The Ramsey Show - App - Don’t Fall for the Buy Now, Pay Later Scam!

Episode Date: May 24, 2022

Rachel Cruze & George Kamel discuss: Juggling a small business and motherhood, Budgeting after a large increase in income, How to decide if it's time to leave your workplace, Selling a business you love to pay off debt, Buy now, pay later scams, What to do once you become debt free. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

I'm out. Live from the headquarters of Ramsey Solutions, this is The Ramsey Show, where America hangs out to have a conversation about your life and your money. I am Rachel Cruz, and joining me this hour is Ramsey personality George Campbell, and we are taking your calls about anything in life, whether it comes to your career, your money, your relationships. Just give us a call at 888-825-5225. It's a free call anywhere in the country. All right. First up is Sierra from Portland, Oregon.

Hey, Sierra. Welcome to the show. Hi, Rachel. Thanks for having me. Absolutely. How can we help? I just became a new mom about 10 and a half months ago. Congratulations. Thank you so much. My son was born prematurely and we had to spend some extended time in the NICU. And before that, I was running a very successful business and it was about a six figure business. And because he came so early and we didn't have a plan in place, um, and I never left the NICU, my business has kind of crumbled. And as a new mom, I didn't, I'm sure a lot of people laugh at this, but I didn't expect it to be as much work as I thought it would be. And I am not willing to sacrifice putting my child

in daycare and losing this precious time because we had infertility issues and this may be my only chance to experience this. So that value is really high to me. But our income has dropped significantly, probably in half. And I'm wondering how do I balance work, establishing a business back up, and also watching my child while I am married and my spouse works full-time as an apprentice. So he's out two nights a week for school. And I just I guess we're kind of we did the budget and our mortgage is about 40 percent of our budget right now. And all of our debts will be paid off and only have a mortgage by September of this year. OK, so how much were you guys

making when the business was at its peak? And then what are you guys making now? About 150 before taxes. And then now we're making about, I'd say 89K before taxes. Okay. So about 90. And you guys with that 90 is when you think you'll be completely debt free by September? Yeah, we already have a plan in place. I just have to contribute money to my, my retirement, my SEP IRA for my business. Okay. And did your business, was it just you solo doing it or did you have team members that had to be let go when it crumbled? What was kind of the history of that? We let someone go when COVID happened and we had counted on doing something to replace that person.

And the baby came, but life just kind of changed. Yeah, for sure. So what kind of business is it? I do personalized drinkware and HG wedding signs but that covid kind of took that away yes the wedding market well it's back it's i feel like it's yeah exactly yeah i know it's like the perfect time to rebound but yeah it's been hard and we also do i should say we have um we will have already three months of savings um up. We've been really good with money and we have been paying extra on our mortgage so far. But now we're kind of like, oh, what do we do? How do we allocate money?

Like what if the economy crashes? Sure, sure. Well, you guys got a lot of things going on. So here's what I would say. Yeah, sorry. No, no, no. It's not a bad thing at all. So when it comes to the financial part of this conversation, you know, you guys are still contributing to retirement.

You have an emergency. Like you kind of have everything before Baby Step 2. And we talk about Baby Step 2 is putting everything to get out of debt. But with these numbers, if you guys are going to be out of debt in September, you know, that's currently when you're calling. I mean, that's going to be in about three four months so i'm not overly concerned um with what you guys have george may may push back a little bit on that i don't know yeah i'm just wondering what the timeline would look like if you didn't invest right now if you took everything in savings but the one thousand dollars and threw it all at the debt could you be be debt-free by next month? So I have to contribute the money

because I stated I would contribute the money with our tax return. So I always wait until the end. So you essentially pledged this money and the IRS is like, hey, you said you were going to invest this. Yeah, and I do have the money. The way my business is,

I'm doing more wholesale orders and they have net 30 through the platform I sell on to get to pay. So my money's being held, which I know your dad would have a cow over this Rachel, but it's just the way that I'm kind of set up. So I'm looking towards diversifying more towards another platform that I was on that was really lucrative. So, okay. So is the business currently making money? Yeah. So, so far this year I have done about, I would say 30 K, um, in revenue, but my problem too is like supplies have doubled the cost, like not doubled, but there's increased dramatically and my profit margins are so much smaller. So have you raised your prices? I'm still making money. I have.

I just recently did that. And I've cut my pay down to just $1,000 a month so that I can make sure I'm buying supplies. Okay. So are you wanting to continue doing this business from home while caring for your son? Yes. Is that the end goal? You don't want to just be full-time watching your son and you can't be full-time in the business.

You want to kind of split your time a little bit. Yes, that's correct. And I think it'll get easier. My husband turns out as an apprentice. He'll be done. He'll be a journeyman next June 2023. Yeah, so it feels like a year from now your life looks very different and you can start to rebuild the business while you're caring for your son at home,

while your husband increases income and finishes the apprenticeship. And so this feels like a temporary problem. Yeah, because we have been listening to y'all for a while now, and we're like, should we sell our house? It takes up too much of our budget. Like, we're living outside of our means. Well, it sounds like with this business that you have going, if you can keep this up, you'll have that mortgage payment be a lot less than 40%.

Yeah, I think that if I went back on track and I had some time and someone to watch my son, but I don't, I mean, my parents, all of our family was too far away. So. Yeah. So what I would say is, Sierra, you may, you may not let it, you know, it may not go back to what it was because you're not going to have the time you had obviously before. And if, since you're wanting to be so hands-on with your son, which I think is amazing. And I think that that's a life value that's going to drive a lot of your other decisions. That's actually a great one. Then you guys need to make a realistic plan and a realistic goal of, okay, hey, I was making six figures out of this business. It's really, I'm going to shoot

to make 50,000 this year or 60,000. Whatever you think is realistic of figuring out what you can do that feels balanced for you at home. And then from those numbers, figure out if the house is too much. Because if it goes down to 28% at that point, then you might be okay. But if it's still hovering around 35%, then yeah, you guys probably do have a lot of house and you can make progress so much faster. We have a lot of equity in our home.

And when it turns out we could sell our house and move to a different state and pay cash for a house and be completely debt-free. And that's something we've talked about. Yeah. So it's options like that, Sierra, definitely that I would look at. And to know that, you know, you're going to be spending a lot of time with that baby, which I think is amazing, but it is going to make your work, the time is going to be

a little bit less, which is totally fine. But I think you guys are on the right track. I think your values are exactly where they need to be. And you guys are just making great decisions. So thanks for the call. This is The Ramsey Show. I just saw a study that really made me sad. It showed that families owning life insurance in the U.S. was at its lowest point since the 1970s. After what we've been through the past few years, I'm just lost on how people don't make this more of a priority. How are you going to make sure your family needs are met if something happens to you?

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Call Zander at 800-356-4282 or visit zander.com. That's 800-356-4282 or zander.com. Welcome back to The Ramsey Show. I am Rachel Cruz, co-hosting today with George Campbell. And up next is Mary from Des Moines. Hey, Mary. Welcome to the show. Oh, my gosh. Is this real life? Rachel, George,

hello. It's an alternate reality. You're in the metaverse. Welcome. I am very excited. This is the second best day of my life. Oh, what was the first? My wedding. Oh, that's my third best day. I don't know. That's awesome. So great. How can we help? Okay. Well, my husband is in the end of his residency. And right now he's making $62,000. And then he just got a new job. And so it's going to put him at $200,000. Oh, wow. That's a nice jump.

It is very blessing and nice, yes. He also is being offered a $75,000 sign-on bonus. So as I would love a horse or a dream car, I would love to be out of debt more. Love it. Good, good, Mary. Good, Mary. We are on the right track. You know what I'm saying?

Yes. Don't put the horse before the car. Thank you. You know what I'm saying? Yes. Don't put the horse before the cart. Thank you. That's what I'm saying. So my question is, should we buy or rent? We're moving to another state. And then should we put the $75,000 towards student loans? Because we do have, that's our debt right now is $134,000 in student loans.

Okay. Yeah. Is that all of your debt? That is all of our debt. Okay. All right, Mary. If I woke up in your shoes, I love that line because it's just really, what would you do? Yeah.

So I would definitely rent for multiple reasons. One, you guys still have the student loan hanging over your head. Number two, you're moving to a new area and planning routes down where you're not 100% sure exactly maybe where you want to be in the city. Logistically, I don't think it's smart. So I would rent regardless of even if you had this debt or not. I would still recommend renting just to kind of get your feet wet and understand, okay, here's where we want to be, what part of town we want to be in, all of that. So I would still live, Mary, like you guys are in residency. I would still live like you are making $62,000 a year.

And I would throw all of your income, the $75,000, everything. I would throw everything at this debt. Because if you guys still lived like you were making $60,000, you guys could have this paid off uh you know in in in 18 months 14 months and and it's crazy to think because is yes it's a lot of debts you know 134 000 but you guys have a huge shovel with this 275 000 so it's it's an incredible um opportunity to to be able to be out of debt. Well, you'll be out of debt in a year. I'm doing math here. You'll have 59 left. If you throw the 75 at the 134,

it leaves you with 59 in student loans, making 200. So let's say you net, I don't know, 130, 140 after taxes, and you lived on a net of 40,000. This debt's gone within seven, eight months. Okay. Okay, so we have four little kids. You said live like no one else. You can live like no one else. Yes. So just live on the least amount possible.

How have you guys been living on the $62,000? Okay, so we use every dollar yes and true confession is we have meetings every week or month and then it's like oh we went over for whatever reason this happened this happened so we don't use the cash system which maybe is something we should be doing because we use the every dollar and we're like oh oh, this is the same. But it's not because it's almost like we're not doing it, but we're trying. Yep, yep. Oh, absolutely. So the budget... Have you guys gone into debt for lifestyle

or you've lived at $62,000? We have lived at that. Yeah. So the point is you can do that for another year. You guys... and it's not fun it's gonna be miserable knowing golly he's gone through residency all of us and we're getting these huge he makes so much money why aren't we feeling it yet yes so so i really would though i don't have it yeah yeah and i would marry i would still just in your mindset and it is a mental decision to say

okay i'm gonna we are still gonna live the exact same lifestyle we've been living for one more year. For one more year. And that's it. I mean, you guys could be completely debt free. And then think about this, Mary. When you have no debt and you have $275,000 coming in throughout the year that's all yours, you guys are going to be able to build up an emergency fund so quickly. You're going to be able to have so much margin, so much breathing room. But if you don't go ahead and just make this intense move of this idea of, hey, we're

going to pay all of this off so quickly, man, it could hang and drag and drag. And then you're going to get a great paycheck and it's still going to be going out to student loans. So make this line in the sand, you guys together, and do every dollar and really stick to it. And so I want you to hold on the line because I'm going to ship you guys a Rachel Cruz wallet because in that is the envelope system. And so cash out your groceries, cash out your AT. Look at the places that you guys tend to overspend and buckle down and kind of go from a clean slate because I think with budgeting, it can be defeating because you feel like, gosh, you know, we tried, we tried, it just isn't working.

So you do. You have to have this new mindset of, hey, this is a, just pretend it's like your first time and give yourself three months to really get more in the habit. And I promise the more intentional you are with it and the more boundaries you set and the more realistic your budget is, because the more boundaries you set and the more realistic your budget is, because your budget may not have been realistic to your lifestyle. 200 bucks for food for six people? I didn't know that wasn't going to be enough. That's right.

Whatever it is. But there is a point to that, Rachel, of when you're doing a budget, you have to look at the budget before you spend. A lot of people just go spend and they look at the budget and go, oh, I went over. How did that happen? Well, did you look to see how much money you had left in your grocery budget? And so when you do it that way, that helps a lot to go, how much money do we have left? You know, we didn't allocate enough. Let's increase it. Let's move some things over here in this category. Let's cut a subscription to create that margin. And next month we're going to do better. And if you do that, you will win with money over time. Yeah. And Mary, you guys are in such a great position. You've done the hard work. You know what it feels like to live at 64,000

with four or five kids that you have. And you guys can keep doing it. Just keep on that. Cut it, cut it, cut it. And man, you guys can be debt free so quickly. It's amazing. All right. Up next is Sean from Chicago. Hey, Sean, welcome to the show. Hi, how are you guys? Doing well. How can we help? Yeah, so this is a pretty cool question, but it's kind of complex. So I currently am working as an accountant, and I actually found another job at another physician at a worldwide company. I thought this was good for new opportunities. And also, I was actually currently in a toxic environment with my manager. But as I actually applied and accepted a new offer, I was counter-offered at my current position.

And this is kind of appealing to me because this is actually a promotion. This is a new position. This is a step up to where I am right now. It also will mean I have a new manager, so maybe the toxicity might go down. We also assured that I will be in better hands now rather than the two years that I've already been here. And I will also have a $10,000 increase in my salary. So the new position at the bigger company, it's actually kind of a step down. I wanted a new opportunity as soon as possible. I found this position to step down to where I am right now. I would be making less. I would be making the same amount that I currently do. So I would be making the amount that I currently do, but I would be not making that $10,000 if I were to go to the new position.

So I'm kind of, I'm young, I'm 23 right now, and I'm kind of just trying to figure out. So yeah, so what's your question? Yeah, so I'm just trying to figure out, yeah, which one to take? Is it necessarily a bad thing if I took the counteroffer? I mean, do you trust the leadership of the company you're currently at? Do you like it there? Other than that one bad manager? Other than that, I do.

I do get along with everybody here. They get along with me and that's why they counteroffered me. And I do like it here. I would want to get that new position, that new title on my resume, and that $10,000 bonus would be nice as well. Sean, I think the answer's kind of easy.

I'm sticking with this company, taking the pay raise, taking the new position. What's making you hesitant? What makes you want to go down in position and keep the same income at a different company? Well, I've heard bad things about taking a counteroffer. You know, like down the line, you're going to get out of it within six months. You'll be fine. You're 23, man. If it doesn't work out a year from now,

you can still go find another job. You've got lots of options out there in the world, but this sounds like a great one. They want to keep you, so they're showing you the money and giving you a higher... Show me the money.

Show me the money. Yeah, it's awesome, Sean. I'd stay, take the new position, and if it's still terrible, then you can leave in six months. This is The Ramsey Show. It's a free call anywhere in the country at 888-825-5225.

And up next is Ashley from Charlotte, North Carolina. Hey, Ashley. Welcome to the show. Hey, how are you guys today? Doing great. How can we help? Awesome. So it's kind of an in-depth situation, but I'm going to try to cut to the chase. And if I'm too long winded, just, you know, cut me off. But the short of it is that I am a business owner in North Carolina, and I've been a business owner for going on six years and have been debt free in business up until this past year, till 2021. In 2020, we actually

had the highest year we've ever had with gross revenues almost at a million dollars. And we thought, you know, me and my husband, we don't have a business background. We kind of just fell into this and then took advice from my dad, who's awesome at finances and, you know, remained debt free. But in 2021, we decided, you know, we really need to get a handle on how to buy inventory properly and also how to do marketing properly. So we got with a company, not y'all's. I want to clarify that. I was asked that before the call.

Not anybody affiliated with the Ramsey program, but basically it ended us in a lot of debt. We have about $89,500 in debt. And at the end of it, we parted ways. But the ending call was that basically they overbought us. And it was they caused us to overbuy. And I knew in my heart along the way that this is I felt like I wasn't doing the right thing but they had over like 35 years of experience right and so it's just like an like a advisory type business that was helping you look at your business plan and they are kind of saying hey you

need to be having this business go into debt for all this inventory it'll be great yeah i guarantee you exactly oh yes i'm so sorry shoot yeah okay so you made the decision so you paid the stupid tax that's what we always call it around here when you do something and i would never do that again um i literally had up until that point we had been debt free in our business and to me that was like amazing we almost bought a million dollars and, you know, we did it without debt. And, um, I did it based on spreadsheets, like two plus two is four math, right. You know? And so, um, I'm at the point, you know, where in November of 2021, we just had to stop the bleeding and, um, sorry, I'm getting emotional, but it's okay. It's

hard. We had to let go of our staff. Um, we did this because we didn't know what to do and we were scared that we couldn't pay them, you know, and we did, we couldn't keep going into debt. So, um, we made some really hard decisions, but now my husband got a job which he actually loves and is doing great and we still have the business but we're trying to get back on the other side of this you know basically have a real cash flow a real cash system of everything um and so my question is i guess twofold number one is we have a house that's worth about $390,000. It could go for higher because people, we don't have a lot of stock in our area. So who knows, but I'm really comfortable saying it could go for $390,000.

We owe $238,000 on it. So besides the business debt in our house, that's the only debt we have. And then the second one is, am I dumb for holding on to this business? Easy one first, Ashley. You're not dumb. No. For holding on to the business or otherwise. This is okay. You're going to get through this. You're not dumb, Ashley. Now, were there decisions that you're like, man, I hate that I did that? Yes. Yes.

But no. Every day for the past eight months. Oh, Ashley. And you want to keep running this business, right? Stop beating yourself up, Ashley, okay? The decision was made, and you made the decision, and you regret it. But I don't want you – that's the thing about money mistakes is they can be so shameful, and there's this inner critic in your ear being like, oh my gosh, you're in your head saying, why

did you do this? Why did you do this? Why did you do this? So listen, you got to shut that down, okay? Stop thinking that, okay? And say, hey, today's a new day and going forward and making different decisions. I hate that I did that, but hey, so I'm going to be making different decisions. So don't let that tape keep playing in your mind. Sorry, George.

No, it's all good. So you want to keep running this business, correct? I feel, to be honest, I feel very tainted from it. Like I feel very scarred, so to speak. But every day, even though I feel scarred, I keep waking up and doing it. And I'm like, why do I keep doing it? You know, at this point, I'm kind of, in my head, it's like mixed emotions. I do love it. I love the people. What kind of business is it? So, which I'm glad it's you guys, Rachel and George, because you guys are the, like, what do you call it?

The DoorDashers, like Dave doesn't like DoorDash and stuff like that. I've never heard of it. I think he does, but why? Okay, so what is it then? We are a retail business. So that's another aspect of it is I own a woman's clothing store and we are online primarily right now because we shut down our storefront due to the pandemic. But we are getting to the point where we do think opening the store back up would bring another cash flow point in and doing it the right way, not going into debt for it or anything like that. But, you know, having money in the bank and opening it back up to have not only our online up and running, but also in stores.

Okay, so when you say that you're hard towards the business, is it more because of the decisions you've made in the business or the business itself? Like if you had no debt on it, would you still want to be doing it? Yes. Okay. Yeah. Okay. So I would say it's still in your heart.

So how much have you guys made, for instance, this year? Total household income. Total household income. Yeah, what do you think you'll do this year? Like for the business? Everything. Because your husband's working now at a different job. So what do you think you'll bring in gross as a household? Gross, I think $380, including the business. Okay. So to me, this debt is going to be gone in a few months, right? It's hard because we have other expenses in the business. So I guess it's kind of, we're kind of conflicted. Like my husband now has taken their, um, like he worked for the business as well. Um, so he has taken like all of our household expenses is how I look at it in my mind.

All of our finances are combined. So I don't want you all to think that. So he is taking that aspect. And my job basically is to, in the business, just make the money in order to pay down the debt. Does that make sense? Yeah, no, absolutely. Okay, so how much would the business make then? How much are you expecting to make this year? I'm looking at $240,000 to $300,000. To $ Yeah, no, absolutely. Okay, so how much would the business make then? How much are you expecting to make this year?

I'm looking at $240,000 to $300,000. To $300,000, okay. What's the net profit? Yeah. I'm sorry, what did you say? What would the net profit be on that $240,000 to $300,000? Because it sounds like you have a lot of expenses. Yeah, the net profit of that would probably be around 10% to 12%.

Okay, so you're making $30 off of $300, essentially. Correct. Okay. I think we need to figure out how to get that. That's a lot of expenses, Ashley. That's slim margins there. Right. And I think it's because of the space that we're in, maybe.

You know, how much we can wholesale costs have gone up a ton due to supply chain issues, which has also taken a beat in on us. Okay, so I'm gonna play devil's advocate real quick, Ashley. So what if you just got out of the business? What if you woke up tomorrow? You're like, I'm done, I'm done, I'm done. Are you able to sell your inventory? How are you able to? Is there? Would you sell the business to someone else? Like how? What would that look like to get out of the business? So I've thought about selling the business to someone else? Like how, what would that look like to get out of the business? So I've thought about selling the business to someone else. And honestly, I,

me and my husband just didn't know if that was possible because of the debt it has. Um, I think we do have a sellable business and that's why I think that I want, I have been holding onto it because our plan has to, has been to grow it and sell it. Right. Yeah.

So, um, in my eyes, they would get all of our customer list, all of our email list, our text list. Sure. They would get all of our inventory and all that. So maybe that's a possibility. Okay. We just don't have the knowledge of that. Yeah.

Okay. Well, $90,000 in business debt, you guys could be completely out in three years if you just threw everything. Or even if you took some of your husband's income, even though he's working for the household expenses. Throw some of that and just get your head above water. I would work hard to do that. I don't think you need to sell the house. You don't need to do that.

It's not that drastic. Nope, not at all. Thanks for the call, Ashley. This is The Ramsey Show. So there's a new trend, George, that is just, it's everywhere. It's everywhere. Taking over the world. It is. Buy now, pay later.

Consumer debt jumped $52 billion in March, the largest increase on record in California. 91% of consumer loans were made in 2020 were the buy now, pay later loans. Wow. 91%. More than 40% of Gen Z consumers will have used buy now, pay later by the end of the year. It's the highest of any age group. And now those debts are going bad. So it is an interesting thing that is happening

in the world of the buy now, pay later. It's the after pays. Klarna, Affirm, QuadPay, Zizzle, I think known as ZipNow, QuadPay. And we covered this on the Fine Print podcast that I did. You've covered it on your show. We were just ahead of the trends. And we were like, this is bad.

Don't do buy now, pay later. Warning people. And now mainstream media is going, hey, maybe buy now, pay later isn't helping people. Wow. What a shock. But if you look at their marketing, I was reading another article. So this one's from NYMag.com. Buy now, pay and pay and pay and pay later.

Great headline. SFGate did another one on buy now, pay later. And the marketing, they interviewed some of the people at these companies, some of the top executives who were saying, oh, buy now, pay later. It's a budgeting tool. That's what it is. Oh, how funny. Yeah, we're not in the lending business. We're helping people with their budget, creating freedom because we can spread out their payments month after month after month.

Well, we were just talking about before the show that because it's four payments and it's not five. They can avoid regulation. That they can legally avoid regulation. The Truth in Lending Act. So whether it's the fees or the interest rates and stuff, they don't have to abide. Yeah. They don't have to be transparent with the full cost of the loan because they don't have to do that until it's five payments.

So they get around it by making it just four. Just four payments. But it is debt, people. Wow. It is debt. Yeah. And this is exploding, especially with influencers on Instagram and TikTok. We're seeing influencers push this because guess what?

They're getting a kickback from you using Buy Now, Pay Later. The retailers are making money. They're making 45% more on the average store order if they have Buy Now, Pay Later on their site. Because it's incredible what it does just to your mental state when you are buying online. And that comes up and it says, well, instead of $100 for this order, you can just pay $25. You're like, oh, just $25. It'll free up money in your budget, Rachel. That feels so much better. And then you pay for it the next month,

and then maybe you forget the next month, and then that's when the fees kick in and the interest and all of it. And we're seeing a lot of people miss payments because everyone does it with great intentions. Yes, that I'll be fine. That I'll be fine. I can pay it.

And then a month gets tight, and you don't have the margin. You don't have the extra, you know, 200 bucks that you had spread across all your buy now, pay later apps. So it goes on to say, buy now, pay later seduced a generation with a great pitch. The firms position themselves as a financially responsible alternative to credit because per Afterpay's former executive director, young people, quote, don't want to be on credit. If the first rule of marketing is give people what they want, the corollary is give them what they don't want.

Just call it something else. So buy now, pay later. They're trying to act like, no, no, we're not like credit cards. We're like not even really dead. We're just trying to help you spread your payments out. That's all it is. But the truth is they're just as bad, if not more predatory than any other lender, any other credit card company out there. That's out there because it is. It's debt. And if you've listened to the show for more than two minutes, you know

this idea of becoming debt free, having no debt, no payments does something not only financially in your life and mathematically, but it does something spiritually for your mental health. You sleep better at night. You spiritually for your mental health. You sleep better at night. You make different decisions in life. You maybe even can switch jobs. I mean, there's so much freedom and options and margin that comes with living below your means and getting out of debt. And so one of the best tools that we have that helps people walk through how to manage their money fully, including getting out of debt, is Financial Peace University. So if you've taken Financial Peace University before,

which over 10 million people have, you know that it's life-changing. But it's hard to watch other people struggle. You know, when you've gone through this journey and you see other people and they're just,

I mean, they're living paycheck to paycheck. They're not changing their habits. They're continuing to live in the cycle. It is so difficult. So now we have the opportunity to help them change their family tree. And you out there who have gone through Financial Peace

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All right. Up next is Joseph from Little Rock, Arkansas. Hey, Joseph, welcome to the show. Hi, how are y'all? We're doing great. How can we help? Well, bottom line, my finances are in good shape. I'm 21. My wife's 24. We have a six-month-old baby. And basically, just wanted to know how to plan for the future. I mean, the world is crazy. My job, I don't know how long the supply would keep up, and we could hit a hiccup in my job to where, you know, can't get the materials, you can't work. So I'm just trying to figure out the best way to prepare for that long term. Okay, so you guys are debt free. Do you guys have money saved in the bank?

Yes. How much do you have? Is it three? We recommend three to six months of expenses. We have about $28,000. Okay, so what is that for you guys? So say your job stopped immediately. How many months would you guys have

that you'd be okay? We can live on $1,500 a month. Okay, and you have how much saved? $28,000. Oh, wow. So you've got plenty. It's a fully funded emergency fund for you guys. I mean, you're looking at $9,000, and you've got $28,000.

Yeah. So you've got plenty there. So what are you worried about? Losing your job? No, no, no, not that. My dad's, my dad has a bunch of rental property and, you know, that, that's great, but there's also a lot of overhead in rental property. There's, you know, there's management problems and there's also, you know, there's just a lot of overhead and he's big into rental property, rental property. But right now, you can't buy rental property.

It's ridiculous. So other than that, the best way to plan besides just rental property. So are you trying to plan for the future or are you planning for the apocalypse? I can't tell. The future. Okay. So if you're just looking at the future, you're 21. You got your whole life ahead of you. You got this six-month-old. Are you just wanting to invest to make sure that you're

able to retire when you want to? Yes. Okay. Are you guys investing anything right now? No, we're not. You're not. Okay. So that's the first thing I would do, Joseph, is I would press play on your investing strategy, which would be putting 15% of your household income into retirement every year. So whether that's, you know, Roth IRA is a great option. Does your company offer a 401k? No, it's a family business. It's a family business.

Okay. So yeah, so I would just, I would talk to a SmartVestor Pro and look to see, okay, here are my options to put some money away. And it could be through a retirement vehicle is ideal, is that 15%. And then above that, if you guys still have margin, you're okay, I want to do something. Then yeah, above that is when you look at paying off your current house if it's not paid off. And then also, whether it's investing in the market and good mutual funds, if it is buying a rental property, which could be, you know, four years down the road, because

usually when you buy an investment property, the way we go about it, and I know for sure, Dave, it's that you make your money on the sale. So it would be a situation where it's something, yes, where you get a great deal and you pay cash for it. So Joseph, do you have a mortgage? No. Okay. So you're renting right now? you pay cash for it. So, Joseph, do you have a mortgage? No. Okay, so you're renting right now? No, we own it.

You own it. Oh, you own it free and clear. How much do you guys make a year? The average week is around $3,000 to $5,000, but there's some weeks we're in the roofing business, so we can't roof all year. So there's some business where we may go several weeks without working at all. Okay. Well, you've got no payments in the world, and you're making $60,000.

Invest 15%. Do the Roth IRA. Beyond that, you might look at a brokerage account. But, dude, you're going to build wealth. You're 21. Yeah. Relax. Breathe.

You're doing great. Slow and steady wins the race. You're doing great, Joseph. Doing great. Well, that wraps up this hour of The Ramsey Show. Thanks to Austin, Kelly, Will, Zach, and Andrew in the booth. Thank you, George, for hosting, and we'll be back, America. Do you love a good day, friends?

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