297] I've visited, I've traveled to over 92 countries.

[298] I've never had a problem with them restoring the money to a debit card account.

[299] George, you just talked about this.

[300] The protections are exactly the same as long as you call and say if you're if your debit card has a visa or master card logo you're covered under their zero liability policy and there's even a federal law the electronic fund transfer act protects debit cards in cases of fraud as long as you report it within 60 days and so on top of that renting a car every single major rental car company has their own debit card policy and so there may be a slightly bigger hold on your checking account which you have the buffer for yeah but you'll have no problem doing that yeah those companies definitely make it a little harder but you you can still do it.

[301] It will reduce your risk as well as give you more peace when you just use your own money now.

[302] And I talk about this in my new book, Molly.

[303] So I'm going to send you a copy because I cover how to rent a car without a credit score, why you should ditch the credit card and even the CDs and why I'm not a big fan of the certificates of deposit you mentioned.

[304] What's going to happen there is it's going to lock that money up.

[305] And if you withdraw it before it matures, the maturity date, you're going to have to pay a penalty of losing some of the interest.

[306] And so you can actually, that rate you mentioned is what I'm getting right now in my high yield savings account, which is completely liquid.

[307] There's no penalties if I take the money out.

[308] So I would encourage you just as you paused and decide what's next to put the money in a high yield savings account.

[309] That's what I would do.

[310] And that's what I do as well.

[311] So I think that that kind of gives you some just lifestyle changes to consider, cutting up the credit cards, living a cash lifestyle.

[312] That's good to consider.

[313] And then finally, if I'm you, as this money is rolling in, the way we teach the baby steps, let me just roll through them real quick so you get the context.

[314] Number one is for people who are first starting out, they just get $1 ,000 saved.

[315] Number two is for people who have consumer debt.

[316] They pay off all of their debt except the house.

[317] Number three is where you're technically at, which is saving three to six months of expenses.

[318] Then from there on, people do four, five, and six simultaneously.

[319] So because I know you're going to have six months saved up quickly.

[320] Let's talk about those real quick.

[321] Baby step four is you're investing 15 % of your income every single month.

[322] So I want to make sure that we start that habit for you.

[323] And then if you have kids that are going to college, baby step five, you can do this at the same time.

[324] You can start setting some money aside for college if it makes sense.

[325] And then finally, baby step six, you can start putting extra money towards your house.

[326] So putting that in context for you, if I'm you, I'm going to start putting that 15 % aside, like on auto pay coming out of my check every month.

[327] And I'm going to start looking at when this $5 ,000 comes, how I can start paying my home off.

[328] And that's an emotional decision, but it is a wonderful one to make.

[329] And you'll still have over 200 grand left over to max our retirement, to give more, to enjoy life and spend more, and to upgrade that 16 -year -old truck, Molly.

[330] It's time.

[331] It is time.

[332] So hang on the line.

[333] We're going to send you a copy of Breaking Free from Broke.

[334] It'll walk you through all of the stuff we talked about and hopefully help you have a new paradigm around it.

[335] I love it.

[336] Man, what a blessing to have life insurance.

[337] Not fun, but man, it changes things.

[338] Absolutely.

[339] This is The Ramsey Show.

[340] You are listening to The Ramsey Show.

[341] I'm Jade Warshaw, joined by George Camel.

[342] And I just want to thank you guys so much for tuning into the show week after week.

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[358] That's right.

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[360] It means a lot to us.

[361] And let's head over to the phone lines where we got Molly in New Orleans, Louisiana.

[362] What's going on, Molly?

[363] Hi, everyone.

[364] How are y 'all?

[365] We're doing good.

[366] How are you?

[367] I've been better We're in a bit of a sticky situation And I'm calling to kind of get y 'all's advice On how we should address A pretty big financial situation Our dishwasher busted And we are down to the slab And the slab and the stud Yikes And yeah it's not ideal I'm six months pregnant And I have two small children Oh no Oh no Not exactly a convenient time.

[368] The big problem we've run into is insurance is denying our claim.

[369] So it's looking like we're going to have to pay for this entire renovation out of pocket.

[370] Oh, so this isn't just a dishwasher.

[371] You have to replace flooring?

[372] Oh, yeah.

[373] I mean, I, it floors, it ruined cabinets, a little bit, yeah.

[374] We're going to have to replace some drywall, some insulation.

[375] What's the price tag?

[376] So I'm waiting for my full estimate because I went and I picked, like, materials today to go pick out flooring and things like that.

[377] But on cabinets and then the demolition alone is $17 ,000, and that's not having, you know, that's not anything to do with floors, my countertops, et cetera.

[378] where we are fortunate is that we do have money saved from saved and invested that my husband inherited after his mother had passed away.

[379] But we're looking, I guess, for the best way to use that money in order to pay for it because we really don't want to have to take out a personal loan or go into any sort of debt to fund.

[380] Well, that's off the table.

[381] So let's look at this as though debt doesn't even exist in the world.

[382] And I like to look at situations that way because it then takes it off the table and it frees my mind to be very creative in my approach.

[383] So from this moment on, there's no such thing as debt.

[384] We don't even, it doesn't even exist in the world.

[385] So let's talk about it like that.

[386] You mentioned that there's some money that you have, but you also mentioned that it was invested.

[387] Can you tell me more about that?

[388] I can tell you, I guess generally, my husband tends to be the one to run the investment side of things.

[389] But from him, we do have, he said there's $59 ,000 in a high -yield savings account.

[390] Good.

[391] It's $53 ,000 invested in stocks and bonds.

[392] Specific ones I can't speak to personally at this time.

[393] I just don't know.

[394] Look, the $59 ,000 is where I'm at right now.

[395] That high -yield savings account just covered this renovation, didn't it?

[396] Listen, I know it did.

[397] There's another $11 ,000 he said in a, he said it's called a money market account.

[398] It's still like a cash.

[399] Yeah.

[400] So listen, the good news is you guys have the cash to cash flow this.

[401] And that's really comforting and good for you guys for making sure that that safety net is in place.

[402] I'm just curious, do you have any other debt that we should know about that plays a role in this?

[403] Not really.

[404] I mean, we have a mortgage.

[405] fine and then we only have we were completely debt -free until about the last year we have about 5 ,000 in credit cards and that was three out of four family members wound up in the hospital at some point so very sudden random unforeseen circumstances that happened aside from that both cars are paid off good okay so so 5 ,000 clears all of your consumer debt yeah let's do that today love it we're clearing that debt out today i love that you still have extra money left to get this kitchen fixed and to repair these damages i don't think you're going off the wall i don't know that you have to spend you know every dime that you have but what i do want you to get from this um and what i'm my takeaway from this situation molly is um you guys have done a good job you've kind of played patty cake with your finances in a way that it's like oh, we can take out some debt for this.

[406] Maybe we can consider it for this.

[407] Because I have a feeling that if you hadn't called in, you guys might have taken out a personal loan to cover something that you can pay cash for and cash flow throughout your life and your situation.

[408] And so my takeaway from this would be coming off of this call, I would have you and your husband really get on a good budget because that's what's going to inform your lifestyle from here on out.

[409] And I think when you have a good budget, it's giving you like this snapshot of what your entire financial situation looks like.

[410] So when something comes up like family members getting ill, you're not going, oh, I'm not sure if we have the money for it, so let's just use the credit card.

[411] Or if something, you know, like a catastrophe pops up like with this dishwasher, you're not thinking, oh, our only option might be to get out a personal loan.

[412] You've got all your finances in one place.

[413] And of course, the budget we recommend is every dollar because you can see everything about your finances and that one app.

[414] And it just kind of gives you that piece of mind to go, in your case, you would look at that and go, oh my gosh, we're doing far better than what I realized.

[415] And we can pay cash.

[416] We don't have to go into debt or stress or monthly payments in order to deal with something honestly as big as a dishwasher flood in the house.

[417] I love that you guys have $59 ,000, really $62 ,000 saved.

[418] It's amazing.

[419] That's saved the bacon today.

[420] And Molly, a few things to consider.

[421] Number one, you may want to consider appealing the claim denial with insurance.

[422] If you feel like you have good reason to believe it should be covered.

[423] is that the case and that's been my battle the last two weeks i think the next step is seeking out some legal advice um which is you know an avenue that we're willing to explore it's um i feel it was definitely a premature denial of our claim um and then i fought back and fought back and fought back they kind of uh sent someone out i think to appease me maybe You know, and let someone come take a look, so I had someone in my house, but then, you know, they're still maintaining a denial, which maybe I'm in denial.

[424] Maybe I'm just not willing to accept that.

[425] Well, if the appliance was old, it wasn't maintained properly, there was negligence.

[426] You know, there's a lot of things that would cause the denial.

[427] But I'm just, if it takes a month of fighting to make that 25 grand needed for renovations, I'm fighting it.

[428] So that's one angle.

[429] The second is to make sure you get multiple bids on this.

[430] Don't just take the first.

[431] bid from the first guy who says they can fix it.

[432] So I'd get multiple bids.

[433] I would try to negotiate and say, hey, we can pay up front with cash if you're able to give us a discount and see what they say.

[434] Yeah.

[435] And a lot of times you'll get 4 % off, which adds up when it's $25 ,000 work.

[436] Listen, wait, I might go against that, George.

[437] What's that?

[438] With cash?

[439] You're talking about with the contractors?

[440] Well, with whatever the bid is.

[441] That's true, but I would never pay a contractor up front.

[442] well when the work is done but i'm saying like some people will go on payments or something like that oh you're saying no no payment plan i got you yes hey we'll write you a check when this is done okay yeah because i was about to say when the guy comes in when they swipe a card there's fees involved that they have to pay and so if that's a 3 % fee and you say can i get a 3 % discount if i just write you a check just simple things like that can save you money so i'd get multiple bids and do your best to just lower this cost because i know it's a stressful time you're six -month pregnant.

[443] You got two kids running around like crazy.

[444] And I'd also get more details on this investing side.

[445] What's your husband's doing?

[446] You should have some clarity and understanding of everything going on with your financial picture.

[447] I definitely agree with that.

[448] Listen, not fun.

[449] That water is one of the most insidious things that can happen in your home.

[450] It is just the worst, especially in her situation, six months pregnant, two kids on the way.

[451] I felt her pain.

[452] I just want to say not today, Satan.

[453] Not today.

[454] I know.

[455] That's right, George.

[456] But thankfully, they had the safety net of an emergency fund.

[457] That's huge.

[458] A fully, fully, fully funded emergency fund.

[459] That's what you need.

[460] When life storms hit, this is the Ramsey show.

[461] One of the questions I get all the time is, which life insurance company should I use for my term life policy?

[462] A valid question, since there are hundreds of companies out there with rates all over the place in riders and add -ons that are simply a waste of money.

[463] to get this done and make the right decision.

[464] That's why the only company I use and have recommended for over 25 years is Zander Insurance.

[465] Zander is a broker who shops the top term life companies for you and finds the best rates available from the only plans I recommend.

[466] They also save you time, whether you want to work online, over the phone, or via text, their team will cater to your needs and help you make the right decision.

[467] This is an absolute necessity, and Zander has made the process easy and convenient.

[468] Call them at 800 -356 -4282, or visit zander .com for instant online quotes.

[469] This is The Ramsey Show.

[470] I am Jade Warshaw, your host, joined by George Camel, your other host.

[471] George wrote the book Breaking Free from Broke.

[472] I wrote the book, Money's Not a Math Problem.

[473] and so listen just two authors sitting in chairs talking about just doing the dang thing just doing the dang thing george that's what i'm talking about so how has it been tell me a little bit about oh my goodness here of this this book here well writing a book is one of the hardest things i think i've ever had to do especially when it lives in the world of total money makeover and what's been really encouraging though is people going like this is dave ramsie said this is financial piece for the next generation reviews are saying this is like total money makeover but written for 24 with me and mind, all of the objections, all of the struggles I've been dealing with the last few years with inflation and the housing market.

[474] And what do we do now?

[475] And credit scores and credit cards, there's so many more traps than there was even 10 years ago.

[476] And so I covered all in this book to help you have this paradigm shift and go, I don't need to play this game.

[477] Building wealth and living a life I want to live is so much simpler than I thought.

[478] I just got to ditch this money matrix that's been created for me. So the reviews have been awesome.

[479] And I love, your book hit the bestseller list jade congratulations i did not even know that that was possible george because you have we'll find a way you have a what i'm going to call full -sized book and i have the miniature version quick read which is a quick read and uh i i didn't know it was possible but here we stand in the national bestseller category yes i love it that means people are getting helped that's right and that's what we're here to do help you guys help you with your money situations your relationship situations, mental health situations, career situations, all of that is directly connected in your life.

[480] So that's what we talk about on this show, your life, and your money.

[481] So you can give us a call.

[482] The number is triple -8 -825 -5 -2 -25, and we will do exactly that.

[483] And let's do it now, going to Taylor in Washington, D .C. What's going on, Taylor?

[484] Yeah, so first, congratulations to you both on your new book releases.

[485] Grazie.

[486] Thank you.

[487] And collapse to that.

[488] I am calling because I'm in a little bit of a situation to where currently I own my home.

[489] I also have an investment property.

[490] The investment property is doing well in terms of just the equity aspect.

[491] So at the moment, it has about $150 ,000 worth of equity that's in it.

[492] However, I'm really not making anything off of it too much.

[493] I find that I'm actually putting out money.

[494] So, like, for example, 2023, I probably spent $2 ,000, $2 ,500, something like that, just kind of doing repairs that maybe the rent wasn't able to cover.

[495] And so I'm in this little mix of, you know, understanding that real estate is the best part to wealth.

[496] I have a home with my husband that we own.

[497] Still have a mortgage on, of course.

[498] How much?

[499] And so the idea was to acquire more properties in a sense.

[500] But now I'm starting to have this idea of do I offload the property at 140, $450 ,000 where I will be able to get that equity and possibly just pay off my student loans where I currently have about $80 ,000 because I ended up getting my MBA and obviously as a result, you know, like a lot of other people, racked up a lot of debt with that.

[501] What other debt do you have?

[502] My revolving debt, I only have about $15 ,000, I'm not only, but I have about $15 ,000 and revolving debt, which includes my car note, credit cards, things like that.

[503] What about your husband?

[504] I'm not sure of which way to go.

[505] What about your husband?

[506] What debt does he have?

[507] My husband probably has about 10 ,000 worth of debt, and that also includes vehicles and credit cards.

[508] Okay, so he has 10 ,000 cars and credit cards.

[509] He doesn't have student loan debt?

[510] He does.

[511] I'm sorry, yes, he does.

[512] He's left in mind, so I think he's 40.

[513] He's about 40 ,000 now.

[514] Okay, so 40K and student loan from him.

[515] Okay, so there's a lie here, Taylor.

[516] I'm not going to lie to you.

[517] This is a tangled web.

[518] grand and just consumer debt.

[519] Yeah.

[520] So what is the investment property worth?

[521] Right now, it is the worst.

[522] I could probably get like 360 at the minimum.

[523] The high would be 380, and I owe $199 ,000.

[524] Okay, and you're thinking after fees you'd walk away with about $130?

[525] Yes, yeah.

[526] Yeah, take about, yeah, after all of the credits and things like that at least.

[527] You guys have any money in the bank right now in savings?

[528] Yes, we do.

[529] We have about four months worth of our living expenses.

[530] How much is that?

[531] We are, it's about 40 ,000 in our, yeah.

[532] Do you guys have stocks, like single stocks or single single investments?

[533] I do, but it's not much in there.

[534] I only have about $6 ,000 in my single stocks, and obviously not including 401K or anything like that.

[535] And do you have a brokerage or anything else?

[536] that we should know about?

[537] No, that's probably it for the most part.

[538] And what's the household income?

[539] Combined, we are about 240.

[540] Ooh, good job.

[541] Okay, good.

[542] And, okay, so I know, George, I'm looking at these numbers, and I'm just seeing a situation that's so complex, that doesn't have to be complex.

[543] It looks, like, when you just said all of that, it was just even a lot to say, like to list all that out was a lot to say we had to take a deep breath at the end we had to like wipe the sweat off of our brow um i think that there's a way to really simplify this and in my mind it does start with selling that rental because it's going to give you the cash you need to get a hold of your life and to simplify your life and then and only then you'll be able to do the thing that you want to do which is purchase real estate and you'll be able to do it the right way so i kind of feel like have you ever seen um on the movies where the guy like clears the table off and he like just uses his hands to like knock everything off like I did with the microphone and and then you got like the clear slate I feel like that's what we have to do with this is just knock everything off the table and start over and I think that selling this real estate is the way to do that you're going to clear like you said about 130 and then we've also got 40 ,000 saved on our debt and I think or saved in a savings account if you take that money you can be debt free immediately with most of your emergency fund on top of that.

[544] Yeah.

[545] Because you're going to have like 176.

[546] If you include the stocks, if you sell those two, that 176 is going to clear your debt and leave you with a fully funded emergency fund.

[547] How good would that feel?

[548] It will feel great.

[549] Now, it's a little intimidating.

[550] So we are in our early 40.

[551] So it's like it also is like feeling like starting over with rebuilding.

[552] What are you rebuilding?

[553] You're clearing the deck here in the best way possible.

[554] You got no payments and you make two four.

[555] I think you're going to be okay.

[556] You're not rebuilding.

[557] Right now, you're 400 pounds.

[558] Mm -hmm.

[559] And you're out of shape.

[560] And what we're doing right here, when you do this, you're going to be 160 and lean.

[561] Like, that's what we're doing for you.

[562] Because right now you're overweight.

[563] It's stressful.

[564] It's heavy.

[565] It's a lot to carry.

[566] And by you doing this, it's literally getting you financially fit, is what we're doing.

[567] And when you're able to be fit, then it's like, okay, I can move better.

[568] I can think.

[569] clearer and you're going to be able to do what you want to do ultimately, which it sounds like you guys aren't interested in real estate, but now you're cleared up to be able to do it the right way, which is ultimately paying cash for it after you've paid off your home.

[570] So there's a right, there's a right and a wrong way to do certain things, and there's a better and a best way to do things.

[571] And we're trying to tell you the right, better, best way to get where you want to go.

[572] Right, right.

[573] Fair enough.

[574] Fair enough.

[575] Thank you guys.

[576] I don't think you're going to regret this decision.

[577] I don't think so either, but I do think, and it's worth noting while you're on the line, I do think there's a certain meeting of the minds that you and your husband are going to have to come to.

[578] And I do, you know, when you get off this call tonight, you guys get home and you're having dinner and you talk about this, what does that conversation look like to you?

[579] Well, probably both be on different chapters.

[580] That's what I thought.

[581] Is he going to want to hang on to the debt.

[582] Yeah.

[583] And that's what made it hard a little bit to move forward with decision making of trying to find that alignment.

[584] I feel like slowly we're getting there, you know, but it's like each of us presenting our case.

[585] Yes.

[586] And so it's like you said, trying to have that meeting of the minds and find like that mutual decision.

[587] Well, here's what I would suggest.

[588] I wouldn't suggest you going straight away tonight and being like, I was on the radio and these two blockheads told me to do da da da da da da i would suggest you taking a moment to get your head around what we've just said because what we told you a lot and there is an emotional component to that and there's an emotional like it's just a lot so i would recommend you taking a moment to get your head around it figuring out how you feel about it that way you're presenting your case not georgianized case because if it's not real to you and if you don't have a genuine connection to it it's not going to go over well.

[589] And I think that's important to know, George.

[590] Yeah.

[591] You guys make $240 ,000.

[592] There's no reason to play with debt anymore.

[593] You're too successful.

[594] You're too smart.

[595] You know too much.

[596] Do stay broke.

[597] It's time.

[598] It's time.

[599] The time is now.

[600] This is the Ramsey Show.

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

[602] I'm your host, Jade Warshaw.

[603] I am joined by George Camel today, one of my favorite co -hosts of all time.

[604] Wow.

[605] Author of the book, Breaking Free from Broke.

[606] We're taking your calls.

[607] The numbers 3 ,8 -825 -2 -2 -25.

[608] So give us a call, and we would be happy to help you out with whatever the concerns you have about your life and your money.

[609] But, George, I have to say I'm really excited because we have just recently announced a new event here at Ramsey Solutions.

[610] It's a big one.

[611] Brand new, new content, new talks.

[612] Total Money Makeover Weekend.

[613] that's it.

[614] Like I was waiting for like cheers and like cannons and total money makeover weekend.

[615] I'm really excited because it's really total money makeover is the book that started really all of this hoopla, the baby steps, all of that.

[616] And so we're creating a live event weekend around that.

[617] It's May 10th and 11th.

[618] And as George said, it's all the personalities.

[619] Like we'll all be there.

[620] The goat himself, Dave Ramsey will be there.

[621] And we're all going to do all new content on really the same money concepts that we've taught for 30 years around here.

[622] So if you're, you know, new to the Ramsey way of life, this is a great event for you.

[623] If you've been hanging out with us for the last 20 years, this is a great event for you.

[624] Give me some pep in your step.

[625] Yeah, it's like a rally tonight.

[626] You're a reminder of what you're doing this all for.

[627] That's right.

[628] That's right.

[629] So it's here.

[630] It's here now.

[631] Early bird tickets start at just $99, but they're for limited time.

[632] So make sure that you get your tickets now.

[633] You can do that at ramsysysolutions .com slash events.

[634] But I'm looking forward.

[635] It's going to be a different format.

[636] than a lot of our other events.

[637] There's Q &A session.

[638] Yeah, this is a two -day event, Friday and Saturday.

[639] We got Smart Money Happy Hour live with Rachel Cruz and I on Friday night, and musical experiences.

[640] So it's a whole weekend in Nashville, make plans to be here.

[641] That's right.

[642] Get your lodging and transportation in the budget and come hang out with us.

[643] Lodging.

[644] I like that.

[645] Lodging.

[646] Yes.

[647] Again, go to ramsysolutions .com slash events in order to get your early bird tickets.

[648] I'll see you there.

[649] All right, let's go to Spokane, Washington.

[650] The city I was born in to talk to Isaiah.

[651] what's going on isaiah hi how you doing doing good what's going on in spokane uh i am here in spokane training to be a missionary pilot mechanic um i'm in my second year okay so my question is is i have some money in a 529 college plan for my great grandma it's about 31 000 uh i've paid for school the last two years out of my personal savings and my wife and i are making enough to where we could probably pay for school for the next three years of the program.

[652] My question is, should I keep the money in the 529 or roll it over into some other investments?

[653] That way it isn't locked up and we have access to it to whether that be reimbursed what we spent on school so far or to just make sure we have the funds to remain out of debt moving forward.

[654] I would definitely use the 529 to pay for college because if you wait and try to use it after the fact whether you have loans or things like that there's limits on you using that money to pay off student loans or anything like that so if the money is earmarked for education which it is in a 529 i would use that money and then you use your personal income and cash flow to do whatever baby step you're on and if it happens to be investing then you would use it there does that make sense yes um so if i've already spent some of my personal money for the 529 plan, can that come back into reimburse what I've spent or does it have to be current and future college expenses?

[655] What you spent, let's see, you're asking if you can use the 529 to reimburse what you've already spent.

[656] I believe you can.

[657] Well, you'll have to look into it because they're different by state.

[658] Okay.

[659] And George, it looks like George might be looking at that right now.

[660] Yeah, I know you can do that against like if you get a scholarship, you can then take that withdrawal against the scholarship with no fees or penalties.

[661] But as far as just going, hey, I paid tuition last year.

[662] Can I take the money out now?

[663] I'm not sure about that based on the plan.

[664] And I know that if it was a student loan, like if you're like, hey, I have a student loan, I think you can only do like 10 ,000 out of a 529 to cover a student loan per year.

[665] So there's some stipulations around that, which is another reason why from here on forward, I would just use that money to pay for education.

[666] Now you're, and that, that just frees up your income to do life, you know, do life on a daily and monthly basis with your wife.

[667] So you've got 31 ,000 in the 529.

[668] Is that going to cover everything that you need?

[669] Yes.

[670] I mean, for the last two years, it's only been about 5 ,000 a semester, which we've covered.

[671] And moving forward, I've gotten a lot of really good scholarships and stuff.

[672] So even if I were to take it against the scholarship, I could definitely use that money.

[673] This year, I had about 18 ,000 scholarships I got.

[674] So if what you mentioned, you can use a scholarship to take the money out in place of that.

[675] So yeah, we could definitely use the funds.

[676] And then whatever's left, you know, if it can roll over to different family members.

[677] So if your wife has further education, if you guys end up having children, depending on the state, you should be able to roll it towards different family members as well.

[678] And the good news is, over time, I believe 529, by the time you're in your 60s, it becomes just part of your retirement, if I'm not mistaken.

[679] But there's some flexibility there.

[680] The point is when money is earmarked for a certain purpose, especially when it's invested money, you definitely want to use it for the purpose that is earmarked for because it's better off.

[681] Was there any other part of that that you had questions or concerns about?

[682] No, the only question is, is like, if I were to roll it out or take it out for school, that would free up some of our savings money.

[683] Absolutely.

[684] Should I just keep getting, just grow the savings or should we start investing?

[685] As a missionary pilot, I'm only going to be able to fly for missionary aviation until I'm about 63 in that field because they kind of cut you off before you get too old.

[686] Flying isn't the easiest.

[687] So I was wondering if I should start investing sooner, knowing that I won't have to save as much for college because we'll be using that plan.

[688] Yeah, I mean.

[689] If you've got no debt, the emergency fund, you're able to cash flow all of your program 100%, then you can begin investing now.

[690] But just make sure, do the math on all this and make sure you're not going to get to year three and go, oh gosh, more expensive than we thought.

[691] So figure out all of the expenses needed, whether that's housing and textbooks and who knows what else is involved here.

[692] Is your wife working?

[693] Yes, she works.

[694] full -time as a nanny, so that is one nice.

[695] Okay, and you don't have any debt?

[696] No debt.

[697] Perfect.

[698] Will you be making money while in school?

[699] I work a little bit, my school is 40 hours a week, and then homework on top of that, so it's not the most friendly to work as well, but I try to pick up stuff here and there.

[700] Okay.

[701] That's the part to think about is you may have a reduction in income, and so I don't want you guys to use up all that emergency fund because you're in school, Yeah, and I'd be working now with whatever money you have left over to build a separate emergency fund.

[702] Like, you've got this $529 money.

[703] What other money do you have?

[704] We have about $5 ,000, $6 ,000 in savings.

[705] And then our monthly expenses, we don't pay rent or utilities or cars or phone bills or anything.

[706] Our parents have blessed us with all of that.

[707] So our monthly expense is about $1 ,500 a month.

[708] So that's around.

[709] that four months.

[710] Listen, if I'm you, I'm going to stock up that emergency fund to six months.

[711] I'm going to make sure I'm on an every dollar budget so I know what the plan is and I know what we're working towards.

[712] And for you, it's getting six months saved and eventually you'll be investing 15 % of your income every month into investments in retirement.

[713] This is The Ramsey Show.

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

[715] So work with a mortgage advisor you trust, not just some random website.

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

[717] Learn more at Churchillmortgage .com.

[718] This is a paid advertisement.

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

[720] Equal housing lender.

[721] 1749 Mallory Lane, Suite 100.

[722] Brentwood, Tennessee, 37027.

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

[724] I'm Jade Warshaw.

[725] This is George Camel, host of the YouTube show, the George Camel Show.

[726] George How's that show going, by the way?

[727] it's honestly bonkers jade i don't know you know january is always a big month for all of our shows but ours in particular has gone zoom zoom as our friend dave would say and so right now i don't know what's going on but we had a really strong episode with dave it was millionaires and cars getting coffee with dave and i in a tesla and we went to his barn it was there was behind the scenes he made me a cup of coffee from a fancy coffee machine and we had a great conversation was the coffee good though it was good yeah i got no complaints i that felt like it wasn't that Good.

[728] Well, I don't want to, I don't want to dog Dave.

[729] You know, I got very boogey with my coffee, but it was a great cup.

[730] So we enjoy it.

[731] You can go check it out on YouTube at, just search George Camel with a K on YouTube.

[732] And you'll see all the stuff we're up to.

[733] Love it.

[734] All right, let's take your call.

[735] By the way, you can give us a call.

[736] The number's triple 8, 825 -5 -2 -25, and we'll answer your questions.

[737] So let's go to James in Cleveland, Ohio.

[738] What's going on?

[739] James.

[740] Hey, how's it going?

[741] Thanks for taking my call.

[742] You're welcome.

[743] How can we help?

[744] So I make about $80 ,000 a year.

[745] I have about $85 ,000 in consumer debt spread out between a car payment, a personal loan, and some credit cards.

[746] Okay.

[747] Can you tell us how it spreads out, just so we know?

[748] Yeah, so I have $43 ,000 on a 20 -21 truck.

[749] 24 ,000 on a personal loan, and then the rest is credit card.

[750] Okay.

[751] Thank you.

[752] Back in September, I started working with this company that is supposed to negotiate with these credit card companies and the personal loan company to help bring the balance balance.

[753] Like these debt settlement relief companies?

[754] Yes, yes, exactly.

[755] And so just recently finding you guys, I'm going to.

[756] coming to the horrible realization that this was a bad idea and to the point where most of these accounts are defaulted or you know not going to work with me personally so I don't really know where to go from there in the baby steps I have a thousand dollars fund saved but as far as like tackling the debt the truck itself is the only thing that's active if you will is it upside down paying them fun every month.

[757] No. So we're selling the truck.

[758] First off, that's what I'm doing, because a guy who's making 80 ,000 probably shouldn't have a car that's more than half of his annual income.

[759] That's kind of just a rule of thumb that we go by around here.

[760] And I mean, yours is just a little above, but considering your debt, if I woke up in your shoes, the first thing I would do is sell that car.

[761] And I love, so many people call in James that are upside down in their vehicles and it kind of puts a wrench in the plan.

[762] I mean, they're still able to do it.

[763] But because you're not upside down, if you sold that car today, what would you get?

[764] It would be real close, regardless.

[765] But my question with that would be is I travel for work and my vehicle is like my lifeline.

[766] Every six weeks to three months, I'm going to a different part of the country.

[767] I build retail stores for a living.

[768] So, I mean, having a vehicle with a warranty was kind of why I went with a new vehicle when I purchased it in the first place.

[769] So are you, you're hauling things in the truck because of your work, like it's a work truck?

[770] Yes.

[771] So you're saying that there's no way that you could have half the truck, have a $23 ,000 truck do the same thing?

[772] Because I guess that's not the case.

[773] Yeah, because I'm not, listen, I'm not telling you that you have to get a $2 ,000 truck.

[774] I'm just saying, I think there's a significant downgrade that you can do in the situation.

[775] situation.

[776] And I'm saying that that's what we're working up to.

[777] Thing one here is we're paying off your debt.

[778] That's what we've got.

[779] That's the house that's on fire.

[780] That's what we've got to be focused on.

[781] And part of that, the reason that your house is on fire is because you've got a $43 ,000 truck.

[782] So if we can knock that down for the time being, if we can knock that down for the time being to far less expensive, that is going to get you where you want to go.

[783] And then the time's going to come where you can upgrade slowly to get back to a $40 ,000 truck?

[784] Sure.

[785] So would I attack the truck, get rid of the truck, and then start working on this debt that's now going to collections and stop working with this?

[786] Yes.

[787] Stop giving them money.

[788] So what these companies do, James, and now you know this, is they'll intentionally tell you, hey, stop paying all payments on this.

[789] Let it tank, and then we'll try to negotiate the payment to make it lower, which in turn just implode.

[790] your financial life and really doesn't solve the problem and by the way you could have done that yourself yeah and so these companies are a borderline scam and i hate them with a burning passion but yeah we need to get rid of this truck and downgrade for now which is going to free up a payment you said how much is the payment on this truck um it is 835 oh lordy listen james 835 do you know that's so much money that is so so much money you're going to be able to make such great headway um before you sell the truck, obviously, you're going to need to set aside some cash that you can get a car in cash.

[791] And again, remember, this is just short term.

[792] Like, I understand everything you said about your truck being your livelihood in many ways.

[793] But this is just such a short term sacrifice because with $835 saved up or, you know, saved in your budget every month, you're going to be able to pay off $10 ,000, $11 ,000 in credit cards, Lickety Split.

[794] You're going to be able to pay off that $24 ,000 loan, Lickety Split.

[795] because I know that's not the only money that you'll be able to free up to put towards this debt.

[796] Yeah, sure.

[797] Absolutely.

[798] And James, the other issue with using this truck for work, a new expensive truck, is that you were destroying the value by taking this thing on the road like that.

[799] And so you need to get out of this thing while you can and you're not underwater.

[800] He's lucky he's not already with the miles.

[801] You'd put another 10, 20, 30, 40 ,000 miles on this thing and that value is just going to drop like a rock.

[802] So that's your homework coming out of here.

[803] your homework is, A, we tell everybody to get on a budget.

[804] So make sure you pull up an every dollar budget.

[805] That's just going to help you.

[806] That's your roadmap going forward.

[807] And then number two, you're going to start saving up a little bit of cash so that as soon as possible, you can sell this car and have some cash to get just in the meantime.

[808] Because once you sell that car, it's going to take you a year to get out of this debt or less.

[809] I'm going to say eight to 12 months to pay this off if you get after it.

[810] Fair enough?

[811] Okay.

[812] And I'm not entirely alone here.

[813] I do have a fiancé and two children at home.

[814] I have a seven -year -old and a one -year -old.

[815] So it makes it a little difficult for my fiancé to help in the income endeavor.

[816] As of now, we don't really have strong support system around.

[817] But as...

[818] Well, I don't think she should help you yet because you're not married yet.

[819] So until you get married, I do, even though you might be living together, financially keep it separate.

[820] And this is your debt until you guys do get married.

[821] Because her credit card debt is in total with that $85 ,000.

[822] Okay.

[823] Okay.

[824] So thank you for the clarification for right now.

[825] When do you guys get married?

[826] We've been together 12 years.

[827] So.

[828] Oh, you've been together 12 years.

[829] But when do you get married?

[830] Yeah, good question.

[831] Listen.

[832] James, you just flipped the entire script on us right here.

[833] You just ticked off the wrong jade.

[834] No, I'm not mad.

[835] I'm not mad.

[836] I just wish I had this information sooner.

[837] Listen, number one, get married and stop playing.

[838] If you've been together 12 years, you've got two kids together.

[839] This is the woman.

[840] And if it's not...

[841] If you want the real wedding and it's just not in the table financially...

[842] Okay, I get that.

[843] But literally just get the piece of paper because this is for legal protection for both of you.

[844] And if you guys want to do the party later, that's fine.

[845] But get the piece of paper so that you can combine your money and it's safe for both of you.

[846] Like, just talk her and be like, listen, girl, we've been together all this time.

[847] Come down to the courthouse with me. Let's get this paper signed.

[848] You don't even have to tell anyone, all right?

[849] that can be your little secret until it's this is just to keep you safe under the law of combining your things together because if something happens you want to show that you were legally married there's financial legal protections with marriage that's right so that's you got some work to do james james thanks for telling us you just he just entered the fire by telling us last minute 12 years listen get a Costco pizza and a Costco cake and we'll celebrate later Listen, they don't even have to tell anybody.

[850] Just go get the datgum certificate.

[851] Don't tell anyone.

[852] And then when you can pretend like, oh, we're, we set a date and we're getting married.

[853] Like, nobody knows.

[854] At this point, they forgot.

[855] I mean, they're like 12, it's been 12 years.

[856] Everybody around them thinks that they're married.

[857] That's crazy.

[858] Listen, if you're listening, I don't care if you've been dating for eight years or 24 years.

[859] If you don't have that piece of paper and something goes wrong, you are not protected.

[860] get married, get the piece of paper so that if something goes awry, the law is on your side to make sure you get your cut.

[861] Come on, ladies.

[862] This is The Ramsey Show.

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

[864] I'm your host, Jade Warshaw.

[865] Your other host is George Camel with a K. Don't get it twisted.

[866] And we're taking your calls all afternoon long.

[867] The number is triple 8, 8255 -2 -25.

[868] And we're coming, George, around the pipe, to my favorite time of year.

[869] Not true.

[870] Tax season.

[871] It's a whole season, Jade.

[872] Like, we got birthday month, but it's tax season.

[873] Cizion, yes.

[874] I don't historically love tax season, George.

[875] I'm not going to lie about that.

[876] It feels stressful.

[877] It feels like, all right, like, I got to start.

[878] You know, people are sending me papers in the mail.

[879] They're emailing me papers.

[880] I got to download the PDF and send it to my, you know.

[881] Well, at least you're tech savvy and young.

[882] You know, my mom, I got to show her how to get the PDFs downloaded and printed.

[883] whole situation.

[884] The PFD.

[885] No, I get it.

[886] I mean, when I schedule my tax appointment, it might as well be scheduling a colonoscopy.

[887] That's how it feels.

[888] Like, I'm just preparing my heart.

[889] It feels that.

[890] I don't feel like we have to feel that way.

[891] I feel like that's kind of just the stigma of taxes, but I feel like it can actually be simpler.

[892] Well, I like my tax.

[893] I got a tax pro and I've enjoyed working with them.

[894] So I'm like, I get to see them again this year.

[895] This will be fun.

[896] Get to catch up.

[897] But, you know, they're all with the stigma, Jay, there's lot of myths out there and I released a video on my YouTube channel called five tax myths broke people believe and not just broke people a lot of people believe these okay and so I want to cover them real quick the Spark Nodes version okay and then people can go watch the full version with all the funny memes and clips that we put in there and jokes but this one's less jokes okay ready for it I'm ready myth number one a tax refund is reason to celebrate you've seen people bragging and the commercials are all like woo I'm going to Disney with my tax refund.

[898] Yikes.

[899] Here's what this really is.

[900] It's an interest -free loan you gave to Uncle Sam.

[901] Ooh.

[902] Yikes.

[903] Because that means you overpaid your taxes all year long and they're just giving you your money back.

[904] So wait a minute.

[905] You're telling me that I loaned the government money and they didn't even pay me interest on it?

[906] Zero percent is what you got.

[907] And then I have to file something in order to get my money back?

[908] Just to figure that out.

[909] That's a problem.

[910] So think about it.

[911] What could you do with that money instead if you had it all year long?

[912] If you had 24, $400 refund, that's $200 every month that you could have been using to budget.

[913] George, listen, I know folks out here who are getting like $8 ,000 refunds.

[914] That hurts my brain.

[915] They are giving the government way too much.

[916] We already do that enough with taxes.

[917] Can we do a poll on that?

[918] I want to know what folks are getting, like, put in the comments, put in the chats.

[919] What is an average or like a normal tax return amount for you?

[920] I just want people to see the amounts that they're letting the government borrow.

[921] That'll be fun to see.

[922] So the goal here is to get to as close to zero.

[923] as possible.

[924] You don't want to give too much.

[925] You don't want to owe too much.

[926] And you can just go on your W4 and like change it.

[927] Like they've made it easier to change your withholding.

[928] Yeah, so work with your HR team and you can adjust that form.

[929] And myth number two, it's bad to be in a higher tax bracket.

[930] Mo money, moe, problems.

[931] People are always scared of making more money, Jade, because they're like, well, I might push me into the 22 % tax bracket.

[932] I'm like, you don't, that's not how.

[933] It doesn't even work like that.

[934] It doesn't.

[935] And I walk through this visually in this YouTube video.

[936] We're not going to do it here.

[937] but tax rates are marginal.

[938] It's not your whole amount that's taxed at, yes.

[939] Thank you, George.

[940] This first portion of your income is taxed at 10%.

[941] That's right.

[942] This next portion is taxed at 12%.

[943] And it stairs steps up.

[944] Yes.

[945] And so if you make an extra $2 ,000, you're not going to be just jumping into wildly more taxes.

[946] Help the people.

[947] You've got to think about the effective tax rate instead of marginal.

[948] I walk through it in the video.

[949] Yes, good.

[950] Myth number three.

[951] You've heard this one.

[952] Keeping debt around is good for the write -off.

[953] Yeah, bro.

[954] I keep my house payment for the tax write -off.

[955] You've heard people tell, Don't pay off your house.

[956] You'll lose the mortgage interest deduction.

[957] The numbers on how many people actually itemize, which by the way is the only way you can get the interest deduction.

[958] Yes, that's true.

[959] It's so abysmally low.

[960] Yeah.

[961] Most people take the standard deduction.

[962] Exactly.

[963] And you don't think about what you've been paying all year in interest for the benefit and joy and blessing of getting a little bit back.

[964] So there's just the piece, right?

[965] Can we just the simplicity of not having debt.

[966] So don't spend a dollar to save a quarter.

[967] That's bad math.

[968] That's stupidity.

[969] and don't spend money to make money.

[970] You've seen the people are like, I'm going to buy a G -Wagon for $240 ,000 and ride it off like a life hack.

[971] No, no one thinks you're cool.

[972] Myth number four, you have to pay by tax day, and if you can't, don't even bother paying it all.

[973] You missed it.

[974] You missed the boat, Dave.

[975] That's a lie.

[976] Do you know what musical that's from?

[977] I don't want to embarrass myself.

[978] Dream girls, but keep going.

[979] I was going to say Dreamgirls, which would have been embarrassing.

[980] So that's why I didn't do it.

[981] So yeah, you have options here.

[982] don't ignore taxes just because you can't pay by tax day.

[983] You've got to file anyways.

[984] Right.

[985] It's just you filing the paperwork, right?

[986] Yes.

[987] And you can file an extension for the payment, but you've got to pay as much as you can and get on a payment plan.

[988] And if you do owe the IRS money, put it to the very top of your debt snowball.

[989] Ooh, good one, George.

[990] That goes to the front of the list because they can screw up your life and garnish wages and take you to court.

[991] It's not, you don't want to do that.

[992] Guys, pay your taxes.

[993] Please don't mess around with these IRS folks.

[994] folks.

[995] Okay, keep going.

[996] Last myth, you're not smart enough to do your own taxes.

[997] Hey, hey, I have felt that.

[998] In times past, I have felt that, George.

[999] Well, they got all these forms and they ask you a billion questions.

[1000] And so here's the deal.

[1001] It's become a lot easier.

[1002] And this one depends.

[1003] Some people, it's wise to do it yourself if you know, if you feel comfortable.

[1004] And some people, it's worth working with a pro.

[1005] So online tax software can be great if you've got one to two sources of income.

[1006] You don't have a bunch of non -retirement investing going on.

[1007] You're taking the standard deduction.

[1008] You don't have any major life changes like moves or marriage or whatever.

[1009] Online tax software is great.

[1010] And we actually have one called Ramsey Smart Tax.

[1011] There it is.

[1012] That is wonderfully easy to use.

[1013] It guides you through the whole process.

[1014] There's no gimmicks.

[1015] There's one price you pay, one flat fee.

[1016] And there's not this surprise at the end of, oh, you have one extra form.

[1017] We're going to get you at this one like the other guys do.

[1018] So they make it Super simple, upfront pricing.

[1019] But if I, if I, like literally me, if I'm looking, I'm going, listen, I can't do my taxes.

[1020] I got a small business.

[1021] We just had a baby.

[1022] Yep.

[1023] His income is like that.

[1024] Then you're looking for a pro.

[1025] And we've got a whole network of Ramsey trusted tax pros all over the country who are ready to help you with that.

[1026] That you can trust.

[1027] They're not, they want to have a heart of a teacher.

[1028] They want to actually educate you.

[1029] And so those two are great options.

[1030] So you can go check that out.

[1031] Ramsey Solutions.

[1032] slash tax.

[1033] Our team created just an entire hub.

[1034] Number one, there's a few questions you can select.

[1035] It's going to show you the best option for you.

[1036] Should you file online?

[1037] Which version?

[1038] Should you work with a pro?

[1039] And it'll give you the next steps.

[1040] There's also a great guide to taxes and some great checklists.

[1041] Like prep checklists, I print this out every year from this website.

[1042] So that you make sure you're having all the paperwork for your tax pro.

[1043] All my ducks in a row.

[1044] Because there's always one I forget.

[1045] I'm like, oh yeah, I need the 1099 I for the interest income from the high you'll say all of that is right there in the checklist so you know you're you're ready to go when you meet with the pro or you're filing online i suddenly have less stressed george that's the goal that is the goal so ramsysolutions .com slash tax you know too much now to fall for these myths y 'all and happy tax filing i like to get mine done as soon as possible truthfully i am already there listen last night as we were getting ready for bed i was because sam's mom is an accountant she's done our taxes forever bless her heart and so i was like did you send your mom the tax stuff and he was like yeah I'm like, did you send her our giving statement?

[1046] The giving statement, you know, at church, you give your tithe.

[1047] That checklist, I now, too, am going to go download that checklist just to make sure, because there's always one or two things that slip your mind.

[1048] And so it's nice to have that checklist to remember all those, like you said, 1099 -I, all those little things.

[1049] So go to Ramsey Solutions .com slash tax.

[1050] You'll see my face.

[1051] You'll see Dave's face.

[1052] We're smiling.

[1053] We're happy.

[1054] And it says you shouldn't have to doubt your tax service.

[1055] So we've got all kinds of options.

[1056] We'll walk you through.

[1057] Should you work with a pro?

[1058] Should you file?

[1059] and at the bottom you'll see the free tax guide you'll see the personal checklist even a self -employed checklist yeah that can be stressful for those that are self -employed listen i want to roll back though george to that myth number one about the refund being a reason to celebrate i feel like people y 'all don't give yourself enough credit because a lot of people just view it as hey hey george this is this is how i say for vacation every year listen it's easy my tax refund comes and that's our trip to disney i really want to bust that myth up because you could literally literally keep that money in your account and have a better rate.

[1060] You could put it in H -S -A, H -Y -S -A for 12 months and have a better rate of return than letting the government hold it for a year because you don't think you can save money for a vacation yourself.

[1061] Well, too many people are complaining.

[1062] They don't have margin in their money right now with inflation.

[1063] And I'm like, well, you have margin.

[1064] You just are giving it to the government all year.

[1065] And then you're getting it at the end of the year.

[1066] So change your withholding.

[1067] It's January.

[1068] This is a good time to be looking at that.

[1069] Reset.

[1070] Whatever you've been getting over the past, you know, look back on years past, whatever you've been getting.

[1071] Take that number and divide it by 12, like George said.

[1072] That's the amount of money you could be having back in your budget every single month.

[1073] Think about that.

[1074] Man, with inflation, that's groceries, that's gas money.

[1075] You just gave yourself a raise.

[1076] Okay.

[1077] I love it.

[1078] Significant.

[1079] There it is.

[1080] We ate our vegetables, Jade.

[1081] We taught the people about taxis.

[1082] Are you happy James?

[1083] James is never happy.

[1084] Oh, this is the Ramsey Show.

[1085] You're listening to The Ramsey Show.

[1086] I'm your host, Jade Warshaw, this is your other host, George Camel with the K, your producer, James Childs.

[1087] He just told us we did a good job, and that rarely happens.

[1088] You know how rare that is?

[1089] I mean, he said a good job.

[1090] You guys are gaslighting me so bad right now.

[1091] It's like the dad who's never said he's proud of you, and then finally 20 years in.

[1092] He shakes your hand and says, I'm proud.

[1093] And he says, take care, buddy.

[1094] Yeah, not a hug, a handshake.

[1095] Okay.

[1096] I'm kidding.

[1097] He pulls a quarter from behind his ear and says, go buy yourself something nice.

[1098] Don't spend it all in one place, kid.

[1099] I love it.

[1100] He's the best.

[1101] The guys in the booth are the best guys ever.

[1102] And the gal.

[1103] And gal.

[1104] Yes, Ibu.

[1105] Listen, they're really the ones that make this show happen.

[1106] Let's be clear about that.

[1107] I can't imagine being on the front lines of screening the phones for this show.

[1108] They whisper all the answers into our ear pieces.

[1109] That would be amazing.

[1110] Give us a call.

[1111] The number is triple 8, 825 -5 -2 -2 -25.

[1112] We're just having a good time.

[1113] And let's go straight to the phone lines where we've got Mark from New York City, New York.

[1114] What's going on, Mark?

[1115] Hi, Jaden, George.

[1116] Thank you so much for taking my call.

[1117] You guys are my heroes.

[1118] Wow.

[1119] That's awesome.

[1120] You're glad you're there.

[1121] You've got to set your sights higher, but I really appreciate that.

[1122] I appreciate your time.

[1123] So I'm in a unique, my wife and I are in a unique situation.

[1124] We have about 1 .6 in a brokerage account, 43.

[1125] 33.

[1126] We have about a quarter million in retirement.

[1127] I also have, I'm about 17 years in the public retirement system, pension system in my job.

[1128] Okay.

[1129] We have, we owe about 260 on our primary and around 113 on our rental property.

[1130] Okay.

[1131] And really what it comes down to is after listening to you guys, I wonder if I should use the brokerage account to pay off the two properties and become truly debt -free.

[1132] We have no debt.

[1133] Cars are paid off.

[1134] No credit card debt.

[1135] It's just such a big decision.

[1136] I'd like to get some advice.

[1137] You just need somebody to kind of push you.

[1138] It's like jumping out of an airplane.

[1139] You just need the guy on your back to just jump.

[1140] And then you go.

[1141] You know what we're going to say.

[1142] The question is, what's holding you back?

[1143] Like, 373 out of your 1 .6, you're still going to have $1 .2 million sitting in that brokerage account.

[1144] And that's what my advisor is saying.

[1145] However, I just, I got this money initially from my grandmother when she passed away as an insurance.

[1146] I feel like I'm the steward of this money.

[1147] Absolutely.

[1148] And I just don't want to do anything wrong with it.

[1149] I pretty much, we've basically quintupled the money, and I know this is a great problem to have.

[1150] I just, I'm so afraid of making the wrong decision.

[1151] Listen, the good news for you is we teach, we teach grandma's way of handling money.

[1152] Like, that's our whole thing here.

[1153] So I never met a grandma that liked debt.

[1154] I'm just saying.

[1155] I think your grandma, if you talk to her now and you said, listen, grandma, I took that money, I paid off all my debt, my family is living debt free.

[1156] We're millionaires.

[1157] We've got paid for real estate, our own home.

[1158] home is paid for.

[1159] I think she'd probably, I don't know the woman, but my guess is she would be so very proud of you.

[1160] I guess the only, well, thank you, but I guess the other thing would be opportunity costs.

[1161] With that money still invested, would it outstrip the, it would it make more than it's as an investment rather than, or is this more of just a emotional decision rather than a purely numbers decision.

[1162] Also, the tax liability on selling those investments, I'm wondering if that would be an issue as well.

[1163] Well, are these going to be long -term capital gains?

[1164] Yes.

[1165] Okay.

[1166] And you're not selling all of it.

[1167] And so do the math on what you would owe in taxes, and we're going to set that aside as well.

[1168] But again, you're still going to have over a million dollars sitting here.

[1169] That money is going to continue to grow.

[1170] Do you need to touch that money for any other reason?

[1171] No. No, we've used in the past, like to, you know, the down payment on this, our current home and things of that nature.

[1172] But like I said before, I really try to keep hands off of it as much as possible.

[1173] Okay.

[1174] Well, play it out.

[1175] Think about this, too.

[1176] You have two mortgage payments right now.

[1177] Take those mortgage payments and plug them into investment calculator.

[1178] You're 43.

[1179] Let's say for the next 20 years, you start to invest that much more into that same account.

[1180] That's going to change the numbers for you.

[1181] That's, I'm guessing, a few thousand dollars you're now investing that you weren't before, correct?

[1182] Yes, absolutely.

[1183] I mean, it would definitely free up cash flow that, you know, in a way that we've never seen before.

[1184] That's for sure.

[1185] And every, if you get, let's say, a 10 % average annual return in this account, if it's invested well, that money is going to double every seven years.

[1186] So 1 .2 turns into 2 .4, turns into 3 .6, and you're still going to be, you know, what, in your 60s at that point?

[1187] Correct.

[1188] And that's if you do nothing else.

[1189] That's if you just leave it alone, and you don't put another dime in there.

[1190] So you're going to be okay.

[1191] So I'm less worried about opportunity costs in the future, and I'm more concerned about Mark right now.

[1192] And is at 43 years old and the freedom and options he gets to have with his family with no payments in the world.

[1193] It does sound very enticing.

[1194] Maybe it is, I mean, I, obviously, I, you know, I called up because I wanted an answer from people that I respect and trust, and I, to be honest, I probably, I've gotten the answer that I expected it.

[1195] So what are you going to do, Mark?

[1196] The question is, what are you going to do?

[1197] I'm going to do it.

[1198] Yeah.

[1199] I'm going to make the ball and pay it all off.

[1200] We always joke.

[1201] If you regret it, Mark, you can always go get more debt.

[1202] You can take out against that, all those equity in your homes and get HELOCs up to your eyeballs.

[1203] That's right.

[1204] I don't think you were.

[1205] I was going to mention that we have a low interest rate, but I know how that goes over on your show.

[1206] Oh, yeah.

[1207] I figured I keep that to myself.

[1208] Mark, my favorite interest rate is zero, and that's what I have on my house.

[1209] And that's what you're about to have.

[1210] Rich people earn interest.

[1211] They don't pay it.

[1212] Exactly.

[1213] And you are a rich person.

[1214] And your grandma left a beautiful legacy.

[1215] see and I think she would want you to solve for freedom.

[1216] And this is what freedom looks like, man. You get the, the world is your oyster with no mortgage payment.

[1217] You guys have done so well.

[1218] 43 years old, net worth.

[1219] I'm guessing we hadn't even hear the full picture.

[1220] Man. With all what the properties are worth, plus the millions in these accounts.

[1221] Excellent.

[1222] The way he's going to be able to give save and spend for the next 40 years is mind boggling.

[1223] That's exciting.

[1224] It's so hard.

[1225] He's a math guy.

[1226] Like he's all into numbers.

[1227] They're the hardest to remind about peace well when it comes to emotion i can get people to look at the math but when people are mathematical it's hard to get them to look at emotion it's so hard to go what would that feel like and they go well i don't know because on paper it's a low interest rate i can make a spread if i invested it yeah and they're losing brain calories and sleep over this and i'm going i got peace and no payments man try it out see how you like it i hear that let's ask dennis let's help him out he's in white plains i think he can help him right quick what's going on dennis well it's not white plains it's west plains sorry about that i got my glasses on she was in a new york state of mine for a second i was i was how can we help well i see all this stuff and hear everything about the high yield interest rates for the high yield savings accounts and i've been looking and trying to figure them out and there's so many names i haven't seen anywhere before i am looking for some guidelines on what to look for in them in order to know i'm picking something that's going to work for me that's a good question.

[1228] I love that.

[1229] So is this where you're parking your three to six months of expenses or are you using it for another reason?

[1230] Well, it's four to three to six months and for taxes at the end of the year.

[1231] Okay.

[1232] So that kind of short -term savings costs.

[1233] Well, I'll tell you, there are a million out there and we don't have one that we've partnered with.

[1234] I can tell you one I personally use and Jade can do the same and Rachel Cruz can do the same.

[1235] But what you want to look for here is one that has low fees to no fees.

[1236] So no monthly maintenance fees, no ongoing expenses, and one that you have easy access to.

[1237] And so a high -yield savings account is not like a CD.

[1238] You can access that.

[1239] It's liquid at any time.

[1240] You can transfer it to your checking account.

[1241] So those are the important things you want to look at.

[1242] And of course, the interest rate.

[1243] That's right.

[1244] So what do you use, Jade, right now?

[1245] Listen, I love an online account.

[1246] I love ally.

[1247] There's not a lot of fees associated.

[1248] Like you said, the money is totally liquid.

[1249] I don't attach it to any debit card or credit cards or any, you know, any checks or anything like that.

[1250] want easy access to it, but at the same time, it's there if I need to pull it out.

[1251] Exactly.

[1252] I use one called Marcus.

[1253] Again, we don't have any affiliation with these, but I try to find one that's also not tied to credit card companies and gross debt products.

[1254] And, you know, that's hard to do in the banking world.

[1255] But Ally and Marcus are ones that I've heard people have great experiences with.

[1256] So just open one, Dennis, and set it and forget it.

[1257] Set it and forget it.

[1258] Ron Papil, baby.

[1259] I love it.

[1260] This is The Ramsey Show.

[1261] Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help People build wealth, do work that they love, and build amazing relationships.

[1262] I'm your host, J. Worshaw.

[1263] Your other host is George Camel with a K. Give us a call.

[1264] We'd love to hear from you, help you sort through your issues with your money, your relationships, your career.

[1265] The number is 8 -8 -25 -5 -2 -25.

[1266] We're here to help.

[1267] All right, George, I say without further ado, we go straight to these phone lines.

[1268] We've got Mo in Columbus, Ohio.

[1269] Hello.

[1270] Hi, how are you doing, Mo?

[1271] Good.

[1272] I'm doing well.

[1273] I'm calling.

[1274] I recently got a job promotion, and I've been listening to the show for about four months now, and I have some debt.

[1275] I don't have really any guidance when it comes to money.

[1276] I've cut off contact majority with my father after some money issues.

[1277] And I'm just trying to set myself up for $6 ,000.

[1278] best.

[1279] And I'm wondering how best to go about it, because I'm still new to, from what I've listened to, kind of trying to follow the step.

[1280] Okay.

[1281] So kind of help us understand what you're trying to sort through.

[1282] Is it debt?

[1283] Is it, tell us more?

[1284] So it's debt and then like retirement plan.

[1285] I have a little bit of student loans, a car payment.

[1286] I currently rent.

[1287] and we'll be moving in May to where it's more affordable.

[1288] After college, I got a job, and I had to move out of my father's house and found the cheapest place that I could, but I've kind of been money hungry and, like, excited to start saving.

[1289] I just, I don't really know the best way to go about things.

[1290] Okay, so, okay, good.

[1291] So let's find out.

[1292] What are you earning?

[1293] What do you earn every month?

[1294] What do you bring home?

[1295] So I was earning 62 ,500 a year.

[1296] And two weeks ago, I found out that I'll be getting promoted and I will start traveling for work.

[1297] And my new salary will be $78 ,000.

[1298] Okay.

[1299] So it was a decent bump.

[1300] That's awesome.

[1301] And so each month, what do you see?

[1302] What does your check look like?

[1303] So I've only gotten like the first, since the first of the year.

[1304] So my new, it's pretty close to four with the new salary.

[1305] Okay, great.

[1306] So you got $4 ,000 a month to work with.

[1307] are you currently taking anything out of your check for retirement?

[1308] Currently, my company matches 6%.

[1309] So, like, dollar for dollar, up to 6%.

[1310] Okay.

[1311] So that's what I have put in.

[1312] And in one year, I've generated like $10 ,000.

[1313] Okay, cool.

[1314] 6%.

[1315] Okay, good.

[1316] Now, I just want to kind of know, are you also using a budget?

[1317] Is that part of your life at this point?

[1318] I have somewhat of a budget, but with the pay increase, and I also, in the spring, and we'll have a little bit of a second form of income.

[1319] Not exactly sure kind of what that budget should look like.

[1320] Okay.

[1321] I have like a general idea based on like my old income.

[1322] Okay.

[1323] That was hard because I've had $10 ,000 of medical expenses.

[1324] Okay.

[1325] Why I was finishing my last semester of college and all of 2023, which I have no medical debt.

[1326] That's all paid off, which is kind of prevented me from.

[1327] like being where I want to.

[1328] Okay.

[1329] So you're new to listening to us.

[1330] Obviously, we filter everything through these seven baby steps, but all of that is contingent.

[1331] It all rests on a budget.

[1332] Like, that's the foundation of all of this.

[1333] So we've just found over the years that people who win with money have budgets and they have a good budget that they follow every single month.

[1334] And it really is that roadmap to get them to their financial destination.

[1335] That's where it all starts.

[1336] So the first things first is I do want you coming out of here, and I want you hooked up with a budget that you're doing every single month, and that's through every dollar.

[1337] But the next thing here is we're walking through those baby steps.

[1338] And like I said, your budget's going to inform and show you how much money you have to put towards each baby step.

[1339] I have a $1 ,000 nest egg, which I think is, like, I don't know which step that is.

[1340] That's Baby Step 1.

[1341] So that's just sitting in a savings account?

[1342] Sorry, say that again.

[1343] Is that in a savings account?

[1344] $1 ,000?

[1345] Yeah, it's in like a money market account.

[1346] Excellent.

[1347] So that is baby step one, just getting $1 ,000 saved.

[1348] It's just getting a safety net there between you and life.

[1349] And then essentially your own baby step two, which is paying off all of your debt except your mortgage.

[1350] So that's the phase that you're at right now.

[1351] And I want to come back to the fact that you're putting away 6 % into your retirement.

[1352] And we teach that in order for you to pay off debt quickly, you need as much money to throw out it as possible, right?

[1353] All your extra money is what you're throwing at your debt.

[1354] You're making minimum payments on everything just to satisfy that, but all extra money goes to your smallest debt and you need extra money.

[1355] And so right now you're giving away some of your extra money in retirement, which I think was a good nature choice.

[1356] Like you're thinking, okay, I'm trying to be responsible.

[1357] Let me do retirement.

[1358] But there is a right method and a right order to go about paying off debt and building wealth ultimately.

[1359] And the first step, is paying off debt.

[1360] So if I were in your shoes, I would temporarily, very temporarily, pause investing so I can have that 6 % back in my month -to -month money.

[1361] That's $400 a month for you.

[1362] That's really going to help speed up the debt pay off.

[1363] Yeah, that makes sense.

[1364] So how much total debt do you have?

[1365] You said student loans.

[1366] What's left on the student loans?

[1367] So when I graduated, I worked two or three jobs through college.

[1368] So I graduated it was 16 ,000, and that's now down to 12 ,671.

[1369] Right.

[1370] My junior year of college, my car broke down, and I had no help.

[1371] So I had to buy a car to be able to transport myself.

[1372] It didn't go crazy, but with the car market, it was at 2018 Ford Fusion, and it was 17 ,500, and I have that down to $6 ,500.

[1373] Okay, good.

[1374] All right, and then you said something about credit cards.

[1375] Do you have credit card debt?

[1376] I have $1 ,700 on a credit card.

[1377] So my thought would be go lowest to highest from what I understood, pay the credit card.

[1378] And then my car payment has a 5 .1 % interest, and my student loans only have like a 2 .7 something percent interest.

[1379] So I'm assuming I would pay the car percent off first and clear that $6 ,500 next.

[1380] Well, the way that we found is the best way is by balance.

[1381] So we list those debts in order by balance, not necessarily by interest rate.

[1382] So in this case, the student loan, is it just one giant student loan for $12 ,000 or is it built into a lot of little mini ones?

[1383] It's three.

[1384] They're either each, I think, about $4 ,000 apiece.

[1385] I don't remember exactly.

[1386] So in that case, those would be next.

[1387] You would do the credit card.

[1388] Then you would make your minimum payment on student loan, which satisfies all those three mini ones.

[1389] And then the extra money, you would look and say, hey, I want it to go on.

[1390] this mini $4 ,000 one.

[1391] And you kind of have to, you either have to call it in.

[1392] Some websites, they have it in there where you can actually delineate that.

[1393] But some websites, they don't want you to do that.

[1394] So sometimes you have to call it in.

[1395] But technically, those student loans would come next.

[1396] It sounds like in then the car.

[1397] But with your income, with the raise, which, by the way, congratulations, listen, my girl is moving.

[1398] You got 20 grand in debt.

[1399] You make 78 now.

[1400] Way to go.

[1401] We can clean this thing up fast.

[1402] I mean, basic math says if you can throw five grand a month, for four months, you're done.

[1403] Four grand a month for five months.

[1404] This thing's done.

[1405] And you're about to free up 400 bucks a month by pausing investing.

[1406] You'll be back to investing in no time.

[1407] And when you do, it's going to be 15%, not six.

[1408] So it's going to be sweet.

[1409] But follow the plan.

[1410] It works.

[1411] I followed it.

[1412] Jade followed it.

[1413] We believe in it that much.

[1414] That's right.

[1415] Way to go.

[1416] I'm proud of you, Mo. This is The Ramsey Show.

[1417] You are listening to The Ramsey Show.

[1418] Thank you for listening to The Ramsey Show, by the way.

[1419] We value it so much when you take the time to like, subscribe, our show, when you log in, when you watch it on YouTube, wherever you watch or listen to podcasts.

[1420] We appreciate it.

[1421] I'm Jade Warshaw.

[1422] This is George Camel.

[1423] Our Ramsey Show Question of the Day is brought to you by Neighborly, your hub for home services.

[1424] Mr. Appliance is a Neighborly brand that can make your appliances, make sure that your appliances are running properly in the new year.

[1425] For appliance parts, repair, and service, find a Mr. Appliance near you at neighborly .com slash Ramsey.

[1426] Today's question comes from Emily in Connecticut.

[1427] husband and I earn $106 ,000 annually, and our only debt is our $200 ,000 mortgage.

[1428] We have $10 ,000 saved for our emergency fund with a goal of $24 ,000.

[1429] My husband comes from a family that made a lot of money, but never saved any.

[1430] Because of this, he has never seen an amount of $10 ,000 in his life and thinks that's more than enough.

[1431] He wants to give 10 % of our savings to the church.

[1432] He says we have been blessed abundantly and, quote, should never feel comfortable.

[1433] I am the one who oversees our finances and wants to become financially stable, but my religion also says to let my husband be the spiritual leader of our house.

[1434] How should I go about this?

[1435] I want to save a full emergency fund, but at the same time, want to be generous.

[1436] Interesting.

[1437] A lot of layers to this tiramisu.

[1438] Ooh, layers.

[1439] Listen.

[1440] So one is just the financial, what is the right amount for our emergency fund.

[1441] Right.

[1442] Two is the how should we give and from where.

[1443] And then three is this, upbringing of abundance for scarcity that they're dealing with.

[1444] Listen, I have a couple of thoughts, George.

[1445] Let's think about the giving part because I love that the, I almost said the dad, the husband wants to be generous.

[1446] I love that.

[1447] But kind of the way I think of it as is when you get paid, it sounds like they're tithers.

[1448] If you're a Christian person, a lot of folks practice a 10 % giving.

[1449] I hear a 10 % in church, I think, okay, tithe.

[1450] Yeah.

[1451] That's what they're doing.

[1452] And my guess is, if you wanted to really get technical here, whenever you earn your income you're probably giving 10 % of that income and then whatever is left that's what you're using to run your household financially whether it's part of your budget you know groceries or whatever or it's setting aside for savings so whatever is in their savings they probably have already tithed from that money um and my thought would be like listen if he wants to give more then let that be from your month to month income like if he's like listen i don't want to give 10 % i want to give 15 % great like i love generosity but i wouldn't say that you have to drain your savings to give.

[1453] We need to separate the buckets.

[1454] Your emergency fund is for emergencies.

[1455] Your giving savings account needs to be forgiving.

[1456] So number one, I would create separate accounts to keep these separate.

[1457] Number two, I would calculate your actual expenses every month and multiply that by three or six, depending on your income situation, stability of your jobs.

[1458] But if it's my wife and she says, I feel more safe with six, we're going to have a six -month emergency fund.

[1459] So he needs to also understand where she's coming from.

[1460] And I don't buy this whole like, well, I grew up never seeing 10 ,000.

[1461] So that's plenty.

[1462] Like that's a really weird way to think about wealth and money.

[1463] He might be like, listen, $10 ,000 is a lot.

[1464] Like some people, and it's also not as much as it used to be.

[1465] It's not as much as it used to be.

[1466] But if you've never had to, like, I can somewhat relate to this a little bit.

[1467] If you've never seen $10 ,000 the first time you see it and get it, you're like, I am just, you're like, Hulk's It's like you can't believe what you've done.

[1468] But I think that he needs to go ahead and let that wear off and realize that $10 ,000 is good, but start really thinking about it in lines of what could happen.

[1469] If your AC goes out, then you live in South Florida anyway.

[1470] You're easily spending $5 ,000 to $7 ,000 on a new AC so that money can dry up lickety -split.

[1471] If you were to lose your job and your income, how long the purpose of that is to sustain you if the worst happens.

[1472] And for most of us, the worst happening is we lose our job, right?

[1473] And it's can you really cause your household to move forward for six months with $10 ,000?

[1474] For most of us, you know, the answer is no and you need a little bit more, especially with what it looks like their situation is.

[1475] Well, the ultimate question was, I want to save a full emergency fund, but at the same time want to be generous.

[1476] I don't see those things as going against each other.

[1477] No, not at all.

[1478] You can do both.

[1479] And this idea should never feel too comfortable.

[1480] well, the more wealth you have, the more you're able to give.

[1481] And so I don't see it as, oh, well, we hit 10 ,000.

[1482] I don't want to be comfortable.

[1483] We need to start giving money.

[1484] That's fine if you want to be more generous, but I don't conflate the emergency fund with giving.

[1485] And I think they both need to have a come to Jesus meeting, no pun intended, and go, here's how I'm feeling.

[1486] We need to meet in the middle here.

[1487] We're going to have a 20 ,000 emergency fund.

[1488] We're going to set up a separate account for giving.

[1489] And you need to go to therapy for whatever happened in your past or own your past, change your future.

[1490] I feel like he wants his giving to feel like a sacrifice.

[1491] Like he wants to feel it.

[1492] And in his, it feels like for him, that's like it's got to come out of savings, but I don't know about all that.

[1493] Because then the H -FAT goes out and you go, well, that's not good.

[1494] We just gave away a thousand bucks we needed for that.

[1495] So separate them out.

[1496] I kind of also want to talk about this.

[1497] We probably should avoid it.

[1498] But I'm the one who oversees our finances.

[1499] Oh, yeah.

[1500] That's thing one.

[1501] And want to become financially stable.

[1502] But my religion also says to let my husband be the spiritual leader.

[1503] it's interesting because she said she's the one who oversees the finances but he's a spiritual leader it just sounds like they've got some conversations that need to take place because you know all I mean you guys are a partnership like there's in any partnership there usually is one person that kind of like has the final word or it's like this is it you know what I mean like like Dave's the boss here you know what I mean like but there's plenty of people that speak into the things that go on and I just think too many people see that as well I don't get a vote because they're the leader.

[1504] It's like, no, you need to be speaking into finances just as much.

[1505] Because if you don't have a vote, it's going to cause resentment.

[1506] It's going to cause financial infidelity.

[1507] So read some books on this whole spiritual leader thing because I think there's a lot of misunderstanding around what that really means.

[1508] When I was growing up, they used to say, the guy is the head, but the woman is the neck.

[1509] And I'm like, oh, that's good.

[1510] The neck.

[1511] Think about it.

[1512] Because I'm like, the head ain't doing nothing without the neck.

[1513] Then who's the rest of the body?

[1514] It's just a weird.

[1515] George, we're just talking about the head and the neck.

[1516] Okay.

[1517] Sorry.

[1518] I thought we're going to go.

[1519] This analogy broke down quickly.

[1520] It did.

[1521] It did.

[1522] Let's move on.

[1523] All right.

[1524] Let's go to the phone lines where we've got Joshua in Chicago, Illinois.

[1525] What's going on, Joshua?

[1526] Hi, how are you guys doing?

[1527] We're doing good.

[1528] How are you?

[1529] I've been better.

[1530] I'm sorry to hear that.

[1531] How can we have?

[1532] Is there anything we can do to help?

[1533] Yeah, I had a couple questions for you guys I know I've kind of reviewed your guys' website And I like to watch your guys' YouTube videos And I know Mr. Ramsey He typically recommends with having debt That you pay off the smallest amount first And you kind of snowball And you make your minimum payments on your larger amounts While you throw as much as you can't Your smaller amounts I'm currently 24 still living at home at the moment, so I don't really have too many expenses, but I got about $2 ,600 in credit card debt and then $6 ,500 in student loans.

[1534] And my kind of issue right now is my one credit card payment.

[1535] The interest rate on it is very high, and I'm getting kind of knocked down on it in the sense that I'll make a payment, and it's not really making a dent in it if I'm putting all of my money towards the smaller amounts.

[1536] What's the smallest debt you have right now?

[1537] About $400.

[1538] And how much are you putting on it?

[1539] About $100 a month, roughly.

[1540] Extra?

[1541] Yes.

[1542] Okay.

[1543] What do you make?

[1544] Currently, I make $16 an hour.

[1545] For how many hours do you work?

[1546] About 40 hours a week.

[1547] And what do you do?

[1548] I'm an automotive technician.

[1549] I work for a dealership.

[1550] Okay.

[1551] Is this a long -term play for you?

[1552] Like, are you in the industry that you want to be in?

[1553] No, I'm actually exploring different avenues.

[1554] I just actually went today and signed up to join the electrical union here in Chicago.

[1555] Okay.

[1556] So it's, but that could take a few months to hear anything about that, and that's kind of a longer -term process.

[1557] So I'm trying to, before I, if I do switch over careers, the opportunity does become, I'm trying to get this paid off as soon as possible.

[1558] Yeah.

[1559] And the issue here, the issue here is not the debt snowball, whether it works or whether it doesn't, because it does work.

[1560] The issue here is we don't have enough money going towards it.

[1561] And so we've got to find something where you're making more money.

[1562] And until then, we're supplementing the job that you already have, more work.

[1563] You're working 60.

[1564] I mean, you work from home.

[1565] You don't have any kids.

[1566] You don't have a wife.

[1567] No bills.

[1568] You're going hard in the paint, my friend, until you get this done.

[1569] Because, yeah, throwing $100 a month, it is going to barely move the needle.

[1570] You need to pay this off in one month.

[1571] Like, you need to get you an Uber cart, an Instacart, all of it, and pay this off in one month, and you're going to see this go out of your life, lickety split.

[1572] This is The Ramsey Show.

[1573] You're listening to The Ramsey Show.

[1574] Thank you for listening to The Ramsey Show.

[1575] I'm Jay Borshaw.

[1576] This is George Camel.

[1577] George Camel hosts.

[1578] of the George Camel show on YouTube.

[1579] Also, author of Breaking Free from Broke, his new book that is out now that I predict George will make and become a bestseller.

[1580] We'll know tomorrow, Jay.

[1581] Thank you for that prediction.

[1582] Yeah.

[1583] The bestseller list come out tomorrow.

[1584] Either way, I'm proud of the work we did, and the feedback and the impact it's having is really what matters.

[1585] I love that.

[1586] But the list is a fun way to go to celebrate.

[1587] And so congrats on you becoming an author in the last few months.

[1588] This is a really fun year for us.

[1589] It's a fun year.

[1590] It's a fun job.

[1591] I think that we're very very lucky and blessed for what we get to do.

[1592] I pinch myself every day that we get to do this.

[1593] Awesome.

[1594] I bet Whitney pinches you.

[1595] You're stronger than me. No, I'll let Whitney pinch you.

[1596] That's her job.

[1597] All right.

[1598] Let's go to the phone lines where we've got Luke in Chicago, Illinois.

[1599] What's going on, Luke?

[1600] Hi there.

[1601] How's it going?

[1602] Doing good.

[1603] How are you?

[1604] I'm doing well.

[1605] Doing well.

[1606] I hope you guys are doing well.

[1607] Yeah, how can we hope you?

[1608] I just wanted to give you guys a call.

[1609] I've got some debt and also got some money tied up in some investment accounts, just wanted to see or get some advice, you know, based on my income, you know, what should I be doing, attacking that debt, or kind of continue investing into retirement.

[1610] Cool.

[1611] Tell us some numbers.

[1612] How much debt do you have?

[1613] So I have $20 ,000 on a car.

[1614] I'm currently making more than double payments on that.

[1615] So I'm paying $1 ,100 a month on that car.

[1616] Okay.

[1617] And then I have 3 ,200 in student loans.

[1618] Okay.

[1619] And then I have 8 ,000 tied up in a Roth area.

[1620] Okay.

[1621] Well, that's not debt.

[1622] You said tied up?

[1623] You mean you've invested in $8 ?000.

[1624] Yes.

[1625] Okay.

[1626] You kind of said it like something bad happened.

[1627] Okay, good.

[1628] I'm glad you got somebody in a Roth area.

[1629] So you only have a car loan and the student loan.

[1630] That's it.

[1631] Correct.

[1632] Okay.

[1633] What's your income?

[1634] My gross income is $87.

[1635] thousand.

[1636] Cool.

[1637] And what do you see every month?

[1638] What do you bring home every month from that?

[1639] Well, it kind of depends from month to month.

[1640] I'm in a commission -based position.

[1641] My monthly take -home on my base salary is $4 ,000.

[1642] Then my commission check is anywhere from $2 ,000 to $4 ,000.

[1643] Someone in that pocket.

[1644] Cool, cool, cool, all right.

[1645] And what's your living situation?

[1646] Are you renting?

[1647] Do you have roommates?

[1648] Tell us more about that.

[1649] Yeah, I'm renting.

[1650] I have two roommates in a three -bedroom apartment.

[1651] I currently pay 13, 30 a month in rent.

[1652] Okay.

[1653] So the question here, what's your actual question for us?

[1654] I just wanted to see kind of, you know, if you guys were to put yourselves in my shoes, would you go ahead and kind of attack that student loans and paid off in full rather than continuing to contribute to that Roth IRA and then kind of, working on that car as well, kind of wanted to get your guys' thoughts on that.

[1655] Yeah.

[1656] Well, you're doing a lot of good things.

[1657] You're just doing them all at once.

[1658] And so it's harder to make progress.

[1659] And what I found was when I started this financial journey, when I paused investing and I just went all in on debt payoff, I felt so much progress and motivation, and it happened faster.

[1660] And then when I got back to investing, it wasn't just a measly, you know, 3 % or 5%.

[1661] It was 15%.

[1662] And that allowed me to build wealth with so much peace and confidence, just focusing on one thing at a time.

[1663] And so that's what I'd recommend to you.

[1664] How much are you investing right now?

[1665] Right now, Rafael, Ray, I'm putting about $500 a month at two.

[1666] Okay.

[1667] So think about that.

[1668] You said you're doubling your car payment, which is an extra $5 .50.

[1669] If you paused investing, you could triple the car payment and paid off even faster.

[1670] Right.

[1671] And if you attack the smallest debt first, that student loan, is that broken up into multiple, or is that just one?

[1672] That's just one.

[1673] Okay.

[1674] So that's technically your smallest debt, right?

[1675] Yes.

[1676] So what if you made the minimum payment on the car loan and you took all the margin you could muster up?

[1677] You paused investing.

[1678] How much extra could you throw at that student loan?

[1679] $1 ,500?

[1680] I could probably, yeah.

[1681] $2 ,000?

[1682] Yeah.

[1683] So think about that.

[1684] It's gone in a month and a half.

[1685] You just knocked out that student loan.

[1686] You freed up that payment.

[1687] Now we applied that to the car loan along with that extra $1 ,500 or $2 ,000.

[1688] Boom, this thing's rolling, man. You're dead freeing like what.

[1689] eight months?

[1690] That's amazing.

[1691] Yes.

[1692] And in March, you don't have student loans anymore.

[1693] That's great.

[1694] That would be sweet.

[1695] And then, before the end of the year, you're back to investing, and instead of $500 a month, it's going to be way more than that.

[1696] Right.

[1697] And so that's what we would encourage.

[1698] That's how we've personally done it, and I don't think you'll regret it that way.

[1699] How old are you?

[1700] I'm 22.

[1701] Okay.

[1702] Dude, you have so much time.

[1703] Yeah.

[1704] It's amazing.

[1705] Way to go on that income, too, at 22.

[1706] That's a good job.

[1707] Well, and when you look at that, the math on it, Jade, you know, 15 % of 87 grand, that's $13 ,000 a year.

[1708] Yeah.

[1709] So he would be investing over $1 ,000 a month instead of $500.

[1710] Wow.

[1711] So he just over doubled a savings rate, which we know is the key to building wealth.

[1712] Absolutely.

[1713] Wow.

[1714] How does that hit you, Luke?

[1715] That's awesome.

[1716] Thank you so much.

[1717] Come on, man. Ooh, thank you for the call.

[1718] I love calls like that.

[1719] I put a pep in my step.

[1720] Me too.

[1721] I'm excited for him.

[1722] I know, me too.

[1723] I never want to go back into debt, but there's like an excitement when you're like, get the plan and you're like, this is going to work.

[1724] I know.

[1725] I know.

[1726] I know.

[1727] It's an adrenaline rush.

[1728] We did a live stream.

[1729] Gosh, two weeks ago.

[1730] It was the break the cycle live stream.

[1731] You can still go on YouTube and watch it.

[1732] But it was just motivation around breaking that paycheck to paycheck cycle, just like we helped Luke do, getting your money, figuring out how to pay off your debt, finding margin in your budget.

[1733] And I was looking through the comments just to see if people were enjoying the live stream and one person put, the way you talk about debt, I get so excited.

[1734] I wish I had debt to pay off.

[1735] I'm like, no, you don't.

[1736] Be careful what you wish for.

[1737] We get the sentiment.

[1738] It's so funny.

[1739] Let's take another call.

[1740] We've got Carter in Austin, Texas.

[1741] What's going on, Carter?

[1742] Are you there?

[1743] Carter.

[1744] I don't know.

[1745] Okay, there he is.

[1746] What's going on?

[1747] How can we help?

[1748] Well, I just heard about the baby steps from my old youth minister.

[1749] And I don't feel 100 % convinced that my wife's 100 % percent.

[1750] sending in on it and whatnot.

[1751] Is she happy with the current financial plan?

[1752] She likes being able to go out on weekends and doing things like that.

[1753] Well, I guess.

[1754] So she thinks the sacrifice is not going to be worth it?

[1755] I don't know.

[1756] I don't think that she sees the long term effect that it's causing right now, I guess.

[1757] Is it out of hand?

[1758] Like, tell us more about your situation.

[1759] so we can see, like, where you guys fit on this spectrum.

[1760] How much debt do you guys have?

[1761] I ran the numbers, like, 20 minutes ago, actually.

[1762] It's 49 ,250 and 49 cents.

[1763] 32, yes, ma 'am, 32 ,300 is with her with 29 ,963 of student loans.

[1764] And on my side, it's a vehicle loan, the major one of the vehicle loan of 12 ,000.

[1765] okay let me just let me clarify that so you said she's got a student loan and it's 32 ,000 29 ,963 okay 29 ,000 okay and then you've got the car what is yours um 11 ,862 and then what else do you have and then I've got a credit card for 732 um I get I don't know we're like insurance or whatnot how that would be but that's not a debt all all it was just showed up so what else you mentioned your car loan you got a student loan and then the credit card but there's more here medical uh 4200 in medical bills 4200 yes ma 'am and then we took out uh personal loans for see 2 ,300 or something like that okay and I think that that's it.

[1766] I didn't know that the insurance thing was it.

[1767] It just showed up on my credit thing.

[1768] Does she know about all these debts and the amounts?

[1769] Not fully.

[1770] Okay, there's the problem.

[1771] Yeah, she needs to be made aware, because I can feel you realize the stress of all these payments.

[1772] I mean, your head's spinning just trying to lay them out for us.

[1773] Are you the one that pays the bills every month?

[1774] I'd do my best, yes, ma 'am.

[1775] I think that's the issue.

[1776] Bring her into this.

[1777] Yeah, you're the only.

[1778] one who's seen the full scope and you're the one who's paying that bill every month online and she hasn't felt that.

[1779] Can we do that?

[1780] Go ahead.

[1781] Okay, we're going to gift you guys Financial Peace University Carter and you're going to watch these nine video lessons with her.

[1782] That's her only commitment right now and that'll get you on the same page, speaking the same language, getting you guys fired up and really showing you why you're too, you guys are too smart to be this broke.

[1783] You can be so successful and wealthy at this young age with this bright young marriage and see it squandered into payment sucks.

[1784] So hang on the last.

[1785] line will gift you one year of financial peace university my friend but watch it convince her you're listening to the ramsie show scripture quote of the day each one should test their own actions then they can take pride in themselves alone without comparing themselves to someone else for each one should carry their own load that's galatian six verse four through five then we've got this from paul mccartney i don't work at being ordinary listen i don't either paul Open like a beetle.

[1786] I don't work at being ordinary.

[1787] We want to be extraordinary.

[1788] Love it, love it.

[1789] Let's go to the phone lines.

[1790] Jonathan, another one from Boston, Massachusetts.

[1791] That's your area, George.

[1792] What's going on, Jonathan?

[1793] Hi, guys.

[1794] Thank you so much for taking my call.

[1795] So I have to be on the air today.

[1796] Awesome.

[1797] We're glad you're here.

[1798] How can we help?

[1799] So I'm calling.

[1800] I'm 22 years old.

[1801] I've been working in construction.

[1802] And I make about a little over $60 ,000 a year before taxes.

[1803] And so right now, I still live at home with my parents, and they're very, they treat me well, and they don't charge me rent so I can get a head start with saving money, which I'm a very fortunate situation to be in, and I thank them every day for it.

[1804] So my question is, you know, I've been, I've been wanting to save for a house, but the Boston market is so expensive.

[1805] I have about 100 ,000 in a high -yield savings.

[1806] And so I'm just trying to decide if I should, you know, on a single income in Boston on 60 ,000, it's kind of impossible to find anything.

[1807] So should I just deploy most of that into a taxable?

[1808] I've already maxed out my Roth IRA for 2024, and I do contribute to my 401K.

[1809] So I'm wondering, you know, instead of just having all that cash sitting in a high -yield saving, should I stop really saving for a house and prioritize moving that cash to my taxable brokerage?

[1810] I see.

[1811] You're saying, hey, if this isn't going to happen for another, you know, four or five years as I continue to save, should I just invest it for the longer term and then pull it out later on?

[1812] Yes, yeah, because, you know, the only way I think I could afford a house here is, you know, by maybe have a career change, something that makes a lot more money.

[1813] So I'm kind of like torn exactly, you know, what I should do because all my family is in Massachusetts, so I don't really want to move out of the area.

[1814] But at the same time, you know, having money, even though it's in a high -yield savings, it still feels kind of like I'm missing out on potential opportunity.

[1815] Well, right now, man, I remember saving up for our house and our high -yield savings account was making 2 % and we were doing jumping jacks at that rate.

[1816] And so we are at record highs right now.

[1817] I mean, I'm making 5 .5 % in a high -yield savings account.

[1818] It blows my mind.

[1819] And so that's a great option that's going to keep your money safe.

[1820] And the problem with investing it is if you're going to pull this money out in the next three years, well, you could see a dip.

[1821] All it takes is one stupid election and all of a sudden everyone freaks out and the market's down 18 % or it's up 20%.

[1822] but that's going to change your heart rate.

[1823] And so if this is truly a long -term play four or five years plus, then I'm fine with you investing in a taxable brokerage account into an index fund or something.

[1824] But if this is three years out and you think you're going to do this sooner, the high yield is a great option with some great rates right now.

[1825] And I might also go, all right, I'm going to go rent for a year or two.

[1826] I'm going to go get a condo outside of town.

[1827] That's what I'm thinking.

[1828] So look at all of the options.

[1829] I mean, you don't need a huge single, family home for just Jonathan right now, right?

[1830] Yeah, no, no, for sure.

[1831] So I've been considering apartments, it's just crazy.

[1832] Even outside, even outside the city, like I live outside the city, it's still almost...

[1833] What area are we talking?

[1834] 2000.

[1835] You're talking, like, outside Boston, so near, like, Lowell, Massachusetts.

[1836] Okay, North Shore.

[1837] Near, like, Drake and Mass. Yep, exactly, North Shore.

[1838] Yeah, yeah, yeah.

[1839] Well, I think you're going to find much cheaper prices as you go further out from the city, And so I would be looking at condos and apartments.

[1840] It's still a great way to, you know, get an asset and build wealth and create a four savings plan.

[1841] How much are you looking to spend?

[1842] Like, what are you looking?

[1843] Are we talking $300, $400 ,000 for a condo?

[1844] Yeah.

[1845] Yeah, yeah.

[1846] I was doing the math and it seems like, I mean, doing it, adding it into like a more, like how much house I can afford.

[1847] What I was getting was about, it was showing like just over $200, like $225 ,000 I could afford.

[1848] Okay.

[1849] And so I was looking at condos and low, it's still.

[1850] Seems like most are, you know, just around the $300 ,000 range.

[1851] And that's even before, you know, your broker fees, clothes, and cost, everything like that.

[1852] Yeah.

[1853] Well, think about this.

[1854] Your income's going to go up, and I would encourage you to find ways to do that.

[1855] You're making $60K at $22, which is awesome.

[1856] You're an impressive dude.

[1857] You've worked so hard.

[1858] You're a living on less than you make.

[1859] You got no expenses.

[1860] You could pretty much stack up all of that cash.

[1861] I mean, could you save up $30 ,000 a year at this point?

[1862] $40 ,000 a year?

[1863] Yeah, yeah.

[1864] Yeah, for sure.

[1865] that's yeah yeah for sure i i do some i do some side hustles and i also you know i always i always like work during the weekend try to take up like extra hours here and there like i said you know i'm in a very fortunate situation where you know my parents don't charge me rent i'm able to save like a lot of that money now's the time i'd probably do this for another year or two and if uh if you need to go rent and just kind of get out of the nest that's great too but i think you'll be a homeowner within two years man you got like 150 to put down on a or $300, that mortgage is going to be real reasonable, 25 % of your take -home pay, and you're in a great spot.

[1866] I love it.

[1867] I love that conversation.

[1868] We had several of those this morning, or this morning, this afternoon.

[1869] It's because I'm on, Jay.

[1870] It's because you're on, and they know that you're here.

[1871] Bostonian.

[1872] Now, that's good.

[1873] That is great.

[1874] So, George, you know, I find that with these conversations, there's so much, like, with the way the housing market is, there's like, should I go, should I not go?

[1875] Is it time?

[1876] Is it not time?

[1877] Should I stay or should I buy home now?

[1878] like it yes that's that's the ticket the i'm trying to think who sings that song james tell us the verb the clash the clash i know it's something i'm like it's i'm so punk but you know these conversations i feel like that's what everybody's where everybody's at right now it's like i've got this money it's going to take me a while longer to get the money i truly need for the down payment i want or for the payment to be what i want it to be do i just sit on that money or do i invest it and i think the the argument that you laid out is really important when you have a lump sum of money that you are emotionally connected to because this is your future like this is your house this is that potential mortgage to invest it if it's not going to be long term you're going to be just on edge the entire time you're going to be logging in all the time to see like what's the market doing and like you said if the market crashes you are going to have a heart attack so that money is truly best we've seen a lot of that lately i mean I mean, it wasn't long ago where we had the market was down 18 % for the year.

[1879] Yeah, that's right.

[1880] But then we've had a great year so far this year.

[1881] And so, but when you're ready to make that home purchase, you don't want to be like, oh, gosh, I can't do it.

[1882] Yeah.

[1883] Because my 100 grand turned into 85.

[1884] Oh, so painful.

[1885] That's too stressful.

[1886] But the longer you keep the money in there, the better chance that money has grown and it's going to be a wise move.

[1887] So, but that's a great, that's a rare situation that someone has no debt and 100 grand sitting there at 22.

[1888] Absolutely.

[1889] What a rock star.

[1890] Most people have debt up to their eyeballs, Jay.

[1891] And they're like, well, I got to get a house because my parents are pressuring me in the housing market's crazy.

[1892] And then they call us again going, I think we need to sell the house.

[1893] We made a mistake.

[1894] You know, in a situation like this guy, too, it is worth noting it doesn't hurt to have some rental history going into buying a home, especially with a zero credit score.

[1895] It's a great caveat.

[1896] And I would say to somebody like Jonathan, it's great when your parents say, you can live here rent free.

[1897] But it doesn't hurt to set up some situation where you're paying them rent so that, you can show I've been paying rent for, you know, I have a renting history, basically is what they're going to ask for, especially if you go in with a zero credit score loan, which is important.

[1898] They need to see that you've made some kind of rent payment.

[1899] Even if it's not market rent of $1 ,200, if you've made a regular payment on the first of the month to your parents for $500, that is going to change the game when it comes to getting approved for a no score loan.

[1900] It's actually very, very important.

[1901] So in his case, or if you're in that case, you can either look at paying your parents or in this case it could be worth it to get out on your own, find some roommates so that you're establishing that trade line, which is really, really important.

[1902] That's big time.

[1903] It is big time.

[1904] I talk about, I have a whole chapter in my new book, Jade, on home ownership and mortgages, and I walk through with a lot of empathy because I feel for those out there.

[1905] Man, it's different.

[1906] You're right.

[1907] Wages have not kept up with the housing market.

[1908] It used to be twice your salary could get you a home.

[1909] Now it's six times your salary is what it takes to get a home.

[1910] And so it is harder than it was before.

[1911] That's right.

[1912] But don't let that discourage you.

[1913] Like, renting is smart, is buying patience.

[1914] It's not a sin.

[1915] It's not a waste of money.

[1916] I'm so sick of these myths that we're telling young people.

[1917] And guess what?

[1918] It's coming from you, parents, because you want what's best for your kid.

[1919] And you go, well, you got to get in the game in the housing market.

[1920] Your kid can't afford it.

[1921] And if you can't afford it, it's a burden.

[1922] It's not a blessing.

[1923] It's a burden instead of a blessing.

[1924] That's exactly right.

[1925] So you got to do it the right way.

[1926] Here's our parameter for this.

[1927] 15 -year fixed -rate mortgage is the only one you want to go with, 25 % of your take -home pay going towards the mortgage and have a solid down payment.

[1928] If you do it that way, you'll buy a house with peace.

[1929] Yeah, how much down payment, George, for those asking?

[1930] 5 to 10 % is okay for first -time homeowners, but I think 20 % is a great goal to have to avoid that pesky private mortgage insurance, which protects the lender, not you.

[1931] That's right.

[1932] Usually insurance is great because it protects you, not in this case.

[1933] Ooh, I love it.

[1934] Another hour in the books hosting with the great George Campbell.

[1935] Thanks for being here with me today.

[1936] Thanks, Jane.

[1937] Thanks to the guys in the booth.

[1938] Thanks, James.

[1939] Appreciate you.

[1940] This is The Ramsey Show.

[1941] Hey folks, Dave Ramsey here.

[1942] You know, budgeting doesn't have to be boring.

[1943] You just need a budgeting app that's made with you in mind.

[1944] And that's Every Dollar.

[1945] The Every Dollar app has helped millions of people work the baby steps and take the stress out of planning and managing their money.

[1946] Start budgeting with Every Dollar for free right now.

[1947] Just go to Ramsey Solutions .com slash Every Dollar and download the app today.

[1948] That's Ramsey Solutions .com slash Everydoll.

[1949] dollar.