The Ramsey Show - App - Creating Margin in Your Budget Gives You Room To Breathe

Episode Date: August 19, 2024

Live from Ramsey Network, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by Jade Warshaw. And we're taking your calls this hour at 888-825-5225. You call in. We'll talk about your life, your money, your weird relationship issues that have to do with money somehow. All of it right here in front of you. And here's the singular goal.

We want to help you take the right next step to help you win in every area of your life. So call us up. Anna, or is it Anna, kicks us off in Tallahassee. What's going on? Hi, I am currently living as a stay-at-home mom with my husband. He is active duty U.S. Air Force, and I am slowly wanting to start going back to school. I have a couple grand in a 529 and a full FASFA, but I'm looking to see how I can pursue going to college when I don't really know what I want to do in the most cost-effective way possible. Cool. So how old are the kids? Right now we have a two-year-old boy, and I'm currently pregnant. Wow.

So what is the game plan for this? Are you wanting to do school completely online so that you can stay at home full-time? As much as possible. My husband, really luckily, I mean, he works pretty much like a 9-to-5, and his work, he's going to college as well right now. And his really luckily, I mean, he works pretty much like a nine to five and his work, he's going to college as well right now. And his is covered, I imagine? Yes. So he is actually Florida Air National Guard, but it's full time. So we will be where we are now for the next about five years, luckily, at least, at least five years. So we don't have an issue of

like moving or anything like a typical military family would. Here's the thing that stood out to me. You said that you're not really sure what you want to do. And I think that's a big part of I would not want to pay money, no matter how cheap, for an education that you're not even sure you want. And so I think the first step is figuring out maybe finding what you're wired to do. Yeah, I guess my struggle is, I mentioned I'm a high school dropout. I have a GED.

I dropped out at 16 years old. I worked in law enforcement when I met my husband, kind of weird, but I haven't really found like a niche that I'm good at because I didn't go to high school. I didn't, you know, and I haven't gotten to pursue that, which is why I'm kind of, I'm definitely nervous to like. Well, I wouldn't let that hold you back. That's more of a mindset thing. There's no difference between the skill set that you have and someone who got a high school degree and is all of a sudden, you know, has all these amazing skills. I think you have a lot to bring, you know, value to

the marketplace. And we just have to help you figure out what you're wired to do. And we'll give you a free tool to do that. It's called Find the Work You're Wired to Do from our friend Ken Coleman. And it comes with the Get Clear Career Assessment. And this is something you'll take. It'll take you a little bit of time. And once you're done, it's going to actually give you some kind of sample career options based on what your talents are, what you're passionate about, what your mission is, what kind of impact you want to have. Then we can figure out, is college the right next step? Because a lot of people just take it too early because they go, well, I'll figure it out. I'll build the plane while it's in the air. And that's costly. That's costly and dangerous. But I would say for somebody like you,

and I would suggest this for many people, but community college is a great place to start, especially online, because at least when you do decide to go, you're getting your gen eds out of the way. It's one of the most inexpensive options there are. And again, the very beginning is just that general part anyway. It's just those general classes. So when you do decide to go, when you do find the things that you're interested in, then I would start there. Yeah, for sure. So I would start doing your research on what is available in your area. What do community colleges cost? What are the online options that you have in case you do need to be at home full time and kind of, you know, crush it during nap times and evenings and whatever your schedule looks like. And then you can look at how we're going to pay for it. And we do know this, we're going to pay cash. Yeah. What's in that 529? I've got only about two grand. I also have a full Pell Grant and I've researched, there are a couple like spouse scholarships that I might qualify for as well. Okay, good. Then, like George said, at the end of the day, the budget

informs where you can go. And that might mean that it takes a little longer while you stack up some more money. But at the end of the day, the cheapest place and the best way to pay for a degree is at a place that you can afford in cash. And it sounds like she's going to do that. So I love these two questions from Ken to help decide, is it the only way and is it the best way? But first you got to figure out what that thing is. And then if college is the only way and it's the best way, then we can begin the journey. So hang on the line, Anna. We're going to send you a copy of Ken's new book and assessment,

Find the Work You're Wired to Do. I hope it's helpful for you. And even talking to some people, like if you have an idea, like I might want to go into this field or this might be interesting to me taking some time to shadow somebody who does that or you know hey can i hang out with you one day or tell me like interviewing them i think is good the idea that we tell a 17 year old hey just guess and then the rest of your life you kind of have to do this or else you're going to have a lot of regret and guilt and student loans spend that's what we've done 50 000 to guess yes or here's even here worse. Well, I want you to go to mom and

dad's alma mater because that'll make us proud. Keep it in the family. We all went to XYZ famous name brand school that now cost 20 times what it did for mom and dad to go through. And I want you to go to the same sorority that's going to cost 10x what it costs for me to go through it. It's these decisions that, yeah. No proof that name brand will ROI. Absolutely. Let's go to Jimmy up next in Atlanta. What's going on, Jimmy? Hey, so excited to be talking to you all.

You as well. Thanks for taking my call. My wife and I are working through the baby steps. We're on baby step two. We're pretty motivated. We're having a baby, our third baby, in February. And we need to find a different car to be able to get all our kids around in. And we own both of our cars now. And so we're planning on trading in my wife's car. But I just want to know what the next right step is for the timing of that.

We've paused the baby steps and are stacking up as much cash as we can to make sure we can get everybody home safe from the hospital. Some good advice I've heard from you all along the way. How much money do you have saved? We have right now $5,700 saved. And how much do you need to do the upgrade you're trying to do? Well, I mean, we could possibly trade in, I don't know. That's the first step. The first step is you looking to see, look in the market and go, okay, what can I get that seats the whole family reasonably because you're in baby step two and you've got the $5,700

plus the trade-in value of your wife's car. And I would suggest not doing a trade-in and instead selling at private value because you're going to get more for that. So look up the KBB private value and see if you can sell it yourself versus trading it into a dealer who's going to give you $3,000 for it when you could have sold it for $7,000 in the marketplace.

That's good. So if you do that, now we know what the gap is. All right, I need an $11,000 van. I can sell mine for seven private. And so then you can figure out the gap of what you need in cash. And I probably wouldn't do any, like you guys are in baby step two. Now's not the time to like have this big car dream. I think it's whatever gets you to the next vehicle that does what you need it to do. You might have this van, whatever, for six months before you upgrade, but you just need to make sure that you don't have zero dollars when mom and baby go to the hospital. So that's the balancing game we're playing, Jimmy. Okay.

So you do, the timing's up to you, but I would want to save up as much as I can real quick, get the van knocked out, and then save up even more to make sure we're ready for baby, if they all need to happen before baby's here. And listen, there's nothing wrong with it. If you guys have to ride in separate cars for a while to make sure you have cash when the baby gets there, that's not a bad thing either. Yeah. But I'd be selling everything because nothing matters more than that, that sweet baby at this point, especially with a third one, you guys have done this rodeo, you know how it's going to go. And so that should help you with your budget. This is the Ramsey Show.

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This is a paid advertisement. An MLS ID 1591. An MLS consumeracgage.com. That's churchillemortgage.com. This is a paid advertisement. NMLS ID 1591. NMLS consumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Rent with Tennessee 37027. Welcome back to The Ramsey Show. I'm George Campbell joined by Jade Warshaw. It's open phones at 888-825-5225. Jade, I'm seeing something on this desk that I've never seen in my life. It is the 2025 Ramsey Goal Planner, and it's even more beautiful than I could have ever imagined. Yes, it's very blue. It's like the ocean. And for those of you who don't know, every year we do a goal planner here. And it's a wonderful gift, but honestly, it's great if you want to buy a gift for yourself.

This is a great gift to give yourself. The gift of staying on track for all of your goals. It's not just money. It's not just money. We talk about faith, relationships. You cover the money side. John covers relationships. Rachel covers the faith side.

And there's content in here. It's not just lines to write notes. It's not just a calendar. It's not just a notebook. It's not just a notebook. It's not just a journal. It's like everything you could all ever want in one goal planner. There's a vision board in there for you to come up with your vision for the year. There's plenty of places to take notes.

I'm a person who, George, I like pen and paper. I like to be able to write things. Things get lost in my phone. I literally have 3,500 iPhone notes. I'm not keeping track of anything in there. Oh, this is what you, George, maybe I'll get you one. I would love that. They never get one to me, Jade. It's actually upsetting. So get me one for real. I'll get you one. I'll splurge because here's the thing right now. Now is the best price that you're ever going to pay for this. It's never going to be cheaper than it is right now. You can get it for $ 35.97 for two weeks only and then after that the price goes up to like 50 bucks george wow so

don't wait for black friday because it's not getting cheaper than it is now yeah i gotta get yours i gotta get yours today they go on sale two days so you are the early bird who gets the worm and let me just i'm gonna spend some time on this because mama mama put some effort effort into this listen let's be honest i wrote three of the the i guess they're kind of like inspirational messages in here they're kind of like kind of a almost like a blog yes from the heart that helps people guides them yes along each step so i wrote about anything financial like if you need motivation or just kind of a plan financial i did that rachel wrote the spiritual and, you

know, that part of it. And of course, John came in there and gave you the health and wellness and mental wellness. And so it's really cool. The thing to note, though, like you can do so much meal planning. I'm going to use this for that. Oh, that's smart. Because you can go in and you can write what your meal plan is so you can stick to your meal budget. There's a place for your goals. You can reflect on it. There's a place where if you can stick to your meal budget there's a place for your goals you can reflect on it there's a place where if you're listening to uh podcasts you can write the podcast the episode so you can go back to it if there's a book that you're reading you can or if somebody said hey you need to read you know blah you could put it in there come back to it i just and it's so beautiful and it's well made i like when i can close it and i know i can be hard on it and it's got those like nice metal edges listen solid I need built different I'm like the sham wow guy remember how he could like sell

anything that guy well he was on something Jade so I hope you're not exactly like the sham wow guy I'm not exactly like the sham wow guy but what I want you to know is you need to pick up a goal planner you're never going to get it cheaper than you are these two weeks. $35.97 is the price. And then it goes back up to $49.50. So let me tell you, these sell out every single year. Every year they sell out. So if you want one, you need to get it now. If you're thinking it'll be a good Christmas present, order it now. Because they won't be here if you wait until November, December.

So get one today. I'm going to get one for myself. And I'm going to get one for Georgie boy over here. Thank you. You're welcome. Merry Christmas. So wonderful. All right, let's get to the phones. Dane joins us in Denver, Colorado. What's going on, Dane? Hey, how's it going? Good, how are you? All right. Great. I have a little bit of a boring question, I suppose, but it's one that's important to me. That's all that matters. I, yeah, I worked at Colorado Department of Transportation,

or I am currently working at Colorado Department of Transportation. It's a state employment position. And as part of that employment, I do not put into Social Security anymore. I put into the state's pension and all that. I can give you details if you need, but my concern is, is this going to hurt me later on down the road? I'm 46 years old, so I got 20 years left to this, but I just want to make sure that I'm not doing something that's irreversible. I've tried getting answers from them, but it's pretty difficult. Well, here's the good news.

If you're ever relying on Social Security as your retirement plan, it's a bad plan. And so I would not look at this as, oh, my gosh, am I going to be okay? But you're right that it will affect how much Social Security you get because it's based on your lifetime earnings. So the way it works is the administration, they calculate the benefits based on your highest 35 years of earnings. And so if you don't pay into it, you won't have those earnings factored in to your benefit calculation. And so you can go on the Social Security website right now and calculate what it will be. What did it say? Yep.

It says full payment will be $2,206. Okay. Then I can either delay it or make it early. And that's at full retirement age? Yeah, that's at age 67. And I do have the four green bars with the check marks. It says my 40 work credits have been gained. And I do do side gigs, and I do kind of put in a little bit each year due to that.

Then it's just based on what you've done previously up until this point. And if you've opted out going forward. It's not going to grow in that sense. But here's the thing. You're also trading that to where now you're going to get a pension. And on top of that, please tell me you're investing outside of all of this. No, I am. We have like, yeah, no, I'm definitely, I'm not depending on this.

I just wanted to know, I had a buddy that i tried to get hired here and um he opted out because he was scared of this and i was like well maybe i maybe it should make me think twice about it so i looked into it and i feel okay and um yeah i just wanted to get you guys's opinion really well as you have more years where it's zero contributed, that will affect your average because they're taking an average of those years. And so it may not be that much when you actually get to retirement because they're assuming you're going to continue to contribute that amount. Correct, and I'm not going to be.

So I would assume, Dane, if I'm you, I'm going to assume I ain't getting nothing. And if I do get it, that's going to be some gravy we'll give to the grandkids. That's how I look at Social Security. Yeah, you sound like my dad. He's like, why are you worrying about depending on the government anyway? I love your dad. Your dad is a wise man, my friend. So that's what I would be doing.

The pension, the Social Security, it's nice to have, but I'm not going to plan on it. I'm going to instead invest myself into things that I have control over, where I control the investments, and they don't have terrible returns, and that's going to be things like a Roth IRA. That might be your best option right now. Yeah, no, we max out my Roth, my wife's Roth. And with the state, they make you donate 10% and they match 10%. So I'm automatically saving 20%. And then I'm doing the Roth and we have 850K from previous investments and stuff already. Wonderful. And you're only how old? I'm 46. Okay. So you're going to be a multimillionaire when you come to retirement. Maybe. Yeah, I hear Dave and you guys say it doubles every seven years. I've done those

calculations. It seems a bit optimistic, but I... Well, it's just based on, it's a simple thing called the rule of 72. So if you, let's say you get a 10% for easy math then 7.2 years that that would have doubled so your 850 turns into 1.7 if you just don't touch it and the thing is you're going to continue to contribute on top of not pulling out any money and so if you pop into our investment calculator on our website dane you're going to have some some confidence you can do a range you can say what if the market does 12 what if it does%? And that will give you a nice range of what your life might look like. Yeah. I always err on the side of safety, really. And we own our house, so I don't have to worry about, I mean, all that extra mortgage payment. I think that goes towards savings.

That's amazing. What's your household income? $112,000. And you guys are investing at least 15% because you're in Baby Step 7, probably more than that? I'm doing 25% to 30% is what I estimate. You're going to be A-OK. Dane, look at that, 25%, 30% of over six figures of income for the next 20 years on top of what you already have. Yeah. Social Security is going to be such a small part of your world, it's going to be cute when you get that check every month.

That's some coffee money right there. Because your investments will be making $10,000, $20,000 a month at that point versus a measly $2,000 from the government if you're lucky. I got you. So listen to your dad, Dane. Dad wisdom right there.

You're going to rely on the government who are known for their ability to manage money so well. I got you. So listen to your dad, Dane. Dad wisdom right there. That's good. You're going to rely on the government, who are known for their ability to manage money so well. Social security is not the thing that you want to depend on. That's more insecure than dudes with lifted trucks. You know what I'm saying? Those pavement princesses. Listen, they're saying by 2034,

the amount, the percentage is already going to be depleted. So I wouldn't count on it. No, thank you. This is The Ramsey Show. What does the future hold for business? Ask nine experts and you'll get 10 different answers. Economic growth or a recession. Business taxes will go up or down. AI will help us work or it will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future-proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite, and you should too.

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at netsuite.com slash ramsey. It's free at netsuite.com slash Ramsey. This is the Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. You call in. We'll talk about your life and your money. Don is up next in Dayton, Ohio. What's going on, Dawn? Hi, I'm wondering if I should be paying off my collections first or where that falls in the baby steps. I'm not sure. Okay. Yeah, definitely. I mean, typically in a debt snowball, we're listing everything from smallest to largest whilst still making minimum payments on everything else. But a couple of things, you know, if you owe money to the IRS, if you have money in collections, I definitely like those to jump to the top of the list because it's only going to get worse, especially if you're dealing with the IRS. So

what is the debt that's in collections and how long has it been there? It's been there less than two years. And my husband has about six or seven on his and I have about four or five on your buy name. That are in collections? Yes, but I have other payments and so I guess I was wondering should I pay off some of these other smaller credit cards so I can have then the money to put on the collections. Well, the good news here's, let's back up for a second. The good news is once it's in collections, you're almost always going to be able to settle the debt. Okay. So do you know, just give me a ballpark, the smallest debt that's in collections, how much is it for? $94. Okay. Do you have... And the largest is like $2,200.

Okay. And then I have my student loans that equal $32,000, but they're not in collections. They're on hold. And there are 16 of those. They're all separate and they're all like smallest is $212, the largest is like $4,500.00 when you mean on hold are you talking about deferment they're on hold i i i don't have to pay on them because of this program with like the i think it was like the government yeah okay um so let's take a deep breath because I feel it. I can feel you through the phone. You got 48 debts hanging around you right now. Yeah. And we have a car loan and we have a truck loan. Okay. So let's take it piece by piece. Number one, let's talk about the student loans.

I'm fine with you having those on hold right now. Save plan, the only way that it's not a piece of garbage is in this case, if you're temporarily temporarily using it to lower your payment. So you have more money to throw to your smallest debt and your debt snowball. So right now you're utilizing it in the best way that you could possibly utilize it. And let's knock out these smallest debts that are in collections. I want you to list out all of the ones that you think you can knock out quickly. And you're just going to call them up and say, hey, I don't have $94. Will you settle it for $60?

Hey, I don't have $140. Will you settle it for $90? And get it all in writing and do not give them access to your bank account. Okay. Yeah, I looked that up on the website and I saw all the directions of what to do. Okay, good. But I couldn't find the answer as to where the collection falls and the debt snowball. Well, like you mentioned, when you have the money to settle, settle them immediately. But if you don't have the money, you might need to clear up one of those little debts,

little ankle biters to clear up some payments to save. But if you could go sell that car, sell the truck, take those proceeds, settle all your collections, you are going to breathe a breath of fresh air. Let's talk about the truck. Tell us about your vehicles. So the truck is older, but it's a Toyota Tacoma, and the payment is $245,000, and I owe $9,600 on it. Okay. My husband.

What's it worth, you think? My car. I looked it up. Kelly Bluebird's value is $8,800 to $10,200. Okay. So you could clear it. You might be able to clear that. Now, you need something to drive in the meantime?

Could you guys go down to one car temporarily? We could share a car. It would be difficult, but we could do it. I think you can do it. Listen, my husband and I did that. If we could do it with kids, you can do it. So I would definitely make that deal, get out of that truck, clear up that 245. you can do it listen my husband and i did that if we could do it with kids you can do it um so i would definitely make that deal get out of that truck clear up that 245 that's going to help you

get traction on some of these collections what else is there then there's the car i owe 20 000 left on the car and it's 530 payment okay and what's it worth? That car's worth about 20. It's about worth what I owe. Okay. I'd clear that one out too. Um, and get something cheaper. Yeah. I'd, I'd, I'd get out of that because you're going to basically break even on it. Do you guys have any money saved? I'm guessing no. We have $800 and like we started the emergency fund, and so we're going to be able to finish that by the end of the week. Okay, good. Here's the deal. Selling the car is going to free up more money right now than selling the truck. Okay.

$530 versus $245. Mm-hmm. Oh, yeah, I never thought of that. So I would sell the car first. You free up $545. You could pretty quickly save up aggressively to get some kind of vehicle if you needed one. But you can drive the truck for now and just hang on to that while you clear up the other debts.

Yeah, I never thought about that. Because the car is like a nicer newer thing, but the truck still fits everybody. Yeah. Well, trucks can hold their value. If they're well maintained and it's a good make and model, which yours is, I think that thing will sell. I love that sell even six months from now. So that'll free up $530 for you to start attacking the other debts,

to start settling some of these debts, and that'll keep that snowball rolling for you. That's the key. You want to keep progress and momentum. The couches, like if I pay off our couches and then this other private loan at the credit union, that'll free up like $540 total. Excellent. And then can you guys work extra yes so i work at a furniture store and um i have a basic pay of 2000 a month but anything i sell i get a percentage of okay so that's on on top love it did you buy the furniture

with debt from the store you work at? Yes. Okay. Would they somehow take it back because you're an employee? Could you get out of that debt? I guess I never asked about that. How old is it? It's three months old.

I might talk to my manager and go, listen, I want to be the best employee. I'm about to bust my butt. I'm trying to get out of debt. I made a mistake taking out debt for this furniture. Would you guys take it back and refund me? I mean, it's like a 90-day return policy at that point, you know? That I could ask. I could ask.

That would be. I'd get real creative because anything you can sell is going to speed up this process. And anything you can reverse is going to speed up the process. Are you using a budget? Are you using EveryDollar? I'm using EveryDollar app. My husband has it as well. And he's on board. He's as excited as you?

He's on board. He's done. Good. He's 100% disabled from his two tours in Iraq. Wow. And, yeah. Is he working right now? What's he doing? So he's not physically disabled. Um, and so he, he does, that's the other thing we have extra income with. He, he, like right now he's painting a porch and so we're able to, you

know, have that money to throw on this as well. Okay. So how much are you guys bringing in every month? We're bringing in about six to eight a month. Okay. Um, and so that, I think too, it's just, it's like when things get stressful, oh, we'll go out to eat or, you know, like we're not as tight with the budget as we could be. Yeah, listen, that's a coping, I think that's a coping mechanism for all of us, right?

You had a hard day, like, let's go to Applebee's, right? You gotta find ways to replace the habit with something. You need to find some frugal vices. So next time you get stressed, it's gonna be, you know what, let's meal prep with some good music and go on a walk. That's gonna be our new way to de-stress. Yes, that's a great idea. So just brainstorm

ways that make sense for you guys to go, hey, it's going to be hard. We're signing up for a little journey. It's going to be 18 months, but after that, we're going to have so much more freedom. Okay. How long have you guys been married? Almost 20 years. Have you ever been debt-free in your marriage? Never. Oh my goodness. You're about to experience a whole new marriage, a whole new husband. Yes. How much debt do you have total? Our house is, we owe $167,000 on the house. Other than the house, what's on the consumer debt side, collections and all the other stuff? Total, I want to say it's about 70 to 75 grand total. Okay. So we owe as much as we make a year. Okay. So think about this. You throw three grand a month,

that's 36 grand a year. We're done in two years. So that becomes the new equation. How do we find three grand extra to throw at the debt? And we make eight. I think we can do this, Dawn. I believe in you guys. Call us back if you need help. The Every Dollar Budget, let that be your guide as you complete this task, this daunting task of getting rid of collections and the car loan and the truck loan and cut up the cards and never look back. These companies are not your friend. You're not doing yourselves any favor by locking yourselves up in chains with payments. This is The Ramsey Show. 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

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The phone number to call is 888-825-5225. Well, Jade, I've been getting blown up about this. People have been DMing me going, hey, what is going on? There was this massive data breach. Social security numbers are all out there. Apparently 2.7 billion records leaked in this massive breach. And we hear about this, it feels like every month now there's a new giant data breach that's bigger than the last one. It's always the mother of all data breaches. Digital age.

So, just want to make sure people know what's going on, what we know so far. And this is a massive database containing 2.7 billion records has reportedly ended up on a criminal forum. That sounds like some dark web. The dark web. Some Gotham level stuff right there. These records belong to individuals in the u.s and were allegedly stolen from the national public data database while the accuracy of leaked data could not be verified hackers reportedly obtained sensitive info such as names mailing addresses

and social security numbers the scale is so vast that if you live in the u.s it's likely that some of your data is included whoo i don't. Listen, I might be a little insensitive. I feel like with the internets, the way they are, I feel like your stuff is just always out there, which is, I don't know. For me, it's like, let me just have identity theft insurance

and then I don't worry about this. Is it just me? There's definitely a piece where you sleep better if you have identity theft protection. And we've talked about it on the show. When it comes to, you need to have all these types you sleep better if you have identity theft protection. And we've talked about it on the show when it comes to, you know, you need to have all these types of insurance. We lump in ID theft protection, even though it's not technically insurance, it will help

you and it protects the wealth that you're trying to build. Yeah. And I don't want to, my thing is I don't want to have to deal with it. I don't want to have to track them down. I don't want to have to convince anybody. It's, um, I feel like it's inevitable that something's going to leak gonna leak right you can go on the internet and find out where people live and find out their mother's name you know like there's so many things that you can just google and find which is scary in and of itself i bet i can google jade right now and find out some info give anybody

any ideas there's her social security number right there they better not find it in your instagram bio if you find it come tell me so i can wrestle somebody down to the ground but the point is i think that if you have the right protection you don't freak out as much when you hear this stuff because you're right every other day i feel like they're saying we've been hacked you know yeah well we have a great blog on how to prevent identity theft and we'll link that in the show notes and it walks through some simple things you can do uh one of the big ones I tell everyone to do is freeze your credit. Yes. All three bureaus freeze it.

And that means nobody can open up a new line of credit. It is blocked unless you unfreeze it. Don't give it like don't fall for the scams. I feel like there's a lot of scammy things that go around, especially the beginning of the year when people are filing their taxes. Never give away your information on the phone. Never give away your information on the phone never give away your information via text message because there's a lot of scammy text messages

right now where they'll like um they'll be like hey i had a good time at dinner last night oh and you're like oh is this wrong number yeah and you open it up but but it's so simple and they'll kind of fish a little bit and then it's like well, just send me your number or just send me your address and I'll get you like that kind of stuff. And it's like, don't fall for it. I hit him. I immediately hit that report and block. Immediately.

Mark is junk. No, thank you. Yeah. So on top of freezing your accounts with the credit bureaus, I also pull my credit reports once a year. And I just did this, Jade. And it is, mine is squeaky clean. Nothing on there. I don't have a credit score. I got zero accounts,

zero debt. It feels so good. What do you use? Who do you pull your credit with? Well, all three bureaus, but you can do it through annualcreditreport.com. There you go. That's what I was looking for. So that's not like a, this is just the website you go to do this. And it's a great way to just sleep better at night. And then on top of that you can get id theft protection we all have it uh through zander here at ramsey dave covers it for the whole team that's how much he believes in it even if you you know don't have it as a benefit super affordable it's like six or seven bucks a month yeah and for a family you can do it for like 12 bucks a month i was gonna say i think the most we've ever paid for it before i came to work here was like 12.99

yep and they have a recovery of up to $2 million in stolen funds. Excellent. And I went through this in 2013. And Xander helped me climb out of it. Oh, really? You had your ID stolen? I did. Yeah.

They opened up accounts across the country with AT&T and Verizon. I got collectors calling me. I'm like, I don't even have these cell phones. I had T-Mobile at the time. I'm like, what's going on? You know, a buddy of mine- They helped me clean it up. A buddy of mine had her social security number stolen. And person filed for her tax return and then stole her tax return

and so now she's got to go through this whole thing she has to have a pin number and da da da da to prove that it's her and so in many ways she's safer now than she was then because now she has all the fail safes in place but man oh, don't want to do that. Stay safe out there, folks. Stay safe. All right, let's go to the phones. Jake is in Las Vegas. What's happening, Jake? Hey, yeah. Thanks for taking me on. I had a question. I'm 21, about a year into working corporate life now, but I feel like I'm behind on investing, trying to see what I could do to actually build wealth. I feel like I'm doing the right things trying to see what I could do to actually build wealth. I feel like I'm doing the right things, but I don't know if I could be doing a lot more.

I feel like I've got to take advantage and maximize our 20s. Well, tell us what you're doing. How do you feel like you're behind at 21? It's like a newborn baby being like, I feel like I'm behind on my reading skills. Got to up it. You just started your adult life as far as career and income goes. Yeah, you know what? I think a couple of things, right?

Like I know that like Ramsey himself had $150,000 to invest in real estate at 22. And I know people from my high school making $170,000 a year at 19, software engineers in the Bay Area. So the bar is kind of up there. Good. Well, you create that bar for yourself, depending on who you're going to compare yourself to. And so I don't want you to get just totally into this vortex of like well someone else is making more out there you got to realize like you got to run jake's race because running

someone else's there is no finish line you're always going to be comparing yourself to people making way more who have way if i compare myself to dave ramsey dude it's going to be an endless chase in life i love the fact that you have this high bar though. Like I think that you have good, I like that. I feel like you're challenging yourself and I think that that's going to be good as long as you don't get ahead of yourself. So tell us more about your, tell us more about your financial snapshot so we can best advise you. Yeah. So been working for a year, like I mentioned, um, pretty stable job that I say it has good trajectory. Um, what are you making? Uh, I work at, Oh, sorry. Who asked what? You're good. What do you make? Uh, I make, I work in software sales. I make $65,000 base and about $43,000 in commission.

That's supposed to be on target earnings. Incredible. Good. So you're making almost $100,000 or over $100,000. Right. At 21. You're already way ahead of the game, by the way. What's your living situation?

So right now, I'm actually moving. Currently in the process of moving from Vegas to the East Coast. So renting? It's pretty okay. Yeah, renting. Yeah, I'm renting right now. And that rent is about $800 for my room. No debt? Yeah, no debt. Okay, three to six months saved? Yeah, I have about a little bit over 30k

saved okay good about 10k my checking why is it in checking um because i always feel like just in case like i have all my savings in my high yield savings account but if i need something like in a pinch okay in terms of like know, getting that just because it takes a second to transfer from my high yield to my checking. So 10K feels like a lot to not be gaining at least four and a half percent. But what do I know? I probably would lower that significantly because I mean, you're a renter, so there's not a whole lot that's going to require 10K in a pinch. Right. Okay. That's just me you're not replacing like an hvac tomorrow that could be seven grand and even then with high yield what

i've done jake is i've done a wire transfer i'll call them and say hey i need it i need the money sooner rather than three business days or whatever and they'll wire that business day or next business day thing is most i feel like most online high yields will do 24 you know if you do it that day it'll be there the next day but that's neither here nor there uh so right now are you investing 15 is that what you're doing yeah so i have i'm pre-tax i'm investing 10 i get a six percent match so 10 into my 401k and then six percent into my employee stock plan. And then post-tax, I do about $500 a month into my Roth. Okay. So you're above the 15%, which honestly, in this case, if we're walking the baby steps, we'd say 15%. And then if you're paying off your mortgage, anything beyond that,

you would put towards the mortgage. In this case, I'm wondering, like, once you said you're moving, what's the goal? Are you saving up for a down payment? I wouldn't want to go too hard in the non-liquid money because at some point you are going to want to buy a home. And so I'd probably cap this at 15% and save above and beyond for a down payment because that day is going to come. How much do you have in investments currently, Jake? I have about a little bit over $30,000. Wow. Well, let me tell you this. I crunched the numbers for you.

At 21, at age 60, you got $30,000. You keep investing at $1,400, never make another dime. 8% return, you'd have $5 million. And that's conservative. You're doing great. Keep it up, my friend. This is The Ramsey Show. From Ramsey Network, this is The Ramsey Show, where we help

people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by bestselling author Jade Warshaw, and the phone lines are open. They're hot, 888-825-5225. You call in, we'll talk about your life and your money right in front of you because we love you that much. Devin is going to kick us off in San Diego. What's going on, Devin? Hey, thanks for taking the call. Appreciate whatever advice you might be able to give. I hope. Don't speak too soon. Yeah, right. My basic question, and I can give you some more context after I give you the basic premise, is definitely get the advice of not exceeding the 25% of your net monthly income if it leaves you with nothing to live on.

And so I guess for my case specifically, does it make sense? And I can answer any questions you might have. Tell us more. What do you earn? You have a fabulous income. I can already tell. What's the income? Thank you. So, right, it's going to be $290,000 base income, $320,000 in total comp. I have no debt.

I have no car payment, no wife, no children. Post tax per month, it probably comes out to a little bit north of $15,000. And I have about $410,000 saved up in liquid assets. Wow. Way to go. Do you have any debt other than the mortgage? No debt. Or is this... No debt. And I don't have a mortgage now, right? This is like a prospective purchase that I may make. Got it. I was just unsure, based off of what I make now, is it okay to exceed that?

How far? How much do you want to... 25%? Is it 55% or is it 27%? Yeah, right. Big difference. So that's a very good question. So from what I've seen, it would probably be somewhere between five to six thousand dollars per month for mortgage, HOA, property tax and homeowners insurance. So it would probably be 30 in the neighborhood of now. Are you are you investing right now? Yeah, I have a lot of money in a lot of like index funds. That's pretty much where all my money is.

Well, I'm wondering, because when we talk about 25%, we're talking about after tax income, but before other deductions like health care, 401k investing. So that might help your numbers. That's why I'm asking and digging into that side. Yeah, so currently I just got to the point where I qualify to contribute to a 401k for the company that I work with. And that $15,000 would be after healthcare is removed. So healthcare would already be reflected in that. So here's your homework. I want you to manually add those pieces back in and go, okay, after taxes, but before anything else, this is what my income is. Then do your 25% and see how close you are. But to answer your question, if it's 30% and you still have plenty of margin to invest, to pay extra on the house, to get knock out the mortgage, that's the key here. Like you

mentioned, we don't want you to be house poor. It's not a legalistic rule that Dave said. It's because we get too many callers and they're like well i can't make progress we're going what's your your mortgage like oh it's three grand how much do you make five grand we're going there's your problem yeah and so for you that's not an issue the key is is your income going to stay there i mean i would like it to right uh nothing is certain um for the first a lot would have to change yeah yeah that's that's the worry so you know when we say 25 it's also conservative because life changes and we don't want that payment to just be right on the brink where it's i can make it but it's tight how much liquid cash

do you have laying around um i guess to find liquid like uh hs hysa uh like 75 grand uh which is irresponsible right i should have i should have more invested uh in that yeah like six months like if you want six months of expenses liquid that's good or if it's a down payment you're going to make in the next year or two then it's wise to keep it liquid but you said you have 410 that you could make that liquid by selling off the index funds? Yeah. Okay. Is that your plan when you buy the house? Are you going to use all of that as a down payment?

Not necessarily. I would like to put 20% down, right? So I think I would need somewhere in the neighborhood of $200,000. So I would need the $75K in high-yield savings and then probably come up with the rest through the index funds that I have. How old are you? 34. Okay. I'm just wondering why not sell off more of the index funds,

put enough down that you get it to 25%, and then you're breathing easy and you still have tons of room to invest. You're still going to create so much wealth that I feel like you're hanging on to the investing side. You've got that muscle down. I want you to have a life in the meantime and have plenty of margin. Oh, so you mean so put enough down so it would bring the monthly payment down to… To 25% or less. I mean, if your monthly mortgage and everything all in is 15%, you're going to be

breathing extra easy to where if you don't have a great year for some reason with commissions or whatever it is, it's not a big deal. And the more you put down, the less mortgage you have, the easier and faster you're going to pay it off. And so you see how it kind of creates a really cool cycle there. Yeah. Cause I guess, I guess the part for me was if there was missing something for that 25% rule, why, um, that is recommended because right. If I were to spend five to $6,000 per month and it came out to be 33 to 39% of my net, um, but I still have nine to $10,000 left over, um, would that be responsible so i i don't think it's going to implode your life because you can out earn

stupidity for a good while making 320 grand but you also got to think about what if i have a wife and kids and what if she stays home and what if that baby is expensive and what if you want to put them in private school and you you just have more options when you have more margin and that's what i want for you. Even though you're in this stage of life right now, it doesn't mean it'll always be that way. That makes complete sense. I appreciate the help. Absolutely. Thanks for the call, Devin. That's a great problem to have. It is a great problem to have. I make $320,000. What should my housing be? Well, you got more options when you make that much.

Yeah, the 25%, obviously, there's the barrier between blessing and burden. But in that case, it's also accounting for life change, whether it's you're in this job now, but you don't know what awaits you a year from now. You know, you're a single guy now, but you don't know what awaits you five years from now. And so really sticking to that 25 to 30%, like if you're 28%, it's not gonna destroy you. You're not on fire.

You're not on fire. But for some people, depending on their on their numbers 28 is a big deal so if he goes hey i need a pay cut because this job is burning me out and i need to make 150 now yeah i want to be home more with my family well now he's locked in exactly and so no one's ever called in going my mortgage is only 15 of my take-home pay and i wish it was more, man. I wish I was closer to 30. And so it's always going to be a blessing to have less payments in your life. I think 25%. I like that margin because it really enforces a key principle of everything we teach, which is truly living below your means. And the more that you keep your lifestyle at this low level, ultimately, like we've talked about,

the more freedom you have, you can switch jobs. You can decide, I don't want, you know, 320 is a great income, but it's not the life for me anymore. I'm going to go over here and be a photographer and make, and you never have to switch your housing. You want to give 10%, you want to invest 15%. You still want to go on vacation and upgrade the car. Life is just better with more margin. And so that's what it is. It's not legalistic. It's all for freedom, baby. This is The Ramsey Show. I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable. Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible. People that call in and their spouse

has passed away suddenly, and they don't have life insurance. When you have to think through, how am I going to pay my bills in the middle of all that grief? It's terrible. So life insurance is the one thing, especially as a mom with three little kids that I'm so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here. You've got to say it out loud, and you've got to say,

I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. To get a free quote, call 800-356-4282. That's 800-356-4282 or go to zander.com. Welcome back to The Ramsey Show. I'm George Campbell joined by Jade Warshaw. Hey, if you're listening to the show, I assume you enjoy it. And if you do, do us a quick favor. It's completely free and share the show. Hit the subscribe button, the follow button, leave us a kind review, let us know what you think. It all helps us us so much it is the best marketing tool we have because humans are the best way to

share the show with other humans that's the goal so do that and we'll keep the show afloat that's how it goes that's how it goes i know no better way to keep the show going than you guys all sharing it and keeping it you're're the plan. Keep it alive. Yvette is in Houston, Texas up next. What's going on? Hello. Thanks for taking my call. Sure. I'm actually having a lot of issues.

I'm in a foreclosure. Oh, my goodness. And I initially did everything to get out of it, and I thought everything was taken care of as far as a modification. I don't know how important this is, but I'm divorced, and my ex-husband is on the deed, even though he's never had any connection to the house. We happened to be in the middle of the divorce when I purchased the house, so I was told that he had to be on the deed. I didn't even realize I could take him off I'm just writing that out yeah but I mean he's cooperative with um you know like when I need the paperwork and all that stuff done so um he lives in another

state though so when I was sent the um final documents for the the, they, you know, sent a copy to him and a copy to me. And I called to follow up to make sure his copy was actually received by them. The first time it wasn't. But the second time they said, yes, it's here. You know, it came in on this day, signed in, but it hasn't been reviewed yet. So that was a worry that was out of my mind. But my documents, they sent them back to me and said that the notary did them incorrectly and I needed to have them re-notarized. Okay.

So anyway, by the time I did that and sent it in, and I had already made two payments, not the trial payments, the actual new modification payments. I had already, so yeah, I'm into it. So then when I called to follow up, they said that the deadline had passed by two days and I no longer was, yeah, I was no longer eligible for the modification. And I talk to these people constantly on a regular basis. And I have to say that my assistant there,

he was very stressful. He stressed me out every time I talked to him, but he never really answered any questions as far as, you know, what happens, you know, by this date, give me dates, never. What's the current status? How many payments have you missed? Well, like I said, I was making the two that was supposed to happen, and then they stopped, and they wouldn't take anymore. So right now, I think... So what's their last communication to you? Where are you at in the foreclosure process? Well, now it's on hold only because I'm a victim of a hurricane, and I didn't ask for anything. They just said, were you affected by the hurricane?

And I said, yeah. And then the person said, um, what hurricane when is this recent hurricane? Yeah. Texas has hurricanes anytime it's summer. So, yeah, I mean, like, but I'm saying that happened this summer. Yeah. It just happened like, I don't know three three weeks ago but even before that we had a we had a tornado before that and i was so they're putting it there they put it

on hold because of the that inclement weather situation yeah and and on hold is what i thought it was but it's a four it's a forbearance okay until when until um the end of october can i ask a couple can i ask a couple of questions just to get my head around this what took place for you to miss the initial payments what was going down that was causing you to miss however many payments that you missed and got behind and has is that situation over no and i'm i'm willing at this point to sell my house, and that's something I fought against for so long. But no, I have a disability, and I haven't been able to work in over 10 years, but I'm not receiving disability. It's been very hard this last time. I haven't even filed the appeal.

I just was in a state of depression. So what has your income been for the last 10 years? Where is it coming from? Well, it was coming from child support for the most part, but now my daughter is an adult. So where do you get money now? Well, now I have a part-time job that makes things even worse. So that's what I have.

But my daughter has her income now. And so, I mean, it's still very low because she only works part time as well. Both of you working part time, both of you living in the house and you can't make the mortgage payment. No, no, we know we can make it now. But but what actually stopped me from making it? I ended up being sued by my homeowners association, which that totally just wrecked everything. I had to pay them $6,000. And that's what really caused me to get behind because- Has the HOA payments been resolved? Did you pay that? Yeah, that's over and done with. And I'm going to have to figure out some way to get that back

because that's a whole other story. I have been on a payment plan with them since i even before i stopped working but we have different people in charge of that and let me just there's a few pieces here we're going to walk you through it yeah i don't think that um have you ever attempted to sell this house here's here's i'm going to give you my 50 000 foot view this is a home that you can't afford this has been nothing this has been a burden on burden on burden um i don't want you to foreclose but i want to know is there a way have you attempted to sell the house at any point to go hey i can't afford this piece of property i got to get out of it have you tried that no and there's a reason for that and like i was saying i have no problem with doing that now going forward. But I've been affected by these hurricanes.

What does that mean? When you say you've been affected, tell us what that means. Was the house damaged? I have property. Yes. And I have property damage, not just from the hurricane I just told you about, from the Texas freeze a couple of years ago when we were out of power. But the issue is the insurance companies. I don't know if you know what's going going on with texas insurance companies i don't do that for even before

yeah even before that freeze we had insurance companies that were just not doing what they were supposed to do are they denying your claims no no they didn't do that my insurance company um gave me eighteen hundred dollars i probably had i don't know, I'm just going to say $30,000 worth of damage. And then we hit a wall and then they pulled out the state of Texas and filed for bankruptcy. Okay. So you have a bunch of work that needs to be done on your home that insurance wouldn't pay for. What type of work is it? Is it something that no one would buy the home in this condition? Is that what we're talking about? Is your roof half gone or is it more cosmetic? No, I think people would buy the house.

But my thing is, I don't know how much value that I have lost. Okay. So what? So that I may not have the equity that I thought I had. It's like right at $100,000. And you're saying you don't know you could sell it for $100,000? No, no, that's not what I'm saying. I probably can't sell it for that.

My situation, I'm 60 years old. My situation is I would not, if I can, I would prefer not to sell a house that I paid for for 22 years and have nothing. Yes. I understand it's frustrating because you didn't build the equity you wanted to, but this is not, you can't have the sunk cost fallacy. You're in a bind where you're going to either sell this home or it's going to be sold for you at auction in a foreclosure. You need to figure out, you need to get an appraiser in there,

figure out what the house is worth. I'd be talking with the bank and asking them, listen, I know I'm behind. At this point, I don't know how many payments you are behind. I know they tried to do a modification. It's on hold now. I think the fact right now that it's on hold is a blessing for you to go in one more time and say, can we just sell the property? If it's at a loss, maybe you ask for a short sale, figure out a way to go in there and don't let this be a foreclosure. I think that that's going to be even more painful.

It needs to be on your terms, which means you tell the lender, hey, sit tight, I'm going to sell this house, and we're going to make sure that I'm ahead, and we're going to get this thing done. And so I would get in touch with a real estate pro. You can get in touch with one at ramsaysolutions.com slash trusted event, and have them figure out the comps and what the house is worth. Let them do that homework for you, because you've got a lot going on.

You need to get to some financial stability right now and build a new financial foundation, and that means we're getting out of this house. Yeah, I think you've been hit with hit after hit, whether it was the freeze and then the hurricane and then you're missing payments. And I realize that you've been in this house for a long, a lot of years, but this is not a place of peace anymore. And your home should be a place that you walk in and you feel peace. And we want that for you. We want you in a place that you can afford and we want you to get the help that you need. I don't want you to be a violinist on the Titanic going down with the ship. You can definitely avoid all of this and sell and move on

with your life and get a fresh start. That's our hope for you. So get in touch with an agent and have them start to do the homework. You get in touch with the lender, figure out what it's going to take to allow this process to happen. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Today's question of the day is brought to you by WhyRefi. Now, we don't recommend refinancing on everything, but for distressed private student loans, there's WhyRefi. We trust them because they help you with a low fixed interest rate you couldn't trust them because they help you with a low fixed interest rate you couldn't get anywhere else to help you stick to your budget and get out of debt. If you want to learn more, go to YRefi.com slash Ramsey. That's the letter Y,

R-E-F-Y.com slash Ramsey. Might not be available in all states. All right. Today's question comes from Kyle in Minnesota. He says, my wife and I earn $230,000 a year. This income is fairly new as my wife just went back into the workforce. We have a five-month-old daughter who my mother-in-law watches while we work. As predicted, my mother-in-law is now requesting we pay her to watch our daughter. Now, prior to making this arrangement, she agreed that we wouldn't have to pay her because we're trying to pay off debt.

I understand we are entitled. We are not entitled to free child care. But with seventy five thousand in student loans to pay off, we don't have this in our budget. It would be more cost effective for my wife to quit working than to pay for child care. They talking about the mother-in-law make three hundred thousand a year and have no debt other than their house. So they don't need the money from us. How do we respond to their requests to be paid for watching their grandchild? Let me tell you something. The animosity is hot.

It's popping. I feel it. Here's the thing. You knew this was coming because you said as predicted. So there's something about your mother-in-law's character that you kind of knew this was coming. And I'm not saying she's a bad lady, but he obviously knew something might come up, come out of the woodwork here. Now, here's the thing. I'm going to call you out first. And then I'm going to be on your side. First, I'm going to call you out because they make 300,000.

It's none of your, you know, they can spend their money, how they want to spend their money. They can decide if they want to be compensated for their time don't add those other little statements in there because that just makes you a little bit like like snap snappy right like i can understand you're mad but if you bring it up to them the second you start saying well you don't even need this money you make 300 000 like that's that's the moment the conversation goes just into terror town um here's the thing you said that your wife and you make $230,000. You said the income is fairly new. I mean, you're in Minnesota. I can tell you for us, for one child in daycare, it's $1,300 a month. That's expensive. So if your wife is making more than $1,300 a month, then yeah, it's worth it. You're paying off debt. Even if she's making

$2,000 and you're only pocketing the $700 after taxes, like yeah, keep doing this. I will say if this is going to cause a lot of animosity and issue with the mother-in-law, cut her loose and say, hey, we can't afford to pay you. We're trying to get out of debt. And you can say, you know, I thought this was the agreement, but if it's not, that's fine. We'll just put, you know, baby in daycare and just do it as gently as possible. Don't really try to hold them to it because, you know. This doesn't seem like it's worth burning the entire relationship over. I think there was some expectations.

Expectations changed on her part. Maybe she realized, oh my goodness, full-time childcare is kind of like work. It's a lot. And I'm not the mom. And so, you know, I don't, I'm not mad at her for saying that I feel like I should be paid something. And so maybe you figure out what that number is. I don't, it's not said here what that number is. Is it less than it would be to put her in daycare? Is it less than getting a private nanny? I think a hundred percent it's less than a private nanny, whatever she's asking for. for. It's probably not 60 grand a year. And so I would figure out what makes sense,

but I would not continue down this awkward trail. Yeah, I wouldn't either. I got to believe that grandma's not going to charge $1,300 a month, but you, Kyle, are right in feeling frustrated that she said, yes, I'll do it for free, and then is singing a different tune. Now, here's the thing. And then is singing a different tune. Now, here's the thing. Here's what we don't know. We don't know how long this arrangement has been going on. And we don't know. I mean, at least five months at the very least. And we don't know how long she agreed to do it without money. Like there's a lot here. But I think, George,

to your point, probably what happened is it's like fun for grandma to hang out with, you know, little Betty or whoever it is for a couple of hours every day. But then when you stretch that to eight hours per day, and then it's like, oh, and can you start browning the meat for dinner? And oh, would you mind that load of laundry in the closet, you know, in the laundry? It's a lot. It's a lot when you're staying home with a child. And I could understand how grandma might be like, yeah, you know. And here's the other thing I've issued with. Kyle said, we don't have that in our budget. You make $230,000 a year. If grandma wasn't around, like we don't have family in the same state as us. So it's not an option. So don't tell me it's not in the budget. Just tell me it's

going to slow down my debt snowball, which is frustrating because we made all this progress. We have all this new income and now it's going to slow it down by X number of months. That's right. Just put that on paper and grieve it and go, we could have been debt free four months faster, but babies change things and that's okay. Sometimes I'm going to throw a perspective shifter right here. I'm going to do this real quick. Um, let me throw it back to this. I'm training for a race. I'm training to run a marathon and it's some mornings I wake up and i'm like oh i gotta run and i'm so like irritated that i have to run but then i remember it's a blessing to be able to move your body and run there are people who cannot run same thing with children we can be like oh i have to pay for

child care child care is the worst it's a blessing to have a child. And there was a day that you wished and prayed for a child. And now you have it. Don't complain about the childcare. I know it's expensive. I know it wasn't in the budget. I know you're trying to do baby step two, but get back that perspective and go, it's a blessing to have this child.

One of the things that go with children is childcare. And I'm just gonna chalk it up to the experience. This is part of life. It's temporary. Because once they hit kindergarten, let me tell you something, George. Ding, ding. Oh, that money goes back in the pocket. You just got a raise.

Hey, I get a raise next year. It's a blessing to have family that you even trust to watch your child for free or for money. Yes. So there's a lot of blessings in here, Kyle. I think you should count them before you start burning bridges, my friend. Yep. There we go. All right.

Dan is up next in Rochester, New York. What's going on, Dan? Are you with us? Hey, how's it going? Good. How are you? I'm here. Good.

So my question is about my student loan payments. Okay. So I just graduated college in May, and I just got a job starting in two two weeks and it pays $95,000 a year. Um, and, uh, I have about 19,000 in loans. Um, so I'm living at home right now with my mom and I'm wondering if the loans are so urgent that it would be a bad idea to get an apartment with two of my friends as roommates. We're thinking $600 to $800 a month for each of us in rent. I would do it. Now, this might be a hot take. Jade may have a different take. I would move out and start your adult life. I think there's something about having your own bills and feeling like you're actually an adult. And the rent is

great. $600 to $800. It's reasonable. And will it slow down your debt slightly because you're actually an adult. And the rent is great, six to 800 bucks. And it's reasonable. And will it slow down your debt slightly because you're not living at home rent free? That's fine. I'm okay with that because you're gonna hit this so aggressively and you treat it differently when it's Dan's money, Dan's bills, Dan's debt, versus well, I'm kind of have a nice safety net here.

I can get comfortable. I can still live. So I'd move out. I would too. And I tell you that as a guy who moved out at 20 years old and flew the coop across the country and i think that helped with my growth as an adult yeah i agree i do it six to eight hundred dollars in rent is great student loans i hate debt but it's not astronomical right how quickly you're gonna pay off 19k making 95

if you keep living like a broke college kid. I'm not sure. That was another thing I was curious about is how urgently should I pay off? I haven't picked a payment plan yet. Do you have any money saved? I have about 6,000 saved. Great. So you could throw 5,000 today

and knock that down to 14. It's going to be paid off this year, no matter how you slice it. It's going to be paid off this year, no matter how you slice it. It's going to be paid off in the next 12 months. Right? Okay. You make 95. Yeah.

Once you do what George said, it's going to be knocked down to 13 or 14. I'm sorry. And you know, 14,000 out of 95. That's, that's nothing for a single guy with no family. You'll be taking home five or 6,000 a month.

Yeah. And so if you go, all right, my,000 or $6,000 a month. Yeah. And so if you go, all right, my expenses, I'm going to try to keep all of my living expenses down to $1,200 a month. Well, that leaves a whole lot to throw at the debt. What if you could throw $4,000 at the debt for four months straight? That looks like $16,000 paid in four months. Boom. You're done.

You'd be done by Christmas. Out of sight, never to be seen again. That would be my personal goal, Dan, for you, is four months. You're done by Christmas. Out of sight, never to be seen again. That would be my personal goal, Dan, for you, is four months. You're done by Christmas. By New Year's Eve, you are celebrating with your buds,

you are debt free, and you make $95,000 with the rest of your life ahead of you. Ooh, you're going to be so rich. You're going to be so wealthy, Dan.

Don't get tempted though with all your, their friends are going to be going out and Dan's going to say, Kate, can we stay in? I'm trying to pay off some debt.

That's the temptation. That's good. But man, you could do anything for four months. Yeah. Dan is going to be rich. I like this. I like this plan, Dan. He's only 20 years old.

Dan's the man with a plan. All right. We'll be back. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. If you want to hear more from us, you can read our books. Jade's got a great one called Money's Not a Math Problem,

and I've got one called Breaking Free from Broke. You can find those in the Ramsey Solutions store at ramsesolutions.com. All right, Jade, we have a question that came from our Ramsey Network app. Okay. And if you want to ask a question that came from our Ramsey Network app. Okay. And if you want to ask a question for those listening without ever having to call in, you can click the link in the show notes, download the app for free. Once you're in the app, navigate to the Ramsey Show and click ask a question and you can submit it for the show and maybe we'll address it live on air. Here's one from Angela. What's a tactful way to communicate

clearly to people that you cannot partake in certain activities like eating out vacations gift giving because you're broke and paying down debt how do i say no in a respectful way i'm not going that's gonna hurt feelings jade be there it's hurting feelings no it's not kind period is that not nice i think at some point societally we decided no was rude you know i mean i think it's from toddlers toddlers yell no it just feels rude i think we just i think as people sometimes we feel the need to give like these disclaimers i can't go because and i'm like you're grown when you're grown i feel like when you hit 30 say can't make it y'all have fun once you hit 30 you don't have to tell anybody anything.

And then once you hit 40, you definitely don't have to tell anybody anything. Especially, and let me add, if you have kids, you definitely don't have to tell anybody anything of what. You just be like, listen, I'm not going to be able to make it. Yeah. Done and done. And if they're a real friend, then you can tell them what's going on. Say, hey, I'm trying to tell.

And they'll understand like, oh, totally. Yeah. Absolutely. If it's a real friend. And if it's not a real friend, then they're just being nosy when they ask they go tell me more well there are sometimes there are like those like trolly people who you're like i can't go i'm trying to pay off your my debt or like i didn't budget for it and they're like budget pay off your debt like those people oh yeah those are the ones that you gotta be careful of they hold their nose high when

you say dave ramsay oh doesn't he want you to live on like rice and beans yeah and they kind of get kind of funky about what you're trying to do so i do think you do have to be careful about you know make sure you're telling people that you know will support you but honestly i know i was kind of being funny before but i really think that you don't owe a lot of people explanations i think you can go listen i'm not going to be able to go this time. You know, period. That's it. It's that simple. It's not a priority.

It's not on the budget. I can't make it. You can say whatever you'd like. Just say it firmly and kindly and move on. You could even say, I wish I could go, but I'm not going to be able to make it. The wish I could is nice. That really makes them feel good about it.

Yeah, you don't want to say, I didn't want to go anyway. But I'm telling you, saying no is one of the only ways to success. Because if you don't want to say I didn't want to go anyway. But I'm telling you, saying no is one of the only ways to success. Because if you say yes to everything, you're going to be going a million miles an hour in all kinds of directions. Yeah. So I think successful people who hit their goals, who have great quality lives have to say no to a lot of things. Yeah. Everything can't be a priority. And, you know, I don't know about you, but have you ever been in one of those group texts

where it's like everybody's doing something and you're like, man, I'm going to be the only one that says no. And then that first person says no. And you're like, yes, now I can say no. And I am that people pleaser. I'm a recovering people pleaser. That's my personality to be very agreeable. Want to make everyone happy. Don't want to ruffle any feathers. So I had to get good at this when I was getting out of debt. Yeah. Now with your family, you know, she doesn't say family, but I think the hardest time to say no is around Christmas time when the family has an expectation. Oh, but you guys always come East for the holidays. Right. And it's like, we're not going this year. Matter of fact, and I'm not trying to weasel this in, but in the goal planner,

the Ramsey goal planner, which just went on sale today, I talk about that exact thing in the Goal Planner. I talk about how to say and set expectations with family members when you're getting out of debt around the holidays. So if you're looking for that, check out my Goal Planner. That's a good one. Thanks for the question. All right, Beth joins us up next in Grand Rapids. What's going on, Beth? Hi, thanks for taking my call. I have a question about term life insurance. I know that it's the best thing to buy, you know, to steer clear of whole life. But I ran into a situation, it was actually a couple of years ago, and I keep meaning to, well, I've been trying to find the answer and no one seems to be able to give me a good answer. So I thought I'd call you guys and find out what you know about this. Um,

when we bought term insurance, I don't know, 15 years ago or so we, I did it online through, I don't know if it was select quote or master quote, but something that you could, you know, look at different plans from different companies and get the best one. That's how we did it. Okay. Then a few years ago, I went to a financial planning seminar. It wasn't just a one night thing. It was a, like a little mini class that was taught by a financial planner. And one of the reasons I went was just to see what kind of information he would give me because I, I know quite a bit about financial planning. I was kind of brought up on Dave Ramsey before Dave Ramsey was Dave Ramsey. But, um, but this guy, okay. So I raised, he's talking about life insurance. And so I raised my hand. I said, Oh, this is what we did. You know,

you can get it online and pretty good deals. And I could tell immediately that I was not to have said that because he just like immediately like look panic I'm like oh no no no that's not good life insurance that's just that's just just horrible and is it because he wanted you guys to buy it through him yeah you took money out of his pocket of course he's gonna be on a tizzy the thing that yes you and it wasn't you put the kibosh in his on his whole thing. He wanted to be able to sell it, and you said, oh, why would you do that when you can go online and you can compare all the rates and get it yourself? Exactly.

But that started getting me thinking, like, is he right? You know, because then he came up to me later and said, oh, you just need to sit down with me. Oh, my goodness, Beth. This guy is an aggressive, sleazy, pushy salesman. I know. And I guarantee you he was selling whole life insurance. Maybe. Honestly, I don't know.

Because the rest of the stuff he was saying seemed pretty on the mark. He did say term was the smart thing to do, not whole life. That's true. But what was the whole purpose of the, there's always a sell. He wasn't just bringing you there to tell you great things. There was a sell at the end. He doesn't work for free. Yeah. So what's your big question? Are you just wondering if you were?

Was he right? No. Is there a difference between to me? I always thought term insurance is term insurance. It doesn't matter. Term insurance is term insurance. And there's a lot of companies that sell it. And so we always suggest a place like Xander who's going to go and make sure they get you the best deal. With the top rated companies. With the top rated. Because it's a lot of work to go through and sift through all that. Nobody has time to do that.

So if you go with a company like Xander, yeah, they're doing all of the hard work for you. And so that's what you essentially said was, yeah, you don't you. There's a whole bunch of people to choose from. You can go on the Internet and choose the one that's best for you. And he didn't like that because he wanted people to think that this is the only place you can get whatever it was that he was selling. And so, yes, he was trolling for business. That's absolutely he was trolling. And that's fine.

He wants to drum it up and offer you a free dinner. That's fine. But to tell you that it's unwise to get term life online is just stupidity. Yeah. He should trolling for business. And that's fine. If he wants to drum it up and offer you a free dinner, that's fine. But to tell you that it's unwise to get Term Life online is just stupidity. Yeah. He should know better. Yeah. Okay. That was my gut feeling. But like I said, I looked this stuff up online. I can't find a straight answer. You know, I just couldn't find a straight answer. That's what I figured.

I got no reason to lie to you. You can get it how you want. We trust the folks at Zander for Term Life. And again, they shop at top companies. That's my family's covered through Zander, Jade's is. And, you know, on one end, term life is term life. You want the company to be highly rated, pay out if something does happen. But it's insurance. You know, I'm not looking for the best restaurant in town here. You just want the best coverage at the best rate.

So do you guys have that right now? Actually, we're kind of at the end of our policies, and I'm actually debating on whether it's a smart idea to re-up or not. Our kids are now out of the house. Are you self-insured uh well if something happens to one of you would you guys be okay well okay our we have no debt our house is paid off what's your house worth completely um well we bought it for 215 our neighbors just bought a house behind us for 500,000 so in this market that could you know the way things have changed, that could be... Beth, I'd be crunching the numbers. You know, what's in our nest egg? Do we need to re-up? Do we need to get a smaller policy? And our friends at Zander can help you with that.

So be sure to reach out to them if you need help with that. Alright, Jade, the show is about to end if you're on YouTube or podcast, but we've got more calls coming up in the Ramsey Network mobile app. So be sure to go download that. Finish the show. You get full episodes. And if you're listening on radio, just stay where you are.

The show will go on. So there's two ways to get the app. You can click the link in the show notes or just search Ramsey Network in the App Store or Google Play. And for those of you who submitted feedback, we heard you.

We are working on it. The team is working to make this app better every single day. We are just getting started. So don't miss what's coming up next. Go watch the full show in the app for free. Who knows what Jade's going to say? We just don't know. I can see the calls on the board and they're juicy. Y'all got to get to the app and finish it. All right, Jade, that

was a fun hour. This has been The Ramsey Show. Big thanks to all the guys and gals in the studio, our audience live and listening. We love you guys. Thank you so much. We'll be back before you know it. From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, co-host of Smart Money Happy Hour, joined by Jade Warshaw. We're taking your calls about life and money today at this number. Write it down if you've got a pen, 888-825-5225. You call in, and we will try to help you take the right next step with your life and money. Kicking us off this hour is Francisco in Denver. Francisco, that's fun to say. What's going on? I hear that quite often. I know. The team, they paid me a dollar to do it. They said it was from Elf. Is that true?

That's where I've heard it from, yeah. Okay, this call is all uphill from here, or downhill. I don't know, whatever's better. What's going on, Francisco? Hopefully uphill. Well, thank you for taking my question. So, I'm 33 years old. I was on baby step number four, and then I got laid off from my job.

Oh, man. It happened like three to four weeks ago. So looking ahead, thankfully I had about a six-month emergency fund. Good. But I'm not sure I'll be able to find a job until November. By November, I know I have a seasonal job that'll start up. Why do you think you won't find anything by November? Partially because before I got laid off, I had a couple of trips planned and I can't cancel them.

Can you afford to take them? So yeah, they were mostly already paid for. And then afford them, yes, but it kind of makes my situation tricky, which is why I called you guys. So how much of your, let's get the real numbers here. So you had your emergency fund. It's been three to four weeks. How much have you gone through so far, a month's worth of expenses? Not quite. It's been, I've gone through about $4,000, but it's mainly because I was paying for some of the trip that I have. And how much do you have left? About $12,000. Okay. This is a slippery slope. So I would not wait till November. I think that you get any job until you can get the job. And in this case, you know, even like you said, November, it's not the answer to the problem. It's just seasonal work. So I think that you need to work at getting a job as though it is

your full-time job, right? Like you go hard in the paint to find something new. What kind of work were you doing before? Yeah, I plan on doing that. But just to go back my my actual question is should i sell some of my brokerage account holdings to increase my emergency fund until i find new jobs just because right now i do have you know other cash i could use it's it's just in the market so it's the volatility how much do you have in the market in In a brokerage account, I have about $60,000. Whoa. What were you saving that for? What were you investing for?

Just retirement mainly. The fact that it's in a brokerage account is because I see myself maybe using it on a down payment for a house in the future. Yeah. Whatever could potentially come up in the future. What is it invested in exactly? Are we talking single stocks, index funds? It's a mix.

Yeah, it's probably somewhere around 50% to 60% individual stocks, and then the other 40% is like S&P 500 and next funds. Okay. Do you have debt? Tell us more about your month-to-month. Do you have debt in your life? No debt. Like I mentioned, I was like on baby step four. So I was just kind of saving money for retirement and for potentially buying a house.

Here's the thing. If you were interested in liquidating single stocks and some of those things, I'm not mad at that. I would do that anyways. Yeah. But for the purpose of you being laid off, what I don't want is for you to feel comfortable because it's like, oh, I've got money laying around. I don't want you to look up and you've burned through 60% of your savings because it caused you to be a little lackadaisical in finding a new job. That's what I don't want. And I also don't want a couple of trips to keep you from really zoning in and getting

a job because it's really easy. I mean, you've already burned through $4,000. It's really easy to look up. And before you know it, you've burned through $30,000. Yeah, I don't want that to happen. That's why I'm trying to think ahead. What were you making? It's really just one more trip.

And the spending for that should mostly be done. I might have to put another $500 to $1,000. And then my monthly expenses are like $2,700. So I should be good if I don't get a job until like December based on the math. You're going to live off your emergency fund? That's what I'm saying. Why would you do that? I do not want to. That's just worst case scenario. Okay. Okay. I do not want to. So you're saying worst case scenario, you've got enough to keep you till December. When is this trip and how long is the trip? So the trip, I get back September 25th. So my plan is then to do what you mentioned, like just get a job no matter what it is to start getting some income.

But you could go work for the next month before the trip. Well, the trip is two weeks long and and I leave September 11th. But even doing side gigs full-time until then would cover your bills. Yeah. I was thinking about doing that. Okay, good. To help. As long as you're thinking, and by the way, even though you leave September 11th,

still hit the pavement and really go hard on finding something, because you know there's always that lag period of like, okay, I've got this interview, and then there's a week later I have another interview you know there's a start date you tell them hey I've got a trip but after that I'm ready to start so I would not wait don't wait in this job search what work were you doing before and what were you making so yeah um I'm doing that I've been searching since since I got unemployed and my skill I'm a mechanical engineer so I've worked in that for the last nine years. But right now I'm doing contract work,

which is usually six months because I like to work in the ski resorts in the winter. So I was working for an aerospace company and the contract just got canceled by the company. Okay, well, you've got a great skill set. It should be easy for you to find something comparable to what you were doing before, no? It should be. I've been looking the last three weeks and nothing has come yet, but normally I have decent luck getting back in the market. Okay. And you're single? Yes, single, no kids. Okay. So you're pretty nimble. If you

had to up and move to a different area, you could do that? Yes. Okay. Well, that opens up your options. I would be looking, you know, expanding your search. I'd be figuring out who do I know who's in this field who might know a guy. That's the kind of stuff you need to be doing, and we'll give you a tool to help with that.

It's the Proximity Principle, the bestselling book from our friend Ken Coleman. It's going to show you how you can get in the right places with the right people to find that work that will fulfill you. And I don't want you to, you know, I know getting laid off, Jay, we see the actual, the data on this, the effects that a job loss can have on someone is the same as losing a loved one. Yeah. And the more you wait, I really don't want them to wait because the longer you go unemployed, the longer, the more you wonder if you can ever get a job again.

And that's why I always say, like, get anything until you get a job until you get the job, because it just does something for your psyche. It makes you feel more confident. Right. It's better to go into a place when you already have a job looking for a job than to go into a place when you haven't worked for four months. Well, a lot of people, they don't want to swallow their pride and go, well, I was making 90 and I don't want to go do an Uber to make 15 or 20 or go work at a pizza shop. I'm going to swallow your pride, man. This is about, you know, like there's dignity in all kinds of work for all kinds of pay to cover your bills. And think how hard you work to build up that savings. You don't want to just put a little way because this job is below you. Yeah. That hurts when you're going Francisco. That was a down payment.

Now it's just like living money that you're burning through that took you a long time to save and you can spend it like that. Yeah. Don't love that. So find a temporary income, side gigs, apps, whatever you got to do in this gig economy to make some income to cover the bills. And hopefully that mechanical engineering job will reveal itself in due time. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The number to call is 888-825-5225.

Frank's up next in Sacramento. What's going on, Frank? Hey, how you doing? Doing well. How can we help today? Hey, I've got a question on what would Dave do if you were in my shoes? The debt that I have is a Tesla 2022 Model 3 Performance, full self-driving. The car payment left I owe on it is 55K. The instant cash Kelly Blue Book offer would be 30K. Could sell it for private party a little bit higher if I did

private party, but I'm wondering if I should just pay it off as fast as I can because when it's paid off, it'll only cost me approximately $300 per month or liquidate some of my, by liquidating some of my assets to do that. Or what you guys recommend is sell a car, be underwater, and then take out funds to pay it off that I have on equity or what would you recommend? The car is $55,000 worth 30K. What's the note on that? That's what the note is remaining is 55K. What do you note on that? That's what the note is, remaining at $55,000. What do you pay every month? Oh, the monthly payment?

Yeah. $12.31. Oh, boy. Well, you asked what would Dave do in your shoes. He would never buy a Tesla. And I say that as a Tesla owner. You're right. He'd never buy a Tesla.

He's too scared, truthfully, Frank. We're very brave. We're willing to risk it all to explode in our vehicles. Is this your only debt? That's both sides of my mortgages, yeah. Okay. What's your income? I make between, well, my income approximately $7,000 unless I work overtime, and that's with cash flow, if you count net income.

So your net income is $7,000 a month? Yes. So you're making a little over $100,000? Gross? Yes. Okay. Yes. Well, this car, it's a big portion of your world.

We usually tell people, you know, you don't want to have more than half of your annual income tied up with things with wheels and motors. So is this your only wheelie thing in your life right now? Yes. Okay. Well, if I'm you, there's probably some sunk costs here. Obviously, EVs have gone way down in value, and you know that the purchase you made, people are not looking to spend 80 grand on a Model 3 in today's world, performance or not.

Right. It's a beautiful car, but as you know, the market says I'm only willing to pay 30-something for it. So what could you sell it for a private party? 41. Oh. That's not as bad. And how much do you have in cash?

So let's see. I'm not supposed to take the phone off my ear to look at my phone, but in cash in my 401k, I have... Well, not your 401k. Non-retirement. Things you could liquidate that are non-retirement, whether in savings or stocks, a brokerage account. Yeah, about 10k. Okay, great. So you're on your way to closing that gap. So here's the deal. There's a few ways you can go about this. You could just pay it off and keep the car, and we won't yell at you. The other option is you come up with a difference in cash, and you then sell the car.

So obviously you need the title, which is with the lender. So you do it all in one fell swoop with the person who's going to buy the car. You go to the lender. You have the difference in cash. They give you the money for the car. The title then becomes clean, and you give it to them. Now, you still need a car at that point. Uh, kind of, kind of. Do you have another vehicle? So I'm only home for a few

days a month. I'm a pilot. So I fly for the airlines frequently and I have two different properties. I own one of them cash flows, which is part of the $2,000 to make it to $7,000 a month as a pilot. When I upgrade it to captain as an airline pilot, my income goes up by 61%. Great. That's great. When's that happening? About five months or less. Wonderful.

So do you want to keep the car? I would like to keep the car, yeah. It's going to be really cheap to drive. It only costs $300 a month to drive when it's paid off. Are you talking about insurance and charging costs and maintenance? Correct. Correct. Okay. It costs $300 a month to drive it with insurance and everything that, from what I've seen in the past, it costs about, in the following several months, it's been about $300 per month to operate. Okay.

Well, let me tell you this, Frank. I have a Tesla. I bought a 2013 Model S, and I bought it in 2021. So I let someone else take the hit on depreciation. There was another Frank out there who bought the car at full price one day, right? And so I'm telling you, it costs the same for me to drive that car that I didn't pay close to what you paid. And so I tell you that to say you could sell this thing and get a cheaper Tesla in cash. Okay.

So that's another option down the line. Okay. So even if you decide to sell it, all is not lost. You can still have a nice car one day, but you're going to pay cash, and it's not going to be an $80,000 car when you make $120,000. Yeah. I mean, the truth is, if this is your only debt and you've got $10,000 in savings, if you did keep the car, this would be your debt snowball and you'd throw $9,000 on it immediately, which would help you maybe with some of the feelings of being so upside down.

Yeah. If I'm you, Frank, I might just drive this thing into the ground and hang on to it and use any liquid cash I can get a hold of to pay it down faster along with my great income. Right. That's why I was curious if I should do

is hold on to the car and get it paid off ASAP or not because besides I mean I own two properties besides mortgages on those and that's

You have a lot of risk in your life right now because you got a bunch of mortgages you got a giant car payment and even though you make good money all it takes is one thing going wrong in this plan and you don't have a lot of margin and wiggle room here how fast can you pay it off what um how fast could you pay it off i mean can you live on less and get this paid off in a year well if i work more, then I make about $9,000 a month, basically $10,000

a month is what I would make. That would accelerate me to... Could you then throw $6,000 at the car loan every month? I could, yeah. That's what I would be doing. You're done in less than a year. Okay. Then when I upgrade to

Captain, I'd be making approximately, I believe it's, if I keep working the amount of hours I'd be working as a captain that the government allows us to work, that I would be bringing home approximately, could you do the math for me? About $162 an hour at about 140 credits hours a month. What was the credits? The credit would be 140. Okay. And the 162, that's your hourly? Yeah, pay rate. Yeah. Before taxes and all that. Okay. I'm not sure how the credits work. How many hours are you talking? I'd be about flying actually 90 or so hours a month. Can we look at it in basic terms? You said you're making about 100 now and you're going to be making 60% more. Can we just say you'll be making 160, 170? Sure.

So the good news is, you know, if you had told us, man, I hate this car, it's a piece of crap, blah, blah, blah, blah, you know, we'd probably be really pushing you to get out of it. But it seems like you like the car. I'd be like, this car needs to go today no matter what. Here's the thing, though. You're about to, you make fine money now. You're going to make even of it. But it seems like you like the car. I'd be like, this car needs to go today no matter what. Here's the thing, though. You're about to, you make fine money now. You're going to make even better money. I think the biggest lesson out of this is let's not do car loans again.

Okay. Like, let's make it a deal to pay cash because George is right. Right now you have more risk than a guy needs to have. You know what I mean? Like, you make great money. You don't need to have this level of risk in your life. And you don't need to be scrapping to pay off a $55,000 loan. You know what i mean like you make great money you don't need to have this level of risk in your life and you don't need to be scrapping to pay off a fifty five thousand dollar loan you know what i mean a guy like you you pay up you you pay cash for you you walk off the lot

you feel good um let's not put ourselves in this situation again it's not it's unnecessary okay that's it frank that's all she wrote i like when a guy's like yeah yes i like frank just owned up it was a stupid thing i'm trying to be better let's make it better but the good news is he's making more money but he's lucky everybody's not i know able to earn their way out of a it's kind of like solar panels people can talk themselves into an electric vehicle going well jade i'm gonna save a lot of money on gas so might as well get a giant payment because i'm still saving money i'm going that's not you're doing some real bad bro math on that and and i was telling him i i looked i did the math on the discount that i got just by waiting and by waiting eight years of depreciation on the tesla that i

bought i basically bought it at 70 i was gonna say 60 70 yeah and to me good job you know i'm a frugal guy and we had already paid off the house and d Dave was making fun of my little Honda hoopty. I was driving around, little Civic. Yeah. And I still was like, it just doesn't make sense to spend a crazy amount of money on a brand new car. So I'm going to buy a used. Yeah. And it's been great.

It drives the same. There's no difference. It still looks pretty. I still love it. I still get the gas savings. Thanks, Dave, for paying for my charging station down there. That's a big plus. That's really kind of him for a guy that does not like these vehicles to have a bunch of

charging stations down there for Rachel and I. Are they the turbo ones? No, they're not the superchargers. That'd be nice though, Dave. Jade has a great point. Christmas present. I'm just saying, maybe it's part of the Christmas budget. I don't think that Dave wants to spend any more money on it. This is The Ramsey Show.

This is The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The number to call is 888-825-5225. Well, Jade, we've got the ultimate debt-free celebration coming up a few months from now. It's called the Live Like No One Else Cruise. It's months from now it's called the live like no one else cruise it's almost sold out and tell the people who this is for because it's not for everyone it's not for everybody this is for the people who have paid off their debt they're in baby step four or above right so you paid off your debt you've got your three to six months of

emergency fund you've started investing and now you are living now you can go on vacation you can pay cash for it it doesn't have to be a burden and you can come and party with us it's gonna be seven days everything ramsay the entire crew dave rachel jay john ken myself and a lot of our special guests and friends we got magicians and songwriters and who else we got? We got celebrity chefs on there. Yeah, it's going to be, to spend seven days with George, I mean, that's worth it alone. And then we just announced Trey Kennedy, one of my favorite comedians. Oh, I love

that. He's going to be joining us. And so join us March 22nd through the 29th 2025. We're stopping in Turks and Caicos, St. Thomas, Puerto Rico, the Bahamas. Jade, I can feel a tan coming on. He's talking about it. Get ready. Get that base tan.

So join us. You can secure your spot with a $600 deposit before all the cabins are gone, and they're going to be gone soon. So book it today, ramsaysolutions.com slash cruise. Get it in the budget. Tell your spouse. Come by yourself. It's going to be awesome regardless.

It's going to be good. All right. Elizabeth is up next in Redding, California. How can we help, Elizabeth? Hi. I'm a single mom, and I'm $107,000 in debt, and I had a recent health crisis. And I'm wondering, should I pause the baby steps now? And if I do, is there anything I can do in the interim to make this load lighter? What's the, what's the, as much as you can tell me, what's causing you to pause?

Is it the health scare? The health scare, yeah. Okay. Is it with your child or is it with you? It's with me. Okay. It's not going to allow you to work. Tell us a little bit more without getting into any detail you don't want to get into. Yeah, sure. Uh, so I work from home thankfully. And so when these things happen, I have, um, like heart racing episodes and so I can work in bed still. I can, I can still do a lot from home. Thankfully. Good. Okay. Um, So when you say pause, would it be just to get your health in order or tell us more about what you would do during the pause and what the doctors are telling you? Well, I had a recent surgery to help resolve things, but it hasn't quite resolved yet. Okay. So I was thinking maybe I just pause and let this all go into remission and get myself more confident and then I can resume my baby steps.

How does this affect your actual income and bills? Because you're still going to be working during this whole time and paying minimum payments on everything? Yeah, paying minimum payments, just trying to keep myself afloat, essentially, with the kids because they also have medical conditions. How many kids? I have two. Okay. And what is your income? So I make about like $2,500 a month right now, but it should go up because the kids just went back to school and we got okayed for free childcare. Wow. That's great. And is there any, you know, alimony, child support, anything like that? No, there's not. Okay. When is it going to go up?

Should be going up next month. Good. Because right now, are you able to pay all your bills off $2,500 a month? I'm really scrappy, but barely. Yeah. What kind of debt is the $107,000 if you broke it out? About $68,000 in student loan debt, and then there's $21,000 on a car, and then the rest is credit card debt from paying for dental bills for my kids. Okay. What's the car worth? The car's worth $23,500. What's the payment on it? $335,000.

Would that be life-changing for you to have $330 back in your life every month, to have a little breathing room? I had a family member loan me some money so that I wouldn't go under with the car. So at this point, I actually feel really confident with it, and I love the car. I had a very good car before this. This car is almost your entire income for the year. So it's a lot of car comparatively.

Unless your income is going to go up drastically, it's just still too much car. Yeah. My fear is that if I get less of a car, I'm going to end up doing tons of repairs because my previous car was costing me about $500 a month in repairs. Well, there's a gap between the beater car that's constantly repaired and something reliable that you could buy for $10,000, for example. So I just wonder if that feels like it could give you some

instant relief. That's what I'm looking for here in these numbers. And I wish I could sell your student loans. Can't do that. Can't sell the credit card. But we could sell the car and buy something more reliable, buy something reliable for cheap. Do you have someone that would loan you a car or give you a car in your community or family? Not at this point, no. How old are the kids?

They're four and five. Oh, goodness. Okay, I'm trying to get my head around this. And then you said you had 68,000 in student loans. Are you working in your, in your career field that you went to school for? Oddly, yeah. I got a bachelor's in psychology, so I'm working in self-development and leadership. Okay. The problem here is income, and I know you called about the health scare. Should I pause the baby steps? Listen, your health is number one. That is number one, but I do want to be thinking long-term

about how to get this income up because you paid $68,000 for a degree. I want you making more than $2,500 a month, and I think it's going to be imperative going forward. I think George is right about the car. I think it's going to be imperative going forward. I think George is right about the car. I think it's going to be a comfort zone thing for you. But I think ultimately it's going to help you out because you said, yeah, a family member gave me the loan for it. But I mean, you got $107,000 of debt and I'm not trying to stress you out, but something does need to give

here sooner than later. Because those credit card, they're going to just keep adding up with the interest. I mean, you're talking about 22% interest probably on these cards? Most of them I've got at zero, but, you know, it's a ticking time bomb with that 0% interest because I'm going to run out. They'll charge you the whole thing once that runs out. And so I don't want you to keep playing this game of whack-a-mole, trying to move balance transfers and paying the fee for that. And so that's where the income is really the big issue. We need to double your income if we want some hope to get out of this debt. How long of a pause do you think you'll need to get back on your feet health-wise?

I think about six months for me to feel 100% comfortable. Okay. Yeah, and maybe I know you guys always stress the low emergency fund, but for me, it's like I was in remission for a year and a half and then this all happened again. So how much do you have right now in savings? About like $4,000. Yeah. Yeah. I can't stress enough. Health is number one. And so you've got to take the time that you need to get well. But then knowing that right around the corner, it's OK, I got to fight hard to do this next thing because I don't it sounds like the health condition you have has

the ability to go go away and come back again. And it's like the next time if there is a next time you want to be in an even better position um in order to so that you can prioritize your health like now you've got a little bit of a cushion there you've got four thousand dollars you kind of have that but i i'm confused because it feels like you can't really you're not really doing the baby steps there's nothing extra to throw at your debts right no there hasn't been for a while so i don't see it as I'm going to stop working the baby steps. What we really need to do is figure out how we can start working them. And that, to me, the only way out here, Elizabeth, is going to be upping the income. And I know that's hard

as a single mom. That's, I mean, that's, it's going to take a whole lot of work. And I know health is a huge part of that. But the sooner we can get you to be working more or getting your core income up, I don't want you working 80 hours a week as a single mom. So if we can get you working 40 hours at something that produces five grand a month, now we're talking. And so I think looking into your career field saying who is making that kind of money in this field, what are they doing? What credentials do they have? How can I get there debt free? That's what I would be doing personally. But there's no easy way to do this. If you want to save up some money and then use that to get

a reasonable used car for 10 grand and then sell the car while it's still not underwater, that might be wise to free up a few hundred bucks because that'll at least get you going on the snowball instead of kind of stuck in this cycle. Hang on the line. We're going to gift you one year of every dollar premium and Financial Peace University to walk with you along this way and call us back if we can help in any way and wishing you the best with your health. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Our scripture of the day, Psalm 1611. You make known to me the path of life.

In your presence is fullness of joy. At your right hand are pleasures forever. Robert Frost once said, Happiness makes up in height for what it lacks in length. All right. That one's going to take me probably till 11 p.m. tonight to fully understand. At first, I thought it was a short joke at me from the guys in the booth, but I think it's way deeper than that. A marinade on something like that.

Simmer. All right. Let's get to the phone lines. David awaits in Seattle. How can we help, David? Yeah, thanks for the call. Sure. I went backwards on the baby steps. So had a paid

off house and then, and then foolishly, uh, changed careers, uh, moved overseas to do teaching for four years with my family. My wife's also a teacher. We have two kids who are teenagers now. And then came back to the States three years ago. And so my debt is, I don't know, $310,000. What kind of debt? What'd you do? How'd you move backwards? So you had zero debt and all of a sudden you had $310,000. What kind of debt is that? It's all house. We sold the house in order to get back into just real estate. The market went up.

So you have a $310,000. You put $310,000 for a house. That's it? Yeah, we're $310,000 in debt. And I think the house is worth $850. Okay, what's wrong with that? Well, because I've heard that the debtor is a slave to the master. Yeah, so you'd like to go back to the life when you had no payments? Yeah, I had no idea how good it was. It's a good life. The borrower is slave to the lender, but I don't want you to be beating yourself up so, so bad

because the only debt that we don't yell at people about is a mortgage. And as long as you did this the right way and it's the right percentage of your income and all of those things, I don't want you going around banging your head against the wall, thinking this was the stupidest thing I've ever done. Although it probably did feel pretty good when you were mortgage free. Not going to lie. We'll get you back there. What's your current household income?

It is 40 plus 110, so I guess about 150. Okay. And are you investing 15%? No. We are putting about $900 a month towards Roth and 401ks. Each of your... I'm sorry, total. Total $900 a month?

Yes. Yeah. That puts you about... You're only investing about 7% then. 7, my bad. Yeah. And why is that? Can you invest 15%? What's holding you back? Yes, absolutely. I just got back. I kind of knew I was on the wrong path, so I wasn't paying attention to being a wise person. Well so i think what happened is you guys you traveled you were doing all this stuff working over you sees and all of a sudden you kind of got

lazy with your habits yeah and so i think getting back to 15 or maybe for the first time is going to help you create the sort of forced savings plan you never see in your bank account and you know it's setting up for wealth beyond that the teenagers are about to go to college soon i assume so we need to see are we saving for that what's been the conversations around college no no um we we we we have no plan i mean we got state universities a couple miles from our house. Okay. What's that going to cost? About $11,000, $12,000 a year. And are you guys going to cash flow that for them?

Well, yeah, yeah. And actually, there's a family member who said they would help with college. Let's define help. Are they paying for the whole thing for four years? Yes. Yeah. For both kids? For both kids, yes.

Okay. I think so, yes. I just want a little more confidence than like, well, yeah, they said they'd pitch in. David, you're all over the place. Let's get some real numbers. David, you're all over the place. You're like, yeah, no. Here's how much it's going to cost.

There's two kids. It's $12,000 a semester. It, you're all over the place. You're like, yeah, no. Here's how much it's going to cost. There's two kids. It's $12,000 a semester. It's $50,000 a kid. We need $100,000 in a high-yield savings ready to cover their college. That's the kind of, you know, get that all dialed in. Then whatever's left, now we can start attacking the house. So what I'm trying to do is set you on a path to where you're basically automating all of these goals instead of hoping and wishing and fingers crossed. So if you set the dial to 15% on both of your incomes for retirement accounts, that much

would go away. And then we're going to develop the plan. If it is, family's going to cover it. Let's put some money down and go, all right, do you actually have the money? How soon will we have it? Are they going to pay each semester on their own? And so that's what I want to get more clarity on. Beyond that, however much is left to throw at the house, let's add extra to the principal. And make it a goal with you and your wife and say, we're going to put $3,000 extra on the principal every month.

And if we can do more, we do more. Okay. Start to crunch the numbers. We're going to have that conversation, yeah, after college. It's just a priority thing. We've got to put our own mask on first. That's retirement. Let's make sure we have a plan for the kids to go to college debt-free,

whether that's them working part-time, scholarships, grants, family, 529, whatever that is. Then beyond that, now we can start to look at how do we get this house paid off early. And you can use our mortgage payoff calculator. We'll link it in the show notes for this show. And you can check that out on our website, ramseysolutions.com. And start to play around with the numbers.

You and your wife go, hey, how much are we willing to commit to putting extra on this principle to knock it out to where we can retire with dignity and we can have a freed up payment again? Yeah, we're on a 15-year loan. It's low interest.

So I kind of thought if I put an extra $1,000 or $1,200, it could be paid off in six years. And so I was aiming towards that just for kind of psychological peace of mind before the retirement. Not before retirement. Once you're investing 15%, then everything extra can go toward the mortgage. And again, I would talk to your wife. Let's set a goal that just scares us a little bit. It doesn't need to be like gazelle intensity,

like you're getting out of consumer debt, but just enough that you go, hey, we got to really be intentional about this. Maybe it's, we're going to say five years, this mortgage is paid off. What must be true for this thing to be paid off in five years? A $1,500 extra payment on principle every month, no matter what. You see how that works?

Well, that's exactly what she said, and I was hoping you would. She sounds very wise. I would listen to her, and all in life matters. Because it would just be so nice for me to have the house paid off, but she said exactly what you said, and I was hoping you'd agree with that. I think she's a financial genius. I don't know her well enough. She's a teacher.

There we go. Well, God bless the teachers, and thank you, David, so much for the call. It's an interesting conversation, and it just goes to show, Jay, there's a lot going on in life, and we've got to balance it all. There's seasons where you can't put much extra on the house because you're trying to cash flow the kid's college or you're trying to just get to that 15% investing. You've never gotten there before. That's a priority. And that's why baby steps four, five, and six are done simultaneously versus one followed by the other.

Yeah, he just needed to get his story straight and get his number straight and focus on what needs to happen in the moment. He seemed a little all over the place. That call was the equivalent of me. You know, you slap your cheeks like, come on, let's go. Come on, wake up. Game on. Yeah. What's the answer? You're live. Yes or no? You're live. Oh, I love that. Well, that if you don't know what the baby steps are, a lot of people I know, we have a lot of new listeners, Jade. Walk them through just the quick steps of like,

here's what you need to do to get out of debt and build wealth. Yeah. So we talk about this all the time. Number one, before I go through the baby steps, just know the crux of all of this that I'm about to say is the budget. If you don't have a budget, you hang it up. So you need a budget, but baby step one is you need a thousand dollars saved. All right. Most Americans could not cover a thousand dollar emergency without using some form of debt. So a thousand dollars puts you ahead of the majority of Americans. After that, you're going to baby step two. You're paying off all of your debt except the mortgage using the debt snowball method. We're not listing it by payment. We're not listing it by interest rate. We're listing it by balance, smallest to largest. You make minimum payments on everything and then throw all your extra money at the smallest debt.

Next comes baby step three, saving up three to six months of expenses. You need this. This is your basic budget that you're saving for. After that, we're doing baby step four, investing 15% of our income. Baby step five, investing for the kids' college, whatever amount works with your budget. Baby step six, we're moving with intentionality to pay off our home, like George said. And then finally, baby, step seven, you're living and giving like no one else. That's how this works. It's that simple and it's that hard. That's right. It's how I went from broke to millionaire in 10 years.

It's how you and Sam paid off almost half a million dollars in debt in seven and a half years. You can argue with us all you want, but the plan works. Millions of people have done it. So don't outsmart it. Just do it. This has been The Ramsey Show. We'll see you next time.