The Ramsey Show - App - Do You Know Where Your Money’s Going?

Episode Date: September 20, 2024

Live from Ramsey Network, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by the inimitable Jade Warshaw this hour. Open phones at 888-825-5225. If you want to jump in, we'll talk to you about your life and your money. And remember, it's just two people's opinion. Take that with a grain of salt. That's right.

And be kind. Let's start off with Michelle in Hartford, Connecticut. What's going on, Michelle? Hi. Thank you for taking my call. What's going on, Michelle? Hi. Thank you for taking my call. Sure. How can we help? So my question is, should I be contributing more money towards my retirement or paying

off my HELOC, which is about $160,000 at 3.99% for a year? Ooh, wow. What caused you to take out such a large HELOC? So I purchased a house last year and it needed a lot of renovations. And my plan was to pay it off in cash, which I had, and not have a mortgage. But just in case I took out a HELOC,

just in case I needed a little bit of extra. Instead of fixing it up little by little, I decided it was just going to be cheaper just to do it all at once. And I did. So I went over, obviously, over budget. And then also I decided to go back to school and take some classes for a side gig. So that went on as well. So that's how I got the HELOC. Is it the only debt that you have? Yes. Okay.

And are you currently investing? I'm basically asking you if you're walking through our baby steps. Are you investing 15% of your income now or are you doing any investing? So I was doing the max. I was doing 19% in my 403B and then the max in my Roth IRA, which is seven something. Okay. So now I decided to try to cut, stop doing that. And I'm doing 4% in the 403 and trying to pay down the HELOC.

But I'm at my age at 56. I'm wondering, is that a good idea, which I'd be doing because I'm not contributing to the Roth, my tax, I don't have the tax savings and all that. Well, you weren't getting tax savings from the Roth anyways. Yeah, good point. Only in traditional. What about the 403, though? Yes.

Is there a tax? But I wouldn't do any of this for the tax savings. That's not what's going to get you to where you want to go. So do you have any savings right now? Just emergency fund, liquid cash? No, I don't. Because there's always something coming up. That's another thing that I'm... What's your income? Something's breaking. About $100,000. Okay.

It's just you? Yes. Okay. So, okay. Rule of thumb, George, we usually talk about if the HELOC is more than half of the value of the home, it goes into baby step six. If it's less, it rolls you back to baby step two. So this would be a baby step six scenario. Yes. Because what's the home worth? About $450,000, $500,000. Okay. Well, I think it would be with income because you make $100,000. So if the HELOC was like $50,000, we could throw it in Baby Step 2.

But because it's such a large HELOC, I'm just going to throw you back into Baby Step 4 through 6 here. So what I would do in your shoes, though, you're not even there yet because you have nothing in savings. And that scares me because what happens when an emergency pops up, Michelle? We're going to go into debt to cover it, aren't we? Right. So we've got to stop that cycle. So what I would do is pause all investing in order to save up a six-month emergency fund. Then we can go back to investing, do 15%. Whatever's left over, we start chucking at the HELOC. Okay. So even the 4% that the company matches, should I be doing that?

Even the 4%. Because you're going to be there soon. I mean, you make $100,000. How long would it take you to get $20,000 saved up if you got real intentional and paused investing? Live on $50,000. A few months? Yeah. So we're not talking about six years of not investing. We're talking about 90 days. Okay.

And then when you go back to investing, you'll be doing 15%, throwing money at the HELOC. How quickly could you pay off the HELOC making $100K? Let's see, probably, I'm thinking a year and a half. I like that. I like that. That's you living on $50,000 a year. And then you can go back to maxing out all your retirement accounts. You'll have catch-up contributions.

And so you've still got years of work to go. You're still young in that regard. You said you're 56? Yes. So think about what could be 10 years from now where you retire with no payments and a big old nest egg at 66 after maxing out for a decade. So you're going to be in good shape. I would just reprioritize the steps.

Okay. I just feel like I'm losing out on the retirement part, like the savings part, the compounding. There's part of this equation that at this point, you're at the point of acceptance because the truth is when you make these decisions, there's a repercussion. And it would be wonderful if I could make a mistake and not have to pay the price for it. But in this case, making the mistake of the HELOC, I hate to say it, but now because of that, you have to pull back on your investing. And so there's a yin and yang to that that can't be avoided. And you just have to accept it for what it is at that point. But truthfully, what

George and I are telling you is the best way to get a hold of this and still be able to build wealth. And you're paying off the debt to build wealth, and you'll still be able to do all of that. Okay. Hope that helps, Michelle. Is there any way to tell at my age? I've heard different things, like I'm behind retirement, I'm okay with retirement. I don't really understand how much I should have at this point. How much do you have?

700. 700,000? Yes. Well, if you think about it this way,000. $700,000? Yes. Well, if you think about it this way, there's something called the rule of 72. And what that would mean is, you know, if you look at, if we get a 10% rate of return on your money average, so we know it's going to go down, it's going to go up. If you follow the roller coaster, though, 10% annual average return, then every 7.2 years, your money would double. So $700,000, if you didn't add anything to it and you got 10%

over the next seven years, it would become 1.4 million. Okay. And that's without you adding a dime, which we know you're going to start maxing out. And so that tells me you're going to be just fine. You're going to have zero debt with probably closer to $2 million when all is said and done. Okay. So I would say you're on track, but I also wouldn't get comfortable just yet. Right. No, no, not at all. Okay. Well, thank you so much.

Yeah. Thank you for trusting us with your call. All right. Should we try another, Jade? I don't know, George. We got a minute and some. Let's talk about mistakes and repercussions. Okay.

Because we do hear that. You know, sometimes people call in and they're telling us the error that they feel they made and how can they get back on track and it's our job to help them get back on track but then you can't help but look in the rear view and go but if i do that i'm missing out on and a lot of times it is the feeling of i feel like i'm going backwards to go forward you're telling me to pause my retirement you're telling me that i've got to possibly sell a vehicle possibly downgrade and home that feels like punishment we generally only want to think about opportunity cost when it'll benefit us that's right but not when we go into 160 000

of debt because if you think about opportunity cost it could be well if i avoid debt i'll have all of my income at my disposal to max out retirement and retire early. But instead we go, yeah, but I want this thing now. I want instant gratification versus delayed gratification. So opportunity cost just helps you think through if I put money toward this or if I go into this debt, I can't put that money toward this next thing. That car payment can't also be invested. That's right. And it's a cautionary tale for anybody listening. It's best laid plans. In her mind, it was like, I've got the money, but just in case I'll pull out this loan. And before you know it, it's like, you know what? Getting my education sounds like a

great idea. And so before you know it, you've gotten off track. And the hard part is when you make a choice, it has a repercussion. We love doing math too when it comes to investing, but never when it comes to what our debt is costing us. That's right. Through interest, through our income, robbing us of our future. And so you got to think about this. The time to do math is before we go into debt, not after when we want to keep justifying our behavior. That's right. And the good news is it's not too late. It's never too late to make your situation better and to make some positive progress in the right direction. Whether you're 26 or 56, it's possible to turn it around. This is The Ramsey Show.

Statistics show that half of Americans don't have enough life insurance or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're not going to die or something? Well, I used to be one of those guys. I didn't even think about it. And one of my buddies said, hey, the only reason to not have life insurance is if you

hate your wife and kids. And I immediately went and got term life insurance. That's a gut punch. For decades, Dave, I've sat across people who've lost a spouse. They've lost somebody important to them. Me too. They don't know what to do next. Terrifying.

You're going to have a crisis here. You know, you got two options while you're sitting and talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up. Or she's concerned how she's going to eat tomorrow. That's exactly the two options. It's saying I love you to your family. Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable.

I've used them personally for 25 years. They're the only people I trust. Go to Zander.com or call 800-356-4282. Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw. Open phones at 888-825-5225. You call up and we'll try to give you the right next step for your life and your money. Marcus has chosen to do so over in Denver. What's going on, Marcus?

Hey, how's it going, guys? Thanks for taking my call. Absolutely. What's going on? Hey. So, recently engaged, we are going through some premarital process and workbooks and some finance questions that I'm not sure entirely what to do. I know the rule is when you get married, then you combine your finances.

I currently have about $100,000 saved up for a down payment on a home. She has about $80,000. My fiance has about $80,000 in student loans and $10,000 on a car. So I know I could pay that off instantaneously when we get married and kind of push the house down the road. She's not necessarily totally on board with that. I'm just not sure what to do with that when we say the ideas. Why do you think she's not on board with it? Is it guilt? Yeah. Yeah, it definitely is. You know, we've both worked very hard and she knows how hard I've worked to get out of debt and save up for money. And it's kind of a little bit guilt ridden that, you know, I'd give up all my the cash or safer down payment just completely into her. You know, there's a part of that that is very real. My husband and

I face that, you know, he felt bad that he had more student loans than I. But there's part of that that you kind of if you put it in any other term as far as cleaning up a mess ahead of time, any other personal mess you can't make perfect before you get married. Do you know what I mean? You don't feel the obligation to fix it completely yourself before you come to them. Like we're imperfect people and we make mistakes. And so I think when you frame it in that way of why are you categorizing money in a completely different light than all of the other aspects of our marriage where we're basically taking each other as we are and we're working together to go forward. I think when you put it into that

framework, it kind of changes the way you think of it and you're like, oh yeah, okay, that makes more sense. You're taking me with my mistakes, you're taking me with my flaws, and we're working together to improve ourselves in our marriage. And accepting, you know, that blessing of, wow, this person worked really hard to save this money, and they're willing to use that to give me a clean slate. I mean, not to get theological, but that's a beautiful picture of the gospel. It's beautiful. We came in with all the debt, and he's got an unlimited savings account.

He's like, I got you. And it's like, I can't accept this. I need to work for it. There's a piece of that that exists. And also, it's a lot easier to go into $100,000 of debt versus saving up $100, a hundred grand that's right so there's also that piece that she's feeling of he works so hard for this but the truth is if you looked at a cons list of okay what she's coming to this marriage with a hundred grand you look at the pros list her you know what i mean like that outweighs any level of debt and you guys working together this is going to be like a blip in your lifetime where

you look back and like oh remember we cleaned up that debt real quick and then we started building wealth together and yeah it delayed our home buying by you know two years who cares and big whoop and so i i think this is harder for her to grapple than you because it sounds like you are like yeah i'm willing to go ahead and pay off the debt and we'll restart the down payment process and then you know for her i mean and i hope she does listen to this call the the flip side of it which is the pretty obvious is it's way better to have someone who says oh yeah it's just money like I'm happy to pay this off and start you know my money's your money and your debt's my debt and I'm happy to be one with you on this and and we're paying it off together with the money that we have once we get married,

that's a lot better than having a jerk that's like, no, you've got to pay off your debt. I'm not marrying you until you pay that debt. You know what I'm saying? Like, that is terrible. And if you were like that, she wouldn't accept that either. So it's like if you have to choose between A and B, I'm choosing A with flying colors.

All right. Well, you know how those guys roll. We're very direct and to the point, so I'll try to frame it a little bit more differently. Have her watch this call. Also, I'm wondering, what will your household income be once you guys get married? Once we get married,

a year's time, I'll gross 220 and she'll be about 55 to 60. Ding, ding, ding, my friend. So think about this. Mathematically, if you want to help her out, just go to a 60. Ding, ding, ding, my friend. So think about this. Mathematically, if you want to help her out, just go to a piece of paper, a napkin math and go, all right, we're going to pay your debt down.

Ladies, we're 10 grand. We still need a little emergency fund maybe. Okay, we make 275 at that point. How quickly can we save up 100 grand? Probably eight or nine months. Yeah, pretty quick. And so I think showing her how little of a problem this really is it's

not derailing your home ownership dreams for a decade no yeah you're just taking a step back to catapult forward yeah okay well i'll try to frame it differently yeah have you guys gone through financial peace university as part of your premarital uh we haven't we're doing a couple workbooks uh we haven't done FPU yet. If I gifted it to you guys, would you go through it? I would pay for it because I appreciate your guys' services. Oh, that's so kind. Well, I can't let you do that today, but you know what you can do?

You can pay it forward. You can get it for someone else. But I'm going to gift that to you today, Marcus, because I'm a Marcus fan. And I think Financial Peace University is a huge part of premarital counseling. It doesn't encompass everything with premarital counseling, obviously. There's a lot of other pieces, but as far as finances go, I cannot think of a better way to get on the same page, learn that language by going through all nine lessons together. Because me trying to convince someone else about the thing I'm excited about, I'm like, Jade, you gotta,

this guy, Dave, he's like, sell the car. And you're like, what? What happened? Yeah, I know. And then you watch the lessons and you're like, I gotta sell the car. And it becomes your idea versus this thing they threw onto you. Yeah. So that's a very different vibe.

And that's why I encourage couples, whether it's premarital, postmarital, whatever, go through Financial Peace University if you're trying to get someone on board. And it's the most cost-effective way to make your marriage better and build wealth together. I agree. I concur. We nailed it. All right. Alex is in Chicago up next. What's going on, Alex? Hi, guys. Can you hear me? Yeah. Loud and clear. Okay. So, yeah. my main question is debating whether I can leave my job in December or if I should sign up for another like little group of second shifts for kind of getting a head start on my emergency fund. Okay, so there's no debt you're working on an emergency fund. Is that what I understand? Okay. So starting in November, I started paying down about $82,000 of debt.

It was 72 by the time I started the Ramsey plan. I had a total of 82. Okay. And now I have 19.4. Nice. And at the end of the year, I should have about 5.5 okay and if i quit my job in december my debt payoff will be the same um in february okay um i'm thinking about keeping it for um like a head start on my emergency fund, but I'm also like completely exhausted.

Are you saying just quitting your second job? Are you keeping your full-time job? Yeah. So right now I work about 52 hours a week. I work 40 and then I work like an extra four hours a week. And this is three times a month for my so I work about 44 hours um and then I work an extra eight is it the work or the type of work is it that is it the fact that you have an extra job or is it the nature of the second job it's more than nature the second job because um I'm a therapist in an acute care setting um and it's like a very physical job and I'm like what do you make from it super tired what do you make from it um yeah so my base pay and my primary job is 4.3k okay I do we I work weekends on my primary job so I have 5k with my weekend pay and then with my second job i do um 5.6 and then i do work overtime at my primary job so that's like 5.9 what your second job is bringing in more than your full-time job

no i'm just explaining um that i actually like that's my monthly income incrementally as i add on more hours oh so you're making an extra 600 bucks from the side job got you um it's about 250 net per shift and i work about eight shifts every three months so um and go ahead i'm just trying to understand just give us really clear what you bring in from the side job every month. Because what I'm getting at here is if you're telling me it's the nature of the job that's the problem and it's giving you $1,200 extra bucks a month or $600, whatever that is, I'm pretty sure you could probably... It's about $750. Perfect.

I think that you find another job and replace that income because a lot of times the burnout is not on the hours itself. It's the job that you're doing during those hours. It sounds like you've been going hard for a really long time and you just need to change a pace. Yeah, if you did something that was more enjoyable, even less, you'd be okay. But I wouldn't just slow down just yet. You're so close.

Keep the gazelle intensity up until you're through baby step three. But I do think we need a shift in the meantime. Just shift the plan a little bit. This is The Ramsey Show. This show is sponsored by BetterHelp. All right, so I was born and raised in Texas, and I love the myth of the lone cowboy. You know, the guy who doesn't need anyone or anything.

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with BetterHelp. Visit betterhelp.com slash Ramsey Radio to get 10% off your first month. That's BetterHelp, H-E-L-P.com slash Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Listen, time is running out to book your cabin on the Live Like No One Else cruise. It's setting sail March 22nd through the 29th of 2025. And this is not your average cruise. This is a premium Caribbean. Are you Caribbean or are you Caribbean?

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Mac joins us in Memphis, Tennessee. What's going on, Mac? Hey, how are y'all doing? Doing well. How can we help? Yeah, so a little bit of preface. I've worked at a company for several years now, small business, and almost every, not almost,

every year I've been there so far, at the end of our fiscal year, my boss, who wholly owns the company, issues bonuses based on how well the end of our fiscal year, uh, my boss who wholly owns the company issues bonuses, uh, based on how well the company performed our fiscal year. And I've gotten it every year. Like I've said, now this year, all of a sudden, uh, no bonus ever came. Uh, there was never any mention or communication of bonuses not going out this year. And, um, then all of a sudden out of the blue, I see that my boss has bought a brand new car. That's kind of not really besides the point, I guess. So my question is, is that ethical slash can they do that, not issue bonuses and not even communicate it?

And then the two-punch question is, what's the best way to approach that conversation with my boss? I mean, in my mind, I'm picturing Clark Griswold when he doesn't get his bonus. That's exactly how I feel. I literally was about to say that. I mean, if you've come to expect it, yeah, it's disappointing if you don't get it. And it's even more disappointing if it wasn't communicated. I could see you wanting that. But at the end of the day, my bigger question is, how is the business doing?

Because it might be that they're suffering and there's not that profit in order to hand out bonuses as it were. And so that's my first question. And I also, I think, you know, that you can strike from the record that he bought a brand new vehicle because that's neither here nor there, but how's the company doing? Well, I mean, as far as I've been, you know, informed and I'm not in the finance department or anything like that, you know, we continue to see year over year growth every year that I've been there. And as far as I can tell, you know, the business seems to be doing well.

We recently expanded the office space and blew out a wall and took over the space next door. So anyway, I guess all the signs that I can point to show, you know... Well, is that part of it, is they had to reinvest in the business and therefore the bonuses went toward those goals? You know, I mean, potentially.

But that being said, I think to someone like myself who's an employee who's not involved in, You know, I mean, potentially. But that being said, I think to someone like myself who's an employee who's not involved in the big time decisions like that, you know, you see all these things we're spending money on and then all of a sudden when it comes time that I'm expecting my little bonus, I don't get it. How much of a bonus are we talking, by the way?

Last year it was $10,000. Okay, that's decent. And what's your salary? $90,000 a year. Okay, so that's a big chunk i think you know you're asking is it ethical yes if they want to say we don't give bonuses anymore yeah that's their prerogative i what i think really is the problem here is the communication within the business um i think that's what's really caused an issue here, because I think if you can approach things with people up front and say, here's what's going on, here's what we're going to, I mean, I know here at Ramsey, it's everything is just laid out on the line all the time. We're always having staff meetings. It's very clear what the goals are. It's very clear what's going to

happen. They cover, here's what the profit sharing is going to be next month. And so there's no surprises. So really what's happening here, it's just poor leadership, poor communication. It's not unethical. It's not immoral. They could shut the whole business down today and that's their prerogative. That's right. And so I wouldn't get too,

get in a tizzy over this or take it personally, but I would in your next one-on-one with your leader say, hey, can I get some clarity on what happened with the bonuses i noticed that wasn't didn't happen this year and it wasn't rolled out to the team and if they can't answer that or they get dodgy then you got to go can i trust this place because if you if they lose integrity and you lose trust it's time to go that's just going to plant a seed of resentment

in your heart but it could just be oh dang it you're right we should have been more clear about that and it could have been a you you know, just a brain fart. How big is the company? How big is it? About 20 employees, small business. Oh, so I feel like there would be even more, like, I could see things. Are all your coworkers talking about this? This has got to be the water cooler talk. Yeah, I mean, yeah, this is definitely kind of the water cooler talk,

no doubt about it. And no one has bothered to ask leadership. Well, so here's the funny thing is we have obviously a management kind of structure, if you will, hierarchy. And I approached both the two, you know, upper level managers who both kind of deferred me and said, that's the boss's decision. I have no say in that. So kind of, and like I said, the business is wholly owned by one individual. So they kind of 20 employees i imagine you interact with these with the ceo yeah i mean every day is it okay could you set up a meeting with him yeah just ask her yeah i mean i definitely could i think it's just kind of like i said you know this is the water

cooler talk and um i figured i think you know, I would own up and go, listen, this has been floating around. I don't, I don't want this to turn into gossip, but people are going, Hey, what happened here? And I think it would be, you know,

a great move for there to be communication around this. And it's not in an, in an entitled way. It's just in a, I think for everybody's good. So there's not to your point, there's not like chatter about it. And so that

i mean i understand that we struck this from the record but the worst thing ever would be for people to be like and look he's driving a brand new mercedes you know that's our bonuses right they're parked in the front lot like that's terrible that is a recipe for disaster terrible well unfortunately that is the uh the reality of the situation like i said we can strike that from the record but you are you hit the nail on the head there. Yeah. People put two and two together. Well, I hope that helps, Mac.

I think this comes down to poor communication, poor leadership. I wouldn't take it personally. I wouldn't go hiring a lawyer to go after your bonus, but I would at least have the benefit of the doubt of the CEO and management to go, I need an answer. That's not okay that this was basically presented to us as part of our comp plan. Yes. have the benefit of the doubt of the CEO and management to go, I need an answer. Like it just, that's not okay that this was basically presented to us as part of our comp plan and then just disappeared. And so I would at least go down that road. Next up, we've got Jeremy in Macon, Georgia. What's going on, Jeremy? How's it going, guys? Good. How are you? I'm doing just fine. I guess my phrase would be better than I deserve.

There we go. I love it. How can we help? Well, I've been listening to the show now for probably a good month and a half, two months, something like that. I have heard of Dave Ramsey and the baby steps and all that for a number of years. And I didn't really start listening and paying attention to it until, like I said, about a month and a half, two months ago. And then when you really start paying attention to it, if you're new to it, you realize just how poorly you have done and what you need to improve on. And I think that's a self-evaluation thing of understanding that you can always do better. And my wife and I, we've been married for 15, 16 years now, two kids, good paying jobs and whatnot.

But we're trying to figure out the right way to do a budget other than knowing what bills that we have and then just eyeballing it as we go each month and wonder, where did everything go? And that's the biggest struggle right now. It's like we're okay as far as bill pay and stuff like that, but it's month to month. We're not putting anything back like we should in savings. So realistically, how do you create a budget? As elementary as that sounds. No, it's not elementary at all.

It's one of those things that it sounds easy to do when you talk about it, but when you really start to do it, you realize there's a lot of nuance there. So the first question is, I mean, obviously, are you using EveryDollar, which is our budgeting app? I am not. Okay. I think that's the first place to start because I can tell you from experience, I was a person that did paper budgets. I got the ledger out. I had a notepad. I tried that for a while. Then I tried the spreadsheet thing. But the thing with the spreadsheet is it's only on your computer. And so if you want your spouse involved, they have to touch your computer. And most people don't want

somebody to touch their computer. So every dollar is the best way to start. So we'll make sure to get that to you for free. And then from there, you can actually go onto YouTube. George and I did a right now. Perfect. Where is it, George? The Ramsey Show highlights YouTube channel. We'll make sure to link it in the description and show notes of this episode. We made a budget in under seven minutes. Yes. On the show. And we did it. And it and show notes of this episode. We made a budget in under seven minutes on the show. And we did it. And it was an ironclad budget. And so that'll give you a great start for anyone watching who's going, it feels overwhelming.

Listen, if we can do it in under seven minutes. And we weren't like geniuses rifling through. We were just going through the process. Every dollar makes it easy. And we do webinars. So stay tuned for those if you want even more. What does the future hold for business? Ask nine experts and you'll get ten different answers.

Economic growth or a recession. Business taxes will go up or down. AI will help us work or it will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future-proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite, and you should too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. With one unified business management suite, there's only one source of truth for the visibility and control you need to make quick decisions. NetSuite's real-time insights and forecasting help you see into the future with actionable data.

And when you're closing the books in days, not weeks, you can spend less time looking backward and more time focusing on what's next. And speaking of what's next, download the CFO's Guide to AI and Machine Learning at netsuite.com slash ramsey. It's free at netsuite.com slash Ramsey. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. All right, Jade, producer James put this on the desk, and this is big news. USA Today headline, you need to start paying your student debt

no really it's time yeah it's funny the time's nearly up for federal student loan borrowers to start repaying or else they're going to face credit score consequences soon um if you remember president joe biden last year offered a 12 month on ramp to repayment so that financially vulnerable borrowers who miss monthly payments during the period are not delinquent and it's not reported to credit bureaus. That on-ramp is set to expire September 30th and anyone who doesn't begin making payments in October risks a hit to their credit score. So if you just remember, student loans were on pause for like ever for years and years because of covid and then that

finally lifted and it was like oh my gosh payments are due again and then as soon as that happened it was kind of passed but if you're not ready to pay you don't have to pay yet you get this on ramp basically another year where if you don't pay nothing your life out yeah ready and again you can you cannot defer than the inevitable Like it's going to happen. And at this point, it's due, guys. Well, the problem is a lot of people, once you start living your life without a certain payment in it, you get used to that. Just like if you become debt free, you're like, wow, this is nice. I got margin to do other things.

The problem here is it's going to be a shock to a lot of people's budget when that $400 student loan payment is all of a sudden due. And they didn't make any tweaks to their lifestyle and their budget. They haven't made progress financially. So you've got to do a budget today just to figure out where is this going to fit in? What do I need to cut? Do I need to go make more money in order to make this payment? And by the way, don't just make the minimum payment. You'll be paying on it for 20 years. You've got to throw extra at it. So that's where the debt snowball comes into play and all the margin driving activities that we talk about. Yeah. If no payment is received within 90 days, your account will be considered seriously delinquent and it can be reported to credit bureaus. And so this is really,

really important. I like your advice, George. If you don't have a budget, start today and, you know, don't wait around for something else to come and possibly well what if they extend it again what if well i'll wait till after the election and see if they give us yeah please don't do that so anyway i hate this but people are hearing us talking about well it could hurt your credit score i thought you guys didn't care about credit scores listen we don't care about the credit score as a scoreboard, but the truth is a bad credit score will hurt you financially. We want you to have no credit score. That's a cool thing to have because you're debt free, but you don't need to not be paying your debt and

having to hurt your credit score because that will hurt your insurance rates. That will hurt your ability to rent. And if you're going to buy a house, that's going to hurt your ability to buy a house. The key is to have no score, not a low score. So make sure you pay your bills. And if you're going to buy a house, that's going to hurt your ability to buy a house. The key is to have no score, not a low score. So make sure you pay your bills. And if you need help with this debt payoff stuff, keep listening. We are here to help you guys get out of debt once and for all. Yeah, and just a quick thing here. People say, well, what's the consequences then if it's not just the fact that your credit gets messed up?

There is consequences for defaulting on your loan. It not only impacts your ability to borrow money, even if you're going to do something like buy for a house, because we do say it's okay to borrow for a house. So that part does matter. But if you allow that to remain in default for too long, the entire balance can become due at one time. It's called acceleration. And once that happens, you're no longer qualified to do like any kind of deferment or any other types of payment plans because you've basically said at that point, we can't help you. And so you don't want that. If that happens, you can lose eligibility for additional federal aid. Not that we would want you to go back into student loan debt. But again, it's reported to credit bureaus and it can take a really long time to be able to purchase or sell things like real estate that bothers you, your tax. And here's the one I think that really will make people be like,

no, your tax refunds and federal benefits could also be withheld. So if you were like, if you're a person that's like my tax return, that's going to break me free. If you don't pay your student loans, they can hold that because- Uncle Sam holding that hostage.

Yeah, and again, of course, they can take you to court and they can sue you. So please get on this. If you need help, we're here to help you. We're not mad at you. We just want you to get out of student loan debt because it is holding you back. All right. Let's go to Kaylin in Annapolis, Maryland. What's going on, Kaylin? Hi. So, um, we're student loan. Um, yay. A student loan call. How perfect. Speak directly on your phone for me, Kaylin. I'm having a hard time hearing you. Is this better? That's a little better. Yes. Okay. So I don't have any yet. Um, I am thinking about getting my BSN. I own a home care agency and I don't need the BSN, but I do want to be able to help my patients as much as possible and be there and work with them. We have a lot of hospice patients. So I don't need to go into debt for it. My business can pay for it, but it also is going to be about $100,000. So I was just wondering what I should

do. What's the upside for you getting it? You're saying you don't need it. In your mind, is it just so that you feel credible or is there a financial upside in any way? I mean, I can absolutely not have to pay more nurses. So when we do assessments, if we get a call from a hospital and they're doing a discharge, I won't have to pay the $75 to have a nurse come out. I can do that myself. And so if you run the numbers on things like that, how long would it take you to break even on this? And is it worth it to you?

It would take about three and a half years. So about six months after I get my BSN, I could have it fully paid off. Wait, if it's going to take six months to pay it off, why not just wait six months and save it up? Yeah, I thought you said your business would pay for it. I assumed cash. Well, it would take about three and a half years to pay it off and then I would get my BSN in three years so six months after I get my BSN it would be

completely paid off when I when I was meaning uh when I was thinking about the profitability of it you were telling me it saves me 75 dollars every time and so my my point to that was okay how long how often do you make that money and how long based off of that that small subset of money alone would it take to pay this off how many times a year do you have to make that 75 payment to a nurse yeah i mean it depends sometimes we get uh 10 billable hours a day. Sometimes it can be 15 billable hours a week. So every, it's different. So that's the, that's the numbers I would want you to run out because ultimately you want to go, how worth it is it for me to do this? Is this $75 something that over the course of a month amounts to $3,000 or is it something that amounts to $250 and really decide how worth

it is that? And is there another way that I could recoup that same amount of money that doesn't cost me $100,000? That's where my mind would go. Gotcha. Okay. But either way, I'm doing this debt-free when you have the cash to do it. So if you need to cash flow it, hey, I can cover this next semester and the next semester and you want to pay that out of your own business, I still think you should pay it out of your own, you know, you're sort of investing in yourself at that point through the business. Is that what we're talking about here? Yeah, absolutely. I'm not planning on taking out the, I'm going to use some FAFSA. I'm not planning on taking out loans for it. I want to pay it all in cash. So it would just be an asset for myself, for the business to do it on my own and just pay

for it as I go. Okay. What does the business make? What is the net revenue per year? and then what do you take home um i am taking home about 120 um and it's about 225 to 275 each year so what's happening with the other money um our employees so our contractors our staff and okay but I'm saying after all, everyone's paid, all expenses, what is your net before you take anything home? About $225,000 to $275,000. Okay, so there should be $100,000 laying around each year that you could use to invest

in your nursing program, right? Right, yes. Okay, so yeah, I would do it and just make sure it's cash flowed. And if it's something you're passionate about that will eventually help you with this business long term. And remember, you're still trading your time for money. So if it's something where you want to grow the business and you want to delegate to other nurses, then just keep doing what you're doing.

No need to go through the program. But it sounds like you want to be a part of this. Oh, absolutely. Absolutely. I want to be as hands-on with our patients as possible. It's just, it's such a blessing to be able to be there and do life with them. I love it. God bless our nurses.

And congratulations on running a successful small business. Crushing the game and doing it debt-free. That puts this hour of The Ramsey Show in the books. Thank you to Jade Warshaw, my co-host, all the folks in the booth keeping the show afloat, and you, America. Until next time, save intentionally, spend wisely, and give generously. From Ramsey Network, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey Personality, George Gamble, joined by the one and only Jade Warshaw.

And we're taking your calls at 888-825-5225. Be brave, Be bold. You call us. We'll help you take the right next step for your life and your money. Seth kicks us off in Fort Worth, Texas. What's going on, Seth? Hi. How are y'all?

Doing well. How can we help today? Yeah, so basically to give you some background context, I grew up very poor. I didn't have both my parents in the picture. And I was homeless at like 17. I'm now 19. I live with my friends and their family. And I had a family member that recently passed away.

And I didn't know him, but I somehow inherited some land that he had. And I'm roughly going to get around 120,000 to 140,000. Wow. And basically, I don't know what to do with this money. I don't know. I want to be able to make sure that it's going to like make me financially free. I don't know if I should put it into a business. I don't know if I should invest it.

I don't know. That's what the land is worth? 120 to 140? Yeah. But the low end will be like 120. The high end will be around 140. Okay. Are you working right now?

Yes, sir. Okay. What do you make? I make roughly around $30,000 a year. What do you do? I'm a delivery tech for a medical company. I deliver like hospitals. Okay, cool.

So around here, we teach a series of baby steps, and it's just kind of to see where you are financially and what your next step is in order to get ahead financially. And so the first question is, I mean, do you have any money saved and do you have any debt? And if so, what is it? I don't have any debt, but I also don't have any money saved. I kind of just been living paycheck to paycheck. Okay.

So just let George and I just give you a run through of this and you can kind of see yourself in it. So the first baby step would be for people that don't have any money saved to get a thousand dollars saved. And then after that, then they go through and pay off whatever debt they have besides their house. So you don't have any debt, but not really any money saved. Then after that, you're saving three to six months of expenses.

So you said you make about $30,000 a year. You live with friends. What would six months of expenses look like for you? Six months, probably maybe like, I don't know, like 10K. Maybe 10K. Okay, I like that. Do you pay rent right now? I do.

Okay. What's your rent? I pay $1,000 a month. Okay. And right now, this is just so you can get your head around it. You'll go back tonight and you'll really look through the numbers. So your first goal would be, okay, I need three to six months of expenses. Then after that, we start talking about a longer term strategy. Okay. Am I investing? So you mentioned you make

$30,000 a year. Does your job offer any sort of 401k or any way to invest something like that? That's what that would be about. So you can start looking into that. And then the baby steps walk on along. There's seven of them. And at the end, by the end, you've bought a house, you've paid it off in cash. And so that's kind of the framework that this all rests on. And you've got a nice chunk of money. So typically we'd say, okay, let's walk it through the baby steps. And what does that look like? For you, because this is the most money you've ever had, I would suggest that you drop it in a high yield savings account for a minute, sit on it and learn as much as you can about how to handle money. And I think being

on the Ramsey show is a great way to start. George, I think we send him Financial Peace University to really get his head around how this can help him and what it means. And it really breaks down the baby steps further for you. And I'll also send you my book, Breaking Free from Broke, that'll walk you through this process and what it looks like beyond that. How do you build wealth? What are some of the investment traps to avoid? Because the problem is, it's easy to get starry-eyed when you see a big pile of money and what you could do with it. And you're going to have a lot of voices in your life telling you, bro, you got to start a bro, you should bet a really nice car. And the temptation is going to be to squander this money. And six months from now, here's what happens with most people that inherit a lot of

money. It's gone within six months. And I don't want that for you. So I would sit on the money as long as you can until you're out of the paycheck to paycheck cycle and you feel like you can actually carry the weight of this inheritance. Yeah. And if there's anybody that you trust that you're like this person has been a good person in my life uh they're a good accountability partner i'd let them in on what's going on because what my mind goes i think about athletes all the time they they come a lot of athletes come from a an upbringing that was tough maybe there wasn't a lot of money or food in the house and then they're making this amazing salary and it's a 10 million dollar check yeah i mean those folks they're they're going broke off of 10 million and 20 million dollars and so here you are you you explained hey my background i'm not

used to having money i've been homeless and so there is a part of this to george's point that this can feel like a million bucks but it's not a million bucks. And you'll be shocked how quickly this money can go. And so we want it to be spent on the right things. And I personally don't want you to leave this call and go, I'm going to do this because Jade and George said to do it. I want you to understand the things that we talk about and things that we teach so that when you do get ready to make a move,

and I'm telling you, I think you're going to make the right move, that you'll know why you did it and it will make sense to you. So financial peace is very important. We'll make sure to give you every dollar, which is foundational to everything we teach. A budget is part and partial to everything we teach. It is the foundational thing. You cannot manage your money successfully without a budget. And the people that we talk to that are successful with money, they all have budgets. And so that is

something that's so important. And every dollar is going to make it really easy for you, Seth, to be able to see what you're bringing in, figure out what you're going to spend that money on and create a rhythm in your life that feels comfortable with how you're using your money. And once you've done that, then it starts, it's time to start factoring in, okay, this $120,000, how can I apply it? What baby step am I on? I've proven consistency here. And I think that's what you really need. So Seth, let's talk about your own personal growth. Because I'm more concerned about you going, what is the thing that Seth wants to do? You've overcome so much just getting out of homelessness and going, all right, I'm working now. I've got a roof over my head. I'm paying rent. I got my bills covered. I got no debt. But what does, you know, 24 year old Seth want to be

doing? Um, I'm not entirely sure yet. Um, I was maybe thinking like, uh, with this money, I didn't, I know y'all said to sit on it, but, um, I don't know if I, cause I also don't have a vehicle. So I was maybe like thinking, should I use this to buy a vehicle, like a little cash car to get me from point A to point B? I like that. The key is little cash car. We're talking used, probably $7,000. Not, and here's what happens.

You go in the car lot, they go, oh, man, you should get, you deserve this car over here. And it's brand new. And you know you have the money sitting there too? Yeah. So don't tell them you got money. Just walk in there saying, here's my budget, $7,000 out the door. Yeah.

What do you got? Bring a check for the amount, the max that you're going to spend. Yeah. And that's going to also change the types of jobs you can get. Because you're going to need transportation if you switch career paths here. And do you need to go back to school? Do you need to get further education to do the thing you want to do? So you're going to get the kit and caboodle today.

I'm also going to send you Ken Coleman's new book, Find the Work You're Wired to Do. It includes an assessment called the Get Clear Career Assessment. I want you to take that. And that's going to let you start dreaming based on your skill set, what you're passionate about, what you're wired to do, the impact you want to have. And I think that'll get your wheels spinning. But I wouldn't go sink this money into a business. No, I would not either. Hey, keep in touch with us. Call us back. You can call us anytime and we're here to help you and engage with us on social media because you need this content in your life. Hearing it one time is not enough. You need this on repeat over and over and over. Absolutely. I'm thinking 15 to 20K is your emergency fund. And that next 100K, that might be

a down payment one day as you grow in your career and you can take the weight of a home. That'd be cool. Man, going from homelessness to a homeowner. He's a winner. That's a cool story. That guy's a winner. I'm rooting for you, Seth. Thanks for calling. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance,

Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of over $11 billion in medical bills since 1981. And CHM has also helped them stay true to their values and avoid miles of red tape. And CHM support goes far beyond meeting financial needs. They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event. So listen, y'all,

there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. 888-825-5225 is the number to call if you want to join the show. Well, Jade, our team here at Ramsey, you know, we've got a great kind of blog article section on the site. And they put this one out there. Can young people buy a home in 2024? These five millennials proved it's possible.

Wow. Very cool. So we all know the article goes on to say home ownership in America has gotten drastically pricier over the last four years. Median home sales jumped to $420,000. Typical interest rate in a 30-year was hovering around 7%. It's dipped down a little bit since then. And it says, after all, millennials represented the largest group of home buyers in 2023. 26% of adult Gen Zers even own a home. That's cool news. That is cool news.

And here's a story. In 2023, Lopez grew tired of renting, decided she wanted to buy a house near her apartment in the suburbs of Houston. And she said, there wasn't any doubt that I could get the number I wanted. And once she set her savings goal 20% down, which is awesome on a traditional single family home, they got to work. She dialed in her budget, set up a separate savings account with an automatic transfer every month and avoided unnecessary spending along the way. Quickly realized her initial goal of buying the single family home was out of reach because the monthly payments would be too big. A lot of people found this out the hard way. Yes, that's right. As home prices and interest rates jumped

up, that same home they wanted was now way out of reach. But the key is you can't give up, and she didn't. It didn't stop her. It says she shifted to looking at condos and townhomes, both newer builds and fixer uppers, which we say change your expectations. And after continuing to stay for a little longer, she started working with a Ramsey-trusted real estate agent and bought her first house in March of 2024. Just a few months ago. You know what's cool, Jade? We actually have Angela on the line.

Because our team interviewed her for this story. We said, can we get her on the show? Angela, are you with us? Yes, I'm here. Love it. How's our favorite homeowner doing? I'm doing great. How are y'all?

Is it all it's cracked up to be? How has it been, the last six months of being a homeowner doing? I'm doing great. How are y'all? Is it all it's cracked up to be? How has it been the last, you know, six months of being a homeowner? It's been all right. You know, we've had some challenges, but I'm in my home and it'll eventually get to where I want it to be, but not today. Well, tell me about that because, you know, we've talked to a lot of people on the line who, again, it's this expectation shift that has to happen because the truth is the numbers aren't what they used to be. And in this article, it says, your quote is, it's not pretty, but I have a home I can afford in a nice part of town. I'm not going to be renting anymore and I'm actually building equity. I don't regret it. So tell us about that. Tell us

about what your initial picture was and then what you shifted it to and why it's worth it. So initially I did want that traditional single family home. That was kind of the dream. But once I started actually looking around online, I realized that I wasn't going to be able to afford that. So I did start switching to looking at townhomes and condos. And then I still realized that I wasn't going to be able to have everything that I wanted. So I had to decide, you know, do I want something that's updated and smaller than I want? Do I want to live in the part of town that I want and maybe not get everything else that I wanted? So I had to decide what was truly important to me, which was living in a decent community in a good part of town.

So location, location, location. really important to me, which was living in a decent community in a good part of town. So location, location, location. And you went, I'm willing to make other sacrifices and compromises, but location is the one thing I'm going to focus on. Yes. So you force ranked your priorities there. Tell us, give us, what was the full timeline of this from the moment that you were like, I want to dig into this to the fact to it actually happening? I was probably saving for about three years. I got really serious about it in 2023. That's when I set my number goals. I hit my goal at the end of December 2023. So I started looking online around then. I think I got my real estate agent in January and we made the offer in February and closed in March. Wow. And that was using a Ramsey trusted agent.

Yes. That's amazing. So for me, I think the glaring thing here is three years feels like a longer time. Will the world exist in three years depending on who's in the white house jade we don't know george you say it all the time it's it's a microwave world and a lot of things it's more like a crock pot if you want it to actually happen for you and so talk to the person who is really afraid of a longer timeline and doesn't is wondering well if i wait longer the the finish line the goal post is just going to keep moving, right? Talk to that person because you walked this out and you weren't afraid of a long journey. Yeah, I mean, the time is going to pass anyway, right? And who knows, maybe at the end of that timeline, you're going to be in a better position than you were when you started. That's how I was. I'm making more money now. I could afford something better than I could have

if I had brushed it and jumped the gun and tried to buy, you know, two years ago. Yeah. How did you get over the hump mentally? Because at some point, you know, you're shaking your fist at the clouds. You're angry. You're frustrated. You're cynical.

How did you get over that to just go, fine, I'll eat my vegetables and I'll compromise and get a townhome? It wasn't a huge hump for me to get over personally. I kind of just like to go ahead and do the thing and get over with. But it wasn't fun having to give up certain things that I had dreamed about. But I'm still fairly young. I'll get there eventually. Yeah, the article said you're 31.

Is that still true? I turned 32 over the summer. Nice. And single? Yes. Nice. Wow. So just to show you, like a 32-year-old single woman in America today.

Houston, Texas. Can become a homeowner. Yeah, and Houston is a big area. Like that's not the middle of nowhere by any means. So you're in a metropolitan area or a suburb of that. So really good. Can you tell us what the house costs and what you put down to help people get an idea of what they would need to save? It costs $170,000, so I put down $34,000. Wow, that's amazing.

So this is a great example, Jade, because people go, well, the median house price is $420,000. And I go, yeah, that's the middle, which means half of the homes in America are cheaper. Yeah. And so, Angela, you didn't go, well, I need to get a $500,000 house for my first home as a single woman. You said, you know what? I can buy a more affordable townhome that's a little further out than I want. It's not as new as I want, but it got your foot in the door. Yes, it did. And being single definitely was

a challenge. There's only one income to try and make that goal. So once I accepted that, then I was able to adjust my expectations and get it done. It's really a great picture of, I was saying it a lot back when real estate was really getting crazy and it was really heating up that, you know, property is a ladder and it's real estate is a ladder. And a lot of times we want to be at the top rung immediately, but it's like, no, you start at the bottom and you buy something, you get your foot in the door and you get on that top rung. And then you're like, okay, I can sell it. I make a profit. And now I can take the next step up the ladder. And I think that you're a really, really good picture of that. This is just the first step

on the ladder for you. And I think that if you call back in 20 years from now, it's going to be amazing for you. Absolutely. And I got one more question, Angela, just to get to reality. A lot of renters are going, well, why wouldn't I just go buy a place? I'm paying two grand in rent. I'll just get a two grand mortgage and call it a day. What is the reality check of home ownership been like for you as far as expenses and maintenance and repairs? Well, over the summer, I ended up having a leak in my AC condenser drain that cost me about a grand to get fixed. and I still haven't completely repaired the drywall. There's still a gaping hole in my drywall. So things are going to pop up.

Things are going to happen, and it's already been obviously a little more expensive than I would have been if I had been renting, but I had money set aside for that, so I'm okay. But something's always going to come up, isn't it? Yes, absolutely. And just a good picture that it's not apples to apples. It's not necessarily cheaper. Rent is the most you'll pay. And that mortgage is just the beginning. But it is a huge blessing to be in a home that you can say, I worked so hard. I earned this thing.

It's going to be mine. I'm going to renovate it to my liking over time with cash. And then who knows? You know, with millennials these days, Jay, we're moving every four years. So who knows, Angela, where you'll be four years from now. That's right. But you're on the path. Making money. And you just disproved this whole idea that it's impossible to buy a home in today's America. There's hope.

We see it. Angela showed us that it's actually not impossible. There's a way to do this. It might be a longer timeline, but it's happening. Thank you so much for joining us, Angela. And if you want to check out that article, Can Young People Buy a Home in 2024? These five millennials proved it's possible. We will link it in the show notes and description of today's episode.

Highly recommend you check it out and share it with a friend to give them some hope. That's really what I feel like this year. We all just need a little hope. I know that's right. I know that's right. If you're not talking little hope, a little good news. I know that's right. If you're not talking about hope, I ain't listening. We're done.

This is The Ramsey Show. There's a time in your life and at 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

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Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. This is the Ramsey Show. I'm George Campbell, joined by Jade Warshaw. 888-825-5225 is the number to call. Josh is up next in Chicago. How can we help you today, Josh? Hey, how's it going, guys? Doing well. How are you? Good, good. Retirement question for you guys. My wife and I are on step four, five, and six, and she is a teacher investing, I guess,

contributing, if you will, a mandatory 9% to the pension program that they have. Now, I guess initially my thought is, okay, we'll just invest another 6% to get her to 15. But with the variables that go along with that pension, I'm curious if we might need to be investing actually a little bit more than that. What are the variables? Well, so the, the variable, the first one is, um, I believe the, the, the first tier is 25 years in order to get the full, the full pension, but you have to be 67. And every year earlier than that, it actually reduces 6% until 62. So you're saying she has to work for, let me make sure I understand that. You were

saying to get the full amount, she's got to work for 25 years and you would get it at a minimum age of 67. Is that right? Correct. And then if you wanted to take a partial pension, you can at 62, but it's going to be at a 6% per year decrease from the age of 67. So if you're 63, 6% for what, three years, four years? Is there ever an option for a lump sum? Just curious. I'll be honest, i don't know okay um back to your first question about the percentages so generally we think about about a percentage you could maybe count it as partial like if you're doing nine percent maybe cut it in half as you're trying to get to your 15% because you don't have as much. Yeah, they perform poorly and she has no control over it,

unlike a 401k where you can control the investments. So we would just count that at half. So if mandatory is nine, we're going to say that's four and a half percent. So she should contribute another 11 and a half percent to get to her 15. Got it. Okay, that's kind of what I was thinking, not necessarily directly exactly the percentages you guys were thinking, but more into an IRA, more into additional investing.

Mm-hmm. Does she have any other retirement options? Within her school system, no, but she does have a Roth IRA that she's been contributing to regularly. Okay. And we plan to keep going with that. Yeah, that might get you there depending on what her income is and what 15% looks like of your household income. But yeah, the problem with the pensions are, you know, there's really

no control. And what you see over time is if you can make 10, 12% in the market, you'd be lucky to get 6% in that pension when you actually look at the rate of return. And so that's the upside is, hey, we get money for a long time when we retire. So it sounds like you guys are younger, though. How old are you two? 31. Oh, my goodness. You're going to be unbelievably wealthy if you're already on this track. Yeah. Hey, I have a question. And this is just for my own knowledge. So teacher pension if god forbid something happened to your wife do you still get the full like what happens uh everything has to be in place like i have to be a beneficiary and everything has to be filed um but yeah to my knowledge i do get whether survivor benefits you get a lower rate yeah i don't i'll honest. I don't know the exact rate,

but I do know that there are survivor benefits. Yeah. Okay. I've always been interested to know that, especially when you framed it up as like the 25 years, age 67, goes down to partial. That's very interesting.

My thing is like, if I'm investing the money, give me all my money. You know what I'm saying? That's common sense. It's not how the world works. And you've got some retirement options, Josh, through your employer? I do, yeah.

I have a traditional and Roth 401k, and then I have a Roth IRA outside of that. Awesome. And what's your household income? It varies, but I guess if you base it off of our base salaries, it's about $110,000. I think we're on track with my with my commission, about 150 this year. Amazing. I mean, if I'm in your shoes, I don't know if we said this, I would not, knowing what you have at your disposal,

I would not go beyond the 9% in that pension. I'd be looking at all of those other areas to max out your 15% as a collective. It doesn't have to be if she does 15 and I do 15. If you have better options, it's okay to say, hey, we're going to shovel more into my roth 401k for example yes and we'll get to that 15 yeah if you can max out your roth 401k then she does a roth ira you do roth ira like anything to avoid putting more than nine percent into this pension is what i would be doing awesome thanks guys thank you great question I'd rather do a bridge account. Like I'd rather do, I know. I just don't like someone forcing me to do something that kind of

sucks. Exactly. If you're going to force me to do something, it better be all good. Make it amazing. All right. Amanda's up next in Milwaukee. How can we help Amanda? Hi. Um, just want to say, first of all, um, that listening to you guys has changed my life. I'm on baby step two and killing it doing that. I'm excited to be debt free. But my parents don't really have any financial skills. They're 63 and 65, both still working and kind of no plan in sight for retirement. I don't know that they really have much saved. And still, when I go to visit them, there's always an opportunity to spend money. So, oh, let's go grab coffee or let's go grab dinner. And I've been really, well,

I've tried to been really clear with them, setting boundaries, saying, you know, that's not in the budget. They know that I'm doing the baby steps. You're saying for you it's not in the budget. Sorry? You're saying for you it's not in the budget, not for them. Yeah. Okay. Correct.

And I'm saying, you know, that's not in my budget. I am not looking to spend money this trip. You know, I just want to spend time with you guys. And in my opinion, they don't really have the money to be spending on these kind of frivolous things either. And I'm a pretty direct person, and I've tried to voice my opinion, but it's not getting through. And I'm just curious your guys' thoughts on how to navigate these boundaries. Well, what's actually happening here is your parents aren't respecting the boundary line and they keep going over it, which is going to continually hurt the relationship. So have you been clear that, hey, listen, you guys are overstepping here.

I've told you I'm not going to go do this thing when I come over ahead of time, before you ever get to your parents' house. Do you say, what are the expectations for the evening? Or do you show up and then it's kind of this weird conflict? But usually before I go, you know, if there's, like, if we're going to the Tony Fair or something, I'm saying I'm happy to go, but I'm not going to be, you know, buying things or grabbing food at the vendor or whatever, you know, I can still go and stay within my budget that I have for myself. But, you know, I'm not going to go to Starbucks with you. Like that's not in my budget. And that's

kind of set ahead of time. And then there's still usually a, oh, do we want to go to dinner? And then when I say that's not in my budget, they offer to treat, which I don't want. Because you feel bad because you know they're not in a great financial position. And you're like, I don't want them putting this on the credit card. now i'm a part of their misbehavior interesting exactly listen the hardest part in the world is when you want somebody to change because they're not you can't make them change all you can do is control yourself and then the next frustrating part is i'm trying to control myself and you're trying to push me in another direction it's difficult um yeah you're gonna to have to.

It's one of those things where you can only say it so many times and then you're just going to have to accept a part of this of they might continue to just do the same thing over and over again. And then in those moments, you can kind of I'm going to tell kind of a funny story here. There was an election cycle one year where my mom couldn't stand one of the candidates. And every time she'd call me, she'd be talking about this candidate. And I was like, mom, I don't want to talk politics. I don't want to do this.

And I finally told her, I said, if you call me and you mention this candidate, just know I'm going to then in the conversation in the next minute. And I just let her know, if you violate this boundary, I love talking to you on the phone. You're my bud. Like, great. But if you do this, I'm talking to you on the phone. You're my bud, like great. But if you do this, I'm going to terminate the conversation and don't get mad. You know, so it's almost like you have to set the next thing in motion of mom, dad, I've asked you to do this. I get it. You're going to be you. You're going to invite, but just know if you invite me, here's what I'm going to do next. And I'm just letting you know ahead of time. So

you're just communicating whatever that, uh, I don't want to say consequence, but whatever that effect is when they violate that boundary. And then you go about your business. You're like, I already told you, I don't have to feel bad about it. I don't have to feel guilty about it. And I would also encourage you to focus on, try not to focus on their financial situation because you, again, you can't change it. Just focus on your own, focus on doing right, and let the chips fall where they may. And hang on, we're going to send you an article from Dr. John Deloney on how to set boundaries, seven simple steps, and we're also going to link it in the show notes and description for you guys. I found it very helpful for my own life. This is

The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. 888-825-5225 is the number to call if you want to join. Today's question of the day is brought to you by YRefi. 93% of undergraduate private student loans are co-signed. So when you're delinquent, Nana and Uncle Joe, they're drowning with you. But there is a way out, and it is YRefi. They refinance defaulted private student loans that other places won't, and they give you a low fixed rate loan that is built for you. Go to YRefi.com

slash Ramsey today. That's the letter Y, R-E-F-Y.com slash Ramsey. Might not be available in all states. Okay. Today's question comes from Kayla in North Dakota. She says, I have $36,000 in debt between credit cards and a car loan. I earn $55,000 a year, and I was wondering if you could help me out with this situation. I'm aggressively attacking my credit cards to the point of paying them something on them every single week. The problem is I get anxious to get them paid off and send more than I have in my budget. Oh, I've been there, Kayla.

Then I don't have any money. So I have to use the cards to get through the rest of the week. It's draining me mentally. How do I stop this habit? I have been there, Kayla. I have been in your shoes. It is the most frustrating thing.

You're so excited to work the baby steps, George. You get that paycheck. You're like, I'm putting all of it on debt, like doubling down. I have to eat too. Yes, it happens. And I think what happens here is you're gung ho, you're ready to go, but you've got to make sure that it's in the budget. So here's the thing. Every dollar has an amazing, an amazing, every dollar premium has an amazing feature. It's called paycheck planning. You need it. And the reason you need it is because it stops this right here from happening because you're able to go through and go, okay, with this check that I get on the first, I know I don't get paid again until the 15th. So with this check, here's what I can

do. I can do this, this, this, this, and that. And you can go in and write, you know, put in those line items and say, this is the date that I'm going to pay it. And you can include things like extra payments. If you're thinking, man, I'd really love to make an extra payment here. And then you can plan your next check. Okay. I get the next check on the 15th or 16th. Here's what's left in my budget. And it will tell you, hey, if you do it that way, you're going to go over budget. High risk of overspending. That's what it'll say. High risk of overspending. And so it's almost like a you, hey, if you do it that way, you're going to go over budget. High risk of overspending. High risk. That's what it'll say. High risk of overspending.

And so it's almost like a puzzle, George, that you kind of scramble and say, OK, let me put it in another order. And then if you put it in another order, it says, hey, if you make that extra credit card payment with that first check, unless you move groceries or unless you move your cell phone payment, you're going to go over budget. So it's going to allow you to see where do I put these puzzle pieces in, in order to make this work. Now, for me in general, I'm kind of the person like I make the budget, I'm tracking my transactions as the month goes, so that I know that I'm staying on par with what I said I was going to plan. And then at the end

of the month, once I've satisfied all the minimum payments and I see this cushy, nice amount of money of margin, then I'm like, yes, I'm about to destroy this debt because I know I've satisfied everything that needed to be paid that's mandatory and that is important for the household for that month. So that's what I do. You've just got to kind of just sit on your hands a little bit until you know. Pump the brakes. Yeah, pump the brakes. And two more helpful tips that are really practical. Number one is have a buffer in your checking account account so don't run it down right to the edge to zero dollars i used to do that too george have two or three hundred bucks in there where you go this is my line i do not go below three hundred dollars that is the new zero george that's where she's running into here you're dropping real facts let me tell you i guarantee there's a lot of people out here

who don't have a cushion i'm i'm embarrassed to admit how long it took me to realize that zero-based budgeting does not mean zero dollars in the account. Like, no wonder Sam Warshaw would be just sweating all the time. You'll be paying $350 in overdraft fees every year by doing that. Yes, we were. We were those people. We were the people who said, I'm going to work the baby steps. I'm going to put every dime towards debt and still paying overdraft fees and not understanding what's happening here

what what where are we missing the boat and it is it's the cushion it's planning individual paychecks and it's just having a little bit of patience to go when it's time to make this payment the money will be there and it is going to happen it just may not be on this particular day yep and the other piece here she said is i have to use the cards to get through the rest of the week no you don't cut the cards up shopping it's it's hard to use the drug when you don't have access to the drug yeah and so i think that happens with credit cards it's still in the back of our mind that it's a safety net and when you cut that safety net you go i'm going to make different decisions i'm actually sticking to this budget because I don't have another option.

Burn the boats. Burn the boats. That's what you're doing. So cut up the cards. You can close the account and just, you still got to, you pay the debt, but you can tell them, hey, I want to close this account down. I'm working on paying it off. Yeah.

So hope that helps you, Kayla. Good, good stuff. And if you guys want to check out that every dollar budget Jade mentioned, you can download every dollar for free in the app store or Google play, or click the link in the description if you're listening on YouTube or podcast. All right. Jordan is up next in St. Louis. What's happening, Jordan? Hi, how are you guys doing? Well, what's going on? So my question is this, uh, my wife and I I in kind of the height of all the real estate craziness purchased a house. And so we're at a seven and a half percent interest rate right now.

Obviously they've come down and people keep saying they're going to continue to come down. So my question is, is it worth refinancing now to drop it and paying all the closing costs? And then if it just continues to go down, just repay the closing costs? And then if it just continues to go down, just repay the closing costs again? Or is it smarter to just kind of hold off and see if the Fed continues to drop rates? Or what would you guys recommend on that? I wouldn't be in a crazy rush. I wouldn't be like, hey, you got to go out today and do it because here's what's going to happen. The rate by the end of the year, probably going to go down again. And the next year could go down by another point by the end of next year. And I get that you're paying all this interest on seven

and a half percent. And so what I would do though, is, you know, you can call our friends at Churchill Mortgage and they'll crunch the numbers right there for you and go, nah, doesn't make sense. It's going to take three years to break even. Or you might realize, hey, going from seven and a half to a five and a half on a 15. Now that's serious savings. 2% of my monthly payment. I'm going to save this much in interest. And based on closing costs, we'll break even on this thing a year from now. And so, you know, we don't know all the numbers to crunch, but I would at least get some info on that to give you some peace. What are your thoughts, Jade? Listen, I agree 100% with George. If I were in your situation, I think for me, I'd want to see, obviously, the Fed doesn't directly affect mortgage rates, but there's some correlation there.

So I think that that's in our favor right now. We saw mortgage prices drop, I think, but they kind of went up again, slightly again. And so the day the Fed cut the rate, the mortgage rates actually ticked up. Yeah, they ticked up a little bit. It's not a direct, you know, connection. There's sort of a lagging indicator there. They tend to move in the same direction. That's right.

And so it likely will continue to go down. I don't have a crystal ball, Jordan. So we can look back at this clip and laugh at how stupid I am. True. I'd wait for after the election, though. I want to know what's going to happen. Like, I feel like there's a lot of uncertainty in the air. And for me, this is just Jay talking. I would want to just let things settle a little bit so I can go,

okay, I'm not acting out of in any sort of way. I'm acting out of, yeah, it's cool, man. Let's go. So that's how I am. Okay. Yeah, perfect. I really appreciate it. Thank you. Absolutely. And we've got a whole hub, Jordan, at ramseysolutions.com slash real estate, including resources about refinancing. We've got a whole blog articles that'll help you crunch the numbers, do the math, all the things to think through, links to all the resources and tools and services and people that can help with this, whether you're looking to buy, sell, refinance, invest, whatever it is. Our team built a really great free hub with tools and resources.

Just go to ramseysolutions.com slash real estate and we'll put a link in the description as well. George, tell us right now. Let's pretend. Okay. Your mortgage rate's 7.6%. What are you doing? What are you doing?

Tell me. In my life? No, yeah. Tell me your course of action. So I'm always crunching the numbers. I'd be on the phone with my friends at Churchill going, hey can you actually show me how long it's going to take because i know we're going to be in the house this long okay it's going to take me a year to recoup based on closing costs but i can save this much my monthly payment because you don't want to do it again

like you don't want to you don't want to turn around and be like oh yes they're down i'm refinancing and then february comes and you're like oh another yes and what does the future look like do we plan on moving the next two years? Because you got to pay fees for that. New closing costs for the new home. And so you kind of have to make sure that you're going to be in. This is a long term decision. So it's not a flippant.

Hey, let's go ahead and refi. Yeah, because every time you refinance, you're paying those closing costs unless you have a stack of cash laying around, which would be pretty cool if you could not roll that into the mortgage, by the way. So I'm not, it might be a good move in Jordan's case, but we just don't know until we crunch those numbers. All right. For all of you listening on the show to the show on YouTube or podcast, it's about to end, but more calls are coming up in the Ramsey network app. You can go download it in the app store or Google play. We'll also put a link in the show notes so that you can keep the fun going. If you're listening on radio, you're safe. Stay right where you are. More calls are coming up.

So don't miss what's coming up next. Go watch the full show in the Ramsey Network app. It's totally free. Jump onto the App Store, and we'll see you over there. From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Jade Warshaw. Free call at 888-825-5225.

Jump in. We'll talk about your life and your money. Corbin is kicking us off this hour in Fort Wayne. What's happening, Corbin? Hello. How are you guys doing? Doing great. What's going on with you? Okay. So I am 23 years old and I'm $270,000 in debt and I have a wife and two kids. And on my journey to get into step one, maybe step one, he said to get rid of the truck payment. So I have one truck payment, which is $32,000. And all the people I went to, my bank and everybody,

and all the people that have cars, they won't take it because it's only worth 18 to 20K. And I just don't know how to get out of that so I don't have less debt to do everything on and get out of debt. I just don't know what to do. How did this... Well, I have a couple questions, but you owe 32 on the000 on the truck, but it's only worth $18,000? How'd that happen?

So, well, it's lifted, and it has a lot of aftermarket stuff on it. I got you. So, you know, it was my dream truck, and my dream is for my family and me, you know, to have our legacy. Your dream changed. Now, the debt, you said $270,000. Is that including your mortgage? Yes. So everything besides the mortgage,

so the mortgage is $235,000, but I'm trying to get a base down before I can get it started. I sold everything and I got a car, so I'm able to get rid of the truck, but I don't know how. I don't know that you need to, because here's the thing. The majority of this, the vast majority, I mean mean the truck is

your only debt basically right based on the numbers yeah basically are you able to pay all your bills right now no no i you just got a new job and i'm starting to make as much as i did with my last job but it's going to take a little while how much is that i know my mortgage um fourteen hundred dollars a week and i'm a month behind my mortgage and a month behind on my mortgage. I'm $1,400 a week, and I'm a month behind on my mortgage, and a month behind on the truck payment. And I'm just trying to get everything. What happened that got you behind on the mortgage and the truck? Well, I got laid off my other job, and I was off for three weeks. And getting everything.

And then I learned about Dave Ramsey in the three weeks, and I'm trying to just come up with a bunch of options. I don't know. Okay, so now you've got $5,600 a month, give or take uh everything's back on track you're back to having a job and we need to get ahead on the payments now because you're behind still we need to get current yes yes yes so then i can do the baby step one after i get current so what's the total to get current right now you got one mortgage payment one truck yeah um so it's going to be probably four grand to get current on everything one mortgage payment in one yeah um so it's going to be probably four grand to get current on

everything one mortgage payment in one truck okay so have you done an every dollar budget yet yes yes okay i started that i i yep and when you do when you do just you're pretending that everything is caught up when you do your budget what's the margin how much is left in the green for you to decide what to do with well with the new paycheck i'll probably have within a grand to fifteen hundred dollars left in the mortgage with the truck yet but i want i don't want the truck and i i understand that like they were i'm just trying to put out one fire at a time so we're looking at you've got fifteen hundred dollars in margin so you need another you know you you need to double that and then some is there something you could do for the next 30 days

to bring in that extra money to bring in that extra twenty five hundred dollars um yeah i could i could probably try to find a side job where i sold everything i can on my property and what i got so the next step is so i put myself out yeah that's the spirit of this because even when it comes time to get your thousand dollars the spirit is okay i've got to go gazelle intense i've got to sell whatever i can i've got to do whatever i can to get this quick bit of money and that puts me where i need to be and now we can start doing these baby steps so i think for you you and your wife sit down it's like we're going scorched earth for 30 days to get this money so we can get current once we get current now our budget actually works pretty well we've got 1500 of margin now let's start thinking about this truck because the the point is i mean you're halfway upside down on this thing and there's

part of this that i do think that if you focus just on your income right now you could probably keep the truck if you can pay it off and you know within the year yeah well okay but the real question is how do i get rid of it do i follow bankruptcy on it no you either pay it off you either pay it off or you come up with the difference that you are upside down and sell it and then buy something in cash and the other option is you go down to your local credit union and you say hey i need the difference as a loan okay and so you're trading down in loan to get out of this debt get out of the truck payment which then allows you to aggressively pay it off the only thing the only thing with you is you're basically taking out,

for what you're taking out, basically an $18,000 loan, now you're going to have to also come up with cash, at least $7,000. So before you know it, you're going to be fairly close to the $32,000 that you owed, and I don't know what your interest rate is going to be. If your credit's pretty bad, it may not be worth all of that. If you love the truck, you customized it. If you can pay it off within a year and a half, it could be worth keeping it. So that's up to you. I think when you got laid off, it really scared you. And I think it really scared you into going, oh my gosh, we're in more of a precarious situation than I realized. Looking at what's going on, I'm like, okay, you've got a $32,000 truck. That's

your only debt besides your house. I think when you lumped it all together, it really freaked you out. So the key here is getting back on track. Yes, keep working the baby steps with intensity, but also understand, just like adjust the thermostat a little bit because if you're like oh this whole thing is on fire you're going to start doing crazy things and i think you just need to go okay something really scary happened but i'm back on track i've got a job we've got a budget we're going to go we're going to go hard in the paint uh for 30 days to get back current and then after that we, we're just, okay, we're doing the budget. We're making extra payments on the car. And then you're just in that rhythm of financial peace, you know,

the journey to financial peace. One more piece of homework for you, Corbin. I wouldn't be going to the dealership saying, hey, you want this car for dirt cheap? I would be going private party, find some dude like Corbin who wants a fancy truck yeah and wants it closer to the thirty thousand dollar mark so i don't think you're as underwater as you think you are i think you're just getting hosed by the offers you're getting because i think there's a dude out there who wants a souped up truck that corbin has and it'll be his nightmare to deal with one day who knows or maybe he pays cash and he's awesome i gotta believe there's sites for that kind of you know what i mean like dealer sites even Marketplace might get you some bites

if you listed at 25 or 30. So if you came up with, let's say, the difference of six grand, seven grand, and you sell it for 25, well, now we're good. You know, we go to the lender, we do the transaction there, he gets a clean title from the lender and we're off to the races.

Okay. So I wouldn't give up. I get real resourceful, real creative, do your homework, move with intentionality and at a pace where you're slow enough to not trip. Mm-hmm. I love your intensity. We just need to make sure we're not just out of desperation making more bad decisions. Spiraling through, yeah.

Yep. I just wasn't sure if it was worth getting rid of it and trying to get out of that 32 completely, but I didn't know what it's going to take or if I will even if i will even get out of that yeah you will and you don't need to file bankruptcy yeah you know that's we're not we're not even close to that of all the options that is not one of them and you gotta love when jade is like you can keep the truck he's like i need to get rid of this truck i hate this truck you know the dream truck became the night it reminds him yeah of the poor decisions and the way he left his family in a lurch.

And now he's like, I got kids. I want to leave a legacy. I'm not trying to impress anyone with my under light LED kit, with my pavement princess. And I respect that. I respect Corbin. He's the winner today. MVP. Did you call it a pavement princess?

Is that what I just heard? As a little guy who drives a little car, it's just fun for me to call a big, scary truck that's lifted a pavement princess. Because they're not mudding. They're not using them to actually haul construction equipment. They're getting mulch from Lowe's twice a year. Like, I need a big truck. But what I hear is... Big twuck.

It's like a kid that just never fully matured. That's my honest thoughts. Oh, wow. I love it. Okay. And Corbin's matured now. He's a grown adult, making grown adult decisions, and I'm proud of him. So call us back if you need help, Corbin. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The number to call is 888-825-5225. Call us up, and we'll do our best to help you out with whatever's going on in your life. All right, let's get to Sean in Roanoke, Virginia. What's going on, Sean? Hey, guys. How can we help?

Yeah, I was just curious. I've got my 401k on hold currently while we're working to pay off some debt and everything, but while my 401k is sitting there, I've got it sitting in a, what is that, like a destination date or whatever, my retirement date? Target date. Yep. So I've got it sitting fully in the target date. How would that compare to how you guys typically say to invest in the four different types of accounts? So the difference with the Ramsey investing philosophy is mutual funds, diversify those across four types of mutual funds, growth, growth and income, aggressive growth, international. So you can basically think of it like small cap,

mid cap, large cap, international. What the target date fund does, and those are largely stocks and equities, by the way, inside of those mutual funds. The target date fund, what that does is over time it moves from stocks and then shifts to where you have more of a bond mix as you get older. So it might go from 100% stocks when you're 20, and by the time you're 60, it might be 40% stocks and 60% bonds. Okay, that's pretty much how I understood how they did that. I'm just curious, you know, what kind of a difference if I end up changing to the Ramsey type philosophy in investing the way you guys do compared to how the target date that I currently have it set up.

Like, what can I expect from that? Obviously, it's the market. I understand, but... from that obviously it's the market i mean i understand but the way that we're teaching we're trying to get you the best rate of return um for your time period that's the idea the the best rate of return for the the right amount of risk i guess is the the best way to say it right george yeah and so in your case having it in a target date fund you really are dialing back for what most people would consider the risk but you're also dialing back the rate of return over the years that those bonds start to set in. You're going to have a lower rate of return.

I mean, we're always aiming here for 10% to 12%. That's what kind of is like, yes, annualized rate of return. Because we want to beat the rate of inflation. And so, Sean, I've got a Vanguard article here that's great. It shows you the return of if you did 100 bonds the average annual return from 1926 to 2018 five percent now if you did 50 50 50 stocks 50 bonds the average annual return jumps to eight percent but if you were 100 stocks over that same period of time the average annual return 10.1 percent and so you can see the shift of you

know the the difference is sean if i was in 100 stocks we were the same age invested the same amount you would be looking at my portfolio going well why did yours do better than mine and i'm going well you weren't willing to stomach the risk of the roller coaster and i use the word risk loosely here because if you're investing the way we teach with mutual funds diversified we're not talking about single stocks here yeah we're not talking about the the risk of you having something and then having nothing i think that's very important too so that you know targeting that i understood yeah and that's the way that i understood those two um is how that worked um you know and i have over the past couple of years when I was watching it, you know, we weren't getting a whole lot of good returns.

Now, just recently I looked at it and I'm at like 11% today, you know, for the year. But, you know, that's, that's topsy-turvy. But yeah, where I'm only 38, I'm sure they're more like, you know, more of the risky investments rather than the bonds at this point, I would think. But I was just curious how that would, how that would play out if I went ahead and I made that change.

Yeah. If you give me a crystal ball and you told me how the stock market would do, I could tell you exactly what would happen. But if it's anything like we've seen in the past, we're looking at almost 100 years of data we have, and we're still seeing 10% to 12% in the S&P 500. And so that's 100% stocks. And I'll tell you, Dave Ramsey, his portfolio is 100% stocks. It's those mutual funds that we talked about. And same with mine. And I have no plans on changing that.

And depending on your personal situation, you know, if you met with a financial advisor, they'd likely say, if you were a 63-year-old retiring today, they'd probably go, hey, let's put you in some bonds because of your risk tolerance. So that's not something that a lot of the financial community has adopted. And it's fine. But the risk is you're not going to get as much returns. And as you pull the same amount of money out without the 10% return over time, that will deplete your nest egg faster. So it's all about your risk tolerance, and can you ride that roller coaster to where you stay in 100% equities and you learn to live on the growth and you'll retire with dignity.

But the key is I want to have as much in there as possible so I'm less concerned about the mix and the returns. Okay, yeah. I mean, the biggest thing for me was I really don't know much about it, so I just kind of threw it all into a fund because it sounded like it made sense, but I really don't know. Well, I'll tell you, the key to building wealth is investing. It's savings rate. It's the fact that you consistently put money away. So if we get to the end and you're 65 and I'm 65 and you've got 2.4 million and I have 3 million. You're both doing great. Let's still hang out and have a good time.

So there's worse things you could do than a target date fund. It's just not the Ramsey way, but it's definitely a far cry from single stocks and terrible decisions you could be making. So I'm proud of you, man, $38,000. Right. And how much are you investing every month? Right now, nothing because we've got debts we're paying off. This is hypothetical. Yeah. Well, I mean, I've, no, I've got $38,000 in there currently. Okay. Um, you know, I was,

I was contributing to it, but then I pulled back off when we decided to go ahead and just start paying off our debts and stuff. Um, but you know, as I see it sitting there and I've been listening to your, your, your different podcasts and stuff, I was curious how my target date, how I see it sitting there and I've been listening to your different podcasts and stuff, I was curious how my target date, how I have it funded would differ or if I'd be doing better if I was doing it the way you guys keep saying to make the investments. Well, the big thing is if there was a big dip, I'd be feeling it a little more than you would because you have more bonds. And if there's a big spike in the market, I'd be cheering and you'd be cheering a little less because you didn't see that return. But there is a part of this that, I mean, the way we teach, obviously, investing, it's over the long term. And so the hope is that

by the time you're at the point that you would be drawing from it, you've got a decent nest egg. And so even if, let's say you're in Georgia's camp and you've got it invested the way we teach, even if there is a down market, everything's, all is not lost. You still have something that you you're living you have plenty to draw from and live off of and the stock market is going to recover because we've seen that historically so there's never this point of like uh it's down and it's never gone back up you know what i mean and so in that way you're both in the same boat it's just who's going to feel it a little bit more but then when the when the tide rises again who's going to rise higher on the tide so yeah it's just how i had a family member they came up to me and they said hey i heard you on this show talking about these 10 return 11 returns i'm not getting that at all i'm getting two percent that's crazy so i said can i look at

your portfolio they had this just nightmare mess of like a thousand different stocks and bonds, and they were largely, they were halfway in bonds or even more. And so I went, well, this is why your bonds are not going to, they're going to barely keep up with inflation. And so if you want to make more, if you want to get that 10% return, you've got to play a little more risky. And again, this is air quotes around risky. we're not talking about day trading and sports betting and gambling here this is the least risk risky risk you could take the list the least risky risk putting your money in the u.s stock market love nerdy talk it's good to go back to what we said though at the end of the day we want you investing we want you investing in things that

you understand we want you making it a regular rhythm in your life when the when the time is right for you to begin invest i mean there's plenty of people george who would say forget mutual funds forget the four different types i'm just putting my money in an index fund and letting it ride good great you know happy for you i'm just s&p 500 index fund that's it that's enough for me like america has a retirement crisis we don't have a you know which fund to choose crisis it problem is no one's choosing it and no one's funding it. That's right. And they got debt up to their eyeballs all the way up through retirement. And it's a major problem.

Every news outlet I've been on, they want to talk about the retirement crisis and what to do. And I always say the best time to plant a tree was 20 years ago. The next best time is today. Yeah, that's right. So time, while it's on your side, if you're in your 20s and 30s, every dollar you put in, you're getting like a 5x, 10x, 20x return. And as you get older, it's more like a 2x return when you're in your 50s. And so you got to put a lot more in to have a bigger nest egg. And so start early, invest often, make it consistent, but first have that foundation of debt-free with an emergency fund. Because we find people aren't investing 15%

while they're trying to make all their debt payments. Massive debt payments, that's right. So that's why the Baby Steps works. It's why we have all these Baby Steps millionaires calling in. Dave and I did a theme hour this week. The plan can still be done in today's America, even with the inflation and the economy. You just got to choose to do it. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Phone line is open, 888-825-5225. Jade, we were just talking.

Last week, you launched a new book. That's right. It's the revamp of one of the goats that's been helping teens for a long time. Five Mistakes You Can't Afford to Make in College. I was flipping through it, and I was hooked. Were you? Your voice was popping off. The graphics, the full page.

Even the colors. Glossy pages. It's a short read, which is good for my attention span, and I imagine that of a teenager. so what are people learning from this yeah it's this is this is paramount if i had had this book life would have gone a lot differently because we're really walking through the mindset of how you feel when you're accepted into college and it's like all right you don't want to make these mistakes right this is a great time in life it's an exciting time of life the world is your oyster but let's keep it positive and let's make sure that it doesn't go down the wrong path.

And so I walk through five mistakes that I actually made when I was graduating from high school, going into college. And I'm sharing those five mistakes because truly I don't want you or the ones that you love or your children to make those mistakes. And so we talk about things like student loan debt, credit card debt, buying a car with a car loan instead of paying cash. We talk about just having no plan and just kind of like la-ti-da through life. And we talk about not having a budget. And so I really work through these things. It's through the lens of my story. It's really funny. It's easy to read. I know for me, George, I don't need a thick book, you know, and surely when I was 18, I didn't want a thick book.

And so this is really cool. It's almost like a journal. It's the size of a journal. You can throw it in your backpack. There's no jacket on it. So, you know, it doesn't get caught on other things. But I like it because it reads almost like social media. So everything is kind of like...

It does look like a bunch of social media posts. Yeah, there's graphics. Everything is kind of a quick hit. It's highlighted the parts that we want you to really focus in on. So even if you're just skimming this, you're going to get a lot of information. You could skim this in probably 30 minutes and be a lot smarter than the average 45-year-old. There you go. Whether you're a teen or adult, this book's going to help you, but it was made for the teens in your life. So go check it out. Where can they get it? They can get it at ramseysolutions.com slash store, or you can click the link in the description if you're listening on YouTube or podcast. Remember, it's called The Graduate Survival Guide,

Five Mistakes You Can't Afford to Make in College. Love it. All right, Sarah's up next in Pittsburgh. How can we help today, Sarah? Hi. Yes. Thank you for taking my call. I'm calling because recently I have gotten myself into some credit card debt. One actually went to a civil action lawsuit and I'm kind of just sick of living paycheck to paycheck. And I just need some advice on how I can get motivated to get myself out of debt instead of when you sit down to look at things, you kind of shut down, push it off to the side and then not worry about it until it gets bad enough again. So you feel like you're kind of having that ostrich syndrome where you're sticking your head in the sand? Yes, absolutely. Like over and over. And then sometimes it gets

deeper and deeper and deeper. And then you can't pull pull your head out is it because let's let's dig in on that is it because is it an income thing are you are you avoiding the the dread of having to work extra and grind that is it the part that I don't want to work extra um I was going to school um so I do work full-time um my annual income is about 41,000 so I know that's not a whole heck of a lot my total debt like loans credit cards medical is about $20,000 and I was going to school and I actually just finished my associates in May so I was taking a mental break for a little while just because I was going for two straight years it was all online and the good thing with that is I don't have any college debt because it was free through work. So that was why I went and did it that way because I wasn't about to pay for school again because I do have student loans previously

from trying to go back to school and I didn't finish. Okay. So you got $41,000 a year. You're making $41,000 a year. You went through school. You've graduated. You're done with school. Yes. And now you're in your full-time job. You said you had $20,000 of debt. Is that the student loans or is that something else? That is just loans and credit card debt and medical.

Okay. Break it out for me so we can see what this looks like. What's the medical? Okay. The medical is about $6,000. Okay. What else? The credit cards are around almost medical is about 6,000. Okay. What else? The credit cards are around almost close to 10,000. Okay. And then I have two loans around

4,500 total. Okay. Personal loans? Yes. Those are personal loans. Okay. Okay. And so you're making $41,000. That's your main job. So basically half of your income is in debt. So the good news is I think you've got plenty of room to grow income wise. Is that fair to say? Yes, absolutely. And, you know, the way life is right now, most of us have a job in a side hustle. So there's also room to grow with a side hustle. And I think for you, if you can come up with something where you're making, I don't know, if you can find something where you're making extra thousand dollars a month, that's going to really change this for you.

Okay. So what I would do if I were in your shoes, and George is going to chime in here too, I would get on every dollar and I would start running these numbers out. I'd put my budget as it stands and I'd say, okay, what margin am I left with? And then I'd say, okay, with that am I left with? And then I'd say, okay, with that money, how long is it going to take me to get debt free? And then I'm going to decide, is that good enough for me? Or is it not? If you run those numbers out, it's going to take you three or four years to get debt free. That's not good enough for me. So what I like to do is I like to say, I'm going to happen to this and I'm going to decide. I'm going to, you know, I'm going to get my income up. My goal is to go from 40 to 50 or 40 to 55 in X amount of time. Like I'm going to write real goals and

then I'm going to write action steps on how that's going to happen because you get to inform how quickly this happens. When do you want to become debt free, Sarah? I would actually like to be debt free within the next year. I literally was, it was in my heart. I said, I feel like she can do this in a year. Yes. So you know what that means, Sarah. I want to do it so bad within the next year. So here's what that looks like.

In my calculator, 20,000 divided by 12 months, you need to be putting 1,666 toward your debt every month. Just that's napkin math, right? Now, the key that Jade mentioned, when you do your every dollar budget, we need to see that number available to throw toward the debt. That includes your minimum payments plus the extra. And so then it becomes, what's the gap? All right. I need an extra thousand. All right. That's 250 bucks a week. What can I do? It's 20. Okay. If I can find a $20 an hour job, that's going to be, you know, this many hours, 10 hours extra working a week. I can do four hours on

a Saturday, four hours on a Sunday, a little bit on a weeknight. I can make this work. And it's going to be a year. I mean, how old are you? I'm 48. Okay. Are you ready for the first time in your life to have some margin to be building for the future instead of paying for the past? Like where does 50 year old Sarah want to be? I just want to be out of debt so I can travel. I have a grandson who lives out of state, and I would like to be able to just kind of on a whim say, hey, you know what? I want to go down and visit for a weekend. What a beautiful goal.

The spontaneous trip. Yeah, so anything like that. Yes. Just, I mean, and something that I can save for him for college. You know, I have, all my kids are grown. And I would like to start saving something for him because I mean, he's only two. But by the time he gets to college, I can't imagine how much it's going to be. Oh, Jaden, I would like to have him. Yeah, to have a cushion where he's able to go if he decides to. And if not, he can use it for

something else like down payment on a house or if he wants to invest it, he can invest. It's a beautiful goal. I love that. And to go back to your first question or your first concern of you being an ostrich I would create that visual in as many places around my home as I could. My husband is great at putting sticky notes on his bathroom mirror and if I were you I'd be putting pictures of where I want to travel. I'd be putting pictures of family members that you want to help. Anything to keep you from burying your head in the sand and keeping you focused on your why is going to be really, really, really important for you. You're going to get home from that side gig at 10 p.m. and look in that mirror and then see that baby.

See that grandbaby and go, oh, that's why. It's worth it. I'm happy to be tired if it means I get closer to that dream. It's got to matter that much. And so we're rooting for you, Sarah. You can do this. And make sure you're also putting your own mask on first. And what that means is you've got to make sure you can retire with dignity

so that grandkid isn't helping grandma in retirement one day. And so that's a big piece of the puzzle, and that's where the baby steps come in. We get out of the debt. Then once we're out of consumer debt, we build up an emergency fund of three to six months expenses. Then we begin the journey of investing. That's 15% of your own income into retirement. Then we start saving for kids' college funds. Maybe you say that's going to be for little grandbaby's college fund. And then we'll have a paid for house one day. And

I think all of this can happen in the next 12, know, 12, 15 years as you head into retirement. And I'm glad you had the wake-up call now. So don't feel like it's too late. Some people, they wake up at 68 and they have Sarah's epiphany going, I got to make a change. And it's harder at 68. You've got time. Absolutely.

If you get moving. Thank you for the call, Sarah. We're rooting for you. Call us back if you need any help. The number to call is 888-825-5225. This is The Ramsey Show. Welcome back to The Ramsey Show, our scripture of the day, Ephesians 611. Put on the full armor of God so that you can take your stand against the devil's schemes.

Toby Keith once said, don't compromise even if it hurts to be you. It hurts to be me a lot of days, Jade. I can see that. Thank you. Tara is with us in New Haven, Connecticut. What's going on? Hi, how are you? I purchased a house about a year and a half ago, and I would like to build a second bathroom in the upstairs, and I'm just wondering how I should fund it. What's it going to cost? I've heard, so I've had people come over my house, three different people, probably about $15,000 to $20,000. Okay. Do you have money anywhere? Yeah. So I do have a savings. I have about $35,000 in savings. Originally when I had

this plan, I didn't think it was going to cost that much. I was thinking maybe about $10,000. And then once I really got the ball rolling and multiple people have said it's going to be way more than I thought, I kind of didn't want to use that big of a chunk of my savings. Is this your three to six months of expenses or is this money aside from that? Essentially, it's like it could be my emergency savings. It's just I have other,, I have a different 401k. It's my main savings that I don't touch, like, really only for emergencies. So you have basically 35 cash liquid to your name for whatever.

Let's call it emergency. Yeah. Okay. So one thing that's helped me, Tara, is separating these out. So I would actually create a different high-yield savings account. It can be attached to the same account, but create a new fund so that it's separate. So when you look at it,

you see 20 in the emergency fund and you see 15 for the renovation fund. And that way, emotionally and psychologically, you don't feel like you're robbing the emergency fund. Yeah. So that helped me. I already agree with that. It's a silly thing,

but for some reason as humans, it's a big deal. we like want to shame ourselves for touching it. And so separating it out has helped me. I would do it. I, and if it leaves you, let's say you had a three to four month emergency fund after that, I'm okay going down to that for a little bit and getting this project knocked out. Okay. Can I just ask a couple more questions? Sure. I had called my mortgage company to ask about a HELOC and I'm not eligible because I don't have enough. Good. I'm glad you're not eligible because we would never want you to take out a HELOC. Oh, can I ask why? Because you're robbing yourself. You're going further

into debt. It's moving you backwards. At an interest rate. And it also, there's generally a variable interest rate with HELOCs, which is very scary. That payment could jump at any moment and it puts your home at risk. Yeah. If you miss a payment. It's your equity that you've gained over time and now you're going to pay an interest, a variable interest rate to borrow your own money. It makes zero sense. Yeah. Okay. So I'm still all learning about the terminology and all the stuff that comes along with owning a home. And it's a lot of information. Oh yeah So I'm still all learning about the terminology and all the stuff that comes along with owning a home. And it's a lot of information. Oh, yeah. I got you. Well, I'm going to send you a copy of my book, Breaking Free from Broke. I did

a whole chapter on mortgages, and that includes all the traps out there, HELOCs, all the different stuff. And we also have a great hub at ramseysolutions.com slash real estate, where you can learn more about all the stuff we're talking about today, buying, selling, renovating, investing. So we'll also drop a link to the show notes for folks listening to that real estate hub, ramseysolutions.com slash real estate. But I would do it.

I mean, if you're debt-free, you have the emergency fund still, you got 20 grand in there, you spend 15 on the bathroom, I'm doing it. That's it. Case closed. All right. I'm with you, George. All right. Tracy's up next in Los Angeles. How can we help, Tracy?

Wait. Wait. Hello? Hi. How are you? Hi. Doing well. Hi. I was calling my son. He's 23, and he currently was living at home, and he was trying to get an apartment, but when he goes, his credit score is coming up zero

because he's working, and he just pays for everything like cash and he doesn't have any credit. What a stud. Love that for him. Right, but people are telling him no, so now he's discouraged. Who told him no? The department place said. Just one?

The letter said so far two. But they straight up said you cannot rent here no matter what. There's no way around it? The letter says based on your credit score of zero, we deny you from living here, basically. I'll tell you what I did because I went through this multiple times. I've rented apartments, homes, all of this without a credit score. I would have them talk to the manager. And generally, they have a policy where they just go, okay, if you don't have a credit score,

but your background check comes up, your income's good, then what we're going to do is charge you a higher deposit that you'll get back when you move out, but you're going to have a higher deposit because they see it as a riskier tenant, essentially. And that's what I was thinking. I said, maybe you'll talk to them or let him talk to them. He's 22. Let him talk to them. He's 22. Let him talk to them. But, you know, Mama Bear wants to talk and say he's, you know, been saving.

He's working. He pays his credit, you know. So I don't understand. So I think that's a good idea. It's just incompetence from people who, you know, are working the front desk who just go, well, I put it in the system and it said you can't. And so he just needs to have a little bit of, you know, gravitas and go well i put it in the system and it said you can't and so he just needs to have a little bit of you know gravitas and go listen here's the deal i don't have any debt that's why i don't have a credit score i have the cash happy to pay a higher deposit

to get this place and if they say no there's plenty of other fish in the sea and i guarantee you someone out there is going to rent to him it won't take more than two or three tries and he'll find a great spot and i want to live somewhere where the people are, have some sense and are smart. You know what I mean? So that's just a green, that's a red flag to say, listen, this is not where I want to live. Check someplace else out that is turning on their mental function for the day. Yeah. And I agree. I was thinking the exact same thing that I was ready to put it in writing, like how I'm paying my debt. I'm a 22 year old young man trying to, you know, so I still may put it in writing and say it.

Yeah. And, and if you can, you know, if there's a way for him to keep record of some other trade lines, I could help him out. Um, and just to say, Hey, I don't have any debt, but here's, I pay my cell phone every day, you know, every month, I pay my car insurance every month and something like that could also help. Uh, but i think it's time for you to just find a couple of new complexes that will listen and turn their brain on and for encouragement tracy you and your son i did a whole video on my youtube channel about this and it was titled i have zero credit and tried renting an apartment and i literally got on the phone and you hear the phone calls and they say, oh, well, yeah, here's what would happen based on your situation. So I hope that gives you some hope. Tim is up next in San

Antonio. What's going on, Tim? Hello. Hey. Yes, sir. The brief description of my question is I have a $2 million house and I have a net worth of $3.6 million, and I'm concerned about that ratio. Well, first of all, congrats on your wealth. Way to go. Good, sir. Worst problems to have. So you're saying you have $1.6 invested? Say again?

How much do you have in your nest egg invested? $1 million. Okay. The rest is not liquid. Okay. So is it a problem that the majority of your net worth is in your house currently? Correct. Well, you know, in the financial planning community, they like to see your net worth diversified. And so if you had 90% of your net worth in your home, well, if the housing market, something happens, that's scary. And if 90% of your wealth is in your retirement

and you have nothing in real estate, that's also scary. And so they like to see just a little bit of balance, but I personally don't see an issue here. If you're going to have enough to retire and you've got a paid for $2 million house and your nest egg continues to grow, you're going to be fine. So it's more about can you live on the nest egg because your home isn't creating income. So the rest of the story is I have an income of about $205,000 a year and I've been retired since 2018.

Wow. Where's the income coming from? $3,000 a month, Social Security, $4,000 a month out of that $1 million, and the rest is pensions. I love that for you. So you got pensions, Social Security, and then you are taking out $4,000 a month from the $1 million retirement account? Correct. So it's $48,000 a year out of $1 million. So you're essentially a 4.8% withdrawal rate. Fabulous. And the idea is that this goes on for perpetuity, but I'm just worried about that ratio.

So I actually have a million in the house, and the other million is appreciation since 2018. Are you thinking of downsizing? I'm asking you if I need to. I don't think so. I don't see a problem here. You're living fine. If you said, hey, I don't have enough retirement income, then I'd say we got to switch some things up and move more to investments. But right now you're living great. You got a million and you're a very conservative withdrawal rate. So you're not going to run out of money there. And so your house appreciated, not your fault. I think this is a great problem to have. And I think a half-half split is totally fine. Thank you for the call,

Tim. Way to inspire us at the end of the show. I want to be like Tim when I grow up. That puts this hour of The Ramsey Show in the books. Thank you to Jade Warshaw, all the folks in the booth, and you, America, will be back before you know it. Take care.