The Ramsey Show - App - Avoid the Allure of Buying a New Car on Payments (Hour 3)

Episode Date: February 12, 2024

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm your host, Jade Warshaw. I am joined by your other host, Dr. John Deloney. He is here with me, and we're taking your calls for the next hour. You can give us a call. The number is 888-825-5225.

And we will do our best to give you our best advice as it relates to your life, your money and your situation. So give us a call. Let's head over to the phone lines where I see Mike from Naples, Florida. What's going on, Mike? How you doing, guys? We're doing good. How about you? Doing good. I'm actually

24. I graduated college with my master's. I have no student loans, no debt. I have $2,000 in my savings and $2,000 in my raw car, right? But I made a stupid decision and I have a car loan for about $32,000 and I

make around $48,000 a year. So when did you get the car? I got it in November. I got it brand new. And after listening to you guys for about a month, I feel really stupid. What's the payment? And I want that thing gone right away. What's the payment, Mike? Hit us. $5.70 a month. Oh, Lord. Wow.

Got a little bit of the diarrheas. How did you find us, Mike? How did I find us? Find you guys? Yeah. My parents love listening to you guys. My parents actually swear to you guys. My parents actually swear by you guys. And I thought having no debt or nothing, I'd be fine with the car payment.

But with the rent and now the car payment, I just want it all gone. I love it. They swear by us and you swear at us. Right. But we're with you, brother Mike. We got you. So what's the car worth? If you look to sell it privately privately what would you get for it uh i was looking since it was so brand new i was

it actually didn't give me a value on kelly blue book but i could probably get around i'd say around 32 33 okay so you think you could sell it for what you owe on it? Yeah, but the thing is, I want to get another car just used, and I don't know how much I'm going to put towards that. All of it, 100%. Don't buy another car without cash, brother. Yeah. So, okay, so... Hold on.

Yeah, but you're going to end up in the same spot no i i don't want to buy another car and go totally in debt i want to buy a cash but but you want more than two thousand dollars worth of car no i'm fine with like what can i get for two thousand that's something that's embarrassing that no one would want to date, and that will get you from A to Z. Well, I think you can get more than a $2,000 car. Let's look at it. Let's see. It's February.

We're midway through February. Let's say that you decide you're going to put this car up for sale. It's going to take a while for it to sell. So let's pretend like you got four weeks in front of you. How much money can you scrape up in the got four weeks in front of you how much margin can you how much money can you scrape up in the next four weeks um i guess scrape up a good amount i'm actually getting a bonus for work an extra five hundred dollars on a paycheck okay and you live at home right i'm renting currently oh you're renting okay um so how much could you scrape up? Could you scrape up $2,000?

Yeah, I can definitely scrape up $2,000 within the four weeks. Can you scrape up $3,000? Sell that guitar. You don't even play anymore. I'm going to keep going higher. Can we scrape up $4,000? I was looking to try and scrape up another $2,000 or $3,000, pushing to $4,000. That's what I would do. And then buying a car like that.

There you go. That's exactly what you do. Keep $1,000 saved. Don't spend your emergency fund. But take that, you know, you've got $2,000 saved. Keep one aside. And then take that one and put it with the three or four that you can scrape up and buy yourself a $4,000 or $5,000 car. Sell this one.

And you're out of it. And then scrape up another four or five thousand dollars and in a couple of months put it you know sell the used car you just bought and get yourself a ten thousand dollar car because it's not going to lose any more value yeah now do i take the hit and sell it quicker and like take a hit on it or do i wait a little while on the car you're like sell it for less no no no you shouldn't have to take a hit i mean it's fairly you've only had it three months i put it on the market as soon as you can like i said i wouldn't sell it back to the dealer i would do private sale because if you take it to the dealer they're gonna take you for a ride yeah i don't want to do that yeah sell it private still

and then you'll get what you paid for it and like you said maybe you'll get a thousand bucks more but i would definitely do that and by the way you're going to get desperate and you're going to go to talk to a dealer even though jade said not to and they're going to convince you to roll equity into something else please don't do that because if you do if you do that just email us because you'll be calling us back in a few months wanting to shoot the other foot no no i definitely want don't want to do that i'm about to go outside and take pictures of it unless they're right now that's what we're doing you're getting off the call you're listing that at the end of the month you're buying yourself a five thousand dollar car and then in a couple months like i said you're

going to scrape up that same four or five thousand,000, put it with your used vehicle, trade it in and trade up. And that's how this thing works. I talked about this a couple of weekends ago, John, because, you know, people hear us on the show all the time say, oh, just buy a car in cash. And there's a reality there of if you've never done that before, it feels really intimidating. And because you're coming from a world where you're used to going to the dealership and buying a $25,000 car, a $30,000 car, a $35,000 car, when people hear us say, oh, from now on, buy cars in cash, they're thinking that we're just suggesting that you just hop on down to the dealer and you've got $30,000 cash in your pocket and you just fork it over. For some people, that's the reality. But for most of us, that doesn't happen until a couple of steps up the ladder. You know what I'm saying? So what it really looks like is exactly what we saw in this call.

It looks like you starting out with a car that you're probably a little bit embarrassed about, right? It's that $5,000 beater. And the thing about when you buy and people get all nervous and up in arms about used cars, but I'm like, guys, all cars require maintenance. All right. So do your research, make sure you're getting one that hasn't been in a thousand wrecks, right? They tell you everything about the car nowadays. So do your research, get your car and just understand when you buy a beater like that, it's already taken the huge appreciation depreciation hit. It's already gone down like a rock. And if you're only planning to hold onto it for a little while. And so when you

go to sell it again and add money with it to trade up, it's going to retain most of its value. It's not going to completely, you know, be worth zero. And so you walk this thing, it's like a ladder and you go rung by rung. You start with a $10,000 car and you add $2,000 to it or's like a ladder and you go rung by rung you start with a ten thousand dollar car and you add two thousand dollars to it or three thousand dollars and you go little by little and maybe one one time you're able to add five thousand dollars to it but when you don't have a car payment it makes it a lot easier to save up that money because most people's car payments are 650 a month which means in two months, you could have $1,300. Wow.

So you see how quickly this can happen. In six months, that's $8,000 or more that you can add. That's fast, guys. That's how this thing works. And you do it little by little. And before you know it, you do have a $30,000 car that you paid for in cash. That's how this thing works. And that's how you do it.

I'm in. John ain't got nothing to say. He's like, yeah, Jade, that's how you do it. Clap it up. Hands in the middle on three. Cash cars on three. One, two, three. Cash cars.

This is The Ramsey Show. This is The Ramsey Show. I'm'm your host Jade Warshaw your other host today is Dr. John Deloney host of the amazing YouTube show the Dr. Dr. John Deloney show let me say it right John geez oh my goodness so if you haven't checked out his YouTube show be sure to check it out because it's going off uh let's talk about this Ramsey Show question of the day. Your Ramsey Show question of the day is brought to you by Neighborly, your hub for home services. Window Genie is a Neighborly brand that does more than just windows. This time of year, they also take care of clogged gutters, which can damage your roof, windows, eaves, and more. Find a Window Genie location near you at neighborly.com slash Ramsey. All right. Today's question comes from Stephanie in Arizona. Stephanie writes, my husband recently admitted to me that he has a

gambling addiction. He has $300,000 in debt, has been stealing from our savings accounts, cleared out his 401, has not been paying the bills, et cetera. how do we even begin cleaning up this mess oh man wow we just had a call like that a couple hours back yeah all right so i'm gonna um i'm gonna really bullet point this and then hop in jade um we can get to the money part of it um i think it's important there's two sides of this number one is the the trauma to your marriage. The marriage as you knew it is over. The person you knew has revealed themselves. And so trying to quote unquote, get back to the way things were, that's a fool's errand. If you stay married and you choose to work through this financial infidelity, then we're going to build a new marriage. That's number one.

You're going to feel like you've been on a boat all day and then you get back on dry land and everything feels wobbly and off. That's what it's going to feel like because everything that you have, every way you've lived is different now because the person who was your ride or die, who stood before your friends and family and God and said, I do forever, stole everything from you and has dug a hole for the family. It's going to be pretty significant. So that's number one. Number two, and by the way, to deal with that, I would get a couple of friends. I would get a counselor. I would get a journal that I write in every day. You're going to feel rage. You're going to feel weepy. You're going to feel anger. You're going to feel like frustrated. Write that crap down

and get out of your body. Number two is your four walls. You have to make sure your bills are paid and that you have a home, that you have shelter, you got food, you got transportation. You're going to have to take care of the basics. You're going to have all kinds of debtors and credit card people calling you. The first thing you get is make sure you got a house, make sure you got food, make sure your kids are safe. Okay. Make sure you can get to work and back and paying the bills. That means you're going to have to go in and see who does the water, who does the electric, who does, where's our rent or our mortgage and dig into all those and make a plan and start paying those things. If you can't, well, that's a whole other conversation. Call us on that one. The third one is hopefully your husband is in rehab of some sort,

some sort of gamblers anonymous, some sort of 30-day, 60-day, 90-day inpatient treatment. This is a big $300,000 in debt plus stealing from your future, wiping out 401. This is a bad problem, and he needs to go get professional help. When he gets out, then y'all are going to begin to create something new. But as we mentioned earlier, 90 days, 120 days, you are keeping the money in your account. He doesn't have access to the money, doesn't have access to the bills. But I thought we were built. Nope. He's got to rebuild trust from Lego one, square one. And so we're going to create a world

where Stephanie's in charge of the money for a while until there's some healing that's happened. There's a new marriage being built and Stephanie, you begin to regain trust. And this is going to take years and years to heal from. That was a lot. I just kind of threw it all out there. No, I support that message. I'm not going to add anything else to it because I think

that's right on, John. It's dark, man. It is dark. That's tough. That is so, so, so tough. I'm sorry that you're going through that, Stephanie, but I think John gave you a great pathway to move forward and it's not going to be easy, but at least you know the steps to take oh after that let's go to the phone lines listen i got a segue right out of it because there's no i feel like we need to have like a we sing a song together or something there's no clean kumbaya all right let's go to cody and reno nevada cody you're up next what's going on buddy hey how you guys doing

doing good how can we help good so right now i'm kind of in a pickle of deciding if me and my wife should continue staying and renting in our apartment or if we should start trying to look towards buying a home right now. Okay. Tell us more. Yeah. So right now between me and her, we make about 120,000 a year plus maybe 10,000 a year in bonuses. Our rent right now is $1,250 a month and each month that we're renting, we're able to put $3,000 in our savings. We've currently got $41,000 saved right now and we take home about $7,500 a month after all of our taxes and stuff.

Okay. So you're trying to decide, do we buy, do we rent? What do we do here? So you're taking home $7,500 a month in income. You've got $41,000 saved and you've got your rent at a level to where you're still able to kind of sock away $3,000 in savings. Did I get that? That's good. That's great. So what's keeping you? Do you have any other debt? Tell me, do you have debt? So the only debt we have is $20,000 in student loans. And she's a speech pathologist where she's working at a low-income school that is paying off part of her loans after she's been working there for five years. Okay. Paying off part of her student loans?

I think it's about $10,000 to $15,000 of it is what they'll pay off, and she owes about $20,000. Okay. Is it the school doing it, or is it the government doing it? I'm not 100% sure if it's the school or if it's the county that we're in that's kind of offering that

because she's working at a lower-income school. I want to make sure you write down the math on this. If she has a service orientation towards low income, awesome. That's fantastic, and I'll support that until the end of time. It's going to come at a cost to your family, and that cost is absolutely worth it sometimes if that's what your mission is. But if she's making $40,000 at school X and they promise to pay off $10,000 of her loans, but she can go work private and make $75,000, this is not

a deal for your family. Thank you, John. Okay. I want you all to sit down and do the math. And it might be, which is almost often the case, if you chain yourself to student loans, you are forcing yourself to put your mission second and honor the bank's commitment first. We hear it all the time from people who want to do ministry. They spend six figures on theology school or whatever. Cool, you got to go get a job. And then after you pay off your debts,

then you can go do your ministry same with mental health professionals similar to speech pathologists who want to work in a low-income area the mission's amazing it's beautiful it's essential and if you can't afford it you can't afford it how many years in is she um She's on her second right now. Okay. I'm with John 100% on that. a personal preference as well where she wouldn't want to go

into the private sector and likes to work. I got that. She might have to do something she doesn't prefer for 18 months or 24 months so that her whole family can be safe. If I'm her,

when I'm going to go to that school, I'm going to say, listen, can you just reimburse me? Because I'd like to pay this off. I don't want this hanging around my neck. If I keep record of all my payments, will you reimburse me when it's after the five years so that I can just go ahead and pay this off? That's the deal that I would make.

Because there's no sense in you having to make payments or having to have this around your neck. you guys can afford to pay it off today and that's the that's what I would say to them and if for some reason they're like no or that's weird that it's not a deal that I want to do because it's either five it you know it's either 15,000 or it's not it either is or it isn't whether they write you a check it's the same check that they're cutting so you having to keep it around shouldn't matter it's who's making the payment or not does that make sense although sometimes you know sometimes logic goes out the window you know when you get a mission well here's the other thing if uh if y'all can just and people are going to give me all kind of grief i don't care um if you can afford it, pay it off. And they have a special program that if

you want to keep debt strapped around your neck or it's all you can do to hang on so you can keep working at this school and taking care of those kids. Cool. That program is not for us because we got the money. We're just going to pay it off and we're going to move on with our life. I like Jade. If they'll write you a reimbursement check, that'd be amazing. Yeah. But yeah, get rid of the debt either way. And by the way, when you buy this house, when the time comes, make sure you've got three to six months saved first, and then you're buying it on a 15-year fixed rate mortgage where the payment's no more than 25% of your take-home pay. That's the deal. You are listening to The Ramsey Show, and I'm so glad that you're here.

I'm Jade Warshaw. This is Dr. John Deloney to my right. Or if you're listening, the other voice that you hear is Dr. John Deloney's. And I want to tell you guys about a brand new event that we're so excited for. It's coming up here in the spring. It is the Total Money Makeover weekend event. It's a whole weekend, May 10th and 11th and it's here in nashville music city and we have a really cool event venue we call it the wreck um it's up on our

property on the hill when i say our property i'm talking like like i've owned the place it's d money's property but yeah the big eagle it's his property but it's on property it's right up the hill and it's an amazing state-of-the-art theater. I'm going to call it a theater. What would you call it? It's a 2,500-seat theater, but it's a masterpiece. It's really cool. It's awesome.

And so we're doing the Total Money Makeover weekend there. It's a three-day event. You can go to RamseySolutions.com slash events to look at tickets. But man, it's everything that you need. If you've been listening to this show, whether you've been listening for 10 years or 10 minutes, it is for you because you hear us all the time walk through the baby steps. We're always talking about, oh, and baby step one, do this, and all the way up to baby step seven. And it really is that. We're going to go through all

of those baby steps. There's something there for everybody, no matter where you are in your journey. This is going to be for you. It's going to be that rally to keep you going forward. You're going to be around like-minded people. You're going to leave feeling so good and you're going to be so excited. You're just going to want to run through walls and tear your shirt like Usher. You're going to be so excited. So I want you to be there. We're going to do Q&As live throughout the weekend. It's going to be so, so fun, very different from any of the other Ramsey events you've attended. So make sure to get your tickets. Early bird tickets start at $99.

That's only for a limited time, though. So get them now because those are going to sell out super fast. Like John said, the Ramsey Event Center holds 2,400 people. So seats are limited. And you don't want to wait to get those tickets. So get them now. Go to Ramseyysolutions.com slash events john all right let's do this it's just gonna be a hoot man i love doing events up

there let's go to brian he's in midland texas that's my neck of the woods what's up brian hey how you doing all right man what's up uh so i guess my question is so i had a like a late start to my adult life, if you will, because I turned 30 in prison. Okay. So I've been just really focusing on working and building a career and whatnot. Good for you, man. How long have you been out? 13 years now.

Okay. So you're 43, mid-40s? Yes, sir. Okay. Excellent. Been working hard, staying out of trouble? Yes, sir. All right. I'm proud of you, man. I don'ts? Yes, sir. Okay, excellent. Been working hard, staying out of trouble? Yes, sir. All right, I'm proud of you, man.

I don't want to do that again. Good for you. That's a hard road when you get out, so good for you, man. I'm proud of you. What's up? Appreciate it. Well, I feel like I just keep getting caught into a lot of the same traps as probably most of the people that call in.

Over the course, since getting out and all that, I've put together a good career. I make pretty good money, but I have an expensive life, and it's not so much a lifestyle. I think it comes with the career I have and the job I have, because I work out here in Midland,

but I live in Virginia, and I have kids in Oklahoma. Um, so there's a lot of travel that, you know, in order to fulfill all ends of the duties, you know, I, I spend a lot on travel and I have responsibilities in terms of child support and whatnot. I want to change some of your language. Is that cool? I want to change some of your language. Is that cool? What's that? I want to change some of your language before we get going. Is that cool? Yeah, that's fine.

And the whole conversation we're going to have, me, you, and Jade, I want you to picture we're sitting there at Rose's in Midland, and I ordered several things at K-Store. It's just three buddies hanging out, okay? So this isn't me getting on to you. It's me sitting with you, okay? Yeah, no, I understand. hanging out. Okay. So this isn't me getting onto you. It's me sitting with you. Okay. Yeah, no,

I understand. All right. Okay. I don't ever want you to say I got caught in a trap again. I don't ever want you to say I've just found myself in this life. I want you, and you've been doing this for 13 years. I want you to stand up as tall as you can as the,

as a part-time Texan you are. And I want you to stand up as tall as you can as a part-time Texan you are, and I want you to say, I am taking full ownership of the chaos that has become my life. Okay? Yep, I can do that. That I can do. Excellent. And so once we take full ownership, we don't fall into traps anymore.

I don't buy stupid stuff. I don't have houses all over the country. I do what I have to do, and then we go from there. Is that a good place to start? Yeah,? Yeah. Okay. Tell me about this house. You live in Virginia, but you work in Midland. Okay. So we rent out there. Out where? To be honest, up in Virginia. What's in Virginia? Girlfriend, I guess, if you will. So you're going to Virginia just to see your girlfriend? I mean, I only go every few months. But you're renting a house there?

Well, the house in Texas is provided through work. Why don't you live there? And just visit Virginia every few years. I mean, every few months. No, that is what I do. I do basically live in Texas, but it gives me a, like a residence, if you will,

because I can't claim the work address as a residence. But let me ask a clarifying question. You said we rent up in Virginia. Who's paying? My girlfriend and I, we share the house. Okay, and you're splitting the rent.

Yes. Does she live with you in Midland when you're in Midland? No, because her career is based over in Virginia. So basically, she's got most of her rent subsidized by a dude

who only comes home every few months. Yeah, unfortunately, that is the case. That's not unfortunate. That's the deal you set up, but she's getting the better end of that deal, my brother.

Yeah, I don't like that for you. No, I agree on that one. I don't think you're wrong on that is the case. That's not unfortunate. That's the deal you set up, but she's getting the better end of that deal, my brother. Yeah, I don't like that for you. No, I agree on that one. I don't think you're wrong on that one. Okay. You have a home, and you have a work home. Yeah, why can't you claim it? And she can live in Virginia. Because it doesn't have a federal address.

Get a P.O. box in Midland. I mean, I guess I could. Maybe I don't understand how all this works. I didn't know if you could put that on a driver's license or any of that stuff. Don't you have to have a

residence? Where are you living? Are you in a trailer park because you're out in the field? I mean, it's a man camp for the most part. Okay, but you're living out in the field? Yes. You would be better off financially and psychologically and spiritually

if you rented a one-bedroom apartment in Midland also. And then, once every few months, if you want to go visit your girlfriend in Virginia, you could go visit her at her place or you could get a VRBO and save yourself a jillion dollars no I mean you're not wrong catch me up what's a man camp a man camp is like when they're working on workers yeah they're working on the oil fields and they just they'll have a whole bunch of uh either small houses or

trailer houses and how long do their trailer. And you stay in there for how long? How long are the stints there versus where you could live elsewhere? I do 20 days on, 10 days off. 20 days on, 10 days off. Okay. Yeah. Yeah, I'm with John. And I just think the girlfriend thing, you having a rent that far away,

she just needs to have her own place to live. And if you come visit, you stay with her. If she comes visit you, Midland's beautiful it's not it's not it's not it's not virginia it's not for sure okay so that that's thing one like let's rectify that because that's a lot of money going out the door where you could be like john said getting yourself a one bedroom or studio place in midland that serves you better and you know that's your time I don't like saying man camp but that's like your time away from the man camp all right that's thing one let's talk about Oklahoma City is that where your kids are it is correct and how often are you going there I go there one one weekend a month I get

them during that 10 days off. I go up there and see them at least once. I would love for you to have a small house that you're buying equity into in Oklahoma. That's where it needs to be. By your children. Yeah. I think it's time to cut girlfriend loose or if girlfriend wants to move across the country, that's cool. But you're a dad and your kids have lost a big chunk of their life with their dad. And I want them when they're 25 to see, dude, my dad, A, turned it around. B, worked so hard out in that hot Texas sun or this weekend, that crazy freezing Texas winter. And then he came to see us as often as he could. But brother, you're making too much money in an organization.

I mean, it will roll over when gas prices, when oil prices drop, they're going to cut everybody. And so it goes up and down and up and down, but you're making too much money to be splitting it across the country like this. Yeah. We didn't get to find out more information from you,

but we're going to get you hooked up with Financial Peace University so you can walk through, figure out how to pay off this $100,000 of debt that you have and how to best optimize your income and your time. So Austin's going to pick up and make sure that you are set up with Financial Peace University and every dollar. This is The Ramsey Show.

All right, you're listening to the radio show, The Ramsey Show, which is also on podcast and YouTube. Listen, I don't know what comes out of my mouth sometimes, John. You're listening to the radio show. I'm Jade Warshaw. That is Dr. John Deloney keeping me in check, man. He needs to. Your scripture and quote of the day.

If your enemy is hungry, give him food to eat. If he is thirsty, give him water to drink. That's Proverbs 25 21 and then paul stanley from kiss says this charity is not an option it's an obligation all right paul he feels he feels strongly about that i'll go along that's one of my favorite proverbs in the whole wide world yeah yep if your enemy let's read it again. If your enemy is hungry, give him food to eat. If he is thirsty, give him water to drink. I like that. Hate has never solved a single problem.

That's a word. In the history of humankind. It's never solved a problem. No. Never solved a problem. Only love can do that. Never solved a problem. We're being very philosophical.

One day, we're going to figure that out. We will. Let's go to josh he might have some answers in cincinnati ohio what's going on josh i think you guys are taking my call today i appreciate it you bet um so i am a recent college grad and i'm just trying to figure out what's the best way to pay off some of these loans so they're all federal and i owe about 24 000 in federal debt. So right now, like the options I have are the safe plan through the Biden administration.

Okay. And it's all, you know, it's income based. So they're going off of my previous year income, which is about $35,000, $36,000. What's this year's income? However, this year's income has gone up to about 60. So it's like 10% of your income. So currently I'm paying $30 a month until January of next year. And then they would reevaluate what my income is.

Okay. So I'm just kind of wanting to know, like, what are your thoughts on this? Is this the best way to go about it? Is there other ways? You know, I'm trying to work the the baby steps and I have step one done and step two is obviously paying off debt is this your only debt that's my only debt in your situation because it's your only debt I wouldn't do it I would just I because the only purpose that I would use and I've gone on this soapbox before so I won't get too deeply into it but the only way that I would use and I've gone on this soapbox before so I won't get too deeply into it but the only way that I would go on a plan like this is if you had if you were

like Jade I've got a lot of debt and you listed all the different ones credit cards and personal loans and cars and student loans and houses I would say okay because when you get out of debt what you're ultimately doing is you're listing all of your debts smallest to largest and the goal is to pay minimum payments on everything and then have a bunch of money left to throw at the smallest debt and so when you're making minimum payments yeah you want those minimum payments to be small so if that were you and you had a bunch of other debts and i would say yeah go on the same plan temporarily so you can have a smaller minimum payment so you can have more money to sock away at that smallest debt but in your case this is your only debt so you're in more money to sock away at that smallest debt. But in your case, this is your only debt.

So you're in the mode where you're socking all the money that you can at this debt. The goal isn't to pay less. In your case, the goal is to pay as much as you possibly can. So if you're making $60,000 this year, or if you're on track to make $60,000, I'm looking at that and I'm going, okay, this guy, are you single? Yeah. Are you, what's your living situation? I currently rent, I have three roommates.

So that's kind of another part of my thing. You know, I eventually within the next year or two, I would like to purchase a house. Well, we can't get to that yet. We got to go in order. So with the baby steps, you know, this is all fitting together in a nice tapestry. So we want to do it, you know, the right fitting together in a nice tapestry so we want to do it you know the right way at the right time so if I'm you I'm going okay I'm going to make sixty thousand dollars this month can I find a way to make 15 more so that I'm at 85 or 75 I'm sorry and then can I can I

pay off 24,000 in a year I think yes okay I think you pick up a side hustle where you make in a little bit more. And I think that you knock this out in 12 months. And then. So I'm kind of working these steps a little funny because I have been with my company now for three years. I just recently, you know, since graduating, I got a new job within the company. So I've already been investing into my 401k. I'm at 13% with them matching five. Is that something you would recommend from where to get some of that money back into my bank account? I want you to be able to invest, but I want you to invest in the right way because what happens here, if you go your

route, everybody thinks the baby steps or the plan that we have is just kind of this idea. But the fact of the matter is there's a method to it. And if you don't do it in the right order, you can actually end up screwing yourself pretty bad. Because what happens is you're investing in that match and you're doing great. But if you don't have money saved for an emergency and you buy a house, what happens is your 401k becomes your emergency fund. And before you know it, you're dipping into your 401k. So there's some things there that are holding you back also if you're investing that percentage that's money that you could be using to pay off this twenty four thousand dollars of debt because what i want what i want to get your brain thinking is that math math is math whether we like it or not

so if you save $24,000 in your 401k but you owe the federal government government $24,000 you you're at zero that money is not yours you tell yourself it's yours but it's not really yours can you do a fun thought experiment with me, Josh? Sure. It's 2024. What's going to happen this year? An election year. Yeah. And we don't know who's going to get elected. We don't know anything.

And we especially don't know the people who are running, what their platforms even are, what things they even want to do. And so fast forward to December 31st of 2024. We'll have some sort of answer, sort of, maybe, who knows. Would you rather be sitting on December 31st with your fingers crossed, hoping that the federal government, which, by the way, has done a real bang-up job

the past 50 years of keeping his promises and doing math problems well, that they are going to continue whatever plan you've signed up for? Or would you rather be sitting on Decembercember 31st owing like doing what jade just said work your job and then go put in some good podcast and uber all throughout the evening and then on saturdays go uber again and sundays uber again and you wake up and it's december 31st and you don't owe anybody anything and then when

things get chaotic and hectic you go at least i'm off the hook and i'm not chained to anything how does which one of those feels like it's gonna feel better definitely the one where i don't owe anyone anything bro i would i would triple down i I would do exactly what Jade said. I would make December 31st this maniacal. I will owe nobody anything by December 31st. My family, I'm going to send y'all handmade cards for Christmas. Friends, we ain't going to do nothing this year. That's right.

And we are going to be free come December 31st. And then whoever gets elected and whatever's on fire at that point, we'll be able to handle that knowing that we're not going to go down with the ship. Yeah, I like that. Josh, how much money do you have saved? I have about $3,000 plus about $20,000 in my 401k. Okay. So we're going to drop, we're going to walk the baby steps. Let's commit to walking. Let's commit to the process and know that this is the plan. Like there's some piece that you have in walking a plan. When you walk a plan, suddenly all of the answers are answered for you. That's one of the benefits of choosing a plan and saying, okay,

I'm going to do that one. Because then when you have these questions of, should I invest yet? The plan tells you, should I pay off my debt first? The plan tells you. And as long as you walk the plan, you can rest in knowing, okay, I'm doing things right. I'm going in this direction. It's worked for millions of people, including the woman that you're talking to online right now. So I can tell you that it works, right? So that's what I want you to do. I want you to take $2,000 of the money that you have saved, and I want you to start putting it towards this debt. Now you have $22,000 of student loan debt. And I want you to get crazy and pay this off. You're going to have it done so quickly. Then you're going to save up three to six months of

expenses. Then you're going to start saving for that down payment on a house. But you don't need to worry about, you know, you don't have to do all this at once. You know, you just graduated for heaven's sake. You're doing right. You got a house with two roommates. You know, you didn't pull out a lot of student loan debt. I'm glad that you didn't. So let's just take our time and walk down that road.

And my guess is that in two and a half years, you're going to be a homeowner and it's going to be pretty, pretty good. Choose freedom, my brother. Choose freedom. Choose freedom. I love it. Thanks for hanging out with us for a couple of hours here on The Ramsey Show.

We love that you were here. We're glad that we were able to take some of your calls. We hope you enjoyed it and we'll see you back here next time. Thank you.