The Ramsey Show - App - Debt Is a Trap That Will Hold You Back From Building Wealth

Episode Date: December 3, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Number one best-selling author, Rachel Cruz, Ramsey personality, co-host of the Smart Money Happy Hour, is my co-host today, my daughter. Open phones at 888-825-5225. Carol is with us. Carol is in New York City. Hi, Carol. Welcome to The Ramsey Show. Hello.

Thank you so much for taking my call. It's a thrill to talk to you all. You too. What's up? I have a husband who's retiring within the next 12 months, and we'd like to finish paying off the mortgage on the house. Good. Yes, per your advice

and our financial advisor is advising us not to because the mortgage is at under three percent and our investments are doing well above that however that doesn't matter to us we want to plow ahead and get this done and our next question to him is how can we best divest of our investments and pull the money out, make the cash available to do this? And his next tier of advice is to pull from our bonds that are earning at tax-free rates as opposed to pulling from our mutual funds that we'll have to pay capital gains taxes on. What do you suggest we do? You probably got no gain on your bonds. Their probably value is down, even though the coupon rate stayed the same.

But as interest rates rise, bond values go down. And so my guess is that you bought them during a lower interest rate environment, so they're probably not even worth what you paid for them today. Is that right? I'm not sure. That's a good question. I don't think you're going to have any gain to amount to anything. So I like his advice on that basis. Okay.

And what is your total nest egg? $4 million. Okay. And how much is the mortgage? $800,000. Okay. Good. And how much is the mortgage? $800,000. Okay. Good. Good.

And you guys are how old? 69 and 67. Cool. And how much have you got in these bonds? That I don't know. That's a good question. Is it about $800? Is it enough to do this?

I think so, yes. Yes. By the way he was talking about it. I was not that specific with him. Okay. Is he the one that put you guys in the bonds, Carol, to begin with, or was that something that you had? Yes.

No, we've been with him for our entire working career. Okay. Okay. Okay. Yes, I agree with his advice on that. I would use the bonds first to answer your question um okay this guy you you need to be aware of a couple things here with this guy uh i'm not quite ready to fire him but i'm close right okay i Okay. I hear you. Number one, because he, um, his job is not to, um, take his glasses on the end of his nose and speak down to you little people who have $4 million

and you shouldn't be paying off your mortgage. Listen to the wise financial advisor because bullcrap his job is to say, okay, what are your goals and how can I help you accomplish them? You shouldn't be paying off your mortgage. Listen to the wise financial advisor because bull crap. His job is to say, okay, what are your goals and how can I help you accomplish them? Yes. So I don't like his approach to this, and it's very typical in the financial advising world, this level of arrogance. It's just below the – it's not overt arrogance, but it's a subversive arrogance. But this advice is very prominent among financial advisors.

That's the second problem I've got with him is he did two very standard things in the financial world that I completely disagree with. One is he told you not to pay off your mortgage, and the second is he put you in bonds. Right. And so these bonds, you have a fourth of your money tied up in something that's substantially underperforming because of this guy right gotcha okay and that's these bonds so i'm um and because here's the thing again the simple thing to remember about bonds is this in the financial advising world we have been, and everyone for some reason decided to agree with it rather than actually making their own decisions, but the people like me

and him that are trained in this stuff, we've been taught that as you get older, we use what's called the asset allocation methodology or theory, and that as you get older, you should be in less and less and less risk. And so that by the time you're age, you should largely be in bonds and money markets and have very little inequities, okay? The problem is that everybody just accepted this as if it's a fact. It's not a fact. It's a theory.

It's an idea. And I disagree with it. I'm 64. I have zero in bonds and almost the same amount in money markets. I got a little bit in money markets just because I like some cash, but I haven't moved everything away from equities because as you get older, you should limit risk because that's horse crap. If I live to 94 and I'm 64 and I've been in an entrance in an instrument making 8 instead of an instrument

making 12 or 14 the amount of money i've lost during that 30 years is millions so it's bad advice this asset allocation methodology it's bad advice and so he put you in these bonds the second thing you need to know about bonds is that they they are not legitimately safer than stocks or mutual funds okay because when you track the volatility of bond values versus the volatility of bond of mutual fund stock values they're very similar it's not safer it's really not and and the reason is the third thing and then i'll let you go okay is this thing but i mean it's teaching for everybody that's good it's good it's everybody out there so bonds the thing you remember about bonds is there's a set interest rate on the bond so when interest rates rise in order to achieve that same,

a higher, let's say you got a 4% rate and interest rates are 7. And so people are expecting 7, but your bond is only paying 4. So the value of your bond goes down as interest rates rise. It goes up as interest rates fall. Bond prices are exactly inverse to the prevailing interest rate market. So in a record low in the last 100 years, we had an unprecedented 3% interest rate environment for a decade, right? Mm-hmm. And in the middle of the lowest interest rate environment in known history, this guy puts you in bonds. And where's it going to go from the lowest interest rate environment in history?

Up! As interest rates go up up your bond values go down and so i'm afraid you may have actually lost money on these bonds when you get into them but i'm hoping you at least broke even that's what i'm hoping so interest rates folks it bond prices the value of a bond goes down as interest rates rise so you never would buy bonds in an in a rising interest rate environment you would buy bonds in a rising interest rate environment. You would buy them in a falling interest rate environment if you were going to buy bonds at all. And that's because of the yield on the bond has to approximate the prevailing rate, and yet the coupon rate is

fixed. Yeah. And I think one of the most important things we've learned with the financial advisor is exactly what you said at the top of this, is that here are my goals. And if they're not respecting or hearing that, they're going to do the inverse of that, right? Where else have I got to figure out that you're giving me bad numbers? That's right. You know? Yeah. So I'm not ready to fire this guy, but I really dislike bonds from him, and I dislike his mortgage advice, and I dislike that he's kind of telling you what to do instead of asking you what you want to do. This is The Ramsey Show. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have, George.

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So I remember the year you were born, Rachel. I was standing in line at Kroger in, at the corner of, uh, Bell Road and Murfreesboro Road over there in Priest Lake, where we used to live back in the day. Those of you in the Nashville market will know that intersection. I think that Kroger's probably gone now. It was 30 plus years ago. Right. So, um, and i'm standing in line and i'm buying basic groceries not with your mom and a baby or two in tow and we weren't really spending like a ton of money and we weren't buying anything frivolous it was just meat and potatoes just to feed the family, right? We were broke. And I remember back in those days you would write a check, not use your debit card.

As I'm writing the check, I'm wondering if by buying these groceries, if there's going to be enough money left in the account to pay the electricity bill. And I didn't know, but i bought the groceries anyway of course and then just kind of on a hope and a prayer get home and everything works out and i can pay the light bill right the reason i remember that specific experience is i think it's the last time that ever happened because i started doing right after that sharon and i your mom and i started doing a written budget before the month begins and we knew we had a certain amount of money to spend on groceries and that by spending that money we weren't worried about everything else because we

knew it fit in the overall because that that was a line item and the electricity was a line item so we knew we didn't spend the electricity money on groceries or vice versa yep we didn't worry because it was all laid out we had a plan and the amount of peace that we got having the month laid out as long as we stayed within those guidelines we knew it was the whole thing was going to work instead of going from anxiety to anxiety to anxiety every time you're paying a bill there's a freak out a question always in the back of is this okay am i okay is this okay and even later on when we uh started having some money buying something a luxurious item is this okay and you've got to go well it okay? And does it fit in this written-out plan where every dollar has been giving an assignment? Folks, if you want to have that change of experience in your life,

where you go from when I'm doing something as basic as grocery shopping, and that being anxiety, an anxiety anxiety event going from that to peace the the only step that does that is a written plan a detailed plan and that's called a budget before the month begins you're giving every dollar an assignment you and your spouse agree to it and then you stick to it and that way the electricity gets paid and the groceries get bought and the kids can have shoes and no one died. You know, it's just like, it's a thing. Most people, though, have that experience standing in the grocery line.

Crap, I don't know when I finish this if we're okay. Oh, yeah. Well, and there's a thought a thought too that a lot of people have that think okay if I know and I plan out and I do a budget and I see a number in a specific line item like groceries then I can't just go and spend whatever I want and that doesn't that that I hear the opposite too of like oh that's just that sounds so constricting and like oh it's that sounds so controlling and I don't know if I want that and then you start to realize there is an underlying level of anxiety whether you address it or not when you still have a question mark in your head of thinking okay as I'm taking stuff and putting it in my cart and I'm going to check

out and I see that total the feeling of oh I thought that was going to be restrictive when I know oh this is how much I have to spend each week it actually becomes such freedom where you actually enjoy and have a level of peace with it so so on on both ends right the level of anxiety of do we have enough but then also people are saying oh my god I don't want to live on a budget because that just means I can't have any fun and that feels so restrictive well you don't realize on that end too there's a level of anxiety because you don means I can't have any fun and that feels so restrictive. Well, you don't realize on that end, too, there's a level of anxiety because you don't know what's going on. You're creating anxiety with that immature look on life.

That's right. Because it's immature to go, I can just spend like I'm in Congress. Yeah. And that's just a childish view. Because obviously we all know we can't do that. I mean, grown-ups know the money runs out somewhere. And so, you know and and you know even like we had to go so far as we went to we went hardcore more than we recommend today

on the envelope system like we had envelopes for everything like envelope for groceries and envelope for restaurants and your mother would not buy herself clothing because she's a classic Southern Belle martyr. And she's like, well, I'll just be Scarlett O'Hara. I'll make something out of the drapes, and the kids can have new clothes. And it's like, no, that's not necessary. We have the money to everything. So what would happen is we would have clothing budget, and she would spend it all on the kids. Wouldn't buy herself anything. So I had to finally separate in the budget in the early days sharon's clothes was a separate category and she was not allowed to spend that on anything but sharon's clothes amazing what that did to allow to give her guilt-free spending yes it is such permission

that okay we're okay we can do this not only permission it was it became like a command you have to buy yourself something i mean it's not you know i mean really because it's out it just got weird it got weird right right right right right so the the thing you know and so we we had envelopes for everything and the first time we had a babysitter at home with you and Denise and we're going out to dinner, one of the rare times we got to do that as we're starting our climb out of being broke, and we got halfway to the stinking restaurant, 10 minutes away,

and realized we did not have our restaurant envelope. Now, we had the car repair envelope and most people would just go on and use the car repair money and when you get back home switch the money out. I probably would have done that yeah. I would I would do that today probably but we were so intent on something has to change we have to stick to something for the first time in our lives we cannot keep doing the same stupid crap and expect to be anything but broke we turned around went back home and got the food envelope i specifically remember doing that impressive yeah blew the babysitter's mind because these people come back home 10 minutes after they left oh god you know so uh but or i

guess her boyfriend probably ran out the back door i don't know whatever but you know so uh but or i guess her boyfriend probably ran out the back door i don't know whatever but you know the uh right but anyway but i mean so we got the uh i'm kidding i'm sure angie wouldn't have done that but um uh you remember angie yeah but anyway she was a great babysitter but the uh um anyway the yeah so this idea that i can, with my spouse, write down what we're going to do, and I have guilt-free permission to spend on a category because our plan is accomplished and it includes this spending item. Yes. Yeah.

That is so freaking powerful. People, it changes everything and john maxwell used to say a budget is people telling their money what to do instead of wondering where it went so download the every dollar app and start budgeting it's free you can do that in the app store or google Play. It's a very simple plan. And it has all kinds of extra paycheck planning. You can plan out not only the month ahead of time, you can plan out each paycheck ahead of time. Yeah, the premium version is so worth it, you all,

because you connect it to your bank account. So your transactions drop in. So you drag and drop them. So some people still use the cash envelope system, it to your bank account so your transactions drop in so you drag and drop them so you know some people still use the cash envelope system but most people this is like the 2024 2025 way of doing version of it yeah and you don't have to go back home but you're sitting there and watching it and you're able to drag and drop these transactions to know per category what's left and to your point all the other features the paycheck planning because some people you know

if you are paycheck to paycheck cycle it is so difficult to break that because you're using that paycheck to funds your life up to the 15th. And if too much is getting taken out at the beginning of the month, you're going to be bouncing checks. I mean, it just it gets it gets really complicated. So the paycheck planning helps even within that to get on a great cycle when it comes to your paychecks and to stay on top of it. It's so helpful. You got to start doing this. It changes everything. You'll breathe different. Your shoulders are dropped. The tension will leave. Download the EveryDollar app. It's free in the App Store or Google Play and get yourself started, boys and

girls. This is The Ramsey Show. Rachel Cruz, Ramsey personality, is my co-host. If you didn't know, we have the Ramsey Network app. It is a free download, and you can get the third segment, the third hour of this show every day only on the Ramsey Network app. And many other things, including you can email us and ask us questions. You can enter a subject, and it will search among the calls on that subject and present them to you. So you don't have to, like, filter through 22 days of stuff to find the answer you're looking for.

The Ramsey Network app, you can download it for free. There is no subscription upgrade. No salesman will call. From the Ramsey Network app, we get our question from cory dave you recently took a call where the person had 35 credit cards how do the banks even allow someone to get that many cards actually a good question cory that's sweet that you are naive enough to think that the banks even think that's sweet that you would think common sense would enter into this transaction that's so sweet cory uh no it doesn't and you know this is the same kind of mentality cory that you've got that people say well i i must be able to handle the payment or they wouldn't have given it to me.

No, they'll give it to you. The same, yeah. Whatever the payment is. They'll approve you for the loan way beyond. 18-year-old, $200,000 in loans for college. Sure, sure. Right? Yeah.

They just hand it to you. So, Corey, the most aggressively – here's an interesting fact. Let's just take it even a step back further. We now, at this moment in 2024, in America, the United States, live in the most marketed to, sold to culture in the history of the world, in the history of the human race, you will receive more marketing impressions on your ears and eyes and brain in this coming calendar year than any set of humans ever has in history. That's pretty interesting when you think about it.

And when you are sold that much stuff, people buy that much stuff. And among the most marketed to group of people in the history of the human race, the most aggressively marketed product in the most aggressively marketed time in history is debt. Debt is a product. They sell it. They sell home equity loans. They sell student loans. They sell car loans. They sell private loans. They sell title loans. They sell any kind of home loans, any kind of loan you can dream up. Put a word in front of the word loan and it happens. Dog loans, cat loans. there are loans for everything i was trying to buy a t-shirt for god's sakes and they offered me payments on it with clarna the other day i'm like it's a t-shirt why would you yeah three easy payments of a dollar 26 i mean come on you know it's like what

five dollar t-shirt i'm kidding but i don't remember that no i know it's like what not a five dollar t-shirt i'm kidding i don't remember that it's at the end of every transaction 20 easy payments of a dollar whatever it is yeah and they're always easy payments no one says hard payments right yeah and yet when you make them they're always hard they're not easy so and among the most aggressively marketed debt products, the most aggressively marketed debt product, debt being the most aggressively marketed product, in the most aggressively marketed to group of people in the history of the human race is credit cards, Corey. Okay.

American Distress Visa MasterCard, they're your new master, and Discover Bondage. Together, those four names spend more. American Express, I said that one, yeah. American Distress. Together, they will spend a billion dollars on marketing. It's more than beer. It's more than Chevy pickup trucks going through mud puddles. More than all your car advertising put together.

More than any other category of advertising. What's in your wallet, says the failed actor. The actor who can't get a part now. What's in your wallet? Or the great actress because they're paying billions or millions of dollars to her too. So, yeah, because they have it. Got to admit, I'm a Jennifer fan. There was a, that's what I was thinking of, Jennifer Garner.

She's actually great. But Maverick, her dad would not be proud. I know. And I'm trying to look up because it was sent to me by multiple people. Now I can't find it. So anyway, the credit card is the most aggressively marketed product out there. And so in the midst of that, they are issuing credit cards in mass to people who can't pay them, don't need them, including dead people, dogs. We used to collect bizarre credit card stories.

I remember that. And I had a guy send me one from Virginia. He, as a joke, which was fraudulent, and he shouldn't have done this, but as a joke, he applied for a credit card in the name of Buck Naked. Okay. They issued the card to Buck. Buck got him a card another guy sent me from new orleans a credit card an actual card he sent me the card and a letter it was um issued to frou frou

who was his poodle who had died. And that was unsolicited. They picked it up off the AKC registration and meant to send it to the owner of the dog, instead issued the card en masse to the dogs. Literally, it's gone to the dogs. And so, I mean, this is the credit card world. So please, God, don't think you're special if somebody gave you a credit card. I mean, when I was in college, I thought they give me if i can get an american express then by god i'm successful and if i get a gold piece of plastic versus a silver piece of plastic then i'm really someone because of the color of my plastic and you get to pay more fees to get

those cards the color of my plastic dictates the quality of my personal identity yeah so cory that's what you're dealing with yeah uh yeah we get we we've had people with 200 credit cards um there are people that um are that that believe that credit cards are excellent and um they have their own youtube channel and all this stuff on how you can live off of the points and how you can be the card man or whatever and all this stuff. Right. Yeah. So it's it's it's a thing because it's so prevalent that any moron can get more credit cards than they can pay. So that's that's how, Corey, because, you know, you're making the sweet and naive assumption that the bank actually cares about you and would look at you and say, you can't afford this. So we're not going to do harm to you.

No, they don't. None of that is true. They will do harm to you in a heartbeat if they get the opportunity. And just to remember that they're here to make money off of you and they know how to do it. Like that's their job. That's their job. And there was a recent clip. It went crazy.

But the one you're just trying to find yes and i found that the president of or whoever it was of mastercard and visa it was the two they have 80 of the market share and they're in front of congress because because of antitrust yeah and well and they can't they won't lower fees for small businesses like they give deals to big corporations like walmart and and they have to verbalize and say what they're making their profit margin it makes you sick it makes you realize literally off the backs of Americans this is what they're making like it is they make and we know we I know we know that they make billions and billions and billions but as you sit there and watch these two people you're like

oh my god and they're not even you know from any level of integrity trying to help small businesses even though we're against credit cards but like like even that, right? I mean, everything is about making money. It's all they're in it for. And so they know how to do it really well. And they market it to you and bring you into this cycle and this mindset of it. That is very, it's crazy. So just remember, if you're issued a new credit card, you're no better than Frufu or Buck. Moral of the story. Look up the Congress clip. The dead poodle or the naked guy that doesn't exist. There you go. One of the two. I mean, you're no better than either. This is The Ramsey Show. This show is sponsored by BetterHelp. All

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Rachel Cruz, Ramsey personality, number one bestselling author. My daughter is my co-host today. Open phones at 888-825-5225. Jake in Savannah, Georgia. Hi, Jake. How are you? Good. How about yourself? Better than I deserve. What's up? I was just calling regarding how I can stay focused on getting out of debt and not incurring more. Okay. How much debt do you guys have or do you have? Um, I have about 20,000, um, and my fiance has about 20,000. Okay. Why are you getting out of debt?

I just want a better life and we have a kid on the way and i'm i'm tired of living paycheck to paycheck okay um so the the the thing that we find is that the bigger and more pure the reason for getting out of debt the why why i'm getting out of, the more intense and sacrificial and disciplined you will be. It sounds like you have a really good why, and if you came to truly believe, deep down in your soul, that the only way you're going to become wealthy and provide an incredible life experience for your brand new bride and baby is to get out of debt then the discipline starts to become easy it's almost as if i said if you don't pay off twenty thousand dollars in two years um your child won't will not be alive if you said that you, you would find $20,000.

Now, obviously, that's crazy. That's not going to happen, right? But I'm saying, you know, if you had to buy a thing to keep your child alive and you needed $20,000 to buy that thing and you only were allowed to pay cash, you'd find $20,000, agreed? Yes, sir. Because your why would be so huge. Your reason. Discipline wouldn't even come. I'm having trouble being disciplined to save the life of my child.

No, that would not be something that would come out of your mouth. And so the more deeply you understand and believe that by getting this $40,000 paid off between the two of you, and the two of you getting married and creating a double income and creating a situation where you dive in and stay out of debt and build wealth the more you believe that that is the path for your family to have an incredible next 50 years the more disciplined you'll be but if you just kind of go well being out there be kind of nice and i think we probably be out to be better, but it'd be kind of nice. Well, that's like a three on a scale of one to ten, and I'm talking about a ten. You see the difference?

Yeah, I do. Do you feel that, Jake? Where do you feel like you are on the scale? I feel like I'm definitely on the high end of the scale, probably a seven or an eight. How about your fiance? Um, her situation's a little different. Uh, she doesn't see eye to eye with me on the getting out of debt thing. Okay. Have you guys talked about that? We have, and I've kind of tried to explain to her like, Hey, us getting out of debt means less payments. It means more money to

take towards our kid and ourselves and our life together. And her side of the coin is she's like, well, she has the mentality of, well, you can't have the nice car unless you have a payment, and you can't have the nice house unless you have a payment. You ought to see my house and my car. Yeah. Better than what she dreamed of and no payments.

Yeah, and I tried to explain that to her. I'm fighting to fix my own debt as much as I can and we do basically everything together. Yeah, you're going to have trouble, Jake. You're going to have trouble, Jake. You're going to have trouble being disciplined as long as the other side of your brain, called your wife,

is tearing you down. So the two of you getting aligned on this is your all's biggest issue. You cannot singularly carry this household on your back to wealth while she simultaneously isn't in agreement. You guys have got to get on the same page. It's a problem in your marriage going forward. It's one of the top, it's always in the top five lists, sometimes the top three, sometimes it's number one, depending on which list you look at of reasons for fights and disagreement in marriage. It's a really big topic. So I would. And I would talk to her, too, about the why behind it for you.

And even on a deeper emotional level, too, Jake. Not just, oh, yeah, so we don't have payments and we can build wealth. But there's a level of value system at which you look at life that needs to be so aligned together to enjoy your marriage and your life together. Crystal's in Tampa. Hi, Crystal. Welcome to the Ramsey Show. Hey, Dave and Rachel. Thank you so much for taking my call. together. Crystal's in Tampa. Hi, Crystal. Welcome to the Ramsey Show. Hey, Dave and Rachel.

Thank you so much for taking my call. Sure. What's up? Okay, so I've been listening to you guys for about six weeks, really diving in. I actually look forward to the show every day like at 2 o'clock. Thank you. I've been talking to my husband about all the things

and kind of keeping him in the loop. I'm the main one that does the finances and it's been that way for years, but, um, we're on baby step two. And so I have, you know, our snowball list. Um, we don't have like a lot of line items. It's just a big amount, unfortunately in total, but, um, obviously listening to your all the advice and I know it's going to take some time

and a lot of hard work, but my main question is, I have not taken into account the $5,000 worth of medical bills that we have sadly racked up. And so with my list my snowball list how do i incorporate or incorporate the payments for the medical bills with like my loans and my credit card that we are currently working on or do i keep how did you uh prioritize your snowball list you listed it how smallest to largest so we're smallest largest what balance or payment balance correct sorry okay so you have balances on the uh medical bills right i do have balances on them yes just redo your list okay so that's that's what i was curious on should i just yep because there's multiple lists of, or multiple different bills of medical,

should I just add them into that list so then it'd be one single list? Okay. No, and the bad thing about the medical bills and the good thing about the medical bills, some of them are tiny. Like you got a $78 from diagnostic just because you drove near a hospital. Yes. Right? You know what I'm talking about yeah we

don't know what the flip that is but they sent us a 78 bill for it and it's like you got all these little mosquitoes flying around they're not even big bills they're just bothersome and so they are that's the bad news the good news is you're going to plow through like one through number 10 really fast and you're going to get this sense of i just did something feels good it does feel good i i've paid off most of the little ones it's of the medical ones that yeah yeah most of the little ones so it's the bigger ones that what's your smallest medical bill right now uh probably 190 right now still smallest one still very small yeah it's still small for sure how much total uh crystal is your debt snowball i'm just curious what your

journey is how much you're paying off so um right now without the medical bills um because currently it's a separate list i've got about 80 000 so 85 85 000 exactly yeah and your household income is what so um i think we make really good money um we bought 230 a year oh great you're gonna be done in a year i know we've just made a lot of what is it you say mistakes with zeros on the end we've made a lot of those you paid a lot of stupid tax yeah but i mean if you live if you live on a hundred grand you're debt-free in a year right yeah that's the goal that's pretty cool and my husband is all on board good good well yeah the more he's involved the more helpful he is i don't want him writing checks because you're the nerd you're the good one to write the checks but i do want him emotionally standing there not just just saying, honey, you're doing a good job.

I want him saying, honey, we got this. He is. He is. Absolutely. Yes, I agree. Thank you. I appreciate it. That's good.

I'm proud of you. Way to go, Crystal. Oh, thank you. Thank you so much. Very exciting. That's very well done. So fun. Man, she's going to knock this out so fast.

Yes. It's so fun when you have been going along and you don't know what to do and you suddenly discover fire and you do it and you're like oh this has been done in a year look at that that's fire that'll i can cook stuff with that yeah it's knowledge is powerful it really really is very cool that puts us our the Ramsey show in the books live from the headquarters of Ramsey solutions it's the Ramsey show where we help people build wealth do work that they love and create actual amazing relationships I'm Dave Ramsey, your host. Rachel Cruz, Ramsey Personality No. 1 bestselling author, is my co-host. You jump in.

We'll talk about your life and your money. The phone number is 888-825-5225. Sarah is in Boston. Hi, Sarah. How are you? Good. It's so nice to talk to you, Dave and Rachel. Good to talk with you. How can we help?

Yeah, my dream is to achieve financial freedom and continue to build wealth, but I feel like my spending habits are getting in the way of that. A little bit of background, I'm 25, I'm making over $150,000 a year. Wow, good for you. Yeah, I have no debt. I'm putting myself through school, but I find myself spending unnecessarily on things I don't need, and I'm just wondering if I can get some advice on how to rein in my spending and start building wealth and achieve my financial freedom goal that I'm shooting for. What do you do, and what are you studying?

I am studying engineering, and I am in pretty much an entry-level engineering position. And I love what I do. I'm able to work from home and I have a lot of great benefits, but I feel like there's more that can be done. So what are you wanting? Yeah, when you say there's more, because I mean, you're putting yourself through school debt-free, correct? You have no other debt. So is it investing you're looking at? Is it just your spending habits that you feel like you're making a lot, but there's not a lot to show at the end of the month? What's your biggest pain point? Yeah, I feel like I don't have boundaries when it comes to spending. I feel like I could be using my money for better things, like investing

for the long term. But I find myself spending a lot of time online shopping or going out. And I don't have a lot at the end of each month to put in my investment accounts like I'd like to. Okay. Are you on a specific budget, like a pretty detailed budget? Not really. I just kind of spend as you want. Yeah. I mean, honestly, for you, Sarah, that's that in an investing goal are the two things that I think completely change your life. I mean, if you have it, if you have a budget, because you're doing well financially, right? You're not going deep into debt. You're not trying to, you know, pay off debt. You really are able to use

the cash that is coming in from your income. And you're going to be able to spend some. I mean, you're at this point that you will be able to enjoy some of it, but you're not able to really enjoy it because you're questioning every purchase. And so being able to put a line item and deciding a dollar amount ahead of time to say, okay, yeah, I can go shopping, but I'm just going to put this amount. And that automatically is going to give you a guardrail to enjoy it. And still, you know, because you're at the point again, I will reiterate, you don't have debt, you have a great income, so you can enjoy part of it. But you want to do it with some level of control and purpose. And then knowing on the other end that you do have an investment goal,

and I would tell you 15% of your income should be going into retirement. And knowing you're doing that as well is going to give you a lot of peace and freedom. But that monthly budget, I think, is going to be a really great tool for you to help. Because I'm the same way. I'm a spender. I enjoy spending, shopping, all the things. And I do it now with such more peace knowing, okay, yeah, there's a specific dollar amount per month that I have the ability to spend and I'm going to cut it off after that. And so that, that takes a level of discipline, but it also allows you to enjoy life and enjoy your money so much more. So as an engineer, you're learning or have learned to project plan. What Covey used to say, beginning with the end in mind. And with your money, what's happening is you're getting to the end with no plan, and it's not satisfying because it didn't go where you wanted it to go.

And so it'd be like building a bridge and making it up as you go. Well, you don't do that. We lay out a plan. We do drawings. We run the math to make sure the structure will hold, and then we build the bridge. We don't just kind of start moving dirt and hope it all works out. And that's kind of what you're doing with your money.

So let me ask you this. Let me see if I'm getting this picture correct, okay? You're 25, you're single, you're in Boston, and you work from home, and you go to school, correct? Yes. Is school correct? Yes. Is school online? Yes. So your work is online and your school is online. And you said, I spend money shopping online and I go out, which would make you, thank

God, a normal human being, because otherwise you're trapped at home online, and instead you actually go out for human connection. Good. Okay? So you should allocate some money. I'm staring at a screen for like 12 hours a day. Yeah, you should allocate some money for what's called a social life. Yes.

Because otherwise your brain is going to melt. Okay? That's good's good humans are it's not good that man or woman be alone we should be out seeing other humans okay so i want you to do that now the problem is you need a i'm going to recommend a non-internet hobby to be done on downtime, an analog downtime. Because your downtime now is Instagram, Facebook, and Amazon Prime. And there is a direct, there's research out there that says the more time you spend on social media, the more money you spend. Because social media is the world's worst Jones's next door.

You see everyone else's highlight reel and they've splashed suggested products, mix it into your Instagram feed, mix it into your Facebook page and, uh, and whatever else you're consuming. Tick tock is even worse and so i instead of when i've got 10 minutes i'm gonna doom scroll your spending is always going to be there if you do that just unplug from take take do a social media fast and say i'm only going to do social media 30 minutes a day between 5 p.m. and 5.30. That's all. Or 5 and 5.15 would be okay with me.

All right, that's all. And your spending will go down. And you cannot go on Amazon ever again unless it is to specifically purchase a certain thing that you thought of as a part of your budget. You cannot go on there and scroll because Amazon is the world's best marketer. They will sell you crap. You following me? Does this sound right?

No, this definitely sounds right. I definitely need a hobby outside of the screens. Yeah, because it had to be with the way you're living your life no this definitely sounds right i definitely need a hobby outside of the screen yeah you you know i because it's it had to be with the way you're living your life because your life is in front of the screen and you go okay i got 10 minutes i'm gonna take a little brew i'm gonna i'm gonna i'm gonna have some brain junk food and i'm gonna doom scroll for a minute just because my brain's hurting from class right that would be that's what i would do and i'm 64 i'm not susceptible to it like you 25 year olds because you grew up with this crap i didn't but

i still i have to watch myself if i get bored i end up buying something if i'm not careful that sound familiar yeah that's definitely me okay and um i am putting money away for retirement i'm just wondering but you start with the i want you to get amazon where should i put it Yeah, that's definitely me. Okay. And I am putting money away for retirement. I'm just wondering. But you start with the, I want you to give. If I'm not spending on Amazon, where should I put it? Yeah, give every dollar an assignment before the month begins. On your budget, on your every dollar budget. Put your every dollar budget down.

And you cannot go to Amazon unless it's to buy something you budgeted for. And the other money to save, she asked, besides just retirement, you know, open up a high yield savings and have a savings goal to say, yeah, I need a fully funded emergency fund of six months. And beyond that, have things you're saving up for to at least have the motivation

to put that money away. And do spend some money on social engagement. You need it. It's good for you. 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, are 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 got to say it out loud and you 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. The cost of stinking pizza. To get a free quote, call 800-356-4282. That's 800-356-4282 or go to zander.com. Rachel Cruz, Ramsey personality, is my co-host today.

The Ramsey Show question of the day is brought to you by YRefi. We trust YRefi because they help people who have defaulted private student loans. If you have a defaulted private student loan, they'll refinance it with a low fixed interest rate. Couldn't get anywhere else. Chris had a student loan and he cut his payment by over 40% with Y-Refi. Try it out. Y-Refi.com slash Ramsey. That's the letter Y. R-E-F-Y.com slash Ramsey might not be in all states. Today's question comes from Lucy in Nebraska. My husband's daughter and son-in-law wants us to get a mortgage on a house for them.

Our house is paid for and we have no bills, but we're on a fixed income. They want to keep their house they have now and rent it out to pay the mortgage that they want us to get. He's a cop and she's a firefighter. We cannot afford a mortgage, but my husband is considering it and I'm not in agreement with this plan. What do I do? Man, Lucy. Yeah. I mean, I would agree with you. I wouldn't be in agreement with this plan either. And with you and your husband yeah I mean I think continuing to sit down and understand and unpack why you're not in agreement and it's not pointing fingers at him saying well you you you

this is talking about you and what and your desires your fears which you are worried about in this and just the simple math of even though yeah you said you guys your house is paid for and you have no bills but you're on a fixed income. I don't know if you're working towards retirement or what that looks like. But realistically running these numbers out, even for a decade, right, the next 10 years, and what the reality is for your situation. Because I do think some parents, the heartstrings get tugged so deeply that sometimes you lose the reality of your situation. And that's maybe what your husband's doing since it's his daughter.

But I would be looking at not just the emotional side, but also the number side with him a lot and keeping that conversation going. Sometimes it helps to reframe the proposal and use words that explain what this actually is. Honey, your daughter and son-in-law who have two good jobs want us to borrow money so they can have a rental property. That's exactly what it is.

When you say it that way, it sounds dumber than crap. Because it is dumber than crap. it is dumber than crap that's why it sounds that way instead of like oh we're helping them get a home no you're not they have a home they want a rental property and they read this and some stupid thing on the internet to go to their retired parents to get a mortgage. Why can't they get a mortgage? They both have a job. Oh, wait, they haven't been paying their bills on time, and their credit is bad. Oh, hello. Yeah, this just screams stupidity really loud, like with a capital S-T-U-P-I-D d say the cheer with me everyone give me an s give me a t seriously oh no don't do this absolutely and here's what happens at our house we start with trying to reason and talk things through and when one of us just absolutely is not going to do it, the heat just gets turned up.

And so our rule is that if we're both not on board, we can't do it, and you're not on board, and you're not going to get on board. Please don't get on board. Please get through the fog of this. What do his kids need? They sell the house and they get their own mortgage. And not only is it not good for you guys, Lucy, but this is a disaster waiting for them. Like this could set them up to fail in a major way too.

So it's on both ends not great. Even though he feels like he's helping, it's actually putting them in a pretty dire situation having to float a mortgage through a rental property. Not good. Not smart. Yeah, you're mortgage through a rental property. Not good. Not smart. Yeah, you're buying them a rental property. No, absolutely not. Heard this on TikTok. Deb is in Oklahoma City. Hi, Deb. How are you? Hi, guys. So great to talk to you.

You too. What's up? So my husband and I are on baby step seven. Um, we have just over a million dollars in, um, our net worth and we have run into a scenario where we think that we have found our dream house and it would have us go back into, um, into debt for it. We would take out a small mortgage to basically we'd sell our house for roughly $450,000 and then turn around and have a mortgage again for about $250,000. You don't have the $250,000? No, not all liquid. What's mean it's all in retirement not liquid not all no i mean yeah we have about half a million in retirement we have 45 cash and we have a 15 000 emergency fund and then um a little bit x other money in some investments. How much? I believe that's probably about 50 or 60.

And you don't own any other property? No. How much do you guys make a year, Deb? 200. And not including his bonus, that kind of fluctuates every year. So 200 is, for sure. I mean, you can do that. It's not going to bankrupt you.

Yeah. There's no possible way you could get me to go back into debt after I finally got out. That doesn't sound like a dream. That sounds like a nightmare to me. But I mean, it's just a stupid house. There's no way I'm going into debt for it. But I mean, if you want to do that, you can do that. But yeah, in a reasonable time, you know, because a mortgage is the one type of debt we do talk about. Yeah, but you're out. Yeah, but if it's a small amount and you liquidate

the 50 from the retirement the other 45 you know that's half of it and if you guys commit to say we're going to pay it off in 24 months or whatever you know what i mean like if there's a you can do that just save up the money and buy something that's what he thought you were gonna say well i mean you never heard me call up and tell somebody in Baby Step 7 to go back in debt. Yeah, no. No, and I think probably we've, deep down, we know that we probably would have buyer's remorse. Yeah. I just threw up a little in my mouth, and it's not even my house.

It's not even my house. Oh, gross. It's just gross. No, I mean, if you want to do it honey i'm not gonna be mad at you we'll still be friends but i i it no we do not tell people to go into debt in baby step seven to buy some to buy a luxury upgrade and if you want to do that if you want to do that you're not going to go bankrupt it to do that, you're not going to go bankrupt. It's not a sin. You're not going to hell. We'll still be friends and you'll just be my friend with a mortgage. And, you know, you know, we have known people that this is like not for a car or anything, but we don't tell people to do it for real estate and baby step seven.

I just don't. I mean, because the goal is to get out so that you don't have to go back and and voluntarily going back to jail after i've been set free i don't want to go i'm i i'm free i i don't i like my freedom i don't i love my interest rate on my mortgage zero um you know i i so deb i mean i I'm making I'm poking fun. But the truth is the borrower is slave to the lender. The truth is the fastest way to wealth is to avoid debt, period. The truth is there's more peace associated with that. The truth is you guys have worked so hard to become debt free that you will have some buyers remorse. You will feel this regret, this taste on the back of your tongue that when you go, man, I just feel like I feel like I did something wrong because you did.

So, I mean, it's not, you know, that's what it's going to feel like. But is it bankruptable? No. Is it going to keep you from building wealth completely? No. It just slows down everything. And there's the emotional and psychological. I think that's the biggest.

You fell off the wagon. It's less about the math and deb situation it is because i'm like reasonably all the things but that's what we talk about is that personal finance it is it is more than just the math it is that element of like oh we're going back in you can buy a house just like that one in 36 months and pay cash for it that's's what I would do. This is The Ramsey Show. There's a time in your life and in the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner you can rely on, Churchill Mortgage. Churchill is

Ramsey trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American dream of home ownership today at churchhillmortgage.com. That's churchhillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org.

Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Rachel Cruz, Ramsey personality, is my co-host today. Open phones at 888-825-5225. Jacqueline is in Minneapolis. Hi, Jacqueline. Welcome to the Ramsey Show. Hello. Thank you. Hey, what's up?

So I just have a question on, I'm not familiar with the baby steps, first of all. We have mounting credit card debt and a mortgage and one loan on a car. And I do have some retirement para that could be cashed in, but that sounds like a terrible idea. And I just want help and guidance knowing what is the, not easiest, because I know this isn't going to be easy, but the most efficient way to pay off this credit card debt. Yeah, that's a great question, Jacqueline. How much debt is it total?

Credit card, I would guess 55 to 65,000. Okay. Is that over multiple cards? Correct. How many would you say? Three cards. Three cards. Okay. What other debt is there? The car, how much is it? Car is $26,000 on my husband's. Mine is paid off. What's your household income? My husband retired last year.

I would say $120,000. Currently it is 120. Correct. Okay, good, good, okay. So what did you spend the credit card money on, do you think? My son has congenital chronic tumors, and we had to pay for those and so we had to put the credit card debt on things for living expenses um just because it got too much so that it's not like frivolous spending or anything like that but it was you know things we needed how old is he

my husband or my son or my husband? Your son. Eight. How's he doing now? It ebbs and flows. He has a lot of surgeries, and the state I live in, Blue Cross Blue Shield and the Children's Hospital, couldn't come to an agreement or who got paid what. And so my son was in the hospital, and we were on the hook for the bill while he was in the hospital. Have you gotten that straightened out? We're working with the attorney general right now on it.

Good. So you've escalated this. I'm proud proud of you i'm so sorry you guys have been through this there's nothing scarier than dealing with a child with medical stuff man that's a big deal um so basically you had 50 to 60 000 of medical bills with your son that you paid for and then used the credit cards to buy the things you would have used that money for. Correct. Okay. All right.

But the prognosis going forward on your son's situation is that hopefully insurance will be picking up whatever he has to deal with going forward right correct okay so we've stopped when my husband we've stopped the the the problem in terms of the call that's caused the credit cards yes how old how old your husband Jacqueline because you said he's retired and is yes he's he's 56. And so when he retired, I had to pick up the family health insurance. So I advised him to get a job with my company because if it's a dual spouse, if both spouses work for the company that I work for, the insurance is free. And so that saved us about $1,400 a month. Oh, wow. is free and so that saved us about fourteen hundred dollars a month oh wow um but obviously

he doesn't he was in law enforcement so obviously he doesn't really want to be working but such is life um so i'm happy that he was willing to go back to work um well if you're driving a twenty six thousand dollar car you can't afford it's kind of one of the things you have to do. Right. Exactly. Yeah, that's good. All right.

So the answer to your question is how do we efficiently get through this? And the reason we're asking all these questions is we're trying to figure out if, you know, where the spending came from so that it stopped because you're going to have to reverse. You not only have to stop the trend, but you have to reverse it. Now, so, in other words, now we've got to find $80,000 to pay off a car and some credit cards, and we make $120,000, right? And so if I take $80,000 and I say I'm going to do $40,000 a year out of $120,000, that means I've got to live on $80,000 minus taxes, right? Mm-hmm. 120 that means i gotta live on 80 minus taxes right so you need to be paying off three to four thousand dollars a month in debt and you'll be debt free in two years now how do we do that

well you're going to sacrifice some other things there's no going out to eat there's no vacations and we're going to take lifestyle to uh ashes nothing you get nothing you got to be on beans and rice rice and beans and both of you got to work every hour you can work and still take care of your baby and um get and get this knocked out as fast as possible and that sounds like three to four thousand dollars a month towards this which gets it done in two years and would trim six months out of it too Jacqueline as if you guys sold the car yep and you got a crappy car for a season you know I have the opportunity to get a different job I went back to school two years ago and I got a paralegal degree and I want to use that and so I do have the opportunity in the next four months or so

to more than double my income. Wow. Yeah. So, I mean, that's excellent. Um, you know, it comes with the sacrifices of, you know, family time and whatnot. So if I do get that job, it would make most sense to me to live on my current, on our current income and put the extra money, you know, the difference in the income. I would live below your current income. Okay. So live below the current income. Live on nothing. The faster you pay this off, the faster it goes away, the faster you get your life back.

And Jacqueline, do you want to be a paralegal long term? Like, do you want to do this for the next? Okay, you do. Okay. Just making sure. Yep. I wouldn't do it for a year just to make more money and then feel like you have to go back to your old job.

Right. So I want to make sure you're that career shift was what you wanted in the first place too. So a written game plan list these debts, smallest to largest. It sounds like there are four debts, three credit cards and one car. So what is the smallest debt, a credit card? Which one? That one, I believe it's $12,000.

Okay. We're going to pay minimum payments on everything else, and I want you to pay that off in three months. Okay. And that means no life. I'm okay with that. It's for a short period of time. Yeah, and stress is causing a whole different set of stress.

So I'm willing to do whatever it takes to do this, and I know my husband is on board. There are some side jobs that I can also do to pay this off. I just. Well, and, you know, here's the thing. And are you guys funding retirement too, Jacqueline? Because I would pause that. Yes.

Yep. I would pause retirement. Temporarily. Yep. For two years. For two years till you get this clear. Or one year till you get it clear, depending on how big the job is that you get. If you get that big job, you might be done really fast.

Or both of you pick up some extra income, you might be done really fast. I don't care. Let's just put it on a schedule where we get it done quickly and knock out the 12. The 12 is gone. You don't have that payment anymore. You take that payment that's freed up and everything else we can squeeze out of the budget, and we put it on the next one down and the next one down the next one down so you list your debts smallest to largest minimum payments on everything but the little one and you attack the little one with a

vengeance okay and listen you are a great mom and dad you've done a wonderful, you took care of your baby. And now you're standing up like two grown up adults and saying, what have I got to do to clean up the mess now that I took care of my baby? I love you guys. You're amazing. We want you to go through financial peace university, our class, and I want to put you in the premium version of every dollar, our budgeting app. I'm going to pay for all of it just to say I'm proud of you. And I like having people like you in our audience that are good human beings that take care of their family and take responsibility, even for messes that are beyond their control. Way to go. You're amazing.

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

far beyond meeting financial needs. They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event. So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget at chministries.org slash budget. Rachel Cruz, Ramsey personality, is my co-host today. Open phones at 888-825-5225. Erica is in Philadelphia. Hi, Erica. Welcome to the Ramsey Show.

Hi, how are you? Better than I deserve. What's up? I wanted to get advice on an upside-down car loan that I'm in. I owe $20,864 on it. It's a 2020 Chevy Malibu. I've been trying to get rid of it for a while now, but they're

saying the value is down it now is worth seven thousand dollars and i guess i do have a little bit of damages on it but they were saying like basically the car it's just so many of the cars and they're being used as rentals that the value of it isn't that great pretty much. Wait a minute. What's a little bit of damage, Erica? Well, it's just the back cover mirrors are off and there's like a couple scratches on it, but it's really nothing that bad. Okay, and when you're saying they are telling us, telling me, who's they?

The dealer? Yeah, the dealership. Have you, just Kelly Blue Book did it all? I did. It's priced at now, I think, between like $8,000 and $9,000. Man, that dropped a lot. You must have had a negative. It must have been upside down in another car you rolled it into this one.

No. This is a new loan. I had a co-signer with great credit because my credit was trash at the time. How long ago did you buy the car? Was it a 20? 2022. And what's your interest rate 11.89 okay you may be looking at the wrong number i think you've got a subprime loan because they're screwing you on the interest and i think the 21 000 is not the actual payoff i think it's the

total of your remaining payments. Well, yeah, no. So when I looked at the loan, it said we got the car for $27,000 and some change. I can't remember the exact number. But right now the payoff is $20,000, $864,000. That's the payoff, not the total of remaining payments. Exactly, but I've made almost $14,000 payments. So I had called them, and I was like, where's the money going? And it's all going to interest pretty much. Well, yeah, it's 11%. It's $2,000 payment. So I had called them, and I was like, where's the money going?

And it's all going to interest pretty much. Well, yeah, it's 11%. It's $2,000 a year. Yeah. So I want a new car. I want to know what to do. Like, should I pay it off and keep it at this point and then just start a new, like, be on a new lease and not get a new car?

How many miles did you put on this car? It is 95, 125 right now it was 95 when you bought it no it was like 46 oh you but you've run it up to 125 000 miles no it's at 95 000 now oh so like 50. there's something wrong with these numbers okay because the chevy malibu uh has not dropped 70 in value during that during that period of time okay um so are you look when you pulled up kelly blue book did you look at trade-in or private sale um trade-in. Yeah, I think you did. Okay. So maybe you could sell the car private sale for, let's call it $12,000. Okay. Okay. And then you would have to cover the difference. And so you'd still need $9,000 to do that. Do you have any money at all? I'm sure you don't.

Not that, no. How much do you have? $2, thousand in savings and then a thousand in the checking okay what do you make fifty thousand a year okay all right um yeah you do need to get out of this, but basically if you went to the credit union and you borrowed $9,000, $10,000 to get a $1,000 car and cover the difference and sell the thing for $12,000 to an individual, that would get you out of it, but you still have payments on $9,000 instead of $20,000. The thing I might do instead is I might just go make an extra $20,000 next year and pay it off in one year by working all the time. Like a maniac.

Like six jobs. And then get this off of you. She goes, oh, man. Yeah. Well, I mean. Do you have any other areas? Listen, it depends on. You don't have to do that, Erica, but you're trapped.

And the way you get out of a trap is it hurts. Yeah. Do you have any other debt, Erica, or is it just this? School loans. How much are those? Close to $200,000. I think it's $189,000. What's the degree in?

Masters. Well, I'm in school now for my master's in marriage and family therapy. Is the 180 include that master's? Is that the total once you get out? Or will there be more? It might be exactly at $2,000 when I get out. I'm in my last year. $200,000?

Mm-hmm. Okay. And what are you doing now for a job? I'm a case manager at a rehab. Okay. And what are you doing now for a job? I'm a case manager at a rehab. Okay. Okay. Yeah, Erica, it's going to be a long road. But can I just say, though, number one, we hear people with these numbers, okay,

and they get out. It does take years. But can I just say, though, number one, we hear people with these numbers, okay, and they get out. It does take years. But this is going to be a total change of lifestyle for the next probably five years. Yeah, and you've got to quit just every time you want to do something, going freaking borrowing to do it. That's true. It's killing you.

I mean, you're a quarter of a million dollars in debt. You got to stop. I mean, you're like an alcoholic. You got to stop. Well, it's all this. It's all student loans. I mean, in that case. No, it's not. It's an 11, 12% loan on a car that she impulsed and then scratched it after she went out to

happy hour. Stop it. No. Stop, stop, stop, stop, stop, stop living like this. You're a case manager. You see people doing stuff. Stop it. You've got to say no more debt. Next time I want a car, the answer is no. I don't need a car so bad. I got an 11.8% interest rate. What that tells me is I know enough about the car business. They not only screwed you on the loan, they screwed you on the car when they sold it to you because you paid premium for both they saw you coming a mile away they said here comes erica we're gonna take her that's exactly what they saw you got had kid same thing they did when they told you two hundred

thousand dollars was a good deal to get a master's and to be marriage and family therapy. That's a complete screw job too. You paid double what you should have paid for that degree. And you got to, you got to say no more borrowing. My life is not better when I borrow to make my life better. It doesn't do it. You got to stop that kiddo. So if I'm you, I'm going to go get that degree, finish that thing up, pass your dadg get that degree finish that thing up pass your dadgum bars get out there get your dadgum income up to 100k live on nothing and raise your right hand and swear i am never borrowing again because it has not brought me blessings and yes you have to work all the time that's the way it is that's how you get out you got to pay a price to clean up your

dadgum mess that's the way this works no other way around it kiddo you got to do this you got to lean into it this is what they teach you in the field you are studying you can't keep doing the same thing over and over again expect a different result that's the definition of insanity that's counseling 101 well and i think you made a good point earlier that and this is good for people to especially young people that are entering into adulthood of buying new cars maybe getting advanced degrees getting jobs like this whole thing is don't take the one offer out there the one car and go and take exactly what they say the one school you look at and get accepted to and you just take right there's a life of options out there and I don't think people do that that, right? They get into a situation and they just, okay, this is great.

This is what they're offering and I'm just going to sign my name and do it. And so thinking through this stuff, getting multiple options. Yeah, when your mind tells you there's only one way to do it, your mind is lying to you. And Erica, that could be your situation, right?

You go and come into this car loan, you get accepted to a school, you accept it. It's just this you get accepted to a school and you know you accept it's just this one option path that a lot of people take that ends up usually not with a great deal like you were saying getting screwed in the car whole thing and the degree and you're not you're not roi-ing things you're not looking at other options and and have five or six different things in front of you to say what's the better deal so guys forward thinking all education is not good some education is overpriced crap just to go to school i you got to go to school no you don't being stupid when you're doing your education is a bad plan.

I'm not saying Erica was completely, but she got taken. It's bad. I'm sad for her. What a horrible situation she's in. I'm angry for her. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Rachel Cruz, Ramsey personality, number one best-selling author, is my co-host.

Open phones at 888-825-5225. James is with us in Salt Lake City, Utah. James, how are you? Good. I'm very concerned about the housing costs here in Utah. They've tripled since COVID. I'm debt-free. I've been trying to save up 20% for a down payment on a house.

It's gone from $40,000 up to $80,000. I'm struggling. Is it a good time to get a house, or should I wait until I have the full 20% down payment so I can get a 15-year fixed, or should I get in the 30 and then refinance? Buy a cheaper house and get a 15-year without 20% down. Okay. and get a 15-year without 20% down. It's just that there's not very much out there for houses,

and all these houses I see are dilapidated, and they're just overly priced. What range are you looking at price-wise? I got approved for $300,000. I make $58,000 a year. You make I make $58,000 a year. You make what? $58,000 a year. I take home $2,400 a month, and all that is going to go basically to interest rates.

What are you putting money in? Whoa, whoa, whoa. You make $5,000 a month. Why are you bringing home $2,400? Well, $1,700 every two weeks after taxes, $2,400. That's not $58,000. $58,000 is $5,000 a month. Okay.

I'll make $28 an hour. I guess more is going on. Are you getting a huge tax refund? No, I'm actually paying into it. Are you putting a bunch of money in your retirement account? I am putting as much as I can. I have a Roth IRA that I'm throwing in through Robinhood, as much as I can in there.

Is that going to help on taxes? No, that's not my question. I'm trying to figure out where $2,500 a month is going. Well, $5,800, I mean, it'll be more like $4,000 after taxes. No, yeah, but I'm just saying, you have $5,000 gross pay. That's $60,000 a year, okay? Yeah, but then you've got to pay taxes.

And you do not come home with $2,400. Yeah, $ four hundred yeah five thousand but minus taxes you don't come home with half would probably be you don't come home with half he's got half well it should look more like four your take-home pay ought to be close to four and it's close to two every Every two weeks I'm getting what's coming in my bank, which is after taxes and everything, is $1,700. So there's something, yeah. If I'm missing out on money, I'd like to know where it's at and how I can get it. Take $1,700 times 26, and you'll see it's nowhere near $58,000.

Well, that's what I'm saying before. I know, honey, but you're not in a 50% tax bracket. You're missing some money. You need to go find your money. Is Utah, does it have an income tax? Yeah, they may. They may. So, yeah, that's what you've got to look for is you've got to find that money.

That's part of your problem is you're looking at a ridiculously small take-home pay for $58,000. I don't know whether you're getting killed with health insurance, you've got a bazillion dollars going into your 401K, or you're getting a big tax refund, I'm not sure, or maybe you're not making $58,000 and you just thought you were. Somewhere in there. You need to figure out what's going on with that, and that's going to help you figure out the other thing.

The answer to your question is housing prices are not going down find a time in the last 100 years in america when housing prices went down and stayed down and even though they ballooned james or what felt like a balloon during the covid years the same in nashville i know salt lake city was a big hot market like there were cities that felt more of an extreme growth than others and you may have been in that but that doesn't mean it's going to go back down if anything it continues to go up a small a smaller percentage but that's the reality so james i would take your down payment down to five percent and go ahead and get in the market and do a 15 year fixed rate mortgage on a

fourth of your take-home and i'm gonna be honest too what's sad is the truth is in america today making 58 grand and owning a home is difficult right now. Like we're seeing on average. That's a below average household income. Yeah. So on average now, what it takes. And so you're going to have a below average home. And the average home, the median house price in America is over 400 right now.

And so, yeah, you're in a $300,000 marketplace when you make 60 grand. Yeah. That's where you are. That's what the math says. And so your only other option is look at your career field. What can I do to get my income up permanently and keep it up? But here's the guy. The essence of his question is, are housing prices coming down?

The answer is no. We've had one time in the last 75 years that house prices went down, and they were down for about six months in about five or ten markets, and that was in 2008. They actually went down a little bit in Las Vegas, which is one of the biggest blooms that popped. I was going to say, it was a massive housing crisis. Yeah, but the prices did not go down but in about five markets

because there was like a balloon that popped. Phoenix, Vegas. Florida. You could go to Florida and get a – Florida, there were some deals. A lot of vacation homes. The vacation strips always go – resort properties always go crazy. I'm talking about single-family homes you live in.

Yeah. Okay? And overall, house prices hadn't gone down. Every single year, every single month month they go up okay and so if you're waiting around on this housing correction that you read about somewhere i don't know who's writing that but they're an idiot there's not going to be one you're not going to get you know you've got to get in and then write it up with everybody else that's what we do that's why homehip is a good thing.

It's your personal hedge against inflation. That's what you do. And, Rachel, there's a fine line. What happens to some people in America today when they feel boxed out, when they feel like they can't get in, that sense of hopelessness, there's two possible reactions. Okay. I got that. I can't afford a house today. Okay.

Reaction number one is just be mad at everything. And I'm pissed and I'm scared and I'm hopeless and life's just not fair. And I get that. I can, I can understand that. I've done that a couple of times in my life, not much, but the other possible reaction is going, okay, the reality is I can't afford a house today. So what has to be true for me to be able to afford a house? And that's a career look. It's a location. Where do I live? I live in Los Angeles.

Oh, well, you're going to have to move, maybe. It's one of the most expensive real estate markets in the entire freaking world. The fact that you can't buy a house there is not surprising, whoever you are that's listening to this. You know, you can't buy one in Tokyo is not surprising, whoever you are that's listening to this. You can't buy one in Tokyo or London either. And there's some other expensive markets. Probably not Singapore. You're probably going to miss out on Honolulu.

And you're probably going to miss out on Manhattan. Unless you make double or triple the national average income. Those are markets that you're priced out of. So you can't live in Silicon Valley on $38,000 a year. So you've got to figure out where it is you can do that and figure out what you're going to do with your income because you can control those things. You can't control the universe. This is The Ramsey personality, is my co-host today. This is a great email. Came in from a listener.

Mary in Nevada says, knowledge change. I've always loved the Christmas movie. It's a wonderful life. We all do. I watch it every year. During this last year, I started the savings, started the steps, and now in step two, because of the steps, the movie is ruined. The Bailey Savings and Loan gives loans on character and is always broke.

I'm so sad. Oh, it's a classic Hollywood. Classic Hollywood take on something, but yeah, it's cute. There's the big evil bank and then there's the sweet little savings and loan with sweet george bailey i know and so that's classic hollywood bullcrap try so hard even though it's a sweet movie yeah it's just like i'm sorry yeah that never happened anywhere small town no they didn't give. On character, like a handshake? You know, right? Old school.

It was after the war. Yes, there was a savings and loans, and they were there, and they went away for a lot of reasons, but that was not the reason. Yeah, they. Oh, yeah. Okay. Yeah. Here's the thing the savings and loan business that gave money on credit that you're talking about after the war yeah or the small town local bank they they made

money they weren't broke i know well which is always sad because it's based on so they that because they yeah i'm sure he's good for it. No, that's not how it worked, even then. But they weren't using a credit score. You are right about that, Mary. And I'm sorry that reality invaded your movie world. That's a good movie. It's such a bad thing when that happens. Jeff is in New York City.

Hi, Jeff. How are you? Good. How are you today? Better than I deserve. What's up? Good. So I'm just starting out, and I'm going to have some money coming my way. And I was thinking, I'm new to investing. I have no idea where to start. But just following politics a little bit, I saw that Elon like gambled his whole career on just having Trump win. And I was wondering if it would just be a good investment to just go with him or invest in his company like Tesla, SpaceX.

Or like that's a terrible idea and I should probably just go somewhere that knows what they're doing and have them do it. I mean, you're talking about investing buying stock in these companies correct yeah i mean yeah i wouldn't do it regardless of a singular person because that's pretty much putting all your eggs in one basket when we're talking about single stocks and so our overall investment strategy is more of a diversification look meaning like mutual funds with 90 to 200 stock versus one. I thought you were saying you're going to think about buying a Tesla or not. So, Jeff, there's a difference between investing and speculating.

Speculating is a bet, a gamble on a certain thing for a quick return. Investing is I'm going to put money in and I'm the tortoise, not the hare. I'm going to win over a long period of time slowly. And I'm going to win and I'm going to win big and I'm going to win safely. That's investing. So you buy a home, you invest in a piece of real estate in other words and five minutes later you're not going to make money but five years later you're going to make a lot of money five years later you're going to make a lot of money and speculating would be when you try to follow a political party or follow a political movement or follow an individual that's in the

limelight and you drop single money on that single individual that's speculating that's gambling more than investing so instead no i and and turn it over to someone that knows what they're doing no i wouldn't do that either you need to learn what you're doing and you can sit down with a financial advisor, with the heart of a teacher, and learn about basic mutual fund investing, and start gradually investing. The best way to get rich quick, Jeff, is to get rich slow. Statistically, the data, the research on wealthy people, that's what it tells us. The number of wealthy people that bet all of their money, slid all the chips to the center of the table on someone like an Elon Musk or something like Apple or something like whatever

you name the single company, the number of people that built wealth doing that is very very very low the normal pattern of people who build wealth is steady and gradual over time and that's how we would tell you to do it brother it's a good question it's an interesting question in the environment we're in right now where all these people are all in the news but nope doesn't make me want to buy a tesla uh doesn't make me want to buy a Tesla. Oh, come on, Dave. Doesn't want to make me buy Bitcoin. And the Bitcoin markets are going bananas right now in a good way. But that doesn't change my assessment of what a Bitcoin is. Bitcoin is a currency, and it is speculation.

It is not investments. It's a gamble. And if you want to speculate, that's fine. But more investors become wealthy than speculators 10 years from today yeah great distinction i am curious how bitcoin dogecoin all of it how it plays out in the next 5 10 15 20 years right i mean we've always said that bitcoin is going to even out and someday will be legitimized yeah in the sense of it would have a standard market the crazy volatility would and the chances of a single currency type going broke and all that i mean you get you know

these characters that were in that are in the early days on that but the um but but even when it smooths out it's just a currency and you know the dollar is a you know you can invest in the dollar if you want to invest in a currency a much more predictable environment uh much more steady much much safer environment uh you know but it's not going to triple and it's not going to go completely to zero right and your bitcoin may do either and so but i think this is going to help the bitcoin story because these guys are all into it and um so it's gonna it's probably going to add some fuel to the fire and there's going to be more and more people call me stupid for not telling for telling you not to do bitcoin but that's okay.

People have been telling me I've been doing stupid stuff all the while I built wealth. So I'm perfectly okay with you broke people with an opinion. But anyway, it's very interesting. And, you know, interesting environment right now on all that stuff. But, yeah, Jeff't don't speculate if you're coming into some money in quotes which you said sit down with a good financial advisor if you want one just go to ramsey solutions.com click on smart investor pro we've got a group of people that we have vetted in that world of advising they have the heart of a teacher they're going to make sure you understand they're not going to do it and you not understand. We don't do that. We tell you not to do that. It's

very important that you understand what you're doing and that we go that direction. That's the best way you can possibly, possibly go. All right, another email in on Instagram that says, at what point should my adult children's finances be none of my business as soon as you define them as adult children? Yeah, as soon as they're out on their own, paying their own way in life. None your business. None yet. If they ask your opinion about something, then you're welcome to do that. But if you went up to a 24-year-old that wasn't your child and started asking about their money and they were standing on their own, they would tell you to go pound sand. And so, yeah, it's not your job to manage adult children.

Although I still love this phrase and I never have figured out an alternative for it. I'll do adult children. You always talk about this. I know. But I'm an adult and I'm your child, though. I know, but adult children always feels like an oxymoron to me. I know it's not, though. I'm your adult child. I know you are.

I'm aware of that. I know. Every time we're on the show and people say, like, my adult child, you're always like, that's a weird phrase. It's not, though. I'm an adult and a child still. You're an adult. You're an adult child.

In more ways than one. I know. It's a weird phrase. I'm just saying. Adult children. Adult child. So the answer to your question, Jacuzzi 101, is if you think they're adult children, the answer is none of your business. This is the Ramsey Show.

That's his name. That's who wrote in, was Jacuzzi101. Didn't catch that. That's great. Brought that up. This is The Ramsey Show. Rachel Cruz, Ramsey personality, is my co-host today. We've extended our Cyber Monday sale,

and that means you can get prices as low as $8 on meaningful gifts for everyone. We're talking about the best-selling hardcover books for $12, like The Total Money Makeover, Building a Non-Anxious Life, the Baby Steps Millionaire's book, the Get Clear Assessment from Ken Coleman audiobooks at $8, and Breaking Free from Broke for $12. That's Georgia's new book, cheapest we've ever done it out. And Rachel's brand new children's book, I'm Glad When I Can Share is available on the site. And of course, all three of the trilogy of those books I've started with, I'm Glad For What I Have, I'm Glad For Where I Am, and now I'm glad when I can share.

That's how it all works. So check it all out, RamseySolutions.com slash store, or if you're on YouTube or podcast, just click the link in the show notes. Jason's in New Orleans. Hi, Jason. Welcome to the Ramsey Show. Hi, Rachel. Hi, Dave.

How are you this afternoon? Better than we deserve. What's up in your world? Same here. So 38. I make $100,000 a year. Prior to that, I was married, living in Los Angeles. I was making significantly more. Me and my ex-wife, we brought in about $330,000. I quit my job to try to make my marriage work. Ended up unemployed for a while, took a lesser paying job making $70,000 but in a higher cost of living state, Connecticut. And now I've had a lot of my credit cards and some of my personal loans go into default. And there's just no possible way for me to make the minimum monthly

payments and still afford to eat. You make $100,000 now. Correct. Now you're divorced. Yes, sir. And how much debt do you have on your credit cards and personal loans? I have a total of $123,463.23. And the reason I know that number to the exact number is because I've been talking to lawyers for talking about Chapter 13 and Chapter 7 bankruptcy the last couple of days.

Asking a bankruptcy attorney if you're bankrupt is like asking a dog if it's hungry. And it turns out, you know, looking at the chapter 13. They all think you're bankrupt. None of them told you not to file? One of them suggested maybe I could, because we talked about how I fixed my credit about 10 years ago, and we talked about how I could do it again, but it was just going to hurt. How old are you? 38.

Okay, so you're a single guy living in New Orleans, 38, you make $100,000. Yes, sir. So what do you spend $100,000 on? Well, I work for the railroad, so our tax liability is a little higher than most people. We pay Tier 1 and Tier 2 retirement tax. And then you look at our state and federal. I mean, I maybe bring home $2,300 after taxes. Rent, car note, insurance, that's high.

My insurance is $400 a month. My car note is $359. Oh, you have a car debt too? Correct. How much do you owe on your car? $17,800. Okay. Okay. Something's wrong. Even with railroad and even with taxes, you don't make $8,000 and come home with $2,300. That math is wrong.

Well, I mean, that's federal income, state. Dude, you're not getting hit for $70,000. That's bull. Something's wrong. Let me go look at the check stuff. Yeah, I'm telling you. They're not taking $70,000 of your $100,000 for forced retirement is what you've got in the railroad. It's not a tax.

You're required to put in mandatory retirement. What is it, 11%? Tier 1 and Tier 2 is about $12.5. Yeah, okay, $12.5, that's mandatory. You have to do it. You don't have a choice. Okay, and $12.5 is $12,000 on $100,000, not $ Yeah, okay. 12.5, that's mandatory. You have to do it. You don't have a choice. Okay, and 12.5 is $12,000 on 100, not 70. And your federal income tax is hardly anything on what's left there.

It's showing about $600 right now for federal. Yeah, okay. That's $7,200 a year. So now I'm at $20,000, not $70,000. You're still $50,000 off after those two numbers. I think we have a cash flow problem, brother. We've got to find our money. We're looking at everything.

We're looking at every dollar that goes out. Once I was paying all of my debts. Out of your 2,300, I can see that you're broke, but $2,300 is a wrong number. There's something wrong. $2,300 twice a month might be. I am salary paid twice a month. You're talking about $2,300 twice a month?

Yes, sir. Oh, okay. Well, that makes sense. I apologize. That's okay. That's okay. That's $5,000. That's $60,000.

You might be getting hit for $40,000, but you're not getting hit for $70,000. Okay. All right. So we got $60,000 a year, and you live on beans and rice. Rice and beans. You got a car note. All right.

So let me back up then, back to your original thing. You're probably not going to qualify. They have to do a means test, and there's a math formula that the bankruptcy court requires the lawyer to use. And if you do not prove mathematically that you're broke enough, you're required to do a Chapter 13. They won't let you do a 7, and I think that's where you're going to fall. A Chapter 13 is payments on this credit cards for five years that's a chapter 13 it's 60 months okay and you will probably not pay

100 cents on the dollar of the 123 let's pay so you paid 50 cents on the dollar of the 123. That might be what happened. And then so you'd pay back $60,000 over 60 months. So it would be $1,000 a month. Okay? That's your Chapter 13. You're going to be locked into this mess for five more years. Don't do that. Okay? I would rather you just – have you defaulted on all this already?

You're not paying the payments now, right? Oh, before I called into your show this afternoon, I actually called my longest relationship banking-wise and asked them to close out my account. I'm calling my other banks to close out the accounts and just default on them. I was going to try the snowball method, but I'm just – No, I think you're going to have trouble doing that with the math you're giving me. But are you behind or are you current i'm behind on eight out of ten of

those cards only two of them are current because they come out automatically yeah and you shut that down today how far behind are you personal loan has already been sold to a debt collector um good my amex is already in debt collections good um my navy federal credit cards are current only because of it coming out of my bank account every month okay if i were let me stop you if i were in your shoes here's what i would do all right i don't think i i would not sign up for 60 months of hell that doesn't appeal to me at all if I'm in your shoes. Instead, I would make a list of these debts, smallest to largest, that are in default. This is a different kind of debt snowball, so listen carefully. We're not paying payments on any of them. They're in

default. I'm going to call the smallest one, scrape together some money, and offer them 50 cents on the dollar lump sum. What's your smallest debt? It's $1,000. I could pay that now. Pay it. What's your next smallest debt? $3,200. It's Amex gold card.

Call Amex. How far behind are you? Oh, a year. Good, good, good. good that's awesome because now they think you're not going to pay they think you're going to go bankrupt oh wait you were okay so there we go so this call is a this call is a blessing to them is what i'm saying there let me just tell you amex are buttholes though so just get ready they're some of the nastiest humans on the planet so just brace yourself when you call, Jason, okay?

Yes, sir. So I hate them. But if you call them, here's what you do. Hang up on them the first three times you call them. Just start talking and then just hang up. Because you're going to have to fight with them. You ready? Double up your fist, okay? All right.

Then go, I've got $1,000. I'll settle this $3,200 right now, and I'll email it to you. I'll wire you the money today as soon as I get an email saying you will settle this debt in full for $1,000. Hang up and call them back tomorrow and do it again. Hang up and call them back tomorrow and do it again. Eventually some idiot will stop talking and take the deal. but they're not smart people and they're mean so you're going to have to deal with them you do that all the way through this you can settle this 123 for around 40 or 50 grand you'll be out of debt in a year and you're not bankrupt you're

just scared hang on i'm going to hook you up with one of our coaches and show you how to do this this is the Ramsey Show. Our scripture of the day, Ecclesiastes 3.11. He has made everything beautiful in its time. He has also said eternity in every human heart, yet no one can fathom what God has done from beginning to end. Michael Alt Shuler says, the bad news is time flies the good news is you're the pilot whoa that's pretty good line mary is with us mary is in seattle hi mary welcome to the ramsey show hey jay hey rachel thanks for taking my call sure what's up yeah so my husband and i we've been married for like eight years now we're in our late 20s and my husband's parents are offering us their 100 acre ranch, but there's a slight caveat. We would get 10 acres now like in our name

and then the deal would be we take care of them as they age and put time and effort into their 90 acres that they'd be keeping and we would get that when they pass away. This makes me a little uncomfortable though as there's a bunch of ways in my mind, we could end up not getting those 90 acres. And I also feel this could be like a limiting factor in our success because their land is in a town with lower wages and things, but I also don't want to be ungrateful. So I'm wondering, do you have any advice on potential pitfalls of putting time, money and effort into land that isn't in our name? Yeah, 100%. Not a chance I'm doing it. Okay, why is that?

Because you're putting time and effort into land that is not in your name. Right, yeah. There's about 9,000 ways that can go wrong, and only one way it goes right. Right. And it keeps you stuck in your late 20s and beyond on this land where you guys in your 40s if you want to go you know move to texas or something right you're stuck you're stuck in this deal right no this is not a good deal yeah long-term deals like that not good it's not ungrateful for you to say it's not for us say thank you it's very kind of you i love the land i love you uh but we we value our freedom

and we value the ability to make our own decisions and move about our life and hey we we love you and if we can ever help you we'll try to come by and help you and if you need if you need some help in your old age we'll try to be there for that we're your loving children but that but we don't have to do a deal to make that happen. And thank you so much, though. We're very grateful. And by the way, Mary, you've not been married long, right? Yeah, just like eight years.

Oh, okay. That's more than I thought. Okay. What I want you to do, though, is this is your husband's parents, right? Yes. Okay. I don't want you to do, though, is this is your husband's parents, right? Yes. Okay. I don't want you to say a word. Okay.

He gets to be grateful. Say a word to him, but he talks to the parents. He calls his mom and dad and says, Mom and Dad, I love you. We're grateful. We've been praying about this. We've talked about this, and we've decided that it's probably not the best deal for us. But thank you so much for the offer. We love you.

We love that piece of land, and we'll always be around to help you. And if you need some help in your old age, we'll do that. But this deal doesn't – it's not good for us, and we're just going to go another direction, and that's okay. And he needs to just do that. If you say one word, it's going to get blamed on you. Right. Yeah, I'm calling you guys because my husband and I are not quite on the same page about it right now.

I think we'll get there, but right now my husband sees this as a very viable option. No, it's not a viable option. It's a control move. Okay. They're totally controlling. If they weren't, they would have just said we'll deed the whole thing to you now on the promise that you'll take care of us and you come up and you come up here and work your wrench with us but instead they're instead they're doling this out a

little at a time this is fear-based and a control move on their part. I'm passing. Okay. Awesome. Thank you. And here's what happens. Okay. You have no idea how many things I've seen in 32 years that go sideways in a deal like this. All the calls we get on this show are the things that cause cancer. So we see cancer all the time, right? We know what causes cancer. So here's what's going to happen. It's going to be something bizarre that you never even thought of your father-in-law gets early onset and gets in a bar fight and sues and and three people in there sue him and this is a man who's never said an unkind word to anyone in his life but his brain isn't functioning good and so he gets sued for 500 million dollars because the death of someone literally this kind of crap happens all the time.

And then there's a lien on your ranch because it's still in his name. He falls asleep at the wheel. This one's more likely. Coasts off the road and hurts someone because he fell asleep at the wheel because he was tired. That lawsuit is a lien on your land. Oh, wait, it's not your land. It's in their name. You never get it. All the money and effort you put into it goes to the people that sued him when he fell asleep and hit the ditch. Don't do this. Okay, thank you. Don't do this. No, I'm very uncomfortable with the idea, so thank you so much.

My husband said, you know, that he really respects you, and so if I called in, he would listen to what you had to say, so thank you. I don't think his mom and dad are bad people. I think they're just trying to control this situation to a point that it gives you guys what Rachel said, no freedom, and it's going to limit your life choices, and you're stuck forever. You have to stay at the ranch. You have to get the Yellowstone brand, and you have to stay there your whole life.

And no, thank you. No, I'll pass. It's a hard pass. Good question. Interesting, though. So if mom and dad want to restructure it and go ahead and give you the thing. And it's under your name and you guys want it. Today it's in your name and you've always wanted it.

And your husband, your whole life you wanted to work this ranch. And you deeply, both of you, want to be homesteaders and run your own beef. Yeah, then maybe you look at it but right now there's 10 acres and i might give it more to you later in 30 freaking years no thank you i'll pass yep it's not it's not it's not a good deal it's a bad deal and um there's too much bad that can happen and go sideways but and i i don't think you want to live there anyway i just got that feeling just talking to you i think she's well i'm that close to the in-laws i think she loves them i think she loves them i don't think she wants to live with them and that's not a bad thing nope we live 30 minutes

from dave and sharon 30 minutes but we love you 300 miles away that's right oh yeah and i don't know i yeah and you know it turns out that that you don't have i don't have to own their property to yeah oh that's that scares me i know family deals are always tough daniel in sacramento what's up dan. Hey, guys. Thanks for taking my call. I am a pastoral staff at my church under my dad's leadership. I'm self-employed, so I'm 1099. Why are you self-employed? Well, I'm 1099. I don't know if that means self-employed. I know what 1099 means. I don't think you should be. Well, that's the way he does it. I don't have an option in it. He doesn't have an option in it. He doesn't have an option, and I think he's

violating the law. You need to check at this. Okay? There's a rule on 1099. You have to be independent, handling everything on your own, running your own business, or you're not 1099. You're not 1099. You're a staff member that he doesn't want

to do payroll taxes on, and he's got to. He's going to get himself in trouble, Daniel. Y'all need to go see a tax professional. He's going to listen to this. Okay, good. Yeah, you're going to. Listen, I used to do this stuff too, and there's like seven or eight guidelines that you have to meet to qualify to be a 1099. You don't meet any of them, I can tell you right now. And so if your church gets audited, they're going to clean your clock. The IRS is going to take him to town.

You don't want, this is not good. Are there retirement options? I think the retirement options change when he's an employee. The church will have a 403B. 403B. Yeah, they'll have some kind of retirement plan and or you can go get your own Rothoth ira if you are a legitimate 1099 you can open up a simple uh a simple ira or a sep ira but please i i beg you i want y'all go see a tax professional i'm pretty sure you're not 1099

i'm pretty sure you are but you shouldn't be and i and i'm telling you you're you're everybody there's gonna you're all gonna have all kinds of penalties and all kinds of junk you shouldn't be. And I'm telling you, everybody there is going to have all kinds of penalties and all kinds of junk you don't want off of this. And they just love screwing up churches. The IRS does. So, no, don't. Yeah. Please check that out.

Please, please, please, please, please. There's several things you have to be to be legitimately standing alone as a 1099. Not just, I don't want to pay your payroll taxes. That puts us out of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Thank you. We'll see you next time.