The Ramsey Show - App - Ditch Debt and Solve for Freedom (Hour 1)

Episode Date: April 29, 2024

Девочка-пай Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by my good friend and bestselling author, Mr. Ken Coleman. And we are taking your calls this hour at 888-825-5225. I'm the money nerd in the group, so I'll be happy to take your money calls and help you take that right next step. And Ken, of course, is going to help you with that shovel, making more income, getting to work. Maybe it's a job switch. Money, money, money. Is that your new theme? Yeah. All right. Dave says your greatest job switch. Money, money, money. Is that your new theme? Yeah. Yeah.

All right. You know, Dave says your greatest wealth building tool is your income, and I'm the guy that helps you figure out what that is or how do we get more money. So, yeah, I thought so. I wanted to also test out the falsetto early. I was impressed. One more note and we would have been taken off the air. I think so.

Hey, it was too good. I don't think so. Too good for radio. By the way, George, the lobby is absolutely packed. You would think Bono is next to me with this kind of electric crowd out there today. And we're going to have a good time. We're going to meet them during the break. So you're a friendly reminder to come visit us.

Let's get to the show. Dan awaits in Gettysburg. What a historic place that is. Dan, how's it going? Going pretty good. How are you? Great. How can we help today?

So I had a question. Just want to make sure that me and my wife are on the right track with our budget and we're hitting kind of a snag whether or not we should move because our neighbor is causing us issues with the apartment that we rent. Wow. That's quite the snag. I'd like to know more about this bothersome neighbor situation. I like a little drama. What's going on with the neighbor? People want to know. Well, so me and my wife are, as Dave would say, scorched earth with our budget. And we really started in April tackling our debt. We have about $48,000 in debt. And our apartment's fairly cheap, but it's connected. And since we're not eating out anymore and we're cooking from home,

the smells are bothering the neighbor from cooking. And it's like we're only getting like two, three hours of sleep that night now. Wait a second. Wait, wait, wait, wait. There's a lot. Can I unpack a little, George? All right. You're telling me your neighbor is upset by your cooking smells.

Yeah. What are you cooking? He can't breathe. What are you cooking? Oh, well, you know, like last night we just did chicken and noodles, and that kept her up for about four hours. What time are you cooking? We cook about, you know, 5, cooking? We cook at about, you know, five, six o'clock at night, you know. So wait a second. So hold on. There's a lot here. So you cook at

five or six o'clock and you're cooking pretty basic stuff like chicken and pasta. And the neighbor, is it a woman or a man, the neighbor? It's just a single woman. She's older. And she's older, and she's saying that it's keeping her up because of how aggressive the smell is. Yeah, I mean, we got a text at 2 in the morning saying she was going to call the fire department on us. Please.

At 2 in the morning? I would love to see them show up and say, what's the issue here? Well, first of all, can you smell it? Why are you answering a text at 2 in the morning? Turn the phones off and put them in another room. Yeah, no, I'm not answering it. I call the landlord, and the landlord wants her out, but he's having trouble getting her out. I'm guessing this is not her first issue.

She sounds like a troublemaker. No, no. Yeah, yeah. What's the problem? Right now, me and my wife are determining like should we move to another apartment that with a higher rent or should we just keep keep cooking and keep cooking and i would just push her out with in fact you guys aren't even cooking like i cook something with a lot of garlic uh i'd really double down on the smelly stuff like how about some fish

drive the old lady out the landlord wants her out anyway why in the world and i'm having some fun with this uh but but why in the world would you move to a higher rent just because she's griping over just nonsense yeah uh just just because it's just mental wear and tear why is it no okay what's the mental wear and tear i don't understand it's some grumpy old lady why don't you just ignore oh no yeah well no i mean well well because they're they're conjoined apartments and she how conjoined are we talking what well like she'll stomp around and, like, scream and yell, and we can hear it through the entire apartment, and that's what's waking us up at night.

Is she screaming at you, or is this a different situation? A couple times she has. I think this needs to go to the landlord. If she wants to get the authorities involved, let them, because it sounds like she's about to be moving out. I think you take it to the landlord and fight instead of giving in to this crotchety old lady. I'm guessing the landlord's on your side with this saying, yeah, she's a problem. I'm sorry. Yeah. He's trying to get her out. Can they move you to a different unit

for the same price? No, no, no. It's a duplex house. Okay. It's not like a complex. Well, how much longer are you going to be here? Is this your long-term renting situation? Well, we don't want it to be. That's why we don't want to go up to higher rent, because we have like $48,000 in debt, and I have a plan to have all of our debt paid off except for my school bill, which will be $35,000 at the end of the year, and then get that done in a half of a year, because we make like $7,500 a month. And so we want to eventually work to get a house of our own.

All right, I'm going to tell you this. I'm jumping in, Dan, for a second because the nature of this call is really not financial. This is an emotional and a mental thing that you're dealing with. And I get how much of a pain in the, you know what it is. But George, unless I'm missing something, this would be a bad financial move for you guys. I would sit down. This is me, but I love confrontation. All right. So I understand not everybody likes confrontation. I'd sit down with the old lady. I'd record the thing and I'd go, ma'am, this is what you're doing. You're stomping, you're screaming. We are going to record all this and document it. And we are going to sue you. We are going to drive you out of here if you don't stop this nonsense. So we're recording

everything from this moment on. We are not leaving. You are not. Stare the old lady down and just go, we're not going to lose. You are going to lose. And here's how we're going to ensure that. And I would just double down on it. I really would. And get the landlord to kick her out. Or she stops this nonsense.

I would at least try that. You got nothing to lose, George. It's a little bit more confrontational than your style. At first I thought, well, maybe they're in the wrong here, but it doesn't sound like that's the case. If she did that to me, I'd go get a drum set and I'd play the drums. I'd fight fire with fire. I would.

I'd go get a bass drum and beat on that thing. Ken is so petty. I'm not petty. Here's the thing. Dan is a nice guy. Dan, you don't want to do any of this. Yeah, well, I work two counseling jobs and i'm a youth pastor so bless it try maybe you should try to counsel her give her some free counseling i of course i'm

having fun with this but dan i wouldn't give in on this i'd drive her out through the landlord not at the cost of moving costs and moving out the more expensive apartment i'm going to stick this out and see what happens in the next few months and really put some pressure on the landlord to do something about it. Yeah, I gave him a deadline last time, yeah. Good for you. It might escalate before it gets better, but I would not make any moves right now. You guys are on track to get rid of this debt fast. I don't want to derail that because of some cranky old lady.

She's got some get-off-my-lawn energy, and we won't stand for that, Ken. I would try cooking some. The most passive-aggressive move is to cook some fish for about five nights in a row. Ken's like, microwave some five-day-old salmon. See if that gets her out of there. Just smoke her out of there. Yes, sir. Let's go.

Hey, more of your entertaining and real calls coming up. 888-825-5225. This is The Ramsey Show. Welcome back to The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by my good friend Ken Coleman. Open phones at 888-825-5225. If you've been around here long enough, you know about Ken's Get Clear Career Assessment. It's helped thousands and thousands of people get a clear picture of the work they do best

and that they love the most. Now we're excited to announce that Ken's new book, Find the Work You're Wired to Do, which will show you how to use those results to get specific in your job search and find the work you enjoy. You can pre-order it right now and get over 25 bucks in free bonus items. And by the way, it includes the assessment in the book. So it's a pretty cool product, Ken, and it's been selling like hotcakes. Yeah, thank you. Excited to see how this helps people. Yeah, and here's the deal on that pre-sale deal. If you get it now, you're getting the e-book and the audio book along with the hard copy and three different assessment codes. So it's basically

three. There's no bonus outside of just the book itself. You're getting those two formats. So it's three books, price of one. And you read the audio book yourself. I did. I did. Exc books, price of one. And you read the audio book yourself. I did. I did. Excited to hear you speak. My baritone voice on full display, hopefully for your listening pleasure. Any singing? No singing. Okay. But I thought about it. I thought about having a bonus track. We'll do our duet album soon enough. That would be great. We're here for it. Well, hey, this book will help you answer four of life's biggest questions. Who you are, why you're wired that way, what you want to do professionally, and how to get there.

So this is your last week to pre-order because this thing is launching with or without you. So go get it, ramsaysolutions.com slash store while the getting's good. Get all those bonus items while you can, ramsaysolutions.com slash store. All right, Nicholas is up next in Michigan. What is going on, Nicholas? Hey, my name is Nicholas, and at 18 years old, I moved out of my home state of Missouri, where my family owns several companies and businesses, and I went into the collision field, got my associate's degree in collision technology, and really hit the ground running. Built a life for myself here in Michigan, and about a year and a half ago, bought my first house, put $25,000 down on $125,000. Whoa, at 16? No, I am currently 25, but when I left Missouri, I was 17. Okay, I got you. So I, you know, moved out to Michigan and started my life.

I was, like I said, my family owns several companies in Missouri, and I always kind of felt not really under their thumb, but just kind of in their shadow a little bit. So I moved out to, like I said, Michigan, started my life in my own industry, the collision industry, and I met a young woman there. We've been together for six years. It's the only relationship I've ever been in. Like I said, about a year ago, I bought my first home. And about six months ago, I was listening to Dave's TikTok. And he told, he said

on there that not many people can become successful or be millionaires while dragging somebody else with them. And that really got me into thinking she's never worked. She's never gave into our checking account. She's never really done anything to help us financially. She's really only been a homemaker. And about two weeks ago, I rented my house out, told her that she needed to leave, and I'm planning on moving back to Missouri. And I would just want to know if Dave thinks that that is the right choice or not. Well, it sounds like it's too late regardless. Well, yeah, I'm just kind of struggling with my decision right now. You kicked her out because she wasn't working.

You said she just wanted to be a homemaker, and you guys were never even engaged? Yeah. And you're upset that she wasn't adding to your checking account? I'm confused by your decision to even combine your life with this person before marrying them. Well, you know, for a long time I was too, but like I said, this has been my only relationship and I really wanted it to be my last, if that makes any sense. And I don't really know. I'm a pretty financially, I feel like, stable person. You know, I drive a 2012 Mini Cooper that's paid for. I bought a house well under what I could afford.

I make about $90,000 a year. But if you split that in between two people, you know, it's a little over $40,000 each, and I just can't. Do you guys have kids? You guys weren't married. You're playing house. You're right. Yeah, I agree. And hold on. Hold on. Hold on. Hold on. Hold on. This is the gal you said you wanted to be your only relationship and you kicked her to the curb because she wasn't really bought in? And does that mean she was anti what we teach or she just wasn't engaged? There's a big difference.

Well, very anti, I would say. Was she racking up debt? Exactly. Brand new car. You know, I mean, wanted to just continuously spend money. But you had to sign the dotted line on all of those loans. Yeah. She didn't have an income.

You're right. So I want to make sure you understand you are fully responsible. I know. Yes, sir. So we've been working for the last, I don't know, probably three weeks on getting everything split. Her parents are actually going to be taking over her car loan, and we're getting all of our bills separated off of my checking account and stuff like that. But like I said, I'm really struggling because for the last six years,

it's been me trying to get her like, just, you know, get an income, go just work. If you bring anything into the table, that's enough. Like I just, I can't do it all by myself. Hey, Nicholas, the more troubling issue is not the income, but just that she is in complete opposition to the way you want to handle money. And so for that reason, I'm fine with this breakup. I think it's the right move. But I just don't think it's as much about her being a homemaker and not wanting to work. The issue is that she's really opposed to being on the same page with you and got you to do things that you know aren't right. Yeah, I completely agree.

So I think it's a good move, but now you're regretting it because you miss her. Yeah, that's where I'm at, exactly. I think you broke up with her for the right reasons, George. I feel like I'm choosing my finances over her. I do think you have been aggressively focused on building this career and very focused on finances and income, which is good, but you've almost got a flat tire. And my worry is if you continue down this path, you'll be great at saving money and you will be miserable and you won't have any healthy relationships. Your spiritual life is going to be in shambles. And I think for a young guy, I love your drive and your hunger, but you can't let

that be your entire life. And my thing is, if you guys had a kid, would you be okay with her not working and being at home taking care of the kid? Yeah. Are you sure? Yeah, but you wouldn't be okay with her being on the other side of the page on debt and everything else. That would be potentially destructive for your marriage. George, do I hear, I think he should have broken up with you. Oh, I'm not saying it wasn't the right move. I think your regret comes from the fact that you poured in a lot into this relationship. Six years is a large majority of your life when you're 25 years old. And you waited too late.

My concern is you waited too late. You co-signed for all this stuff. You hope she plays ball. You hope she goes along with all of this. Yeah, you guys combined your life before you were even aligned in life. And that to me is the big problem here and that falls on both of you. And so I don't think,

I think the regret will pass. You'll meet someone new but you gotta get Nicholas healthy first. So that the next relationship doesn't end the same way where you go, what are you bringing to the table financially? That's the wrong way to look at a marriage. I agree. Okay. Well, thank you. I'm sorry you regret it. I wouldn't blame Dave. I would blame your lack of getting alignment on vision and values and goals before you structured your life together. Yes. Do you have advice on how to better do it with my next one,

I guess? Yeah. How to move on, I guess. Yeah, before you get in a serious relationship, you talk about money. Okay. You say, what are your values around debt? I think this is probably a third date conversation. I really do. I think it's early on. I'm going to say third date. You know, it doesn't mean you're talking about combining finances and getting freaking the girl out.

You don't need to ask about income and all that. No, but just talk about how do you view money? How do you view debt? How'd you grow up with money? What were your parents like? Yeah, you need to find somebody who has got shared values on this issue. Money is as big a cause of marital strife

as anything, George. Yeah. What's the big ones? Money, politics, religion? Money and kids. And kids, that's the big one too. Yeah. So I think it's okay as you get further along

in a dating relationship to start talking about things. Not further along. I'm sticking with third date. Third or fourth date. Third it is. What do you say? Yeah, I'd say a few months into the relationship. A few months?

Yeah. You got to get to know someone first. That's a lot of time and money invested to find out that you're not alike. There's a lady in the lobby that's going, my third date. She's saying third date. Why waste each other's time? What are we doing? Wow. What are we doing? So the other part of my question is, like I said, I rented my house out now. I'm in a really good loan place on it. I owe $100,000 on it. It's

worth about $170,000. And I'm thinking about moving home back and being around my family. Do you think that that's a good decision? I don't know why you'd move backwards unless you're financially destitute and needed to. You've already started your life of independence. You've got a good financial spot. I don't see any need to move home. You don't need that landing pad right now.

You're going to be okay. Nor do you want to be a long-distance lander. Yeah, I would sell it if you do plan on moving home and restarting. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Ken Coleman. The number to call is 888-825-5225. Bria joins us up next in Seattle, Washington.

Bria, welcome to The Ramsey Show. Thank you so much for taking my call. Absolutely. How can Ken and I help? Hey, so I've got some medical debt out the wazoo. I've got, going all the way back to, I think, about 2018, most of it has gone to collections. We hired a financial planner recently, and his advice to me, because we had a lot going on in our life right now, is to just ignore the debt, and it'll fall off my credit, and just don't pay attention to that right now. I can kind of see where he's coming from, but at the same point, I just feel a little icky not paying attention to the debt, but I'm wondering if he has a valid point. Well, why did he make that point? Do you have a lot of other debt to focus on right now? We've got some credit card debt, but my husband's salary just tripled and our housing is being paid for. So we're knocking it out pretty fast.

So what's your total debts? List them out for me. So in credit cards, I would say we have about, we have one $5,000 credit card. We have another $2,000 credit card, a $300 credit card. We just paid off our car. And then we've got, I think, another $1,000 credit card. What have you been racking up on these credit cards? So, I guess the brutally honest answer is that we've just kind of been irresponsible.

My husband did take a sales job last year, and he was commissioned only. And I started to have seizures, and so he had to take a few months off. Was that the medical debt from the seizures or what? Yeah, the medical debt is from the seizures, as well as we also stupidly took out credit cards to be able to get by during those times. Are you guys done with credit cards? Yeah, I'm done. I don't even have a physical credit card anymore.

I've just tossed them. Well, they're still all tied to your account, so you can go make purchases on them still, right? Yeah, yeah. So we need to cut ties. We need to actually close the accounts and then we can begin paying them off. Remove all the card info, stick to the debit card, and even then you got to be on a tight budget because what is your income now that your husband's salary has tripled? Right now he's making about two to three grand a week. I don't know what that is monthly.

Um, he can do the math. It tripled and now it's two grand a week? Um, well, his, his, sorry, I think I misspoke. His commission for sales tripled. So they tripled his commission for each sale. Got it. Okay. So he's making somewhere between eight and 10 grand, maybe 11,000, maybe $11,000 on a great month?

Yeah, $11,000 a month. And you're currently not working? I'm a stay-at-home mom. Okay. How many kids do you have? I have a three-year-old and a one-year-old. Okay. And how much medical debt do you have? So you laid out the credit cards. You've got $8,300 in credit card debt. What's left on the debt um

for the medical bills uh that's the thing i'm struggling with is i i went through my bills and i called each hospital and i asked them to send me their information for collection agencies like work based on their where they send their debt to um and I'm in the process of making all those calls, but I would say it's like... Have the collectors not reached out to you? They have, and I'm ashamed to say that I've ignored their calls. And so this is kind of a panic call, I guess. Well, the key is you need to start being proactive. You need to be calling them saying, here's the situation, here's where I'm at, here's what I can pay. And because these debts are older, they may be willing to negotiate and

settle. The first thing I would do is get itemized bills from each hospital. And if the collectors cannot provide it where every single dollar went to, then they legally cannot collect on that. And so you need to look up the Fair Debt Collection Act and make sure that they're following it by the book. And then worst case, you might be able to settle on this for, you know, a quarter of what you actually owe, but you have no clue what you owe. How many thousands of dollars? Um, I know that, uh, the bills that I have physically seen, um, show up at my door, I would say at a minimum, I owe around like 15, 15,000. And how much money do you guys have in savings? Right now we only have about $2,000 because we've been paying out of pocket for medical care

because we're in between insurance, so we don't have much savings. Okay. And you guys have insurance in place now? Yeah, we have a health share. Okay. Well, my advice, maybe against the financial planners, is to not keep ignoring all the debt. It's kind of why you guys ended up here. You've had your head buried in the sand, spending as you will, buying whatever you want,

and then looking up going, la, la, la, one day we'll deal with this. So you and your husband need to sit down and have a grown-up conversation about what are all the debts we owed, what is our game plan, I'm going to follow the debt snowball method in the baby steps. That's paying the debt smallest to largest, and let's see if we can settle with the medical debt once we get a clear picture. And you can pull your credit reports to get a clear picture. You can pull them all from each credit bureau. Go to annualcreditreport.com.

You can pull all three for free. Okay. So that would be my first step. Okay, I will do that. And, Bray, but listen the the collectors are supposed to be mean and scary and rude because that's their job but you are in control and if you just remember that take a deep breath and you control the conversation you tell them what you can do then they will start to play ball but their goal is to scare you and push you into a corner

where you do exactly what they want. And once you make it clear to them that you're not going to do what they want, but you're willing to do something, then the whole conversation changes. So trust us on this, and you hold tight. Hold firm in that conversation, and then they'll start to play ball. And never give them access to your checking account. Ever. Okay.

Get everything in writing. Whatever they say, say, i'm willing to do this but you need to get in writing you need to email it you need to snail mail it i'm not making any moves until i get in writing and that's a very good point record the conversations as well record the conversation and tell them if they refuse to give you something in writing go you're holding this up and i'll be happy to talk to your manager and start dropping in the fair debt collection act yeah start dropping stuff like that adam and and go, I'm not doing anything. You're the one holding this up.

And get names of every single person you talk to. Get down what day and time you called. You need to document all of this like a detective. Yeah. So then all of a sudden they realize they can't push you around. I like that. I will definitely do that. Do you see how this is all proactive instead of reactive?

Proactive instead of reactive. That's what you need to be. Reactive is how we got in this mess. Proactive is how we get out. Yeah. You happen to the debt collectors. Don't let them happen to you. That's what we're saying.

Yes. Got it? I love it. Thank you. Yeah. Thank you so much. Be strong. Don't be afraid to growl at them.

I'll throw them off. Okay. That might also scare them if you start growling on the phone. Thank you. Yeah. Thank you so much. Be strong. Don't be afraid to growl at them. I'll throw them off. Okay. That might also, yeah, it might scare them if you start growling on the phone. Could you imagine? That's actually kind of funny. I'm not saying it'll work, but it's a strategy. It's probably not going to work, but I think it could turn the tables a little bit. It might get them to laugh.

And I'm also going to hook you guys up with EveryDollarPremium. And what you're going to do once you get this tool, you're going to list out all of the income for the month, the husband's every single commission he thinks he's going to get. Let's list it out. Then all of our expenses. And my guess is once you do that budget, you're going to find, oh my gosh, we brought in $11,000 this month. Where is it going? We made great money. And you realize your expenses, your bare bones expenses add up to $4,000. Well, there should be $7,000 in these couch cushions, if we look closely, that we can throw at the debt. In total, even if you paid off the medical debt as it stands and the credit cards, it's about $23,000. You guys make way more than that.

You could kill this debt within a few months if you really grind it. And so I think this is going to be a memory and this is going to be the first day you guys happen to your money instead of it happening to you. So hang on the line. We're going to send you every dollar premium Christian and Taylor will pick up and they'll make sure to get you that. And for those of you wondering how to start paying attention, maybe you're like our friend Bria and you're going, everything's been a mess. I don't know where to start. I'm telling you the budget is the place. I know it's scary to look in that financial mirror and actually go, oh, that's how much debt we have. Oh, that's the interest rate. Oh, here's scary to look in that financial mirror and actually go, oh, that's how much debt we have.

Oh, that's the interest rate. Oh, here's what our paychecks actually add up to. Instead of just kind of the thoughts and prayers mentality, fingers crossed, let's just hope we have enough money at the end of the month. That's what's caused America to be broke. We're just hoping and reacting instead of being proactive. Hashtag money and margin. That's what it's all about. Instead of hashtag thoughts and prayers.

Because most of the time, it's really not an income problem. They're making great money. They're just not doing anything with it other than letting it disappear into the abyss. Yeah. So that's what it takes to get control, and it's possible for you. Get started. Everydollar.com, you can get started budgeting for free and make that intentional spending plan. Welcome back to The Ramsey Show. I'm George Campbell, joined by Ken Coleman. Open phones at 888-825-5225. Well, Ken, it's Financial Literacy Month, and one of the ways that we are celebrating is taking questions from students at high schools that are going through our Foundations in Personal Finance curriculum. And today's question comes from Ava in Illinois. Considering the whole goal of the baby steps is to never go into debt again,

is it advisable to freeze your credit? That is a mature question from a high schooler. I love that question. It is. They're already thinking about credit in a good way, I might add. So yes, the goal of the baby steps is to never go into debt again. Hopefully you haven't gone into debt if you're 16 or 17. That's what I love about this curriculum, Ken. As students are going through it, they're avoiding the mistakes. I just ran into someone yesterday. I was getting a cookie and she said, I recognize you. I'm going through the curriculum right now. And I was like, that's amazing. She's going, I'm paying cash for my car. Nice. I'm saving up. I'm not going to go into debt.

Was this at the mall? This was at a cookie store. It's a new one called Whitney's Cookies in downtown Franklin. You should stop by. So you're grabbing a cookie. Free advertising. Grabbing a little gluten-free cookie at the festival yesterday. Love it. So anyways, yes, it is advisable to freeze your credit. And here's what that looks like. There's three main credit bureaus and you can go onto their websites or call them and you can freeze your credit. What that means is nobody can create a credit account under your name using your social security number. And this is something many people do to it helps you avoid identity theft. And it helps you avoid going into debt because they have to you have to

unfreeze the credit in order to open an account. And so the only time you might need to unfreeze it temporarily is let's say you're getting pre approved for a mortgage. And that's really the only time and you can simply unfreeze it, they'll run your credit to make sure that you don't have any delinquencies. Then you can freeze it again. So it's really no big deal. And so I would absolutely recommend freezing your credit and checking your credit report once a year from that website I mentioned earlier in the show, annualcreditreport.com. No affiliation. It's just the actual, you know, it's the one you want to go to. It's free. Don't pay to have this done to run to pull your credit. This is different from a credit score. The credit report is actually showing all of the accounts that you have open and will give you a clear picture world of hurt and pain. Thank you for that. That gives me a lot of hope in the next generation.

All right, let's go to the phones. Adam is in Bozeman, Montana. What's going on, Adam? Hi, George. Hi, Ken. Thanks for taking my call. Sure. What's happening?

So I was just calling. I'm getting ready to really start attacking my mortgage. And I got in three years ago with interest rates being extremely low. And I was just wondering if it's more advisable to throw the money at the mortgage account with a low interest rate, or if it would be better off in like a gross stock mutual fund or a high yield savings account and then pay it all off in one big chunk at the end. This is a classic existential question in today's world, and then pay it all off in one big chunk at the end. This is a classic existential question in today's world, Adam.

And it's a tough one, truthfully, because we get harangued for this in the comments section on the internet. They're going, you should never pay down your low-interest mortgage. Keep it forever. And I'm going, do you guys understand the options you have when you don't have a mortgage payment? You can, like, move if you want to. And what I'm hearing, Ken, is people go, I have a low interest mortgage. I'm handcuffed to it because I can't sell the home because then I'll have to go get another mortgage that's going to be at a 7% rate. So number one, Adam, you're choosing freedom. You're solving for freedom when you pay down the mortgage. And we can do the nerdy math and go, here's how much you're paying in your amortization schedule towards interest. Here's how much you could make in a high yield savings. Right now it's about 5%.

Is that accurate? Yeah, 4.7 is what I currently have. Okay. And your mortgage is at a two something or three? Three and a quarter. Okay. So if you actually did the math on what you'd be making, do you actually have enough to pay down the mortgage today in savings? No, not today. I'm looking at about probably a 12-year schedule. Okay. So if you wanted to nerd out for a second to do a mathematical equation, you could see how much money you'd be making in that high-yield savings account over the next five years. And I can almost guarantee, since you don't have the money in full today, that you'd be better off paying down the mortgage because of how much interest you're paying on the front end. When you look at that amortization

schedule, you'll notice that most of it is going towards interest and only a small percent goes to the principal. And as you start paying it down, it starts to switch. And so I would almost guarantee that right now, without even seeing the math, it would be a better bet for you to have that guaranteed interest by paying down the mortgage and building equity versus investing in a high-yield savings account. Okay. Thank you very much. That's the math side. Yeah. And the emotional side, like I mentioned, I'm a guy who did exactly what I'm telling you to do, which is pay down the mortgage regardless of

what the market is doing, what high-yield savings are doing. Because you also got to remember, high-yield savings accounts, they're at pretty amazing rates right now, but that could fluctuate. That's variable. It could go down to four, it could go down to three over the next year or two. Whereas your mortgage, you're always going to pay that 3.25% on a few hundred thousand dollars on that mortgage balance. And I would encourage you to go look at your amortization schedule and everyone out there. If you have a mortgage, go look at what you're actually paying in interest per month and add it up over the course of a year. It will make you want to hurl. It'll make you want to get rid of that mortgage. So that's my thoughts, Ken. Anything to add to that?

Well, I would just say for our money audience, I don't think the Fed's going to do anything on the interest rates anytime soon. You may see something towards the end of the year, but the days of the super low rates are gone. They're not coming back anytime soon. But the flip side of that is, and quite frankly, I'm okay with it because I want to get more for my savings. So I think, like you were describing, I just would let the audience know that you're getting an elevated interest rate. And I think that while it may fluctuate some, I think it's going to stay higher for those that are savers. So that high yield savings account, that rate's going to stay at a pretty nice number, I think, for the near future and maybe distant future. Yeah. And the only time it really works out on paper is if you have the exact amount of your mortgage sitting in savings

working for you. And most people, they don't. They're not in that situation. And he didn't either. But just a side note i just because people are paying attention they think the fed's going to come rescue them and and right now the fed's black kind of backed into a corner um because they can't lower rates right now well spending is still so hot so they're not really cooling inflation well here's a fun little term i I know James loves it when I talk economics. Can I guess? Is it stagflation? We are now officially in stagflation. Most of you don't know what that is. You may remember it from sixth or seventh grade, but that's where the GDP shrunk the last quarter and inflation went up. And so when you see the economy, the GDP, the gross domestic product, when it is shrinking and inflation is increasing, you are officially in stagflation.

So the Fed, for those of you that are paying attention to this, in an election year, plus the fact that consumer spending is still high, inflation is spike, their hands are tied. So maybe that's a little too nerdy, but I'm telling you that's where we stand. So now it's good for savers. Debt is bad. It's always bad. It's even more ugly right now. Well, we always say, you know, broke people pay interest, wealthy people earn it. And so that's one of the keys of getting out of debt.

And I'll tell you, I have the best mortgage interest rate of all time right now. It's 0%. And the way you get that is by paying off your mortgage. And we found that as people do this, they don't call in and say, can I regret it? I could have made more in my savings account. I could have made the spread on the one or 2%. It's simply not worth the mental calories, the emotional weight. And it sounds silly to people who love to do the math, but there is such emotional mental freedom. Yeah. Well, for years, Dave called it financial peace. We still, you know, refer to it as financial peace. And while we put the word financial in front of it, it really is peace. It's peace in that I'm not worried. It's peace in that I've got options. You know, people that have a lot of margin and no debt in their life, they can change and make moves anytime they want to.

Switch careers, move different states. 100% sell a house, go somewhere. So, you know, if you want to be stable in an unstable economy, then follow what we teach. Because no matter what the Fed's doing, no matter who's president, no matter who controls Congress, you're just pretty much like you realize how much those people don't matter. Yeah. you realize how much those people don't matter. Yeah. You realize how much of a circus it is watching the news, freaking out. They want you to freak out about what's happening in the economy. And so if you're truly freaked out about what's happening in the economy, what could happen, then we would all be paying off our mortgages if we

truly believe that. Well, I agree. But why would people do that when Congress is continuing to spend trillions and trillions and trillions of dollars? It's just, it's debt is just okay. It's just a necessary evil to so many people except for us. And that's sad. And we're converting people. America's number one in a lot of things and consumer debt is at the top of that list. We are leading the charge. All-time high.

The national deficit, all-time high. We keep beating our own personal best, Ken. It's amazing. It's really exciting. There's nothing we can't do. Well, I tell you what. If it were Financial Olympics, we'd be winning, huh? That puts this hour of the Ramsey Show in the books.

My thanks to Ken Coleman, my co-host, everyone in the booth keeping the show afloat, and you, America, will be back before you know it. you