The Ramsey Show - App - Do I Have Enough Money To Retire? (Hour 3)

Episode Date: January 5, 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. I am your host, Jade Warshaw. I am joined by author and host of The Rachel Cruze Show, Rachel Cruze. We will be taking your calls all hour. So give us a call. Phone lines are open. The number is 888-825-5225. We'll talk about your life, your money, relationships and money, kids and money, whatever it is

that is on your mind. We would like to talk about that with you and hopefully help you with that. So let's go straight to the phone lines where we have Hunter in Philadelphia, Pennsylvania. What's going on? Hey guys, how you doing? We're doing good. How can we help? Yes, it's more of a question of like, what would you do in my shoes? Basically, my wife is in school for 18 more months and we will be renting till she finishes just based on proximity and commutability and things like that. At the end of that, we know we'll stay in the area for like five to seven years. We're thinking of buying, but we never wanted to time the market to buy necessarily. But we know it will be a short term, you know, five to seven year home we just don't know if maybe like buying with that short

term in mind is a smart thing since we know we'll be moving um back to virginia at that point or if we should just continue renting keep putting money away for more equity in the house down the road that's interesting um where are you guys at financially hunter do you guys have are you would you be in a spot in 18 months to be able to buy a home, have a good down payment, letting the mortgage be no more? Like, have you guys run the numbers? Like, would you be able to do that financially? Absolutely. Yeah. So we definitely have the down payment and, you know, in 18 more months, it'll just be, you know, we could own a more expensive house. Not necessarily we're doing that, but financially we are stable in that sense.

Yeah. I mean, I probably would buy if it's gonna be if it's gonna be five to seven years i would i would and the fact of the matter is like like if you want to make god laugh tell them your plans like that's the kind of way i feel like i think it's good to have a plan but you never know you might get in the area and decide to stay like i just feel like there's a lot of factors in a seven-year window and for that reason i wouldn't rent the entire time yeah yeah that makes sense yep go ahead and buy but again under making sure yeah you're debt free you got a good down payment emergency fund all the things check all those boxes we uh we give you the thumbs up to do it love it because i really do think you know when

you look over the scope of time with real estate it's gonna go up right I know there's been down times I know all the things but over the scope of at least five to seven years you're going to see a return on that and so and then you can use that as equity when you go buy home yeah he goes and leaves and goes to Virginia so yeah I agree seven years also it's just a long time to lose out on yeah but yeah like not that renting is losing out but it's just a long time to lose out on. Yeah, but yes. Like not that renting is losing out, but it's just if you don't have to. That's right. If you have the ability to buy and you have that time, if it was 18 months, I'd say, no, don't mess with that.

Yeah, absolutely. But five years, I would. Very good question. Thanks for the question, Hunter. Let's go on to Newark, New Jersey, where we're talking to Mike. What's going on, Mike? Hey, Jordan, Rachel.

Thanks for taking my call. You're welcome. How can we help? So my wife and I are going to combine our finances as soon as this weekend and we're just trying to figure out how to split our money between either a high yield savings account or a generic bank savings account and our goal is to save 20 for a down payment okay cool i'm happy that you guys are starting to combine your finances. Are you newly married or is this just something you decided to do because you think it's the right thing to do? So we're married about a year and we're just finally fully committing into it.

Awesome. So you're interested in buying a house, you're saving up for the 20% down payment. Where's the best place to put this money, right? mean i'd probably put i'd put it in a high yield savings account that's what i would do um yeah you're going to make more interest on a high yield savings um and usually some of the best ones i've found mike jade i don't know what you've found but that usually it's like an online bank yeah we like my husband and i we have one we use ally bank um for oh there you go for for our high yield savings so a traditional savings account you're not going to make as much interest um you may have more flexibility to get money out when needed with that high yield you have you you're not able to

use it like a standard checking right there's a limited number of transactions but if you don't want that yeah and you're not using it for that you're using it to save up for a down payment you're not going to touch the money once it's in. So those are the kind of the big, you know, obvious differences in it. So yeah, you're, and right now, Mike, I'm like the high yield savings, when the interest went up with the Fed, with the debt, it also went up with the savings. And so we did, we found some good, some great rates with high yield savings. So yeah, that's, that's the route I would take for sure. I love it it does that answer your question so you wouldn't put anything in a generic bank savings account just put it all on

how you yeah i put it on yeah put it all there but if you have mike uh you you know for like an emergency fund and that kind of thing i would have separate line items within that account to know hey this is our emergency fund we're not touching this this this is our dump for our down payment so even if you wanted two different accounts or within the same account we have yeah line items in that so yeah this is not an ad for ally by any means um but i do use ally and they have buckets there so you can you could either i mean you could make another account if you wanted to but honestly you can just put them in different buckets yeah and you can see it that way honestly I think with that it depends on your temperament and because some people like there was a stage in my life where I definitely mentally

would have done better with a separate account for for emergency funds versus that yep so whatever you think will work better for you and your wife. All right. Awesome. Yeah. So I had the buckets and that just seemed like the easiest way to do it. Yeah. I mean, some people like Marcus, like there's different banks, like people have different preferences. So don't see this as an ad. Like, do your research, figure out the one that you like. But definitely I would veer towards an online yield savings account. Hope that answers your question. Rachel, I think there's a lot that you can talk about when it comes to savings, because a lot of people struggle with saving money, whether it's for a down payment, emergency fund, or just in general, they've never built that muscle of

savings because it really is a muscle that you build over time. And I always, these are, we can go through a couple of tips that I think will help people um i definitely think that if you have savings you need to put it in a separate location like we just talked about versus a checking yes yes it can't be grouped all in there together and you just mentally know like well this is my savings like that's number one um you're three to six months i think that you know once you get that to a place keep that separate from any other savings, whether it's through buckets or depending on your mentality, like we talked about in a completely different location. I think another great way to save, like if you're just,

if it's tough for you, that's one thing that I would automate. We talked earlier in other segments about not automating. Savings is something that I would set up. Like once you kind of know what your budget is, it's like, all right, this automatically comes out of my paycheck. The day that I get paid, like don't mess around. Yeah. Don't mess around and, you know, put it for a couple of days later because before you know it, that money's going to be gone. So that'd be my thing too. And thing three, these are not in any particular order, by the way, but you've got a budget for savings. Yes. You have to know that you have the margin for it and and prioritize against it. Right. That's right.

Like against it. Yeah. If you have a you know, you want to hit a certain amount for a down payment in two years, you have to back out and say, OK, how much we have to save per month. And that's going to affect our budget. That's our goal. So you kind of plan it out that way. But it is I like the the automation factor in it, I think is really good because it out that way. But it is. I like the automation factor in it. I think it's really good because it creates the discipline. But the budgeting aspect is so key because if you don't budget and you do an automated transfer for savings and then something comes up before you know it, you're pulling that savings right back out. And nothing, Rachel, is more frustrating than that wheel of saving and spending, saving and spending. So budget for your savings.

That's so good. This is The Ramsey Show. You're listening to The Ramsey Show. I'm Jade Warshaw, your host, joined by your other host, Rachel Cruz. We're taking your calls about life and money. So give us a call. The number is 888-825-5225. And we will be here for you. It's the new year.

I'm wondering what your goals are. If you're anything like the rest of the population, it's probably one or two things, money or health, right? It's like you're on a cleanse, you're on a diet, and you're trying to get this budget in order. If that's you, I've got two things for you to consider. Number one, we have a wonderful resource coming up here on January 11th. It is a Break the Cycle free live stream. All right. So you can register for free. It's January 11th at 7 p.m.

And we're going to give you practical steps on how to get your money on point and in check. If you're one of these people who you're like, man, no matter what, I feel like I just can't get ahead. I feel like I'm living paycheck to paycheck. This really is for you. All of us are teaming up and we are just hitting you with a one-two punch of money knowledge to get you through the new year and beyond. Okay. So I want you to sign up and register for that. Next thing is in order to get prepped for that, because you're going to get some information you're going to learn about every dollar, you're going to learn so much. And then after that, I want you to mark your calendar because January 31st, I'm going to be

doing a webinar, basically going over again what you learned at the live stream. So those are two dates I want you to remember, January 11th, January 31st. Go January 11th. It's free. Get the, get the, get the knowledge, right? Get the game and then come again, January 31st. And I will re-up you on the knowledge and you'll keep going forward. And you need that because Rachel, goals, it's not easy. Like you have to keep, you have to keep at it. Like I posted on social media, I think it was today I posted, when you set these goals, right? It's like, you're all excited.

It's January 1st. He's like, I wrote it down. I'm like all excited about it. And then the resistance starts coming and you're like, oh, I didn't know it was going to be like that. Like, and the thing is the resistance doesn't, like if you set a money goal,

you're like, all right, this year I'm paying off my debt. Whenever I have extra money, I'm throwing it on my debt debt and then suddenly it's like your car breaks down suddenly like you know something happens crazy in the kitchen the blender flies off and the knife flies and it breaks the window now you got to pay for the window like it's like all these things start happening and it's all trying to get you off pace yes and when that happens I just I want to encourage everybody just zoom out for a second because I feel like so many people have hit that wall where it's like, is it going to be worth it? Like I told myself I was going to bring my lunch and it's just it's such a hassle and you already want to give up. You've just got to zoom out for a moment and go, OK, this is resistance.

And I knew that this was going to happen. This is not a bad thing. It doesn't mean that I should stop. Matter of fact, the way I view it is if you're getting hit with that, it means you're really creating friction. And that's good. Because if you want change, you cannot change without creating friction in your life, right? You're doing something completely different. You're going on a new pathway and there is going to be resistance. So embrace that. Stop for a moment and go, okay, that's what that was. Like now I know that's what that was. I can go forward and don't let it stop you. That's my encouragement for the day. Now let's get to the phone lines where we've got Carrie in San Francisco, California.

Hi, how are you? Thank you for taking my call. You're welcome. Thanks for calling us. How can we help? Well, essentially, I would like to retire. I'm planning on retiring in October. I'm a teacher and I'm getting nervous just financially if I'll be able to do it. So I just wanted some reassurance. I think I'm going to be fine, but I just need a little reassurance. Okay, so let's kind of look at your numbers here. Number one, are you working with any sort of professional or is it just you looking at your accounts evaluating it on your own i do i do have um somebody who manages my roth and ira my portfolio and what are they saying to you he says i'm totally fine okay well that's good that gives me a little bit of but let's kind of let's make sure you understand it. So how much do you have set aside in your nest egg? I have 350 right now.

Okay. And what about... And then I have 80,000 in high yielding savings. Okay. And that's just because me, I've been stockpiling since I paid off my house. Okay. More than a train Okay. And I also have a travel fund. Yes. And I have a travel fund that's like it's 30,000 and it's another high yielding. And that's the one I was planning on, you know, when I want to travel, I could just go

into there and get it. I love that. And so if you were to retire in October, what percentage are you pulling off of your nest egg? And what is that equal to per year? Oh, well, I'm not sure if I'll even have to pull out any. I'm assuming I met with the retirement people and I'll be getting about $1,800 a month. And from that, I also have another $1,200 that I get monthly from another retirement through a divorce. Okay. So none of that is the $350,000 that you talked about? No, no. That's just what I'll be getting from my retirement through work. And yeah, that's what I'll be bringing in. Yeah. Like if that $3,000 is enough for you to live your life and do everything you want to do

and you're not, I have no objections, Your Honor. Yeah. Yeah. I mean, it's exciting. It's a big question, Carrie, because I don't want to direct you wrong. It's like you, you know, retiring. So I do want to make sure that you are talking to somebody that's looking at your actual accounts and the historical data of what they've done. I mean, like, yeah, they're looking at the whole picture. But for you calling us in a two minute radio call. Yeah, I mean, it all seems to pan out. Carrie, you've done a really great job and your living expenses, you don't have a mortgage. Do you have anyone or anything that you're responsible for financially? Is it just you? No, I don't. Okay. Yeah. So $3,000 is enough for you, Carrie. Plenty month to month. And you have a travel funds over here. You got $80,000 stacked away. Yeah.

How much is in that divorce? The one that's paying you $1,200, the one from the divorce you said? How much is in that? What's the nest egg? I just, I'm going to get $1,200 for life. For life? Okay. Yeah. And then there's the $1,800. Now are you getting any Social Security? No, I

will be, but it's minimal. Yeah. And I'm only 60 and I'll only be 60, but it's minimal. Yeah. And I'm only 60, and I'll only be 60. So it's not like I don't think I can draw on Social Security for quite a while. But, yes, there is some available there. And I also know I won't be paying into my Roth because that's what my guy told me. He's a carry, but you'll also be having $800 that you pay every month for your rent, you know, that you won't be paying once you retire. That's right, because you're not drawing an income.

Like, you're not working anymore. Now, the $1,800 that you're getting, what's that nest egg? Or is that continuous as well? That's for life as well. That's just through my work. Is that just a pension as a teacher? Yeah. Yes, I'm a teacher

that's great Carrie from right now it feels like green lights that's great congratulations that's exciting congratulations thank you I feel a little better

you've done wonderfully thank you you're welcome Carrie happy new year thank you so much. You should feel great. You've done wonderfully. Okay, great. Awesome. Thank you. Yes. You're welcome, Carrie. Happy New Year to you. Thank you so much for the call. You know, there's so many people, Jade, that, oh, they want that story.

And here's what I love about Carrie, too, is I'm like, there's a level of contentment in her. Did you hear that? She's like, I have some money that's set aside for travel, but i can live on three grand i'm great i'm great and the 350 that she saved up i'm like that's a lot of money to stock away throughout her life one for retirement for retirement and you know you hear people and they're like oh i have to have x amount you know all of this and i'm like there's just a beauty in listening to carrie as she walks through those numbers and i'm like yeah she's done it. She did everything right. Yes.

She let them take the money out for her pension, but then she continued to put hers away in the Roth, which is what we teach. I love that she's got the 80K saved, which honestly is above and beyond what she might need for an emergency fund. But I love that she has it. Like, that's wonderful.

And for me, I think the biggest thing, her mortgage is paid off. Yes, she didn't have a mortgage. No mortgage. There's no like bills. Yeah. And that's why she can be like, yeah, 3,000. I'm good on that. Yeah, I think the biggest thing, her mortgage is paid off. Yes. She didn't have a mortgage. No mortgage. There's no like bills. Yeah. And that's why she can be like, yeah, $3,000. I'm good on that.

Yeah. I'm great. I mean, it's awesome. That's what people have to challenge yourself to think about. And in San Francisco, California. I'm like, hey. She's in Northern California. Like as a teacher, y'all.

I mean, did you just hear all of that? Like. Yeah. That's great. A teacher in Northern California. Like, yeah, I feel like we need to marinate on that for a second, Rachel, because that's such. Because I bet with her house, she's close to being an everyday millionaire. One hundred percent. We should ask her that. Carrie, we're going to just dream for you. She's an everyday millionaire. But for those of you

listening, start dreaming. It's January. Start dreaming. What would your life be like if one day you paid your mortgage off? Right. Most of us are paying a couple thousand dollars a month for our mortgage. That's the biggest line item. How would your life change? This is The Ramsey Show. You're listening to The Ramsey Show. I'm Jade Warshaw. This is Rachel Cruz to my right. We're taking your calls all afternoon. So give us a call. The number is 888-825-5225. I'm excited to be here taking your calls in the new year. So whatever it is that's on your mind, I know you've got goals. I know there's things that you're aspiring to. You're probably starting to have those difficult conversations with your

spouse. You're starting to budget. You're starting to take your lunch, all those things. It makes you feel some type of way. So we here to help so give us a call uh we've got analise who's on the phone line in phoenix arizona what's going on analise hi um so my husband and i are dual income no kids and we're looking to have kids in like three-ish years and we just bought a house and so we're trying to figure out for the next three years we know we're going to have more financial flexibility than when we do have kids. And so we're trying to figure out because we're young, whether to focus a lot of our attention on chipping away at our mortgage or saving for retirement. Since we live mostly off just his income, we have almost all of my income to put somewhere. Awesome. That's great.

That is great. I think that's a great way to be thinking because it is true when you have kids, life changes and things do get more expensive. And so there comes the question, put the extra money on the mortgage or onto retirement? So the answer that I'll give you is just kind of filtered through the framework that we use here at Ramsey Solutions. How familiar are you with the baby steps? Pretty familiar. We have zero debt. We have six months of living expenses saved up. So we have like all those. I'm pretty sure we have all the baby steps done. Perfect. Okay. So then it's just really, we're getting to a technicality, right? So for all intents and purposes, you're on baby step four, five, and six, right? So baby step four for new listeners is putting 15% into retirement. Baby step five is you're putting aside some amount of money that you decide for your kid's college,

and you're putting it in a non-prepaid 529 or ESA account. And then baby step six is you're also simultaneously putting extra money on your mortgage. Now here's the thing, baby steps four, five, and six, if they all apply to you, you do them simultaneously. So are you already at the 15% mark on your investing? Yes, my husband puts 15% of his paycheck and I put 20% of mine. Okay. So you want to be at 15% for your household. That's the goal. And once you get to 15%, because remember we're doing these simultaneously, anything above 15% at this point, you need to be thinking about baby step five and baby step six, because you are saying, okay, now if you want to wait until you have kids to do baby

step five, yeah, that's totally fine. I wouldn't put I would not put money aside for future children that I do not have yet. Yes, that's right. And then for you now you're to baby step six. So the extra money right now you're putting on baby step six, which is paying off your home now. And this is for you and anybody listening. Once you pay off your home, then you can go ham on the investing. Like you can start investing way beyond 15%. And that's the beauty of how this plan works is you are going to have that extra

money to just get crazy. And that's where things like go off the rails. So my question with that would be, we're super young, I'm 22. And so I have heard the advice that investing in your retirement younger is going to do better. And since we just got our mortgage, it's probably going to be a little while for us to fully pay it off. Would you recommend putting more than 15% because we're so young or no matter what, 15% and then pay off the half? I would still do it the same way because you're going to be fine. You're going to be fine. And you're creating diversification, which is really important. 15%, number one, is so much more than average. Like most people invest right up to their match. Most people do

it while they have debt. So the fact that you're debt free, you're at 15%. And I'm sure, by the way, if you have a match, the match is not included in the 15%. So if you or your husband has some sort of your match, make sure you're still of your own money putting 15%. And then, like I said, with this extra money, yeah, you guys are young. And that's part of the beauty of this equation for you. Because not only are you going to grow compound interest over time, because you are actively investing, you're going to have your home paid off over time. It's just going to offer you so many options because you're going to have wealth on two sides. And then once you pay your home off, like I said, you're off to the races and you're just going to be blown away by how this works for you. Yeah. Because Annalise, let me say this, Annalise, just to paint a picture for you. Yeah.

That 15% of your income into retirement and then everything else goes to the house is what I would do. And because you are so young, you pay it off early. And then what's wild is you're gonna be one of these people that stands on the debt-free screen stage and you have your house paid off and you guys are in your 30s and then you go and invest like crazy because then you'll move on to baby step seven,

which is save and be, you know, or invest and be extremely generous. So you will then bump up that 15% probably with investing and do more if you guys want like you just have so many options but having a paid for house and investing 15% like that's the ultimate goal which you guys are working towards which you could have which is just crazy how much you guys make a year I'm just curious um we make roughly combined close to like $88. Okay. How much is your house? Our house, we have $305 on the loan. Okay. Yeah. I love that. So yeah, you guys are gonna get this

paid off and it's gonna be great. And then you can bump up other investing if you want after that. Well, let's kind of reframe this in your mind on a lease because I do think that sometimes people view, okay, I've got my retirement investing and then I've got my house. They're both investments. Yeah, that's a good point. Like they're both investment vehicles.

I don't want you to think that a 401k or a Roth IRA investment is more important or a better investment than a home. Like there's a reason that real estate is a big choice for people to put their money because the rate on return is very, you can count on it. You know what I'm saying? We say all the time, like if you, if you're owning a property for three to five years, five years or more, you are going to see a return. Like that's what we've seen over time. The same way we talk about the S&P 500, we know like over time, you can expect, you know, a 10 to 12% rate of return annualized over the

course of, you know, X amount of years. So that's, I think that's really important for people listening to understand these are both great investment vehicles. That's why we say do them simultaneously, not do this one first and then reach over here and do that one. So that's something worth pointing out. Thank you so much for the call. I like it. It's a good conversation. All right.

And the younger people are that are calling, it's amazing. I'm like, Jade, I feel like we've had so many calls of young people doing this stuff early, you guys. And I'm like, and it's just an encouragement to you listening out there uh again regardless of age but man it there is something to be said about these principles and doing them in the right order and and being diligent about it it just it it proves in your favor always it will yield in your favor yeah but i mean we we do have to call out like there is that tension between um we know like she said like obviously the longer that you're in the market, compound interest has a longer time to work for you. And obviously, the more money you invest, the more money there's there. But it is that tension between if you work the plan and do it

the correct way. Yeah, like you're pushing play on some pushing pause on some things to push play on the on other things. But ultimately, like it all works out together you know and so many people are worried like well if i pay off my debt then i'm waiting to invest and i know you guys say pause investing while you're paying off debt jade i'm gonna miss out you know three years and i can't stress enough to people listening that you will make it up like the way this is designed you will make up for the time as long as you stick to the plan like if you yeah like lollygag or if you like take this but leave that and you don't this is a plan to be worked as the plan is written and i can't stress that enough um if you say oh i'm working the dave ramsey plan but you're just you

know messing around with this debt and kind of being willy nilly on it. And it takes you six years. Yeah. And you miss out on retirement. You're missing out. That's right. That's right. So you've got to walk it the way it goes. You know, if you say, oh, like I talked to somebody the other day, they're like, oh, Jade, I'm working the Ramsey plan. I'm not investing yet, but I just really want to get my house paid off. Yeah. I'm like, listen, I'm glad you want to get your house paid off, but you need to be investing. So follow the plan as written if you want the results that we're always talking about. Yeah, there's an order. Yeah, it's the order for the reason. But yeah, like Annalise who just called, she's at the perfect position to do it. And it's going to be amazing. We're debt and money doesn't have to be the thing

that controls you, that you really do control it. So being proactive in that sense. It's great. I love that. And then I always like to remind people who think that it's too late or it's too late to start or maybe there's no hope. I'm like, listen, look at look at me right here. I didn't start investing till my 30s and I'm blown away. Like I'm blown away by the numbers I see by just being diligent and working the plan. So if you're out there, you feel like you got a late start, it's not too late. Just keep doing what you know to do. And in the right time, you will reap a harvest if you don't give up.

This is The Ramsey Show. You are listening to The Ramsey Show. Thank you for listening. I am your host, Jade Warshaw, joined by Rachel Cruz. We've been taking your calls and now we've got the scripture and quote of the day. James 1.17 says, every good and perfect gift is from above, coming down from the father of heavenly lights, who does not change like shifting shadows. Love that one of my favorite verses. And our quote of

the day, I feel like you should read this, Rachel, because you're a true Swifty. I feel like Taylor Swift quote, no matter what happens in life, be good to people. Being good to people is a wonderful legacy to leave behind. See, there you go. What a gal.

What a gal. She was at the Chiefs game handing out $100 bills to the staff and everyone. Yes. That's pretty awesome. She like crazy. She like tipped insane bonuses to all of her to the staff and everyone. Yes. That's pretty awesome. She like crazy. She like tips and same bonuses to all of her.

I heard about that. Yep. Truck drivers and stuff for her tour. And yeah. I'm about that way. I believe she's generous. You know what? I'm going to say in front of all the world.

I think I need to understand more about Taylor Swift. I've never been on the T-Swift train. Oh, come on. I got to get with the times. I'll share my seat with you on the train. It's a fun ride. Yeah. Help me get on because I don't get it and I need to get it because I feel like I'm... I know. I think she just speaks what we've all felt in life. Is that what it is? It's her song. I think it's her, well, like her songwriting. She sings, I should say. Yes. And writes. I think just what we all thought.

I don't know. That's good. I'm a 14 year old at heart. What's your favorite T-Swift song? Oh gosh, Jade. Just hit me with one. Shoot. Give me a few notes.

I'm not going to sing. I'm just kidding. That's going to be my question. The Lover album might be my favorite. That's going to be my question to all the callers moving forward. All right, let's go to Peter in Manchester, New Hampshire. What's going on, Peter? Hey, thanks for taking the call.

So I am about $9,920 in credit card debt and $19,638.87 in student loan debt for a combined total of around $30,000. thousand nine or nineteen thousand six hundred thirty eight dollars and eighty seven cents in student loan debt okay for a combined total of around thirty thousand dollars plus or minus that's right a little under that um and so i was wanting to know how can i get out of debt and then what should i do after i'm out of debt i have emergency fund. So I don't know where to start. Good. Well, you came to the right place. I'm happy that you're here. Okay. So let's start by getting some particulars. How much do you earn every month? What do you take home? $874 after taxes. I'm a student employee at my university I currently attend.

Okay. What year of college are you in? I'm a sophomore. Okay. So you're in school full-time. Yes. If I wasn't, I wouldn't be able to stay in the housing. And since my parents passed away when I was 11 years old, I'd be homeless on the streets. Oh my gosh, Peter. Oh, I'm so sorry. That's tough. Oh, goodness. How old are you now? I'm making it.

I'm 21 years old. Wow. Way to go. Wow. So you went through college. I just want to make sure I get this. Are you still a student there or you're working there and living there? You're still a student.

I'm still a student. Okay. Sophomore. Oh, I'm sorry. I hear you. Okay. So, okay. I want to address two sides of this. I'm still a student, my understanding is per FAFSA, which it's all, all of them are federal loans. Right. So I won't have to go into repayment until

six months after I graduate. Right. So, and I'm guessing they're subsidized, so they're not, they're not gaining interest right now. Yep, I do have two unsubsidized loans with a max interest on both around 5.38 percent. Okay, yeah, and I know that it sucks that it's accruing interest on the two unsubsidized loans, but I wouldn't let that get to me right now. Now, your credit cards, you don't want those to go into default, so I would work to make sure I'm paying minimum payments on those. If you can get a little extra, that's fine. But my main focus for you is focusing on school and focusing on graduating without any more debt. Is that fair enough? Yes. And Peter, can I ask what caused all the credit card debt?

So I needed, I was a little worried I wasn't going to be able to afford college anymore. So I kind of panicked and purchased a bunch of emergency supplies in case I ended up on the streets again. And so that's the majority of the debt. I also purchased a bicycle to get to and from a job site when I was homeless after I left the Marine Corps after I was medically discharged I was able to use a bike to go to and from my campsite and my job okay so I was kind of planning ahead and I planned too far ahead okay which is understandable yeah yeah yeah totally but yeah Jade, what she was saying though, I think is, is key. We don't want to obviously go deeper into that and we don't want

to default in that. And so, um, is there any other time, Peter, um, that you can look at throughout your week that maybe you could do, um, one more thing on the side to bring in some income? Currently, I'm also in the Army ROTC at my college. So I just got a medical waiver approved to reenlist or rejoin the military. Okay. And so in about four months or so, I'll be getting an ROTC stipend in addition to a scholarship that should actually reduce the overall cost of my overall college experience by about half because I'll no longer have to account for room and board. So, yeah, it's really good. getting the $420 monthly stipend from the United States Army. I'll also be working an additional

on-campus job that pays around $17 an hour. Okay. How many hours? About 20 hours a week. And then my current job I work that nets me after taxes $874 per month is a work-study job. So it is a mandatory required minimum of $12 an hour for a maximum of 20 hours a week. Okay. So here's the equation we're trying to solve for. I like that you're getting into it. You're finding money. The equation we've got to solve for is can you pay for tuition and cash? How much does it cost? Because I don't want you, I mean, you've got $19,638 of student loans. And my guess is that's because you've gotten student loans for each semester thus far.

So we've got to look at going forward. Are you able to make this work? And what does it look like going forward? Does that make sense? Yep. So what do you need to, um, how much does school cost? So my current semester, I was looking over my bill. It's around $25,000 per semester. $25,000 per semester? Where are you going to school, Peter? I'm going to Southern New Hampshire University. Okay. Is it public-private? I don't know.

I believe it's private. It's a private non-profit, though. That feels expensive. It's also because I'm an out-of-stater, so I was in D in dc yeah unfortunately it was really unsafe for me to continue living in dc while i was homeless i was involved i was shocked so um i didn't feel safe going to school or living in washington dc anymore okay and okay um how old are you again? Tell me your age again. 21 years old. And what's your degree going to be in?

It's going to be in justice studies with a minor in sociology. I'm going to say something difficult. And it just, it just is what it is. You're choosing an expensive route here for school. You're at a private university and you're at an out-of-state private university. And you still have two and a half years left. so something's gonna have to change and i know that you've suffered a trauma so it's very hard for me to sit here and be the one to say hey listen go back to dc um i'll be honest with you if you're in dc i don't know like can you go to any school in in can you get into maryland or can

you get into virginia does it count because i'm obviously district of columbia is a small area so are there the do the surrounding states count at all? You need to really look into this and start evaluating your options. Is there anything you can do? Is it an online school? Is there something you can do that you can get that degree, go slowly? You cannot go into any more debt. That's got to be off the table. I know you've been through a lot, but we got to start thinking about this. This is The Ramsey Show.