The Ramsey Show - App - Budget Your Time Like You Budget Your Money (Hour 3)

Episode Date: January 29, 2024

🎵 Live from the headquarters of Ramsey Solutions, this is The Ramsey Show. It's where we help you win in your life, specifically in your money, in your work, and in your relationships. 888-825-5225 is the phone number. 888-825-5225. the phone number. 888-825-5225. You're one call away from some hope. We're going to be honest with you. We're going to have some fun as well. Speaking of fun, the incomparable, the combustible, Jade Warshaw.

Combustible? You can be combustible in a good way. You're kind of like catching fire. You're like the star of the movie. Hunger Games. Thank you. Katniss. Thank you.

You've got that. You remember who her costume designer was? Listen, that's better than Mr. Bombastic. Who was her costume designer? I don't know, Ken. The one, the only, speaking of incomparable, Lenny Kravitz. I did not know that. Lenny Kravitz played her costume designer and designed the combustible costume.

Good to know. But this is speaking to your charisma and enthusiasm, which I enjoy. It is infectious. We're here together. I'm Ken Coleman. I don't know that I mentioned that. She's Jade Warshaw. And speaking of combustible.

Yes. You and your amazing social media specialist have come up with some fun clips recently of the two of us. And I feel like I'm next to one of the big shots. Like I'm just one of the Supremes next to the star. I don't know. But it's been fun. It has been fun. And there have been several.

So one of them, you tell me, has garnered quite the reaction. And dare I say, is there an overwhelming amount of criticism for you? I don't know that I would call it overwhelming. What were you saying to me? Okay so in the clip here's what I want you guys to know. We post these clips from the show on our social media and we like we're on social media like we're watching it we're reading the comments so you know we posted today a clip and let's just play it so you guys can see it okay here we go if you have time to watch netflix you have time to get a side hustle let me just say it like that why'd you have to go and do that i'm just saying making us all feel guilty for sitting

there and watching i'm just saying do something during that time i have a buddy that i follow online and she does the surveys oh you know you can do the surveys and it's like there there is always something you can do to make money even if it's a little bit there's always something you can do with that extra 30 minutes here and 40 minutes there okay so there you have it so i'm clearly being facetious i agree with you get after it you shouldn't be watching netflix if you're broke yeah but people are they're giving us some grief yeah somebody said while it makes sense let's not underestimate the value of rest some hobbies and doing something that also makes you happy listen yeah but not not now like you got to get out of debt first like you got to earn your rest

like rest when you sleep yeah like it says let no what is that what does the scripture say no sleep to your to your eyes no slumber deliver yourself like a gazelle from the hand of the hunter like and i know that's not exactly literal but there is a piece to when you're getting out of debt you have to be willing to sacrifice and do things that right people who aren't in debt don't have to do. Which is me. I can watch Netflix tonight. You know why? Because I'm not broke.

I do think that there's something to be said for working to the point of- A couple of good shows I'm into right now. Listen. Sorry, I interrupted you. Sorry. I'm over in my own little loop. Kid is in a reverie. I was just thinking about, what do I got in the queue tonight?

But you make a very good point though what you were saying in this clip is you don't need to be watching Netflix you need to be working until it's time to fall into the bed because you're exhausted and we all say that you know we all say we don't have time oh I would do it if I had time I'm like listen you go and do a time audit and see where your time is being spent and i bet you and when i say time audit everybody should do this practice a couple times a year really journal out what you're doing from sunup to sundown all the time what time you woke up what you did after that what you did after that and really start seeing where your time is going and i think that you'll be shocked at

how much time you can find throughout the day and because here's a thing it might not be in big blocks and you might learn like listen i need to scoot my day around so that i can create blocks of time or you might realize listen i'm i could wake up an hour and a half earlier or i could go you know i could stay up or like there stay up later there's things that you can do and i don't want to create excuses and reasons why i can't get where i need to go because ultimately and i get don't get me wrong rest is important i get it but here we're trying to motivate your butt to get out of debt so when i'm telling you to to go pick up jobs don't come at me with like but jade we need to rest you'll have time to rest what else are they saying?

Is there anything else in there? Let's see a little bit more. I'd like to know some more of these comments. This person said, why did you have to go and say that, Jade? This person said, rest and live within your means. And I'm like, I'm talking to folks who are trying to get out of debt. Now, what I like is what Julie9658 said. She said, all right, Jade, I needed this. I hear you.

Deleting Netflix. That's the kind of energy I'm rocking with. Julie9568 took that one very literally. I need the person who looks at it and says, oh, this person is giving me away. They're showing me how to get to succeed. I bet that's her username on Netflix. Julie2568?

Whatever it is. I just think that's really funny that that's what she went with. Yeah. It just cracks me up. I think that when- You make a very good point. And I agree with you, by the way.

I got to say, I don't know if sometimes people realize that I'm being facetious in that clip when I said, come on, Jade. No, they know. But come on. I think you're right. I think watching TV, let me tell you this, millionaires don't watch a lot of TV. Multimillionaires, billionaires, they don't watch a lot of TV. Listenmillionaires billionaires they don't watch a lot of tv listen they really don't we can tell people i'm gonna get into it we can tell who said what to who you can tell me what taylor swift said to what's his

guy's name i don't even know the guy's name oh her boyfriend yeah the football player this is what's wrong with america everybody knows her but we don't know who he is but i'm saying my daughter walks into the living room last night and she sees the chiefs are on. True story. She's like, oh, is Taylor there? That's what she said. And I'm just like, go out of the room. Leave the room now. Go to your room. I can't handle it. His name is Travis Kelsey. Travis Kelsey. Folks can quote exactly what Jay-Z spent on a meal. People can quote. Really? Yes. People know numbers, but they don't know their own numbers. They can tell you exactly what somebody else's plan is and what they're doing with their money and their business, but they don't even know what's going on in the state

of their own life. And they would rather spend time gathering information and gossip about celebrities than going out and getting your own life together. Like that's not your life. That's fake. Or we spend time on social media, scrolling and looking at other people's lives, comparing ourselves to other people's life. We'll spend more time. Hold on.

I'm about to get them. Ken. We'll spend more time looking for the right lighting to take a photo. Then we'll spend looking for the right side hustle. It's a very good point. You are 100% correct. We're spending our time on the wrong stuff. And then here's the deal.

Then they're griping and they're exhausted. And all this rest, what you're really exhausted from is the stress. You're exhausted from the stress. You can't sleep enough. And you'll rest better when the debt's gone. But you want to watch your shows. By the way, it's not just Netflix anymore. What is the deal?

There's 75 platforms that you've got to pay for to watch everything. Hulu, Plus, Plus, Plus. Back in the day, you used to say, I've got to watch my stories. Remember that? I don't ever remember saying that. Oh, soap operas? You'd be like, oh, my stories are on today. She knows what I'm talking about.

My stories? I've got to watch my stories? That's what they call them? Yes! I will say this. For about a six-month period that I regret, James, I did watch Days of Our Lives during post-college. Oh, I know about that. I'm never getting that time back.

No, you're not. Alright, the good news is we'll be back before you know it. It's a very quick commercial break. Don't move. This is the Ramsey Show. Welcome back to the Ramsey Show. I'm Ken Coleman. Jay Warshaw joins you. We're here for you. 888-825-5225 is the phone number for you to jump in.

888-825-5225. Let's go to Jesse now in Buffalo, New York. Jesse, how can we help? Hey, guys. Thanks for taking my call. I'm just trying to get some advice on how to navigate kind of the disposable income I have at this point. All right. Tell us what you got that's disposable.

Well, so I pull in about $3,300 a month. That's my take-home. And my current expenses, including the contributions I already have to my retirement accounts, and that's kind of the core of the question here. So I'm pulling in $3,300. I have about $2,500 in expenses right now. So I have about $1,000 a month that I'm not really doing much with at the moment. And you have no debt? I have no debt. I'm very lucky that I have no debt. Do you have an emergency fund? I do. I have about $3,000 in a savings account. Okay. And are you investing at

all 401k at work, any kind of investments? So that's really the core of the question. I am pretty focused on investment at this point in my life. So I have a Roth and a traditional IRA through Vanguard, and that has about $30,000 in it currently. I have a 401k through my employer that I just started. So that only has about $600, but I'm contributing $200 a pay period to that. And then I have a Y, I used to work for the YMCA, which I'm not sure if you're aware, they're a great company to retire with because they match 12%. And just for years of doing that, I have about $20,000 sitting there. Great. So how old are you? I'm 32. Okay, you're 32. Good. I'm listening to

everything I hear. It sounds good. What's your living situation? So I live with my partner. We have a monthly rent of $1,600 and then utilities cap out about, I would say, $200 a month. So between the two of us, we're looking at a little under $2,000 per month. Okay. And you just split the rent. Everything is just split right down the middle. Yep. Split right down the middle. So of all the things you said, the thing that sticks out to me most first is that you only have $3,000 saved. So the way we would teach is for you to have at least three to six months saved. So that I would beef that up. And I'm, I shouldn't have jumped forward,

but do you have any other debt? No, no, I'm very lucky. I, my, I was, I got help with my undergrad and then I didn't do grad school until I had the money for it. Okay, excellent. So no debt. The next step then is to save up what would be akin to three to six months of expenses and i'm not gonna lie the way i just i love when people have six months so if you can get six months considering um you're not technically married and you know so you're treating you're treating your income as a single guy and so i do six months of savings um since you're the only one who funds your lifestyle. So that would be next. And then I would walk with that extra thousand dollars that you have after you've beefed up your savings.

I'd walk down the additional baby steps with you. So if you don't see saving for kids college anywhere in your near future, I'd want to make sure that you're definitely saving 15%. So what percentage are you at at this point? So I'm putting about $500 a month into my Roth and then $200 per pay period. So $400 a month into my, I have a 401k through equitable. Okay. So is that a part, just to clarify, you still have $800 in additional money surplus even after doing those two things? Yes, sir. Okay. Okay.

So what percentage, because only you know your gross pay, I want you investing 15% of your gross pay every month. Okay. So that's before insurance comes out. That's before taxes. So look on your pay stub or whatever, or however you get paid and figure out what 15% is because that's what I want you doing. And you're going to mix it across like what you said, if you've got, if you've got a match on your 401k, invest up to that match, and then go over to your Roth and try to max that out. And if you still have money to go,

come back to the 401k and try to max that out. And for you, go ahead. Oh, I'm so sorry. So that's really the question I have. So I'm on a bit of a grind and like I'm at an age right now where I've shifted focus to how do I really maximize these retirement contributions? So I work full time. I have like a main job. I'm a school social worker, but I also have two part time jobs. And I'm actually going to be getting another job that's going to be seasonal. So all of this to say is like, really, there's a lot of my money that I can be maxed out. I maxed out my IRA last, my Roth out last year. I'm on track to max it out this year. I don't think I'd be able to max out the equitable just because that's about $23,000

I can put into there. And I don't think I'd get there. But the thoughts I'm having right now is I have all these different spots, and obviously it's not going to hurt me, but is there something better I could be doing with that money? Because I have so much. What about a house? I stopped working. So that's a question. I'm not sure what that looks like right now.

Well, you don't have to. But do you feel like at some point you're going to buy a house? I mean, you're 32. I would assume at some point you want to buy a home. Yeah, yeah, that's true. Well, I would be, I mean, right. You don't have to know what the price of the house is down the line, but you can start saving. At this point, you're doing a really good job with investing.

If you do what Jade says, in our baby steps, we have what's called 3B, which is saving for a home. And so right now at your age, I would start socking away some money for a house down payment in the future. That may be three years from now. I don't know. If you think it's more of a five-year or longer play, I'd probably take whatever money that you think, listen, this might be my down payment or my home money. And I just put it in a brokerage account, invest it in an index fund and let it sit. As long as you know, it's at least a five-year play because we just see that the chances of you having a positive return on your investment is better at the five-year point than it would

be at, say, the two or three-year point. And so that's what I would do. I would start focusing on the idea of buying a house with a super high down payment or dream a little and be like, listen, what would it look like if I one day paid cash and bought a piece of real estate completely in cash? Because it seems like you're really in a money motivated mode right now. And I'm not mad at that. You're like, I'm willing to do what it takes. And technically, the state you're at, you could just continue to pile up investments. Listen, maxing out a 401k maxing out a roth ira maxing out

whatever other uh situation you said you had there that's all good like all that stuff is compounding over time um and if that's your goal there's nothing wrong with that but i do think that to ken's point real estate is going to sneak around the corner before you know it and if you've been paying attention to anything going on is it's harder and takes people longer to save up to buy a house than ever before. So it might behoove you to kind of get that process started. That way, when you're ready to buy the money, it's just sitting there and you have your pick of the litter. Okay. Yeah. Yeah. I think I've just been so focused on retirement because of the compounding aspect. But then I'm wondering if, yeah, what are the other things I could be doing with that money that would be beneficial? And makes a lot of sense yeah i look at repeat things sometimes i

wake up and i feel like i'm on track sometimes i wake up i feel like i'm behind some days i wake up i feel like i'm ahead it's really hard to you're not i mean let's let's think about it let's let's do some math because i love bringing up a retirement calculator you said you are and i'm just on the ramsey solutions retirement calculator. You said you're 32 years old. Let's pretend Social Security starts at 62. So let's just say at 62, you decide that you're going to be done with things. And let's pick the 401k since you already have $600 in there. And let's say that each month you're contributing how much to your 401k? 400.

Let's say for another $400. All right. Let's pretend it's getting a nine percent rate of return even though we could probably do more just in a s&p 500 that's just in that account alone if you only for the rest of the next 30 years of your life only put 400 in that account that account would have 741 000 in it just that And don't forget, you're also maxing out Roth IRAs and you've got these other accounts through your work. So that should give you some hope that you're going to be just fine. And you've got a long, you know, you got a long path to do a lot of great things here.

Yeah. Yeah, definitely. I think one of the catalysts for this change in mindset was setting up the equitable account and seeing my retirement year date being 2060 and just being like, well, that's really not that far away. I'm getting kind of freaked out by that. Listen, a lot happens in 30 years. A lot happens in 30 years. And I like that you're diversified in a lot of different accounts. Sometimes people think it's just one big nest egg and one account can, and that's not the case. I mean, you've got a lot going on here and you'll soon add real estate to your portfolio too. And we've seen that most millionaires do have a paid for home as well. So adding that to the mix is going to be very, very good for you as well. Yeah. Jesse, you're on a great path. You don't

have to freak out. Just continue to be disciplined. If you haven't found someone to really help guide you, go to ramsaysolutions.com and click on Smart Investor Pro. Find some of those folks in your area. Go interview them. See who's the best fit for you. Having someone to guide you and explain it and teach it to you to where you understand it is going to give you even more confidence. Thanks for the call. This is The Ramsey Show.

Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of over $11 billion in medical bills since 1981. And CHM has also helped them stay

true to their values and avoid miles of red tape. And CHM support goes far beyond meeting financial needs. They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event. So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Welcome back to The Ramsey Show. I'm Ken Coleman. Jade Warshaw joins me. 888-825-225 is the phone number. And this is a show built on basic baby steps that get people out of debt and allow them to live a life that they have dreamed of. And there's no better example of that than when we have our debt-free screens.

And as I look across the studio, I see two fabulous people by the names of Joe and Kat. And they're on the debt-free stage. Joe, Kat, welcome. Thank you. Gladbt Free Stage. Joe, Kat, welcome. Thank you. Glad to be here. Where are you guys from? We're from Floyd Knobs, Indiana. Okay, good. All right. And you're here to do a debt-free screen, I presume?

Right. Fantastic. All right, give us the numbers here. Let's walk through this. How much debt did you pay off and how long? It was $122,749. It took about 60 months. 60 months. And what did that... Well, let me first ask you, what was your range of income during that time? $125,000. Okay. Stayed at $125,000. That's very good. What do you do for a living? I'm a registered nurse. Okay, great. Fantastic. And what was the debt comprised of, the $122,749? Well, it ranged from credit card debt to our house payment. Hey, there you go.

Paid for house. Well, no, I take that back. We didn't pay for our house yet. We're still trying to pay. Okay. So what was the 122,749? Some of that's what you've paid in the house or what? Help me out. We did pay some of the part of the house off okay gotcha mainly credit cards and we had some student loan parent plus student loans for our kids gotcha how much in student loans uh it was probably around 50,000 wow parent plus loan man you guys got out of that alive we did home repairs home repairs okay gotcha and a couple car loans and cars we had to replace. Okay. Right.

Well, take us through this journey. Let's start 60 months ago. Okay. What caused you guys to get on this journey? Okay, well, we originally had attended a financial university in 1993. Okay. And probably have been in and out of debt about three times. Okay.

But we just couldn't seem to stick with the program. And so that many months ago, we found ourselves paycheck to paycheck, and we called our older son. It's like, can we borrow $100 until we get paid? We just don't have it. And he's like, yeah, but he's like, we need to figure out what's going on with your finances because you all got to get ready to retire.

Yeah. And so we found out at that time we had given both our sons, the Financial Peace University, his wedding presents when they got married. But my son David and his wife Amelia actually stuck with the program. They paid off all their student loans for Vanderbilt and Butler. And they don't have any debt at all except their house that's all they're doing now and they've like moved up three different houses and just their excitement you know we even called my son David David Ramsey sometimes because he's just so excited about it

is this the the sharp looking young man you keep looking at here yes okay so is this also the same son that you called and asked for a hundred dollars yes so you gifted him financial peace university back in the day he did it he did y'all didn't do it yet we didn't stick to it wow i love it but you saw the fruit he sent us back to the class so then we did it again and then he just helped us stay with the baby steps. And when you say, like, who's our cheerleaders, there they are. David, way to go. What a good son. And so we also had like 18 snowballs that we had to work on. And so Amelia knows we like cats, so she made us like a cat chart.

And we'd color in a cat when it was paid off and have a glass of wine. Oh, there you go. Oh, very good. That is so cute. And then David would make progress reports for us and we didn't always do quite as good as he wanted us to do but i think we have found out what our problem was uh this is the nerd and i'm the free spirit but the discipline and accountability is what we were. And that's what they helped us find. And so now we finally have the real peace. And it's just really awesome.

I think you guys have an incredible family. I think that what I'm hearing is really something special and spectacular that you would be willing to hear from him. Because that's the hardest part. We call it powdered butt syndrome. The hardest part thing to do is to hear from the person whose butt you powdered when they were a baby. Sorry, David. We're talking about you like you're not here. And I just love this.

I think it's so great. Yeah. No, it is actually really great. So, okay. So that's how it got started. Right. So your income did not change in this time. So that means you guys just started working with what you had. What did do to start getting momentum where are we did both work extra okay so we did

okay i don't know what you had yeah i got a part-time job okay huh worked for about five years i guess okay so you did make additional money beyond the 125 okay yes gotcha all right so okay let me clarify something because you said your son came to you and said hey you're getting ready to retire you got to clean this up so did you retire from your normal jobs and just pick up other work how did you do it no i'm still working okay plan on to retire finally since he was saying you need to get ready to retire got it got it okay we were in such a mess yeah it's like but joe has been wanting to retire for the last couple of years and he's actually going to be able to retire this coming december way to go we've been working with kevin wells that's one of the uh david ramsey finance smart investors smart investors okay good and uh david

kind of turned us over to him after he took us as far as we could so now david's got us with the how plan to pay the house off and being able to do some trips and just enjoy the retirement. So what would you tell people that are listening and watching to you right now the key to getting out of debt is what was it for you guys? Well I would say probably gosh I don't know what you think. It's the discipline and being able to actually finally see that it's going to make a difference and not go back because that was our problem. We kept going back and we just had to actually use the steps in the program. Right.

Yes. You know, and if we would just get off of them or start one credit card or do something like that, you know, and so we finally don't do that. So can I, that that's that's interesting so the other times that you tried to do the baby steps you kind of did it your way you went over here instead of going over there right and that caused you to go backwards yes but when you finally submitted to listen this is the plan i'm going to walk the plan the way the plan goes that's when it well david's like you got to get rid of all the credit cards i was like no we got

to keep one everybody says that i was just stumbling all the way and it's like christmas we got to have credit cards vacation and it's like no no no so all this time we've not put anything on credit for christmas or vacation good job saved and did all that so it felt really good very good breaking the mold you know i i we've already covered this but it bears repeating because you keep repeating it cat that david your son just kept riding this process going no yeah no no guys no it's my private day frames are right there this is exciting it's uh it's also a testament though to you guys kind of swallowing your pride and saying all right i'm gonna i'm gonna take some encouragement wherever we get it.

And in this case, it's your son. These are the role models for us. So how does it feel? What's the feeling now? The house is coming up next. You're going to pay that off. You're going to retire. I mean, we just really feel like we can enjoy retirement.

It's just a peace of mind. And be able to travel a little bit. Yeah. That's awesome. Peace of mind. And we mostly wanted to be on here to say no matter where you are just start now yeah that's right yeah that's a very good point i didn't want to ask you how old you are so i'll ask joe joe we're not gonna ask kat i'm a gentleman

joe how old are you i'm uh 66 so it's not too late no it's not started at 61 if i'm doing the math right right wow right way to go you guys are awesome how about that really really great what a great family uh all right so i want to call out again david the son is over there with his lovely family and uh so very cool his wife the kiddos watching and cheering i love that let's let's get this ready here we go you guys ready to go mom and dad all right here we go we got joe and cat uh and they paid off 122,749 in 60 months making 125 plus plus plus here or there and they paid off $122,749 in 60 months, making $125,000 plus, plus, plus here or there, and they were hustling.

Let's hear your debt-free scream. All right. Three, two, one. We're debt-free! Yahoo! There it is. Joey Kett bringing it. I love it.

He was 61 when they started this process. And it's not too late. They went out and hustled. And how about that son? I mean, is he not nominated for son of the year? Son of the year. I don't know who gives out that award, but we're going to nominate David. He was their own Dave Ramsey, she said.

Yes. And his name is David. And it is possible. And, folks, this is a reminder. It's not too late. because these baby steps work. I don't care who you are or where you're from or how old you are. They work. Great, great stuff. All right. Don't move. More Ramsey Show coming right up. You're listening to The Ramsey Show. I'm Ken Coleman.

Jade Warshaw joins me. And our scripture of the day comes from Proverbs 16.9. In their hearts, humans plan their course, but the Lord establishes their steps. Our quote today from the fantastic legend Zig Ziglar. Lack of direction, not lack of time, is the problem. We all have 24-hour days. That kind of goes with your rant about Netflix and paying off debt. I feel like you and Zig...

If Ziggy said it, that's it. You were channeling some Zig. I love it. All right, let's go to Rob, who joins us down in Milwaukee, Wisconsin. Rob, how can we help? Hi, thanks for taking my call. Hopefully you can help me out here. I think I've got a fairly straightforward question. My wife and I, our income has increased

drastically over the last couple of years. We're finally getting our finances in order that we should have been doing a long time ago. But my question is, I've got a car right now, a vehicle that I owe about $35,000 on. It's worth about $27,000, give or take. And I'm wondering if that's something that I should just work on paying off or if it's something that I should try to sell and just pay something, you know, cash and get something that's going to be workable. Do you have any other debt? We've got about $6,000 on another vehicle that we'll have paid off by April.

In February here, we just have some small miscellaneous debts, a couple thousand dollars that we'll have paid off in February. Other than that, we've got a house and then about $50,000 in student loans. Oh, $50,000 in student loans. Oh, $50,000 in student loans. Okay. Well, you know, Jade, at first I was like, well, if your income could allow you to pay that off. I'm wondering about his income. Yeah, what's your income?

Total gross before bonuses, about $240,000. Tell me about the bonuses. For me, it'll be about $33,000 a year. On top of that, so that's going to take you to roughly $275,000, roughly? A little bit below? Listen, for you... Do you like the car? Yeah, but I've kind of

grown up a little bit here and realized that it's just a car. Well, I like that, Jade, because I'm always for selling the car. I mean, it's up to car. Well, I like that, Jade, because I'm always for selling the car. I mean, it's up to you. Here's the thing. What you don't necessarily have to do, if you liked the car,

I'd be like, listen, keep the car. You can pay it off in two years or less. Yeah, exactly. So it's not changing anything. Or if you're like, I don't like that car, I'm going to take the $10,000 hit. I'm going to put some more cash with it and I'm going to buy another $25,000 car in cash.

I'm not mad at that either because your income allows for, easily allows for it. Your income allows you to be debt free over the course of this next year. So there's not, none of these things are going to make or break you. Yeah, I figured if I got rid of the car, up for you know 12 15 000 car i could probably do that in five or so months if i paid you know if i paid the car off i could probably do that within the next 12 months i also have part of the equation too is uh late summer i've also got uh tuition bill about 17 000 for the three three kids that I'll be paying as well. So yeah, I'm factory managed.

Okay. I think all of this stuff is feasible. I'm seeing $85,000, $95,000, $100,000 of debt, give or take, because you said you had a couple of other little things lying around. I see $270,000 of income and I go to myself, okay, 270, can you live on 170? And can you take the other 100 and pay off all this debt? And the answer is an overwhelming yes. And that includes the tuition, by the way.

I think I say it all the time, and this is not directed specifically at you, Rob, but I think that when you get into this higher dollar earning, it gets tough because people are like, listen, I'm making a good income. I want to be able to live the life and I want to show it. And it gets harder to pull back because it's more visible when you pull back. When you sell a $35,000 car and start driving a $12,000 one, people see that. And I don't think that's really a problem for you. I feel like you're at a place where you are ready to make those changes and it sounds like this higher income is relatively new right yeah last three years or so but our biggest problem is the income went up all the little miscellaneous spending went up yes exactly it's just money

flowing out the bottom that you don't even realize yeah Yeah. It's just, it gets, it can get messy. And before you know it, you're like, oh my gosh, how are we spending? So my prescription coming from here more, cause you know, you have to pay off the debt, but really being on a good budget is the prescription here because that's where you really see what you're spending. And for anybody listening, not just you, Rob, but a budget is, it just gives you that custom organization for your money. A budget is not a spending restriction plan. That's not what it is. It's just a plan for your money. And so it allows you to see, okay, with an income of 270,000, being able to live on 170 is still very nice. Yeah. And Rob, I'm going to come back to your initial question. And I just think

that the fact that you don't like that car that much, you just didn't. I mean, when I asked you the question point blank, you're kind of like, eh. And for that reason, because there's no emotional attachment to it, I would sell it. And it's going to give you momentum. It's going to. I think you're a guy who gets it now. I think you're sick and tired of being sick and tired. I can hear it.

And for that reason, I would pay it. I'd pay the car off sell it uh so I'm sorry I'd sell it and you're making enough money where you can go do what you need to do for the second car or whatever but that's what I would do if I were you based on how you sound but there's no wrong decision whether you want to pay it off or sell it put it in the baby steps if you're going to pay it off if you change your mind after this call but but the way you sound yeah i'd probably get rid of it and it would be like a way to go ah i got that mistake out of my life that's the way i would look at that based on how you sound but i'm curious is that where you are or am i projecting on you no no that's that's correct it was it was one of those stupid purchases that I shouldn't have done.

Then I'd get rid of it. I'd tell you what, you know, first of all, I've made plenty of mistakes. It's haunting him. But I like getting rid of my mistakes and trying to remove them from my mind as much as possible. Yeah, that car is haunting him. So you're right, I think. It's like a ghost. I mean, he's got enough money and he's going to knock this out either way.

Which, let's talk about that right quick. Okay, you have a car. You're upside down on it, right? He owes 35, it's worth 27. Some people face that and they're like, hey, I don't know if I can get out of this car. Walk through what we tell people to do there because we didn't cover that. I'd like you to do that. So ideally, if you have some money saved, you can cover the difference between an upside down situation.

Meaning in this case, he's about $7,000, $8,000 upside down. If he's got that in savings, then when he goes to sell the car, he can put the 8,000 with it. It's a clean deal. But now you're carless. So you've got to make sure you've got some money for the next car, $2,000, $3,000, $5,000 cash,

whatever you can muster up. Now, sometimes you may hear us say, listen, if you don't have that cash to meet the difference in between what it's worth and what you owe on it go down to a credit union go go get you a loan because that's the only time we would say to take out any form of of debt because you're still lowering your main amount if he let's say he didn't have any cash if he went to to the credit union, heck, if he even found a credit card that would give him that $8,000, he's still taking away the $27,000 of debt. And now he only has eight, right? So we're doing math here. We're still going lower. He now owes $8,000, not $35,000. And we put that $8,000 in the debt snowball. So now what was $27,000 is $8,000. And

then you continue to work baby step two. And now the math that we did there beforehand, I told him, I said, if you can't pay this car off in the next two years, that's kind of a rule of thumb. If you can't pay it off, or if it's just grossly way more than what your income is, like we say the rule of thumb is about 50%. You don't want your vehicles to be any more than what your income is. Like we say, the rule of thumb is about 50%. You don't want your vehicles to be any more than 50% of what you earn in a year as a household. In his case, that wasn't the issue. He made $240,000.

But if you're sitting in a situation, your take-home pay is $70,000 and you have a car that's 30 and your wife has a car that's 35, y'all are tripping and tripping hard. Both of y'all need to sell those vehicles so that's kind of how we do it um am i leaving anything out so if you're selling it private sale you're going to get the best value for that if you're upside down you put the car

on the market you you write a bill of sale for it you get your money from the the credit union put it with the money from the sale you're good and now you're able to send get get the title and then you're able to send that title to the person who sold the car yeah and again we prefer your local credit union to get a better rate on that eight percent uh yeah you want a good rate on the eight percent but at the end of the day i just want you i get it you don't but my you said credit, and that could be a really high percentage. It could, but to go from owing $35,000 to $8,000, you're still walking away.

But our preference is the other, and for obvious reasons. That's right. But that's a great explanation for how you get out of an upside-down car. Thank you, Jay.

That's really helpful. You're welcome. Hey, great hour. Thanks to James Childs and the crew for keeping us on the air. Thank you, America. This is The Ramsey Show. We'll see you next time.