The Ramsey Show - App - Don't Let Debt Steal Your Reality (Hour 1)

Episode Date: February 27, 2023

John Delony & Jade Warshaw answer your questions and discuss: How to decide if you should rent or buy when moving to a new city, from the blog: Should I Rent or Buy a House? from the blog: How Much House Can I Afford? What to do with debt when expecting a baby, How you can turn $100 into $1,000,000?, from the blog: How Teens Can Become Millionaires "My mom lied about paying my student loans and I don't know what to do", from the blog: The Truth About Debt and Relationships Sign up for our Money and Marriage Getaway event with Rachel Cruze & John Delony! How get started on the Baby Steps to really win with money, from the blog: How to Win With Money in 7 Baby Steps Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, live in Nashville, Tennessee, it's the Ramsey Show where we help people build wealth, do work they love, and create actual, incredible relationships. I'm John Deloney, joined here my good friend, Jade Warshaw. We're taking your calls on money, life, mental health, relationships, work, whatever you got going on.

We've probably got an opinion on it. And if we can't figure it out, we'll just tell you we don't know what we're talking about. The call is toll free and that's about what the advice is worth. 888-825-5225. 888-825-5225. 888-825-5225. Let's go to Logan in SLC. What is up, Logan in Utah? What's up, man?

Hey, thank you for taking the time to discuss my question today. You got it. Thanks for calling in. What's up, man? Yeah, so I'm about to graduate from graduate school. My wife and I have two little boys and we're looking into home buying options. What's up, man? Yeah, so I'm about to graduate from graduate school. My wife and I have two little boys, and we're looking into home buying options. I just accepted a job, a full-time job down just south of Salt Lake City.

The housing market in Utah is very booming right now. So we're looking into options for renting versus buying. We would like to buy a home. We like the idea of following the principle of keeping a mortgage payment about 25% of our monthly take-home pay, but this doesn't leave us with a ton of options for home buying. So we're just kind of trying to see if it's more worth it for us to get our foot in the door and buy a home that may stretch us a little bit, or if it makes more sense for us to rent and try to build up a bigger down payment but with rent prices the way they are in the area we're just a little bit

concerned that by the time we pay our rent and try to save up for a down payment we're going to be going to cost us more than if we were just paying a mortgage payment anyway so get your thoughts on what are you graduating with what's what's your degree in uh it's a master's in landscape architecture. Outstanding. Hey, I got a buddy out that program. That's a fantastic program. Well done, dude.

Thank you. So I've got a non-money related opinion on this, and then I'll pass it over to Jade, who can break down the baby steps for you. I would not buy a house moving from Salt Lake to, are you like St. George area? Is that where you're going? No. So right now we're up in Logan at Utah State University and we're looking to move to Utah County, Provo, Lehigh area, just 30 minutes south of Salt Lake. So the reason I wouldn't do it is I would rather go with my young family and get settled in that community and figure out where the cool restaurants are and where the walking trails are and where the

parks are, all that stuff that makes for a great life and not have tied myself up into a house and then tried to do life around where we stuck a flag and i know that's such a pain with two little ones to move twice the thought of moving twice was enough to make my wife just start weeping instantly right um and so i get that um but man the times i have chosen to rent that's that's just a deloney family rule we rent when we move to a new town and we get settled. We even rented when we moved back into a city we had lived in for years because the city had shifted a little bit. So that's just my thought on that. What do you think? I think that's a really great place to start. That's kind of a Ramsey principle as well, is we would tell folks, you know,

if you're moving to a new area, wait a year. And just like you said, find out the area, see if you like it. I do have a couple of questions financially. It just like you said find out the area see if you like it i do have a couple of questions financially i'm it sounds like you guys do the baby steps and understand i just want to double check no debt right um so the only debt that we have right now is a small student loan but that's kind of up in the air as far as when those payments are going to need to take place or if those payments will right now how much is right now it's 16 16 000 we've been making payments while in grad school and whittling that down okay do you have any money saved any liquid cash we do how much yes we do about um 18 000 hold on hold on hold on hold on off your dick do you love that

are they are they do they keep you warm logan do love them? The 18K is what's keeping him warm. The 18K is his buddy, his cuddle buddy. All right, so here's what you need to do. Let's just walk through the baby steps because at first you're going to be like, oh no. And then you're going to be like, oh yeah. Okay, so the good news is you have the money to do everything you need to do

to get the right foundation. So let's walk that through the baby steps. We would say get $1,000 saved as your starter emergency fund, keyword starter. So that's $1,000. That leaves you with 17 left. And then we would say pay off all of your debt except the house. So you can knock out all 16,000 of those student loans, which now is a great time to knock them out because they're on pause.

They're on freeze. You know, they're not collecting any interest. So now's a good time to knock them out. And then you can still have another thousand saved up. So now you've got 2,000 going towards your now three to six month emergency fund. Does that give you hemorrhoids to just even think that way? That's all you have in the bank? No, it's all right.

That's good. Okay. So why haven't you done it? He didn't know, John. Yes, he did. Logan, you know. Why? Did you know, Logan?

Yes. Yes, I did. Well, I mean, with the potential loan forgiveness, we've taken a pause on our payments just in case that goes through. Keyword potential. You've got plans. We're not going to wait on the government to do all the things that we want to do with our life and family. So that's, I mean, that's honestly where I'm coming from. So we don't know what the government's

going to do. These jokers take forever. So let's not wait on them. Let's go ahead and do this. And here's the thing. If it goes through, if you feel like you need to get you a refund, get you a refund. But none of that is even real yet. So let's deal in the realities of what's actually happening. So yeah, I would do that. You'd have the $2,000 as kind of a jumpstart

to get three to six months saved. And then now we're starting to work towards a home purchase. So we want to go to baby step 3B, which is saving for a down payment. Now, the good news is this is going to move really quickly for you. So we want to go to baby step 3B, which is saving for a down payment. Now, the good news is this is going to move really quickly for you. So during this time, like John said, you guys get to know the area, start doing some math. We've got a really great calculator on Ramsey Solutions. It's called how much, if you Google, how much home can I afford?

And you'll find that calculator. And so you can start to work towards what that's going to look like. But I would rent until you can put a responsible down payment on a home that you are interested in. I would say no less than 10% so that you can make sure that you're building up some equity fairly quickly. How does that sound to you? Yeah. Yeah. No, I mean, that sounds great. Mostly, yeah, we've just been kind of trying to weigh the options and see what's going to make the most sense for us. And I feel like everybody has a different opinion, so it's good. But you like ours the best. Well, we're right. Logan, can you and I have a quick, just to the side, private conversation?

Sure. There may be a couple of million people listening in. I'll go over to the side. Hey, here's the thing. What's your job right now? I currently work part-time in the job that I will have full-time. Okay, good gig. What's your salary going to be?

Yes, it is. It's going to be $80,000. Outstanding. Excellent. Well done out of grad school. And with the landscape architecture, you're going to end up moving up in that company, and you know that. You're going to do great. This is just two guys having nachos.

You got a great job and you took out a loan. And nobody tricked you. Nobody pulled one over on you. You told whoever gave you that loan, whether it was the school or the government or whoever, hey, I'll pay you back. You help me get through school, I'll pay you back. I'm all for loan forgiveness for people who got taken advantage of and ripped off. For those of us who had great jobs,

who have been blessed with good work, I think it's on us to do what we said we were going to do when we signed that piece of paper and not wait on the government, not wait on your neighbors to pay off your loans, but you pay them off. Do the right thing, man. Pay them off and be debt-free by the end of this afternoon and then wait on your neighbors to pay off your loans, but you pay them off. Do the right thing, man. Pay them off and be debt-free by the end of this afternoon, and then head on.

This is The Ramsey Show. I'm John Deloney, joined by Jade Warshaw, 888-825-5225. It's 888-825-5225. Taking your calls on money, life, marriage, mental health, work, whatever's going on. Let's go out to Michaela in Colorado Springs. What's up, Michaela? Hi, thanks for taking my call. So my husband and I, we're currently on baby step two.

We've knocked out about $8,000 worth of debt, which is awesome. Yeah. We recently found out that we're expecting our second baby. Wow, yeah. Yeah, it's awesome, but I haven't told the rest of my family yet. Are we the first ones? Only you guys, Jordan and my parents, and I are the only ones that really know. Look at that. This is quite the announcement.

I'm glad to be the head of your family. Well not like my parents know and his parents anyway um so we're we're on baby steps too and we need a bigger car to hold like two car seats because we have a little toddler right now um and i was wondering how in the world do you save up for a car while doing the debt snowball? Okay. Couple questions. Do you mind if I ask you a couple of questions, Michaela? Sure. Okay.

Thing one. Well, let me do the good news first so you're not mad at me. Number one, yeah, if you have a baby on the way, we would say to just pause the baby steps in general and stack up money for a baby whether that's stacking up your deductible or just getting ready for you know the I mean you're bringing a new human in the world there's so many variables there so we would say to go ahead and pause that we call that stork mode so you could do that as far as the car is concerned that's where my question came because you said you had two kids and most of the cars that I've seen on the road, you can fit

two car seats in the back. I'm calling shenanigans, Michaela. What kind of car do you want? I would prefer a Subaru Forester. Of course you would because those are awesome. It was very specific.

I was about to say that's the official car of Colorado, of course. What do you drive right now? A Subaru Legacy. So it's really low to the ground, and I don't feel very safe having my toddler in there right now. So I'll speak for me, Jade. We did my son, who's humongous, and my daughter and my wife in a used prius 2010 come on for a long time and there was lots of legs and elbows and arms and there was no car payment so i'm with you on the safety thing i always had this this like man i'd feel safer if

they were in a like in a Hummer or a Suburban. And I felt even more safe not owing anybody any money with two little kids. Booyah. That's just my thought. What did you, were you all in the same boat? My thing is this. You bought, the car was safe three months ago. Yeah.

And then once baby comes, suddenly it's not safe. I do think that what John is saying and what you're saying, I think there's some validity to those feelings. But at the end of the day, I feel like it's really more based on feelings. How much debt do you have overall? About, sorry, I calculated it earlier, but I forgot. Oh, 31,000. 31,000. Okay. Now, this Subaru that you have now, has it given you any, like, is it just, it's low to the ground, I feel like I just want something bigger, or has it given you reason to say, hey, this is not a reliable car whatsoever? Well, it is low to the ground, and I've had, like, two car seats in there before whenever I've gone with a friend somewhere. But it was very squished and not very comfortable for either one of the little babies and things. But they're in their car seat. They don't know. They don't know.

They're in their car seat. I think here's... I think the passenger wasn't very comfortable either. Well, they'll be all right. That sounds like a passenger problem to me, right? Yeah. I really want to challenge you on this, Michaela. I want to challenge you big time to not buy a new car right now. You've got debt. I want you to clean up your debt. I want you to go on stork mode, pause, stack up as much cash as you can for this baby. Once this baby is born and it's healthy and everything is good to go, then take all that money, throw it towards your debt snowball. And then after that, if you're feeling like,

you know what, before we go much further, I want to save it for a car, you could do that. But other than that, I'm not buying it, John. No, here's the thing. I had a picture of what my life would be like. I didn't even know that picture was there when I had two kids. And what my house was going to look like, what my cars were going to look like. And it took some adjustment. It even took some grieving on my part because the house I had in reality was much smaller. Yeah. And the cars that I had were much less nice and everything was great. I think these major milestones, I got a new job. I got a promotion and a raise. I'm having a kid. If you can hold

steady in those big moments and not let your lifestyle swell up to accommodate what the world's telling you you got to do yeah that's those are those magic little moments when you you get ahead absolutely absolutely the case yeah i i mean what she's saying i think we've all felt that but oh dude with all my heart i get it man i hurt for her man but just can't just don't don don't. Yeah, don't do it. Don't do it. All right, today's question comes from Tiffany from Michigan. Tiffany writes, I love this,

my husband fully believes in you. I do not. I have serious doubts. When you don't have the income to take care of your debts, how does your $100 month in savings become over a million dollars in 30 years? I mean, seriously. We have five kids all the way down to 10-month-old twins. We are dealing with formula shortages, job shortages,

and an insane increase of cost of living. How can you possibly believe what you preach is easy when the economy has changed okay okay there's a lot here okay tiffany i'm gonna i'm gonna track with you on this uh yeah it's not easy that's the first thing i'm gonna say nothing that we teach is easy and i'm saying that coming from someone who started this journey with a $30,000 combined income with my husband and almost half a million dollars of debt. There is no piece of that that is easy. There's no piece of that that is fun. It is a slog, man. It's a struggle. Struggle slices, if you will. But that doesn't mean you can't do it just because something is very very difficult doesn't mean it's not um completely worth doing and not completely possible uh to accomplish so

i want to put that out there in your head um and it might change it might take a mental shift and i want to touch on this before we get to the money part all the way down to 10 month old twins formula shortages job shortages and an insane cost of living. Yeah, cost of living has gone up. And during the inflation of the last few years, it's been wild. Oh, yeah. Crazy time. Job shortages.

There are more jobs available than there are human beings in the United States. So in your particular area, that may be true. But across the country, that's not accurate. And there's so many unique ways to find work these days. And I'm hearing, and Nashville's been beneficiary, millions and millions and millions of people are saying, hey, we had dreams of always living in California, yet it got too expensive or the work didn't work out and we're going to move and we had to say goodbye to family people have said that about in the northeast and the northwest and they've been

moving to my home state of texas they've been moving to nashville here they've been moving all over the place and so it may be that season when you look at your husband like couples and families and have done for centuries which is say hey we had a vision of our life here, and that vision is going to change. We need to move where the work is. And that may be the way it is right now, but to say that it's all coming down just isn't accurate. It's just not accurate.

We are in – there's hurting people. Make no mistake about it. But, Jade, we have people all the time here, 12 month old twins, five kids, seven kids, no kids, two kids. It's just part of the, I mean, the, the, the math and the plan works every time. The math works, you know, and her math here is, is not quite right. Uh, $100 a month in savings is not going to be a million dollars in 30 years. You'd have to invest $500 a month. That's usually kind of like the, the Holy that people preach. $500 a month over 30 years at a 10% rate of return, you're going to have a million dollars. That is correct.

But we would say actually not to invest in the S&P 500 and index funds. We would say, you know, seek to pick some mutual funds that are going to outperform that. And I know a lot of folks say all the time, you can't beat that. Yes, you can. Over the last 20 years, the S&P 500 has averaged more than 9.87%. And over the last 30 years, it's averaged more than 10%. You have to look at the annualized rate of return. That's how we are measuring that rate of return there. So it is possible. Don't let anybody steal your hope or steal your reality. Don't let them take your reality i love that this is the ramsey show we'll be right back 888-825-5225 this is the ramsey show give us a shout we're talking money mental health marriage

whatever you got going on we're here for you let's go go out to Sarah in San Francisco. What's up, Sarah? Hi, how are you doing today? So good. How are you? I'm good. What's up? Okay. So my question is, I went straight to culinary school from high school back in 2003. Thank you. My mom took out a loan for me because I was 17. Okay. The original loan was $30,000. We agreed to split it 50-50. Soon as I graduated, I was giving her money every month. I was staying with her because I didn't have the money, but I was giving her money every month. I eventually realized that she was not paying on the student loan at all. When I found out, she apologized and she said that she would start paying.

I continued to give her money every month. As you can imagine, I wasn't making very much money at that time. And I then again discovered she was not applying any of that money towards the student loan. How much have you given her so far, Sarah? So I'm not sure exactly because I wasn't counting, but I do know that I gave her, when we talked, I gave her at least $5,000. Okay. How did you give it? Was it a check? How did you do that? I was giving her cash. I was giving her $200 every month towards that.

Oh, man. Every month towards that. Well, I was making minimum wage. I was working at, anyway. Is your name on the loan or your mom's name? Your mom's name is on the loan? Only my mom. It's a parent plus loan. So the reason why I know now all this information is because recently she came to me and she brought up this loan because after a while I just stopped giving her money.

How long has it been? So 2003. Oh, girl. Okay. So recently she brought up this loan and she asked me for a lump sum of money. She asked me for about $20,000. I'm like, I don't have that kind of money. I can't give you that. And we didn't agree. I've been giving you money, blah,000. I'm like, I don't have that kind of money. I can't give you that.

And we didn't agree. I've been giving you money, blah, blah. Long story short, I looked into the loan. She owes over $70,000. Oh, God. Sarah, listen. Oh, Lord. This is...

Oh, gosh. I'm sorry. I had to let a little bit of my... I had to let it out a little bit. It's really scary, and I don't know what to do. Here's what's not scary about it. There is some scary but I don't think it's what you think it is.

Here's the scary. You and your mom's relationship is different from this point forward. Okay. And the sooner you come to terms with the fact that your mother um did not uphold your end of the agreement i can tell you all day i think the agreement was dumb and she y'all should never have set that up um it was it was destined to create a wedge between a mother and a daughter but here we are um okay she has decided to not um sit down and be the adult and say i took out a loan here's every month for

the next however many years here's what you're going to pay me here's how this is going to work i'm going to keep a spreadsheet i'm going to mark off every date all that like a bank would do yeah you basically funded her lifestyle in a tiny little way and then she comes knock on your door 20 years later asking for for $20,000. Yeah. Do you know who's not on the hook for this money? You Sarah, none.

You, you're not on the hook. You look, you are not on the hook for this money. Now this is your mom. And I know that you feel some level of guilt or, but I should probably, but you,

you gave her the money. You gave it to her. That doesn't, it doesn't matter. At this, literally at this point, anything you say about to try to like make it better, I'm going to tell you it doesn't matter. Doesn't matter. You gave her the money.

She chose. She chose. And now for whatever reasons that she has, which don't matter, she wants that money back from you. Well, the loan is probably is it tripled is it 80 or 90 000 70 000 it's 70 000 and some change and now she's making me feel like no no no no no here's what you know here's what you could do she doesn't hold on she doesn't

get to you're allowing her to get inside you and to make you feel a certain way. You decide who has permission to hurt you, period. Now, that's harder when it's our mom. Because our mom should be the one person on the planet that's always got our side. And yours doesn't. Okay? And I hate that for you. But she's not making you feel bad.

You're choosing to feel bad on her behalf. Okay. You got to own that. You got to own that. Okay. Here's what you could do. Now you said to your, you said if you were really interested in feeling very clean walking away from this situation, you said that the loan was 30,000 and you were supposed to split it. So that would be 15K on you. Now, if you're telling me, hey, I paid $5,000 towards this loan. I know that I paid $5,000. Give her another $10,000 and say, hey, I paid my half and that would have been it. If you wanted to do that and just say, I know I paid $15,000.

You didn't do your thing, whatever. You could do that. But you're not on the hook for this. So Sarah, if this is me, like I'm just, I'm fast. whatever, you could do that. But you're not on the hook for this. All right. So Sarah, if this is me, like I'm thinking about this being my mom, okay, and we sit down. What I would say is exactly what Jade said,

but I would add one extra layer. I would put a payment plan in front of her and say, I agreed to pay $15,000 of a $30,000 loan. I'm going to pay you 20 back and I'm going to already say I've already given you five and that's on the low end. So I'm going to pay you $15,000 and here's what I can pay over the next 12 months, 15 months, 24 months. And you make the payment. Don't hand her any more money. Yes. Okay. So directly to the, if I, if I give it directly to the place will they now want my information no no just get the log in and pay it say mom the only way you're getting this money is

i sit right next to you we log in and we pay it because you're not handing her you're not funding her uh ridiculousness because she has not been a good steward with money so that is ridiculousness and you're not going to hand her fifteen thousand dollars to do whatever it is that she's been doing which whatever that was caused a student loan to triple all right so we're not participating in that yeah really bad okay so here's another thing we're going to do for you sarah i'm going to give you i'm going to give you a year of FPU. Okay? And she might not,

but she's still got $55,000 left to pay off after you write her a check. And so if she wants to, you can sit down and put these videos on and y'all can come up with a plan. It's not too late for her either. We deal with folks all the time in the 50s, 60s who are figuring it out,

and it's not too late. But you get to make that choice she gets to make that choice okay so hang on the line here we're gonna hook you up um and hope you maybe even say i'm gonna give you 15,000 dollars which is five grand more but you got to sit down and watch these videos with me because you got 55,000 dollars and listen if she starts hassling you, starts saying, oh, you're just going to leave your mama to whatever, you can always stand up and walk out the door. And that's hard, hard, hard. But remember this line, behavior is a language.

And if your mom chooses to swear at you, get mad at you, send you on guilt trips that you can't afford, she's telling you through her language i don't want you around here i don't value you and so i'm gonna hear what you're saying through your actions and i'm gonna head out the door until we can have a grown-up conversation it's gonna be hard hard treading um you're gonna have to grieve the loss of your mom yeah or your new relationship with your mom because things are different now dude money does weird things to people, John. But this is why, I mean, I can't. Money makes people act up though.

It does. But co-signing on loans, man, just, I've never seen it work well. It doesn't work. I haven't seen it work well. It doesn't work. Co-signing is stupid. And especially if you have,

listen, if you've taken a loan out with your kids and y'all have like car payment, you just pay me back or student loan. Put it in a spreadsheet, be adults and say, you owe me this much on this date in this way. And think about this. She said she was 17 when her mom signed that loan. Adults be adults and understand that your kids were kids and you were adulting them

at that time. Do not come after these folks for these Parent Plus loans. You signed them. Parent. Parent Plus. That means parent plus your money. That's who's paying it off. The bank looked at your kid and said, I'm not giving him money.

And you said, well, you can give it to me. I'm trustworthy. Yeah. Be trustworthy. Be trustworthy. Be trustworthy. And pay your bills. Parents, act like parents.

Parents, act like parents. I'm going to have to get the Preparation H out. Hey, this is the Ramsey Show. We'll be right back. If you haven't heard, we recently announced that Money in Marriage event is back. And this time, it's going to be a whole weekend. Join Rachel Cruz and me right here in Nashville for Money in Marriage getaway in October that will have you and your spouse feeling more aligned and more connected than ever before.

The Money in Marriage getaway is designed for you and your spouse to disconnect from everyday life. And finally, after three years of being roommates and co-managers of your house, you can focus on your marriage. I've been hearing from a lot of couples who are struggling to find time to dedicate to your marriage. This is months out, so you got plenty of time to figure something out.

This weekend-long event is for you. As part of the getaway, you'll have a fun date night experience. Dude, we it out. There's going to be time set aside to reflect and grow together. There's going to be some time to be awkward and time to be weird and plenty of encouragement and ideas from Rachel Cruz and me and others that will help the two of you stay on the same page about your money and your intimacy and your future. So remember, this is an intimate three-day event. So ticket prices start at $6.99 a couple, which is a steal for a three-day marriage retreat here in Nashville. So if you're

in Baby Step 2, this event probably is not for you this year. It will be soon. Go to ramsaysolutions.com slash events to reserve your spots today. Man, I'm going to that. It's gonna be good. I'm going to that. You might be on that might be on that stage so okay okay let's do that john we'll have man the last thing i was about to say we should invite our spouses and i thought the last thing on earth my wife wants to do is to sit in an audience and listen to me talk about how to be married sam warshaw will be there she would just want to follow up and be like let me let me tell you what it's like being married to that guy all right let's go to joshua and raleigh uh north carolina what's up, Joshua? Hey, what's going on, guys?

Partying, man. What's happening? Not much, not much. What up? So just basically wanted to kind of touch base with you guys on some thoughts I've had circulating in my head. I kind of, I would consider myself not in as much debt as most people, but, I mean, that's subject to

interpretation. How much? What you got? So right now I'm currently, excuse me, I'm about 7,500 in credit card debt. And then also I owe about 6,400 left on my car payment or my truck payment. Okay. And then I had, then I have my townhouse that I bought as well. So that added into it as well, but that's basically my pool of debt for now. What do you own that townhome? I think I'm at 160 that I owe now. What's it worth? Probably about 240, 250, somewhere in that price range. Cool. So what are your thoughts for today? So that's kind of where my thoughts stem from, right, is that I've been reading up on some of the articles on the website and then listening to a lot of the shows and everything. And I just was trying to figure out what would be the smartest decision to make. Like, would it be smart to kind of make a seasonal change and, you know, sell or my townhouse or whatever to eliminate all my debt

and kind of get a fresh start, so to speak? What's your monthly payment on it? It comes out to about $11.60 a month. And how much money do you bring in monthly for income? It's around, after taxes and everything else, it's about $3,800 a month. All right. It's close. Yeah, it's around 30%,

I believe it was, 30, 31%. What do you do for a living? So I work for the federal government here. I'm a financial analyst for them at the depot here. That's not very much money. Are you making $55 or $60 a year? No, no, no. So that was net bring home after TSP contributions, retirement account contributions, health insurance,

like all that stuff gets taken out as well. Okay. So you're at $3,800 after contributions. Correct. Okay. That's great news. Before taxes, I'm sitting at around $91,000 in salary. Okay. So here's... Hold on. $91,000 and a take-home of $38,000? Yeah.

How much are you contributing to your retirement? So I have two different pools right now. There's the thrift savings plan that I contribute to, and then there's the other, I believe it's FERS, Federal Employee Retirement, something I can't remember. What's the total contribution between the two of those? I'm at 8% in the T um because they match up to five okay and then the other one is just automatic so i'd i'd have to dig in a little further to see exactly what percentages of that okay so here's here's what we're gonna do here here's what i would do you're calling the ramsey show here's the ramsey method yeah I would

I would not sell the house because it's not it's it's really not the problem here the problem is pretty small you've got 13 almost 14,000 of debt I'm not going to sell the house to get rid of 14,000 of debt not when you're investing at least 8% into retirement and probably more, possibly double, we don't know how much. So what we teach is that when we're in baby step two, which is for all intents and purposes what you're in, when you're paying off debt, we pause investing so that we can pay off our debt

as quickly as possible. So if I were in your shoes and this is what I believe that you should do pause your investing so you can get this debt paid off you're gonna have so much more income left and you're gonna be able to knock this out quickly do you have any money saved in savings uh yeah so currently i have about uh it's it's around 800 900 right now okay i think like in cash. Okay, great. So let's bump that up to $1,000 and get your starter emergency fund. That's baby step one. And then while you're doing that today, go on to your, you know, company's, you know, HR portal, wherever it is that you manage your

contributions. And let's stop that contribution. Or it's the federal government. So you may need to send it like a carrier pigeon. Oh, that's a good point. It's the federal government so you may need to send it like a carrier pigeon oh that's a good point it is the federal government yeah uh go down to the dmv i'm just kidding whatever that means for you to pause that contribution that's a lot of money left in your pocket and i know a lot of people i'm not gonna lie a lot of people get they get squirrely over this one because it's like no you know time is on my side i need to get the compound interest i need to get the match the match is going to be there this is going to take you less than a year to pay off it's a limit the match is going to be there and then one one sec john and then you're going to have 15 to invest not eight percent you're going to have more and you're going to make up for that loss so let's

just walk those baby steps pay off the debt and then get your three to six months, and then baby step four, investing 15%. So I, Josh, I, my wife and I sat down and mapped it all out. We owed six figures. And I sold my house because I had an opportunity to live for free for a year in an apartment on campus. And so I had a unique situation where I dug myself such a massive hole and I had an opportunity that was just a straight shot laser beam to get out. If you tell me, hey, I'm done with the townhome life,

I want to actually leave Raleigh, I want to control all at the lead, I'm kind of done with the federal job, I want to go back into private banking or whatever. That's a whole other conversation. That's a life conversation that if you start to transition your life, you're going to have some free cash after you sell your place to pay off your debts. That would just be, hey, I've got $80,000 or $90,000 from the equity of the sale. I'm going to go ahead and pay this thing off. But I firmly believe what she just said. Not for 14 grand,

man. I mean, you're talking like a couple of clicks on a website and three or four months of dedicated work and you're free. Yeah. Not to mention there's something to be said about just walking yourself through that process of paying off debt. Yeah. Making those payments and realizing, okay, I don't like this. Like it doesn't feel good paying off debt, right? It doesn't feel good pausing your retirement. And when you feel that in your body, it changes the way you do things because you go, I don't want to go back to that. I don't ever want to have to pause my retirement contributions again, right? I don't ever want to have to sacrifice to this extent again. So it's really good to allow yourself to feel that and

not try to bypass that with a quick sale of a house where you can just go get another one. And Joshua, you're new to our gang, right? Yeah, so I've kind of been listening in, but pretty intently for like the past couple weeks or so. Okay, I want you to get ready for what's coming. You make six figures, almost six figures as a federal employee. You're going to have an old used car in the parking lot

and your coworkers are going to make fun of you. You're going to pause spending. Your coworkers are going to say, what are you doing? Are you trying to bankrupt yourself? Do you realize how good this, we've got it here in the federal whatever. And people are going to look at you like you're nuts

because you're paying your debts off. Keep moving forward. Like millions and millions of other people have walked the path ahead of you to freedom. Be the weird guy in the parking lot, man. And that's for everybody in America. Be the weird person in the parking lot and the weird person with a big bank account. We'll be right back on The Ramsey Show. Hey, it's Dr. John Deloney. If you love the show and want a deeper dive on your money journey, We'll be right back on The Ramsey Show.