The Ramsey Show - App - Don’t Overcomplicate Building Wealth, Keep It Simple

Episode Date: December 6, 2024

Live from the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by my good friend, Dr. John Deloney. We're taking your calls at 888-825-5225. You call us, we'll try to help you take the right next step for your life, your relationships, and your money. Lucas is going to kick us off in Grand Junction, Colorado. What's going on, Lucas? Hey, how are you guys?

Doing well. How are you? How can we help? Good. I'm trying to sit down and go through a budget and start making a monthly plan. My wife and I have both gone through Financial Peace University together. My income has changed since we've done that. I get paid basically daily. So how do I kind of set up my monthly budget for something like that. Because my budget or my income is very, it fluctuates a lot from summertime to wintertime. So how do I set up a budget for something like that? What do you do that you get paid daily?

Are you slinging rocks? I'm a farrier. I trim and shoe horses. Oh, dude. Okay, so I get paid. That's amazing. Rocks on. Yeah, that's way better than selling drugs. I love that.

Okay, good. So do people call you out to their farms and you go out there and take care of them? Or their horse ranches? Yeah. Dude, good on you, man. Awesome. So I love that you're still doing a budget because a lot of people think, well, budgets are for people with consistent incomes. And you definitely need a budget if you have an irregular income.

And so here's how I would set it up. You need to make a prioritized spending plan. So you know it's not going to be a $0 month. So what's been your worst month in the last six months? My worst month, probably $5,000 gross. Okay. And what's been your best month? $16,000. Amazing. And what are your monthly expenses? What do you need to just cover all of your basic bills? Food, utilities, housing, transportation, insurance?

About $6,500. Okay. So you can do what I call a peaks and valleys fund. So if you have a great month, like $16,000, well, you don't need it all. So we can park that in a separate savings account to cover the leaner $5,000 month where we're 1,500 bucks short. Make sense? Okay. And as you go out, you know, go throughout the month tracking your transactions, you're going to prioritize what you need to cover. So first up, food, utilities, housing, transportation. If we have all of those covered and we still have money left over, we go to the next priority and the next priority. And at the very bottom will be the, you know, life's little luxuries, your subscriptions or

whatever the fun things are, your hobbies. Okay. And that way, you know, you're going to cover all the major bills. And if you're able to cover more and put extra in savings and hit your other goals, that's great. But that'll allow you to make sure that you don't have a month where you're behind and then need to go into debt to do it. Hey, Lucas, hang on the line here because I want to ask George a question on your behalf. So George, so you have a peak and valley fund and let's say, it feels like in my head, it would be smart to have a line

that when you cross that line, there's a chunk of money that you decided what to do with. So let's say his lowest month he had last year was five, his highest was 16, but he averages 12, right? And so he's going to continue to move this money over there and money over there. Does it make sense to say, okay, when we get 25,000 or 10,000, we're going to stop and either move that to X or move that to Y? You see what I'm saying? Yeah. Well, this largely depends on where you're at in the baby steps, Lucas. So are you

debt-free with a fully funded emergency fund or are you working to pay off debt? We're working to pay off some debt. We don't have a bunch. The only thing we have left is, like, two small personal loans and a vehicle loan and a house. Okay. And what do you have in savings right now for your emergency fund? Right now we're slim.

We just got through a remodel, so we're less than $1,000 in savings right now. Okay. So your A1 goal with any extra money beyond basic bills is to fill up that $1,000 starter emergency fund. Beyond goal with any extra money beyond basic bills is to fill up that thousand dollar starter emergency fund. Beyond that, any extra money beyond your basic bills goes toward debt payoff. Then once you have the debt paid off, it goes toward the emergency fund. Then when you're in baby step four through seven, you have more margin. And so like John said, this is where you can decide, hey, our next goal is going to be paying off the house early,

or we're going to just stash money away to where maybe you have an extra three months of expenses to cover you for those leaner months okay okay the way to go you're crushing it man five to sixteen grand is quite the uh spread there yeah dude i follow an instagram account and all all that guy does on this instagram account is takes horses hooves that are like infected or messed up and he cleans them all up and makes them amazing and I'm just mesmerized by it. So cool, dude. How long have you been doing that? It's a fun job. About

10 years. How many times have you been kicked? A lot. A lot. Not by your wife, but by these horses. Yeah, exactly. You ever encounter people, Lucas, who maybe should sell the horse just curious all the time

thank you for that that's all we needed no further questions your honor there's people who have horses there's a lot of people who don't deserve horses and don't need them alright so I got you a more equine question it's an equine theme hour here on the Ramsey show

listen Lucas we got you. We helped you out, so you have to help us out. There's a mystique around horses. Is it real? Yes, sir. Are they like a magic animal in some sense? You know, in a way, they are. There's a connection that you get between a person and a horse

that actually does have that connection. They're a personal animal. They're kind of like a dog. They get to know their person, and you have a connection have that connection. They're a personal animal. They're kind of like a dog. They get to know their person, and you have a connection with that horse, and there's a lot to them. But yeah, they're a very sensitive animal. They can feel every emotion that you're feeling, and it adds to the experience around them. If somebody had a deep personal connection with a horse, and they were struggling financially,

and somebody just popped in their ear and was like, you should sell that horse right away, that'd be kind of cruel, right? Yeah, it's hard to do. I mean, I've had some pretty lean financial years and it's hard to think about getting rid of the horses. There you go. Just wanted to make sure. I have a friend named Kordj Jamil and he did that one time and it was pretty tough. At least it wasn't in front of millions though. Yeah, it was in front of a whole bunch of people, yeah. But hey, Lucas, I appreciate the work that you're doing, brother. That's awesome.

Thanks, man. Thanks for the call. It's a great question, John. A lot of people, when they look at budgeting, they opt out because they go, well, that's for a certain type of person. It's for broke people. It's for people who have a lot of money. It's for people who have consistent income.

And what I found over time is it's for people who want to know where their money's going and want more of it. Yeah. And I don't, you can tell me if I'm wrong here, but it feels like, especially as the world has moved almost overnight to this gig economy where everybody's got a job and then a side hustle and then another side hustle. If you're making $250,000 and you're going to fudge here and around the edges, okay. If the $14 you just earned that hour is going to a bill, you have extra, you better be paying

attention to every dollar, right? Like watching every penny. Yeah. It matters more when you're that tight. Yes. And so if you're getting paid every day like he is, if you are working these gig jobs where you're measuring mileage and you're, it's on to you to pay extra special attention to every penny, every dollar, wherever you happen to be. And that's how you're going to get ahead, especially on this day to day by day by day by day basis. Absolutely. And I see Lucas is still on the line.

So I'm going to gift him one year of every dollar premium. And I hope that helps him with this inconsistent budgeting. We have a paycheck planning tool as part of the premium version, John, where you can lay out all your bills. It'll show you when your money's going to run out based on when all your bills hit. So it's a super helpful tool to visualize. Then you can start moving your bills around and figure out, okay, I need more money after the bills and before it, so I don't run out. So there's a lot of cool features there. Go check out EveryDollar. You can download it for free in the App Store or Google Play, or just click the link in the description if you're listening on YouTube or podcast.

And whether you are broke, you consider yourself wealthy, you have regular, consistent income, irregular income from commission jobs, you need a budget. If you are a human being who has bills to pay, you need a budget yesterday. So go download EveryDollar. It will solve that problem. And then your job is to stick to it, to track those transactions, and to take control of your money instead of it controlling you. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Maloney. Open phones at 888-825-5225.

Christina joins us next in Florence, South Carolina. Christina, welcome to The Ramsey Show. Hey, thank you guys so much. I appreciate your time. What's going on? So in 2018, I was diagnosed with breast cancer and was out of work. And unfortunately, over the time period

that the company I work for allowed, so after 20 years of service, they called and told me they no longer needed me. So I have 401k with that company. I know I should have done something with it, and I did not. So it is sitting in an account, and I was just diagnosed in the past year with stage 4 cancer. So now instead of preparing for my retirement, I am looking to see the best way possible to leave this money for my family.

I want to make sure that tax-wise or whatever penalty that's going to be made, it gets the less hit. I would like them to have the most of it. So how certain are you about your new contracted timeline for just being around? I would say I've only been given that by one doctor, and I would say we're looking at within a year. Wow. Do you feel pretty confident about that?

I believe in a big God, and I know that he can do big miracles. So, no, I don't believe that. However, I am doing everything possible to make sure if anything does happen that I leave my family having the most that they can. Yeah. You're a pretty amazing woman, Christina. Yeah. To be thinking about your 401k beneficiaries when you're going through something like this speaks volumes to the kind of person you are.

I want you to, I'm going to assume you've got longer than a year, but I'm going to pretend like you are that we're going to go ahead and do those things just in case. Okay. Okay. Thank you. I want you to never say you are that we're going to go ahead and do those things just in case. Okay. Okay. Um, thank you. I want you to never say the words I should have again. Okay.

Literally life is too short. Okay. You're right. We're not going to say I should have, I needed to, we're just going to do the next right thing. Okay. Okay.

So we're going to let old Christina who is trying to survive getting hit in the mouth with a cancer diagnosis. The first round, we're going to let her off the hook. She's tired. Okay. Is we're going to let old Christina, who is trying to survive getting hit in the mouth with a cancer diagnosis, the first round, we're going to let her off the hook. She's tired. Okay. Is that cool? Thank you.

That's cool. So no more shoulds. It's just going to be the next right thing. I'm assuming you're a list maker. Have you made a list of all the things you need to go do? I have. Yeah. Okay.

I want you to put at the top of that list, things that bring me joy and laughter okay and i don't know what that means for you for me it would probably just be will ferrell shows and playing with babies and hanging out with my kids and my wife i don't and puppies everybody's different okay george would just be smashing android phones that would bring him the most joy he could possibly have not a bad idea right um but i want you to put that at the top. Okay. The greatest gift you can give to your loved ones in this season is to find joy where you can.

Okay. And then we'll do these tasks as they pop up. And this is one of those tasks. Okay. I'd recommend you get a SmartVestor Pro if you haven't already. And just consolidate this stuff as quickly as you can into a single account and if you've got if you've got multiple like when i moved to ramsey i had left three or four other jobs i had 401s everywhere so i called my smart investor pro we gather them all up into one central place and it took like i mean he did it in no time and that's that's a direct rollover so

you're not actually withdrawing the money you're're just directly rolling it over to an IRA from that 401k. So there won't be any penalties or taxes there. Do you know if the 401k was traditional or Roth? I don't. Okay. There might be a little bit of homework just to figure out, you know, if it's traditional 401k, that means you haven't paid taxes on the money yet. And so you're, you know, whoever inherits it will have to pay income taxes on it. That's fine. Someone was going to have to do it at some point. If it's Roth, it means you already paid taxes on it. And therefore, when they inherit it, it'll be tax-free. But there's not going to be penalties or anything like that with an inherited retirement account. Now, who would be the beneficiary on this account? Who would be getting this money if you passed? It would be my husband and my daughter.

Okay. So if it's your husband, there's different rules. He will likely be able to roll that money into his own account, and there won't be the 10-year withdrawal period. If it goes to a non-spouse, they'll have 10 years to withdraw the funds based on the Secure 2.0 Act. And again, a SmartVestor Pro can walk you through all the nerdy ins and outs of this. The key is just to check who is the beneficiary of this account. Is it the person I want?

Okay. So I should probably my husband if I want him to have access to money within 10 years. Yes. If it was me, I would, unless you have reason not to give this money to your husband, that would be the next in line I would be passing this money to. Yes. And by splitting it, you're going to make things way more complicated for him when you pass away. Do you have a will in place? I'm working on it. Okay. Hold on, no. Before the weekend is over, at least go to Mama Bear Will and get a will, okay? Mama, okay. Yeah, and we'll hang on the line. We're going to help you out. Kelly's going to

hang on the line, and we're going to help you out kelly's going to hang on the line and we're going to gift you as much as we can to help you with this process but mama bear legal forms they're the folks that john and i have our wills through it's online it's all ironclad it's legit and so let me say i i that's who i got it when i moved from texas to tennessee and i i went and got a mama bear will because i've moved states and then i recently have sat down with a, with an estate planning attorney, my wife and I did,

and we went through the whole rigmarole and it was, he was awesome. He's awesome. He's here in Nashville, but getting a thing right now, just in case, and then sit down with, um,

an estate planning attorney with you and your husband. Okay. And earlier, I want to reiterate, George asked you, is this in a Roth or is it traditional 401? And your response was this. I don't know.

You're not failing anything. It's not a pop quiz. Okay. 99% of America doesn't know the answer to these questions. That's why this show exists. Okay. The least amount of beating yourself up you can do over the next year, the better. Okay. And the least amount of brain calories you can spend do over the next year, the better. Okay.

And the least amount of brain calories you can spend on stupid stuff like this, the better. And that's why it's wise to reach out to a smart professor pro who goes, hey, don't worry about it. Let me explain it to you in a way that I can teach you. You can understand it, but you don't have to worry about it yourself. Okay. All right. Is that cool? What else we got?

What else we help you with? Do you have any term life insurance in place? Through my husband's job, I do. Okay. And you probably wouldn't qualify for any others at this point. Yeah. Yeah, the big question is, is my family going to be okay if something were to happen to me? And it sounds like the answer is yes, they're going to be okay.

Okay. One more question is, is there a penalty? Someone told me that there's a law that passed that if something like this happens to you, that you can withdraw your money early with no penalty. It would probably constitute as a kind of a hardship withdrawal. I still wouldn't do it. Okay. Even if you're able to. Are there pressing financial things that you guys are trying to pay off? Debts, things like that? No, no, no, there's not. I would leave it sitting there because it's going to grow and continue to grow with compound growth. I don't want you to unplug that regardless of what the penalties are. You've worked really hard to

establish this level of wealth for your family and there's no need to withdraw it early. Okay, okay. All right. Can I give you one piece of magic advice? Yes. I don't think it's going to be, but you get a rare gift that most of us just blow by. You get a rare gift to at least consider this might be the last Christmas you sit around the tree. Mm-hmm.

Soak up every minute of it. Yes. Every minute. Go on the vacation. Go do the silly things. Yep. Throw water balloons at your daughter when she gets home from school.

Do all the stuff. We're headed to New York in a week. Fine. Never done that before. That's amazing. Write the letter. Make sure she's got something to read forever and ever and ever.

Okay? You're a brave, brave, brave woman. Thank you for sharing your bravery with us. Thank you, Christina. We're pulling for you, and we hope there's only good news in the future. Call us back if we can help in any other way. And hang on the line. Kelly's going to pick up and make sure that you have what you need

with all the links and goodies to take the next steps. For all the men and women listening out here um we all have our last day and you just heard what bravery looks like someone who says okay it's common i want to make sure whether i know what day it is or it might be 50 years in the future i'm gonna do the best i can to make sure those that i love who are left when i'm gone are taken care of that's what that sounds like right there. Making a life well-lived. Awesome. 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 because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner you can rely on, Churchill Mortgage. Churchill is Ramsey trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American dream of home ownership today at churchhillmortgage.com. That's

churchhillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Welcome back to The Ramsey Show. I'm george camel joined by dr john deloney friendly reminder that you can watch the show live just south of nashville tennessee if you're making your way through town we got a lovely audience here today and as the holidays approach if you're coming through come visit us the show is free to watch through the glass we're like zoo animals out here we got free coffee and baked goods in the cafe, and you can leave with a free Ramsey Show mug.

So come see us. We've got Mason up next in Henrietta, Oklahoma. What's going on, Mason? Hey, George and Dr. John. How are y'all? Doing well. How are you? I'm pretty good, I'd say. So my question is, I have a sister and a cousin

that are in a position in life where they're getting ready to start getting their first cars and jobs and things like that and I've recently in the last couple months started listening to the show and got really into it and I haven't fully started the baby steps yet

I've wanted to I just haven't made that leap yet. And I'm just wondering, how do I convince them? Because I can't deal with my life right now necessarily. But how would I convince them that doing things with cash and not worrying about credit scores and things like that are the way to go? So you're not doing the plan, but you want to convince others to do the plan? Is that the summary here? Yes. You're excited about the plan, and you want them

to be excited about the plan. Mason, this is the most America call I've ever received. Like, we really want to do a thing that none of us are doing. So y'all do this thing. I think the I think the as the great country lyric goes, you say it best when you say nothing at all, Mason.

Just start paying with cash. Just start getting connected with your wife. Your actions will speak louder than words. If you roll up in there like, y'all need to start paying cash and getting rid of your debts, how about you just go, yeah, what'd you do today? Oh, I paid off my car. Felt pretty good.

How'd you do that? Well, I followed this plan. And then if they're interested, they'll listen. But I've never been able to convince someone of something they were not interested in. You just have to lead with intrigue and they have to go, tell me more about this. So why haven't you started yet, Mason, if it's such a great plan? Well, I mean, I don't know. I just haven't. I mean, mean i mean i guess technically i'd be in baby step one i just haven't um yeah i got the uh every dollar i've started the budget and i'm getting stuff lined out i just need to start putting that first thousand dollars together um and then i'll be

going on it i know but you didn't answer my question if this is so great that you want all your friends and family to get involved, why haven't you? I don't know. I don't think hesitation would be it. I think it's just I don't know. I think today's your day. Yeah, where are you at financially?

Not terrible. Great answer. I love the confidence there if i was like hey john how's your marriage and john said not terrible terrible that means it's not great so how much money do you make um net maybe around uh 40 000, and how much debt do you have? About $38,000 probably. So Mason, that's 100% leverage. That qualifies as terrible. It's not great. How'd you get into this mess?

You sound young. How old are you? 22. Oh, yeah. I was actually about where you were at 22. I was $36,000 in debt with student loans, $4,000 in credit card debt. And I was making about what you were making. Where did you, where's your debt come from, brother? So I have a truck. I have about $9,400 on.

And then we had, we were pretty close to paying off my wife's car. And then before we really got into all this, we got another car. You have three cars? No, just two. The other one we got rid of now, but my truck and her car together is about $95,000 and $16,500. Is she working outside the home? Not as of yet.

We got a nine-month-old little girl, and she's in her EMT school. So once she gets out of that, we're going to be looking into having her work a little bit. Okay. How much debt does she have? Does that include in your 38, or is that just your debt? Technically, we're married, but technically, I guess it would all be mine or ours. But she's got a couple collections from before we were married that are like $1,000 or something. Well, her problems became your problems as soon as you said I do.

So we've got to get all of this listed all out, smallest to largest. I don't care whose debt it is. I don't care what the interest rate is. List it out by smallest balance to largest balance, and let's start attacking these debts aggressively with the debt snowball. Right. I got my every dollar budget set up as far as our monthly payments, and I just last night actually wrote everything down on paper to look at. And when you see between the small things and the vehicles, it adds up to $38,000. It's a little bit, it takes your breath away a little bit, I think.

Mason, how quick can you get $1,000? Stop thinking about it and stop making lists. How quick can you get $1,000? A month, maybe. I bet you can do it faster. What can you sell? You got some toys laying around? What just popped in your head?

That guitar guitar that tool thing that what you can sell it four by four i mean honestly i don't we don't keep a whole lot of like just things around um i want you to put two week time on yourself you got two expensive cars sitting in that driveway man that's more than half your income yeah just depreciating every single day, continuing to go further down in value. I would consider

selling your wife's car or yours, but it sounds like hers is worth more with a bigger payment. True. And could you then downgrade in car

and get something for six grand while you get out of debt and then upgrade later a year or two from now? That's the kind of sacrifice that would get your family talking. They're going, do you see what they, they sold her car and got this crummy little beater car. What are they doing?

So when Dave says the words gazelle intense, he's been saying that forever. When a lion shoots out of the brush after a gazelle, a gazelle does not just sit around and like, for a couple of months and like a plan and talk to the family. Like, are you guys going to run? I'm thinking about running. The gazelle just starts running for its life. And until you get that kind of intensity, brother, you're going to be 22.

You're going to have a nine-month-old. You're going to have a wife. And you're going to be scared to death. Like you are right now. I can hear it on you. Yeah, I'm also nervous. I know. We're not that... Don't be nervous.

We're not that great. We're not that good. But you see what I'm saying? I want you to get fired up on behalf of the world you're going to create for your daughter that you didn't have, which is a house that doesn't owe anybody anything. Can you imagine that? Yeah. Is your wife even on board?

That would be my A1. I don't give a rip what your Uncle Larry's doing. I want to know if your wife is willing to make the sacrifices needed. She definitely likes the idea of it, and we've talked about it. She makes fun of me a little bit because I talk about it so much. My head spins whenever I get involved in things like this. I'm excited about something. My head spins. It's like a burnout, essentially.

It's all throttle, no actual forward movement yet. She was telling me last night as well when we were talking about the debts that she wanted to start listening to the podcast and get into it and see what it's all about so we can really kind of lock hands and go forward with it. I think it's time to get on it, brother. I think it's time to get on it and tell her in two weeks I'm going to have $1,000. We have an emergency fund, and we're going to stop using these credit cards, and we're going to start knocking them off.

We're going to list our debt smallest to largest and get out of this mess. No more games, man. I'm going to change what you call rage, tear this roof off like two dogs caged. You hear that? That's exactly right. There we go. There we go, Mason. He knows what to do, John. It's just, how do you find the motivation to do it? It's like, I love the idea of this

Ramsey. Man, that sounds so cool, getting out of debt. And then you just get paralyzed. Yeah, you have to lose yourself to the music in the moment. You have to just own it. Well, it's weird to think about. You really do have one opportunity to seize everything you wanted. One moment. You have multiple opportunities. You just have to go for it.

This one life. This one crazy life you have. Would you capture it or would you just let it slip? That's a good question. You have to lose yourself in the music in the moment. That's gazelle intensity. I don't know what else to tell you. Go, go, go, go, go. Mason, stop sitting around thinking about it and talking about it.

Go get it. Yeah, you're sitting over there. Your palms are sweaty. Knees weak. Arms are heavy. Let's go. Let's go. Let's go. Let's just go for it, man. Debt freedom is on the other side. What are you waiting for? Tell your wife. Tell the kids. Hide the wife. Hide the kids. I don't care. Just follow the Ramsey plan and call us back when you're debt free, and we will celebrate with you, my man. This is The Ramsey Show. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have, George. Sketchy and never trust them. And that's why we recommend Delete.me. They help with that.

Yeah, they do. Delete.me actually goes in and removes your information from data broker websites, and it is an incredible service that everyone needs. And there's a lot of shady companies out there that solely exist to sell your personal data to bad guys. And that means your info, like your email address, your home address, your kids' names, your name, everything is just out there for scammers and spammers to find. That's right. And then once they remove your information, then they're going to send you a detailed report telling you where they found your information, when they removed it, how many hours they've saved you. I mean, it is incredible. So detailed and it's beautiful. I love these reports. So far, get this, they've reviewed 27,000 listings on my behalf, removed me from 240 data broker sites, and saved me 77 hours of time. It's incredible. Absolutely amazing. And Winston and I now get fewer texts, weird emails, spam calls, all of it. I love it. So you got to be sure to check them out. Ramsey fans get 20% off their annual plans. Just go to joindeleteeme.com

slash Ramsey. That comes out to less than nine bucks a month. Super affordable. It's amazing. So again, that's joindel delete me.com slash Ramsey. Make sure to check it out, you guys. Welcome back to the Ramsey show. I'm George Campbell, joined by Dr. John Deloney. Open phones at 888-825-5225. You know, John, over the years, we talk a lot about habits of the wealthy. Dave has always said, you want to be wealthy, do what wealthy people do. You want to be broke, do what broke people do. That's normal. So I thought it'd be fun to go through some of the actual habits so that people can identify where they're at. Whether or not they feel broke or feel wealthy, if you do these habits, you probably fall into these categories. You ready for this?

So here's what broke people do. Payday loans. We see these in zip codes with lower incomes. You see these payday, they look like old pizza huts a lot of the time. There's title max and payday loans we see these in uh zip codes with lower incomes you see these payday they look like old pizza huts a lot of the time there's title max and payday loans these are some of the worst the interest rates when you actually do the math are astronomical and it keeps people in a cycle of debt with these short-term crazy high loans interest rates average 400 so it keeps them chained uh title loans another one we mentioned that high interest loans that require your car as collateral because you have the title of the car. Buy here, pay here car lots. You've seen the we tote the note. That's never a good sign. Cash advance. That's another short-term

high interest loan against expected income. Are you seeing a theme here? Rent to own. So again, they go, well, I'll at least be paying towards something. But most of these have crazy hidden fees and it might sound like a good idea, but it preys on people who have poor credit and can't come up with the money. And then finally the lottery. This is known as a tax on the poor. It's a regressive tax. And if you look at who's playing the lottery, it's not people making a hundred thousand dollars. It's people who can barely afford to cover the bills and they're hoping with false hope, this is going to be their ticket out. So it sounds like here it's it's a like what you just described if i was to like put a theme over it is

desperate i gotta get through today it's desperation just got to get through this afternoon yeah right and if you are constantly waking up on a treadmill of i gotta get through this afternoon i gotta get through this afternoon there's plenty of people out there that are ready to prey on you yeah but here's the. Most people fall into this next category, which is average, normal. And here's what average people do. They chase credit card rewards. How many times have we gotten this call? Well, I really, you are spending so many brain calories chasing these rewards and the companies love it that you think you're winning, that you think you're gaming the system. Recent survey shows 23% of people didn't even redeem the rewards in the last 12 months. And there's a reason they went away from cash back.

Now it's, well, you're going to have a bajillion points. What are those points worth? It's like a Chuck E. Cheese. You have all these tickets that can't even buy you one of those little sticky hands. It's ridiculous. And the number of things I've bought for Christmas for people online, I get so many emails back that's like, you've now got five points with whatever shoes and five x the point

like what i don't even know it's all been gamified i don't know what you're talking about yep the next one on the list this is what average people do they buy new cars and they go well john it's gonna it's gonna last longer it's safer it's more reliable for my family just admit it's for your ego yeah just admit that used cars are less expensive you've already taken the hit on depreciation you let someone else do it. We know new cars drop 60% in value in the first five years. We know the average new car payment is now over $700 a month. And if you're leasing a car because you think it's somehow smarter, you're the dummy here.

You're just renting very expensively, and you're prepaying all of that depreciation. You're paying the dealership's depreciation for them on the vehicle they just bought. But, John, I don't have to do anything. It includes the insurance. Okay. Keep telling yourself that, buddy. Next up on the list is HELOCs. We've seen a big rise in HELOCs over the last few years because people have all this home equity,

and they get marketed to, and they say, hey, this is basically a credit card attached to the value of your home. You're not actually borrowing money. You're borrowing it from yourself, John. It's a great plan. And what are the calls we get? Hey, we're stuck because we have the HELOC on top of the mortgage and it's killing us. And most of these HELOCs have a variable interest rate and you're putting your home at risk and your family at risk by doing this. And of course, the next one, this is part of the American stew here. We got the student loans. To give a 17 or 18 year old hundreds of thousands of dollars for their business idea of getting this degree to hopefully

have passion marketplace are you passionate about oh my goodness you're 18 you know i can't even see on the air what i was passionate about when i was 18 i'm just glad i didn't get a hundred thousand dollars to pursue it we shouldn't if it was a, we'd all go at the bank, the bank would go, this is a terrible business idea. What are you going to do with a sociology degree? Uh, socio stuff. Don't do this. There's no way out. Student loans are not discharged by declaring bankruptcy. So you can't even get out of this thing through bankruptcy. The next one that we get a lot of, and this is a very middle-class move, is buying whole life insurance. And it's some dude from college who's like, hey, did you know this is what the wealthy do? They buy life insurance and they borrow against it and it's tax-free. It's a wealth hack. And I go, dude, this guy just

scammed you into thinking that you should be investing through your insurance. Think about how dumb that sounds, that you're using your insurance as an investment tool. It's super expensive and we know that term life is a fraction of the cost and you can invest the difference and be way better off than giving someone fat commissions. And then finally, buy now, pay later. This is when we see average people do. I just saw this on a website, John. It said it was $140 for this pajama set. And then underneath, it had the girl math of 36 cents per night. They divided it out over a year and said, well, listen, it's 36 cents a night. And if you wear it every night,

I mean, you're basically making money off of that. So it's insane what they're doing with buy now, pay later, with the marketing tactics. I like this here. It says the average person asks not how much does that cost? They ask how much is it going to cost me a month? And can I make this pile of monthly payments? Can I make that less than I make?

And people feel like I'm spending less than I make. I'm living less than I earn when their payments all add up to that, not the total purchases. That's right. Broke people ask how much down, how much a month. Wealthy people just ask how much. How much? What is the out-the-door cost? What is the total? And if I can't afford it today in full, in cash, don't do it. That's a surefire way to be wealthy. So this is what wealthy people do. Number one, they don't pay interest. We've said this, broke people pay interest, wealthy people earn it. That's what

they're doing. They're investing in assets through real estate, through mutual funds, whatever it is, and that's giving them money. Broke people buy things that go down in value and take their money through interest. And so that is a big thing. Their goal is to have assets, not liabilities. Another thing wealthy people do is they buy used cars. Even those that have the money to buy a new car in cash and they could light that money on fire on the kitchen table and it wouldn't mess with their world, they still go, why would I take the hit on depreciation instead of someone else and buy a four-year-old car? Here's what our millionaire study found. Most millionaires are driving Hondas and Toyotas. Not crazy luxury

cars, not Lamborghinis. Our millionaire theme hour backs this up. So we may as well have those hours sponsored by Toyota. So reach out. Reach out. Next one, John, this one won't shock you. They pay off their mortgage. A lot of people think, well, wealthy people know that you can invest a difference and become very wealthy. So they hang on to their mortgages for 30 years and then refinance for another. Nope, not what we found. They get rid of their mortgage on average 10.2 years, our millionaire study found. They get rid of their mortgage on average 10.2 years, our millionaire study found. And so following the baby steps, we teach pay off your mortgage early. I don't care if the interest rate is 9% or 2%. Getting rid of that payment allows you to

build more wealth, which brings us to the last one. What do wealthy people do? They invest for the future. Eight out of 10 millionaires studied invested in their company's 401k, three out of four invested outside of the company plan. They know that investing over a long period of time instead of buying crap you don't need with money you don't have is the key to building wealth. That's it. It sounds simple, but it's so nuanced because you would think that wealthy people just do what they want and they're not really intentional. And that when you're broke, you have to be more intentional we found the opposite well it's it's like a it's i think the great lie in this country is one day you get to retire so you can quote unquote do nothing and i think people consider wealth i want to get enough money so i don't have to worry about it and that's not how it works and if i was to come up with a theme

for the wealthy people it is they don't make other people rich and they solve for peace. And so they, a wealthy person, you always want to ask, like, I want to be a billionaire by 40. And I always want to say, why? For what? So you can sleep at night? Okay. Give your body the opportunity to live in a home that nobody could take away from you. Then you're going to sleep, right? Then you're going to have peace. And so they pay off their mortgage. They invest. They know that come what may, I'm going to be okay then. No one can take my house now. It's this idea. It's they're thinking about tomorrow, not just this afternoon, not just this afternoon. But if you solve for peace, not for credit card points or not for the difference between my 2.9 and my... Solve for... I'm telling you, man, you get wealthy for a reason. You don't get wealthy

for the sake of wealthy. And I think our culture has missed that completely. We have no why behind it. We just judge ourself. How much are you worth? It's a number. And that, and that the answer to that question is never a number. And we always are like, okay, what are we worth? What are you worth? What are you worth? Instead of saying why? And dude, I don't want, I don't care what my interest in my house is. I don't want care what my interest rate on my house is. I don't want anyone to be able to take my house away, so I'm gonna pay it off, right? And wealthy people solve for different problems.

That's a good lesson right there. And if you wanna see where you stack up, we have a free get started assessment you can check out. It's a quick quiz to see if you're on track. Go check out the quiz. It's in the show notes, the description, wherever you're listening and click on the title. Are you on track with the baby steps? Good stuff, John. This has been the Ramsey Show. Live from the 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 bestselling author Dr. John Deloney, and we're taking your calls at 888-825-5225. You call us up, and we'll give you the right next step for your life and your money. Sharon's going to kick us off in Sacramento, California. What's going on, Sharon? Well, I just had a quick question regarding transferring balances to a HELOC loan. And I'm not sure if that's a good idea because the interest rate on the HELOC is lower than the credit card. So I wanted to get some input. So what's the balance on the credit card?

It's about $2,300. And what's the balance on the HELOC? About $13,000. Okay. And what was the reason for both of these? What'd you use it for? Well, the HELOC, two years ago, I had to replace my roof and I didn't want to refinance at a higher rate. So I got the HELOC to replace my roof on my house. And then the credit card, the water pump in my car cost a little bit more than I anticipated, and I had to repair that about six months ago. How long have you been living on the edge like this with no money for emergencies? Probably for a pretty long time. I mean, I have $1,500 in my savings, but I didn't want to use it for the car.

I didn't want to drain it to zero. It kind of scared me. It scares me to be in credit card debt at 25% interest, trying to transfer to a 13% interest HELOC. Well, no, actually, my HELOC is at 4.5, and my credit card is at 13%. Okay. So here's the hard truth, is that the interest rates aren't the problem. Okay.

You can pay off $2,300, and the interest is going to be negligible. Okay. The harder thing we have to deal with is getting out of this cycle where we turn to debt and then try to move one debt to the other piece of debt to pay off the debt. I want you out of this cycle. Don't you want to be out of this rat maze? Oh, absolutely. I spent all last year paying off four other credit cards. So, I mean, I was doing the baby steps before I knew about the baby steps. So what if instead of transferring the balance and paying a balance transfer fee to move it to the HELOC to hope to pay off the HELOC, what if we just said, I'm done.

I'm going to pay off the card and then cut up the card. I'm not going to go into credit card debt again. I'm going to build an emergency fund and I'm going to get out of this HELOC and I'm going to start a maintenance sinking fund for all the things I know are coming up. I want you to get ahead of this so that life isn't just happening to you. And it sounds like it's been that way for a long time. Are you doing this alone? Are you married? Single? No, I am divorced. I am doing this alone. How old are you? I'm 60. What does 65 Sharon want to be doing? Well, 65 Sharon wants to hopefully retire and build a long-arm quilting business. Oh, that's fun. Sounds awesome. So you want to plan to retire? Yeah, I'm planning to retire and use the long-arm business to

supplement my income because I know I won't have enough for 401k and retirement, yada yada. So what are you making right now? About 65. Awesome. And what's your total debt other than your mortgage? The HELOC, the credit card, everything. Okay. Well, my long-arm machine, I still have 13 on it, and I have 13 on the HELOC, and 23 on the credit card. 2,300 on the credit card. 1,300 or 13,000?

13,000. On the first one. And what was that? Yes. The long-arm machine. And what was that? Yes. The longarm machine. And what does that do? I'm not privy to this world. Oh, and your quilting machine. So the longarm machine puts the pretty pattern on the quilt to sandwich it together. And you owe $13,000 on that machine? Roughly, yes. What are you making from this business right now?

At the moment, nothing. Only because the timing on my machine isn't working correctly, so I can't quilt other people's quilts and I don't want to ruin their quilt. Oh boy. So you have a $13,000 depreciating asset in your house. It's a paperweight. It doesn't work? Well, it works. I just need someone to pay somebody to come out and fix the timing on the machine. Oh man. My honest thought is if you want to have this dream where you get to do this one day, you might have to sell this thing to get out of the debt. Because my guess is you don't have a ton of margin left over every month. Have you done a budget where you list out, here's all my expenses, here's what I'm taking home,

here's what I have left to pay down the debts? Yes. And how much is left? I don't necessarily, not much. And what's the payment on this machine? $260. So you'd have an extra $260 to throw at the debt, at least. That'll help you get out of this credit card debt, which will free up another payment.

Do you see how this debt snowball would work? If you pay off the smallest debt first, which would be the credit cards, you'd free up a credit card payment. And if you sold the machine, you'd free up another $260. Now we can use that to attack the HELOC and be out of this debt. My guess is making $65,000, getting on a real solid written budget, you could be out of this debt completely in under a year. So at $61,000, we're debt-free. By $62,000, we have a fully funded emergency fund,

and then we're maxing out all of the retirement accounts we can for a few years so that we can retire with dignity. Okay. Then we're buying a quil years so that we can retire with dignity. Okay. Then we're buying a quilting machine with cash that's ours. And probably used our Facebook marketplace from someone named Sharon who said, hey, I can't fix it. If you can fix it, good luck to you. I'm selling it for five grand and you'll get a deal on it.

You'll buy the same exact machine back from your alter you at half the price. How does that sound? Not the question you called in for, but that's the answer I would give to my own sister or mom or friend. Yeah, you're talking to two guys who have moms in your age vicinity. And both of us are getting nervous right now. Why are you getting nervous?

Thinking about our mom and your situation. Because I want my mom to retire with dignity. I don't want to see her struggling with bills as she enters retirement, wondering how she's going to make ends meet with no ability to work a full-time job. That scares me. And I also want to acknowledge how heartbreaking it is.

This is not how you drew it up how you thought things were going to be when you're 60 is it no no and so i think instead of having dreams that you know we're going to put on a credit card here or move some money around here or get a credit card and put on a heloc here i think there there comes a moment when you sit down and acknowledge i did not this is not how I drew this up. I had a ride or die and for whatever reason, my marriage fell apart. I don't know why I'm still here in Sacramento. I want you to have those conversations and get with a friend and grieve it.

And then be intentional. And the word I use here is not to mock anybody or point fingers, but it's, I have to choose reality. Here's reality. I really want to do quilts. And right now i can't afford to do that because math okay and i really want to be free when i'm 65 and that means i'm gonna have to work really hard at 61 i don't want to be you don't deserve to be mom should be having their feet up at 61 and playing with grandkids and rolling like you know i mean and unfortunately that's just not your reality so let's get there as quick as we can and let's go do the next hard hard hard

things for 61 and 62 so that 65 75 85 year old you has a pretty sweet ride okay you're gonna have to reverse engineer this sharon that's why i want you to envision that 65 year old sharon and then say what must be true to get there? And that might mean selling this machine for now so that I can have it later with freedom instead of stress as I'm quilting. This is The Ramsey Show. Hey, you guys. I'm not a fan of the big banks, and you probably already know which ones I mean. But I do like credit unions because they're non-profit organizations that focus on their members. And I'm proud to

endorse Fairwinds Credit Union because they share the Ramsey mission of helping people get out of debt and live generously. In fact, they design products to help keep you from going into debt in the first place. Fairwinds has been in business for over 75 years, and they serve hundreds of thousands of members worldwide. You can feel secure because your deposits are federally insured by the NCUA up to $250,000. It's easy to join and Fairwinds partners with more than 5,000 credit union locations around the country. So you can bank in person wherever you live. But if you prefer the online experience, you can log on to Fairwinds and do anything you

could do at a physical location. So go to fairwinds.org slash Ramsey to learn more. And while you're there, look at the combined checking and savings account bundle they created just for Ramsey fans to help you take control of your finances. That's fairwinds, F-A-I-R-W-I-N-D-S dot org slash Ramsey. Welcome back to the Ramsey Show. I'm George Campbell and joined by Dr. John Deloney. Hey, today's the last day of our extended Cyber Monday sale, and that means it's the last day you can get prices as low as $8 on meaningful gifts for everyone on your list.

We've got best-selling hardcover books and assessments for just $12. Total money makeover, building a non-anxious life, they get clear career assessment, and more. Plus, audiobooks are on sale for just $8. Baby Steps Millionaires, Paycheck to Purpose, On Your Past, Change Your Future, just $8 for the audiobook there. And for the first time ever, my book, Breaking Free from Broke, is on sale for just $12. That's incredible. And it's a great gift for young adults. I'm going to expose all the money myths and traps out there and show you a better path to build wealth in this crazy world we find ourselves in. So go to ramsaysolutions.com slash store to check out all of the Cyber Monday Week deals. And if you're listening on YouTube or podcast, just click the link in the show notes or description.

All right, let's go out to Caleb in Portland up next. What's going on, Caleb? You with us? Hello. Yes. Sorry. My question was, I was wondering, I've got to, here in about a year, I'm going to be coming into about $37,000 personal injury settlement. And I'm a new father and i just kind of want to make sure that i set up my family uh and make sure that you know i i just i do the right things with it instead of looking back on it a year five years and being like damn i really wasted an opportunity or darn sorry i apologize but that's wise um are you okay now? How's your health? I'm all right. Just a little shaky. I apologize. No, it's good. I'm just wondering, do you have ongoing health issues that you take care of? Do you need this money for anything related to the injury? No, sir. I'm debt-free.

I'm not at all into your guys' baby steps. It's something I need to definitely look into. I know my grandma is a big fan of your guys' show. Grandmas love us. What can we say? Yes, sir. So you're debt free. So you kind of followed the plan already by accident.

Yes, sir. You have no debt. Are you guys renting right now? Yes, sir. Okay. And do you have you guys renting right now? Yes, sir. Okay. And do you have an emergency fund of three to six months of expenses? No, sir. Okay. Where are you at on savings? I don't have any savings.

Well, congratulations. You will a year from now. And here's my encouragement to you, get an emergency fund before you ever get the settlement. Because you said you're going to get it a year from now. And here's my encouragement to you, get an emergency fund before you ever get the settlement. Because you said you're going to get it a year from now? Roughly. It'll be February of 26. Okay. So even longer than a year. So you need an emergency fund now. So that would be your next goal is to add up what it takes to run your household for a month. Let's say it's $5,000 and you want a four- month emergency fund, that's $20,000. So how much do you make as a household? I make roughly, I think 40K a year. I honestly don't know. I was trying to figure that out

because they asked me. I answered $19 an hour. So I'm not very well versed. Okay. So you get paid hourly and you're working 40 hours a week? Yes, sir. I answered $19 an hour, so I'm not very well versed. Okay, so you get paid hourly and you're working 40 hours a week? Yes, sir. And $19. Yeah, that's about $40,000. Okay, so your next goal is to go, how much can we squeeze out of this budget, aside from basic bills, to get that emergency fund in place so that then we can begin investing? And once you get that settlement money, now it's, well, what can we do with this? Maybe a start of a down payment to buy a house one day. Right. Is that a goal for you guys?

Well, this is something that happened when I was in middle school and that was always my thought, was to buy a house, to not squander it. But I'm not the financial gurus. That's kind of why I called you guys. Well, you don't need to be a financial guru. You just got to stay out of debt, have money in the bank to cover emergencies, and then begin building for the future. And that would mean following the baby steps, you'd be investing 15%. If you're income into retirement accounts, you'd be putting money away for that down payment. And when the time is right, you can get that house. And you're 24.

There's no rush to do any of this, but I want to put you in a position so that you have options. Yes, sir. So I'm going to send you my book, Breaking Free from Broke. It's going to walk you through this whole process so that when you do get this money, you'll know what to do with it. Because I can tell you don't want to squander it. And as a new dad, I'm a new dad too. It changes the way you look at things. You're not doing things for yourself anymore. If you look at our purchases on Amazon and Target, it's mostly for the baby now. And so I love that you're looking at this from a legacy perspective and not just a selfish 22-year-old knucklehead perspective. Well, that's been the last 24 years,

and I got the next set of years to not be selfish and take care of the kids. I love it. Hey, you're wiser than John and I were at your age. I'll tell you that much, man. I didn't even know what day it was when I was 24, man. So good on you, brother. It's awesome. Yeah, and I hope you heal up fully from that incident.

So hang on, and we're going to have our friend Taylor send you that book, Breaking Free from Broke. Kate's up next in Alberta, Canada. What's going on, Kate? Hi there. Hi, guys. Thanks so much for taking my call. Sure. I love learning about how to best utilize our money and need your guys' help with something,

because I've been wrestling it around in my head with many different scenarios. So my husband and I want to build a modest lake home in our retirement, but I'm just cautious. I don't want to make a mistake or spend unwisely. So just a bit of background. My husband and I have had a few hard goes in life, but now after putting our noses to the grindstone on our own, we've established financial security. We think we've been in collaboration with our financial advisor.

And so our financial picture looks like this. It have $150,000 in mine. We have combined $300,000 in our tax-free savings account. We have an extra $140,000 saved up in cash. Our primary house is worth $440,000, and that is paid off. Awesome. We have an additional rental house that's worth about $400,000, but we have $150,000 worth of mortgage still on that. What I alluded to earlier, I know this was a poor decision, but we were doing the best we could without any parental guidance or help. We bought Universal Life. And so we have 650 that will be a payout on our debt. And so thoughts moving forward, I just recently retired. So as well as my $150,000 in my RRSP, I have a defined pension benefit of $3,000 a month.

Okay. My husband, I'm 54, and so I'm hoping, because I've gone through some tough health issues, that I could retire. And my husband is 56, and he's looking at maybe working for a couple more years. And so our financial advisor really feels strongly that, you know, we are okay to be able to, you know, have some good deaccumulation strategies in retirement and we should have kind of a nice little legacy at the end. So what's the retirement home going to cost? About $400,000. And will you be paying cash for that?

Well, see, that's the thing. I have to figure out all the nuances about RSPs and tax-free savings, but we don't really want to tap into that. So our thoughts are that if we kept both of our homes, like the one that we've paid off our primary home, and we can use the rental income to help boost our income in retirement, we could remortgage our rental property. So that money... Can I be honest with you? I don't like the idea of remortgaging anything as you head into retirement. That's adding risk and stress into your life. So here's what I would do because we're short on time. I would pay off the rental. And if you have the money and it's not going to decimate your nest egg,

you can build that retirement home one day. Right now, it looks like you guys are going to rent a wonderful home for a few weeks as a vacation home. But I would not sink $400,000 of your nest egg. That's a third to half of what you guys have right now. And I'm not super confident in this plan. I want you to solve for peace. You have 5,000 moving puzzle pieces and it's exhausting.

Just listening to you trying to balance this and move this over here and try this thing. Try solving for peace. How simple can we make this? How simple can we have the life that we want to live? Seek that option. 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,

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. The number to call is 888-825-5225. The Ramsey Show question of the day is brought to you by YRefi. We trust YRefi because they help people who have defaulted private student loans to refinance with a low fixed interest rate they couldn't get anywhere else. Chris had a student loan and he cut his payment by over 40% with YRefi. So go to YRefi.com today slash Ramsey. That's the letter Y, R-E-F-Y.com slash Ramsey. May not be available in all states. Today's question comes from Jenna in Minnesota. Jenna writes, a few years ago,

my husband loaned some money to a friend and also let the friend use his credit card. He thought the person was trustworthy, but by the time we realized what this guy had spent, he owed us about $15,000. He pays us back here and there, but it's only a couple hundred bucks every few months. At this rate, I'm worried this guy doesn't actually intend to pay us

back the full amount and is only paying us occasionally to keep us happy. We recently found out he had taken advantage of at least two other people as well and still owes them also are there any legal measures we can take that won't cost us more than it's worth walk away jenna this is what we call a stupid tax the fifteen thousand dollars stupid tax it's a heartbreaking tax it's a i thought you were a better friend tax, but walk away. You are expending way more emotional and relational and psychological energy over this than he is. And so it's, it's like that old AA adage. You're drinking poison every morning,

hoping that he gets sick and dies. It's not how it works. You're the one getting sick. You and your husband, wash your hands of this thing block this guy on social media and go about your life and just know we're never going to loan friends money again we will give our friends money we'll give it to them all the time generously and recklessly but i'm not going to loan any money because it puts a it puts a uh it just puts a huge wedge between us and our relationship that's it so i don't think this is worth going to Judge Judy over to some civil court to try to get the money back because my guess is he doesn't have it. He's not secretly hoarding hundreds of thousands of dollars. And you learn the lesson here is you lost a friend over this and it wasn't worth it. And he did this to other people. And the fact that he couldn't use

his own credit card because he was doing that bad financially that you lent him your credit card that's asking for fraud and the problem is it's not fraud because you willingly gave this guy this money and loaned it to him so you didn't think about this in court the judge is going to say um let me see the contract and you say well we don't have one see what are the terms y'all agreed on for when he'd pay it back we don't he just said when he could and did you just did he steal your credit card no i gave it to him i didn't think he was gonna spend 15 grand did you tell him don't spend 15 grand no so it's one of those things that it it defies the implied social contract we all have with each other which is to treat each other with dignity and respect you guys um got spit in the face and

i hate this for you so you can just sit there with spit on your face getting mad at him and mad at him or you can clean up and go on about your life and just know like the delonys we don't get we don't we don't loan money to friends i'll give money all day long i might alone money because it creates a wedge in our relationship my friendships are too valuable to me 100 thanks for the question somebody comes and says hey can i borrow some money and you say hey we don't we don't loan money to friends tell me what's going on and they launch into well screw you or who do you think you are they aren't your friend they are not your friend they want to use you as a bank you were just a pawn in their scheme yes you were a means to an end and it's a good litmus test of your relationship if your friends piss and moan about

your your boundaries so sorry jenna but i would you and your husband would uh as the great jay z says brush your shoulders off and move on i thought you're gonna go elsa let it go total frozen all right fine that's fine you're cool my kids are older than yours all right justin is up next in ok City. What is going on, Justin? Hello. Yes, I'm Justin. I'm currently 18, and I'm attending college for a cybersecurity degree with a full ride. Cool.

So I got a job offer for between $14 and $20 an hour back in my hometown for full-time. So at the higher end, that's about $50,000 to $2,000 a year with overtime included because it's a 50-hour work week. It would be an operation technician for a Bitcoin mining company. And while that can seem sketchy, they contacted me through my trade school

and they have a good history with my trade school. So I'm just wondering how much of a salary would it make it worth it for me to drop out of college how far along are you in your program so I attended a concurrent degree whenever I was in high school so technically I'm three semesters into my program out of eight out of eight um man i i might be on an island here but um if you were my son i would tell you you have a willy wonka ticket which is a free ride to a college education i would take that ticket for a great degree for a great degree and the money you'll be making in cyber security you're going to be like, why did I leave all this for a $14 an hour job for a Bitcoin company? Which, regardless of my thoughts on Bitcoin, is very volatile. And so this company could go under and they could say, hey, man, we shut down operations yesterday.

You don't have a job anymore. And so I would continue down this path. If Bitcoin really is what everyone says it is, it's going to be around a long time. And if you were qualified at 18, you're going to be very qualified by 22. So I would keep pursuing this path of cybersecurity, knowing that you're going to make six figures upon graduation,

working for a reputable company with great benefits. And I would pass on this job right now. Yeah. And you're going to have a certificate. You're going to have a credential that no one can ever take from you. The credential plus the training. And I think that's invaluable.

And let me tell you this. Can I just, can I applaud you? 18 years old and someone's coming out of the gate offering you 40 grand just to walk away from everything. You know what that tells me? You're in rare air, my brother. That means you work hard. That means you're very smart.

That means you get your stuff turned in on time. Your grades are good. That means they're already identifying you. And what's hard when you're 18 is when somebody sees you and you feel seen and you feel known, it feels so good that it's easy to get derailed.

And it's the 18-year-olds with wisdom that say, okay, if I, if I got this at 18, just imagine how many people are going to be knocking on my door when I'm 20 and I'm fully credentialed. And you're going to have zero, none, no student debt because the school's paying for it, man. Full ride. It's a Willy Wonka ticket, brother. You won. So I can tell you, I work with college students my whole life but more than that i'm just telling you what i would tell my son which is ride this out get the education get their credential this is a valuable degree and will only get more valuable over time and these these jobs

at bitcoin i mean dude you're gonna have jobs lined up for you so that's that's my recommendation all right thanks for your time. Hey, congratulations, man. It does my heart good to know. You're building the infrastructure that my kids are going to grow up in, man. And I'm glad to know there's young people out there like you out there busting it, working hard, and making their grades, dude. That's awesome. That's huge. And, John, there's a lot of students out there 17, 18 years old, and they're going, what the heck am I supposed to do with my life?

I'm getting this degree because I was told it was the next right step I take out of high school. And so you've got to also weigh your options here and go, if Justin was getting a useless degree that he wasn't excited about and his parents just said you have to go to college, do something, and he was just aiming at nothing and spending 50 grand a year in debt to do it we we'd probably say hey dude pause go work go do the job making 40 grand a year cash flow college later when you know what you want to do this was different where he's going he's in a great field sounds like he knows what he's doing it's excited about cyber security stay down the path and don't get distracted yes and that it's just that understanding that the jobs will come the jobs will come the jobs will come yes if you find yourself your parents are saying you're going to be a doctor and you just finished that it's just that understanding that the jobs will come, the jobs will come, the jobs will come. Yes. If you find yourself,

your parents are saying, you're going to be a doctor and you just finished your first semester in college and you hate it. You hate, you hate, but you know, okay. I mean,

you hate biology and somebody comes along and says, I'll pay you 40 grand to come home, take that job. Right. And that's a great situation to figure out what's next for you. But if you're on the path and someone tries to, in that same field, get you off the path early, the discipline thing is to stay on the path. Right. And it checked a lot of boxes for me. It was a full ride with a great degree on the other

side. And he's already three semesters in, young guy, already has, you know, clipped some credits here and there. So I feel like let's ride this out and see where it goes. My guess is four years from now, he's not looking back with regret that he didn't take the $15 an hour job. He's going, oh, my goodness, I'm doing what I love to do. I'm at $120 an hour job. Yes, exactly. I would aim your sights higher when you're as smart as Justin is. So thanks for the call.

This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. Open phones at 888-825-5225. Well, it's that time of year. In a few weeks, we're going to be doing a special giving edition of The Ramsey Show. Dave Ramsey and I will be hosting that one. And we want to hear stories from you about how you have given generously this season.

Maybe you tipped a waitress $100. You bought Thanksgiving dinner for a family who couldn't afford one. Maybe you tipped a waitress 100 bucks, you bought Thanksgiving dinner for a family who couldn't afford one. Maybe you blessed someone in need by giving them a car, or maybe you've been on the receiving end and had your life changed by someone who has given generously to you. We want to hear that story.

Go to ramsaysolutions.com slash ask, A-S-K, and put giving in the subject line, ramsaysolutions.com slash ask, put giving in the subject line. It's one of our favorite shows. It's coming up on December 18th. Start sending in your story so we can celebrate living like no one else so that you can give like no one else. And if you didn't know, this hour of the show, when it ends, you're going to miss out if you're not over on the Ramsey Network app, where we're doing a whole nother hour. The Ramsey Network app is the only

place to get full episodes of The Ramsey Show show you can download it for free using the link in the show notes or by searching Ramsey Network in your app store and if you're on radio stay tuned the show will continue but if you're on YouTube or podcast anyone else don't miss what's next finish the show in the Ramsey Network app they also just rolled over the my show the Dr. John Deloney show I heard that video on the network app so now it's the place to be it It's where the party's at. All of your favorite shows. You can get my show a week in advance before it launches out in the real world.

Nice. Now you can tell all your friends, like, wait, what? Like, yeah, dude,

I get it early in the app. I already got it. Where you been? Yeah, it's kind of the, kind of the cool flex is to be on the app. Don't be late to the party. I don't even get invited to the party,

let alone late. You'll get there one day. All right. Steve's in San Antonio up next. What's going on, Steve? yes uh thanks for taking my call i'm talking about the identity theft let's talk about it i'm having i'm uh i'm being bombarded with uh data breach letters and and it's all from either the hospital or their vendors or uh ambulance service and And it's really, and for somebody like myself who doesn't really know that much about the high tech world, it's bothering me.

It's messing with my head. And I just want to know if there's an easy way to get to, you know, take yourself out of the system some kind of way. When you say bombarded, sometimes when I get nervous or frustrated or I'm in a world I don't understand, I'll say bombarded or I'm getting blown up, but actually it's like two or three. So how many letters, I mean, how many times have you been

the victim of a data breach? I would say about five times. Five times since 2017. Five times, okay. And it's like a hospital or an ER or something like that? Yeah, it's a hospital. The vendors call the hospital, you know, and more than one hospital.

And then this ambulance service that's the latest, and the only reason they took me on in 2017, that's a long time ago. I thought, you know, I mean. So are these emails texts phone calls how are they contacting you letters letters letters in the mail all right yeah and sometimes those letters just say hey a big block of things got exposed it doesn't even mean anybody took anything it means somebody hacked into a thing and they may have gotten 10 names but there was 10 million names in there and yours was one of the 10 million so it can be pretty confusing um i've

got a couple of routes for you here's the thing getting quote unquote out of the system at this point and you're talking to a guy that spent my whole life trying to avoid being on the internet john is a privacy nerd i am it, it's a game for me. I don't even know that his real name is John, to be honest. It's for sure not. It's Daryl, right? But so I don't, I have tried to opt out. I've recently relented.

There's not a way out. And so I think the things to do is to protect yourself. How do I make myself less vulnerable? There you go. So two things that I do, and that George does too, is one, i work with a company called delete me and you can go to delete me or join delete me.com j-o-i-n delete me.com slash ramsey we'll take you right there yeah or slash deloney because then i get credit for it

but oh wow ramsey wow but here's the deal they go through and pull all of your anything on the dark web where they're selling your, like spammers and scammers and people trying to steal your data. They pull it all off the internet and they send you a report every month. It's pretty amazing what they do. The second thing is to get identity theft protection from our friends at Zander. I've got it. George has it.

And it's really inexpensive. In the rare case that you get your identity stolen and even money stolen money's taken out of your account it's very rare if it happens it happened to george once yeah never happened to me if if it does happen um they've stolen funds recovery they go chase it down for you so so in a world like i'm like you man i don't know how any of this stuff works i don't get it if you told me to log into the dark web i don't even know what that is i don't even know what that is i don't even even know what that is. I don't even know how Twitter works, right? But I trust these folks that if something does happen, they're going to chase it down and help me out.

So those are the two ways I protect me and my family right now. What's the name of that place again? We'll make sure to get you the links. Hang on the line. But if you go to joindeleteme.com slash Ramsey, you'll get 20% off their plans, and they're real affordable. We're talking like $9 a month, Steve. And then same with Xander ID Theft, very affordable, about the same price, and they do two different

things, but they're both wise to have, and it'll give you peace of mind. For that $20 a month you're spending for all this, you're going to sleep better at night. And I'll tell you, anecdotally, Steve, I've got a lot, I've much fewer text messages and phone calls and spam since signing up for this. All right. Well, I was thinking about turning my money into gold and burying it. No, no, don't do that. The banks are not the issue, Steve. So keep your money in a bank. It's much safer there if it's FDIC insured, which most banks that you're using are going to be. Same with your savings accounts.

I would not put this money under a mattress. Or in gold. Don't bury it in the yard. Up to $250,000, it's safe. Sure. That's one account. Yes. You can also get some of these high-yield savings accounts that have rollover protection that they move your money around to multiple banks, and they can be millions and millions.

My high-yield savings account has millions of dollars in FDIC protection on it. So, okay, so I guess, but if I just assume that I had some gold buried up here, and I took a one-ounce deal out and one ounce of gold and took it and got 30% of the money, how does a tax man get his cut? When you buy gold? Or when you convert it to money? I don't know the tax ramifications of selling gold and turning it into dollars. Yeah, from your what? I don't know the tax ramifications of selling gold and turning it into dollars yeah from your yard I don't know man yeah my guess would be

at some point you'll have to report a commodity sale as income you're just it's like me going to London and getting some pounds out of my dollars you're just converting it so I don't know It's like me going to London and getting some pounds out of my dollars. You're just converting it.

So I don't know. That's one to Google, Steve, if you can do that. But as far as your safety goes, gold is not going to keep you any safer than having your money in the bank. Yeah, my guess is on money, if you got money and then you bought gold with it and buried it in your yard, and then you took that gold out and converted it to cash, you would have probably already been taxed on that money when you got it the first time well i'll tell you what uh i think germany before world war ii when they printed printing presses they're printing money all over the place uh just because he was they guaranteed so much of it doesn't mean it's worth anything. That's right. That's right.

But I'll tell you this. A great friend of mine who is a bank executive said, the best we can do is the next right thing, and we can plan, but if we spend our time trying to avoid meteorites, like I don't have a meteorite plan, if suddenly the United States is not able to ensure its federal deposits

and the banking system collapses, the gold that I buried in my backyard will be worthless because my neighbor is going to come over and try to fight me for my water. And so what happens a lot is these stupid commercials come on these news channels trying to sell you end-of-time hedges.

End-of-time hedges don't work. The greatest hedge you have against an end-of-time apocalypse is to be really closely connected to your friends and neighbors so that everybody can work together. I really wish that the government was more responsible and they didn't put us in this situation where we have to be so concerned about it. I know, but the next best thing is we're responsible. Yes, I wish that. And

it just isn't the case. They spend money like it's going out of style. And Steve, I googled it. Check this out. There are reporting requirements for gold sales, and you will likely have capital gains tax if you made money off of it. You want to get real nerdy? Form 8949 and Schedule D.

There you go. There's your nerdery for the day. You're looking to sell some gold. Well, not how I expected to end this hour, John, but we did it. This is... I love my job. The Ramsey Show.

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 George Campbell, joined by number one bestselling author and host of The Dr. John Deloney Show, Dr. John Deloney is my co-host, and we're taking your calls at 888-825-5225. Leah is brave. She's kicking us off this hour in Albuquerque, New Mexico. Welcome to the show, Leah. How can we help? Hi. So, yeah, so many questions. We've found ourselves in a huge mess recently. We've been in business for 30 years, been married for 30 years. We've been on the verge of filing Chapter 11 bankruptcy. My husband's brother is a CPA.

He has advised us not to file Chapter 11 and instead take a large loan from his parents who are very well off and were very good about giving us the loan. So we took that loan. We're currently going through all the Ramsey steps. We're on step two of snowballing our debt. Our main question is, should we go ahead and sell our house, um, to try to help us to continue to get out of debt or just continue down the snowball? How bad is this situation? It's bad. Tell me, tell me about it. Well, we're almost $2 million in debt.

Okay. Yeah. We took a $400,000 loan from my parents to, or from, sorry, his parents to help us just, you know, stay in business, keep things running. What is it about your business

that's not working? Well, that's a good question. We, you know, we've grossed for the last four years over $2 million. Where's it gone? Yeah. Who's doing the books for this place? Yeah. I mean, we have a CPA and, you know, every year at the end of the year,

our CPA tells us, you know, you know, you're doing great, you're making lots of money, you need to go spend more money to avoid paying taxes, so we have to go buy a truck. Fire your accountant yesterday. They're telling you you're doing great and to spend more money to save on taxes while you guys are on the verge of bankruptcy. Do they not know about all this debt? I don't know how they don't know about all the debt. I mean, and honestly, I didn't know about all the debt until the last six months. So you already owe your in-laws $400,000, and you want to go back to them and say, hey, can we borrow another million to prop up a failing business?

No, we don't want to. You said the CPA your your husband's to borrow more from your family that was an old story they have they've already done what he said yeah yeah no no they don't want us to borrow more money from i'd imagine my family okay what's what is this debt because here's what i'm concerned about i'm concerned your husband's not telling you the full picture. Okay. What is this debt? So a lot of it is business debt. What does that mean? Okay. So I'm looking at our debt right now. We have a, you know, loans from the bank for business to keep it running. We have fleets of trucks to keep all of our...

Because it's an electrical contracting and HVAC contracting business. So we pretty much owe on every truck that we have. We've taken out just loan after loan for all of that. So maybe you have a CPA, you have someone doing your taxes, but you don't have a CFO. Correct. You don't have a controller. You don't have somebody running the cash flow of your business. Saying, we don't have money for this.

Here's where we need to cut. Here's where we need to increase the revenue. No, we do not. Yeah. Jeez Louise, yeah. Jeez Louise, man. So how much profit does the business make? You don't know, do you?

No. Yeah. And does your husband not know? What is, is he, is he one of these guys who was a great electrician and a great guy? And then all of a sudden this business got humongous? Yes, exactly. Okay. So can we scale down?

Let's say you sold a bunch of the trucks and you had less revenue coming in, but you could breathe. Is that a possibility? It is, but how do we do that when we're all upside down on the trucks? But you don't even know where you are. Okay. Is that fair? I would spend an entire day with whoever's involved on the team, leadership, your husband, and write everything down and go, here's the real picture. Here's what all the debts are. Here's what the trucks actually are worth.

Here's what we could sell. Here's the chess pieces we can move around to get out of this. Because I think if this business is actually profitable and you can squeeze out $500,000 a year to pay down debts, we can be out of this thing in four years. That's a realistic plan. But if there's not enough margin to even pay the bills and we're going to go continually into debt, let's just cut our losses and figure it out. Okay. So, but yeah, who does your invoicing? Who makes sure accounts are received and all that? My husband and we have an office manager as well. Does your office manager know what day it is?

Yeah. Maybe not. Somebody has to, unless it's just in your husband's head and that's kind of the problem here, somebody has to know, here's how much money, when somebody comes in and says, hey, I need a new truck, they don't just say, run down to the Ford dealership and buy it, I got an account there.

And somebody's got to be keeping track of that. And if you don't have anybody keeping track of that, before you do anything, sell anything, file anything, like George said, you need to know if you have a solvable business. You may have an amazing $2 million business and it's just leaking out the back door and it takes some

tightening up and some new rules and somebody watching the cash flow. And this sucker's right back propped up, ready to rock and roll. Or you guys could have what's very common in small businesses. Y'all are making a jillion dollars and you're spending $100 jillion. And it's just, it's a great idea that didn't work. How much of this $2 million is consumer debt that you got, you know, just your personal cars or student loans or whatever? Okay, so including our house or not including our house? Don't include the house.

So $130,000 is what we'd say is personal. Okay, and what does that include? It includes a boat, a camper. Perfect. Yeah. You know what? All of these things can be sold for money, can't they? Yes.

And if we're upside down on them. So if we're going through the step two of the snowball, do we jump ahead and try to pay that stuff off so we can sell that, liquidate it, or do we just keep going down the list? Yeah off so we can sell that, liquidate it, or do we just keep going down the list? Yeah, if you can come up with a difference, let's say the boat is, you know, it's worth $23,000 and you owe $30,000. Well, you need the $7,000 difference in cash.

Correct. So that would be my first step is, okay, how much cash can we save up in order to liquidate these assets to free up the payments and then apply it to the next debt and the next debt? And so you just got to start debt snowballing this. But like John said, there's a bigger problem here. We can debt snowball all day long, but unless the business is making profit

and we have margin to throw at the debt, we've got a bigger problem here. And I'm being willing to bet, is your business expenses and personal all commingled? Yes, exactly. Yeah, dude. It may be worth, it's going to be very expensive, but it may be worth getting a forensic accountant to come in

and divide all this up with you guys. Or get somebody, hire a buddy who's a CFO or somebody who is a controller somewhere who will come do this on a weekend for you. Help you pull this entire mess apart. My guess is it's not as bad as y'all think it is, but it's such a spaghetti barrel of fish hooks

mess. You need someone to come in that knows what they're doing and help pull this whole thing apart. This is The Ramsey Show. This is The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. The number to call is 888-825-5225. Chase is in Jackson, Michigan.

Up next, what's going on, Chase? Hey, guys. Thanks for taking the call. Sure. How can we help? Hey, so we just sold our house recently, my wife and I. We have a year and a half old and a baby due in February. Woo!

Party. Party. We have $80,000 left over after selling the house and paying off my truck. We have about $11,000 in credit card debt and another, we have a total of about 40, and part of that's student loans and part of that's credit cards. Okay.

We are in a two-bedroom, two-bath. We need to upsize. I'm going to have one of the credit cards paid off this month, and I'm wondering, you know, do I keep debt snowballing the rest of them, or do I take a chunk of my money and pay off my debt? I would get off the phone immediately and be debt-free. I'd be debt-free by the end of the afternoon. Just pay it all off. That leaves you with 40K in the bank, which now becomes your emergency fund, maybe plus some down payment. And then begin consistently socking away money for that down

payment. That would be your next goal. But first we got to get rid of this debt. You'll free up that payment. You can then apply that to your savings. And then, you know, by the time you said the baby's coming in February? Yes, sir. And we'll have to make due on our rental for now. I mean, the baby's going to live in your room for the first six months, right? Yeah. We're in a one-bedroom apartment right now. Okay. So what's your next goal for the house? Are we talking a year and a half from now? We purchased something with our down payment money? You know, I was hoping to be sooner than that, but. Please don't. We want to be. Well, how much can you have? Let's say

how much is your emergency fund for six months? Should we call it 30 grand? I don't know what your expenses are. My expenses go to about two grand a month right now, but we got gifted some rent money for six months, so we have extra income right now to throw at these. But I'm talking like food, utilities, housing, transportation, insurance. It's more than two grand. Yeah, it might be closer to three. I just downloaded your EveryDollar app and made my budget for this month. So let's say 20 grand is your emergency fund and you put your down payment money in a separate high yield savings account.

It can be in the same general bank, but put it in a different account so that you see it divvied out. So that 20K is now your down payment fund. You pay off this debt today. And then how much can you save in the next, let's say 12 months on top of that? Now that you have freed up debt payments. Yeah. Um, probably another 10 or 15 grand. How much do you guys make? What's your household income? Um, I bring home about 55 a month. My wife is a salon owner. She doesn't own anything on the building, but she works when she can because she's taking care of the kiddos. Okay. So $5,500 a month is your take-home pay?

Yes, sir. Okay. So you're bringing home $70,000 and you have no debt. You can only save $10,000 a year? I could probably do better than that. I think so too. I would sit down with your wife, look at that every dollar budget. You're going to have those debt payments removed because you're going to pay it off as soon as you get off the phone and then go, hey, we can probably put two grand away in savings every month. That's 24 grand on top of our 20. That's 44 grand for a down payment a year. Then you got to decide, is that

actually enough for us to buy a home in your area? I don't know what the real estate market's like. Yeah, for a 20% down payment on a three-bedroom or four-bedroom, that's probably... And you want to make sure that payment is no more than a quarter of your take-home pay. So a good next step for you, jump on to our Ramsey Solutions home base. Go to ramseysolutions.com slash real estate. We've got tons of free tools and resources,

mortgage calculators for you to start figuring out, okay, what is that down payment goal? I want a crystal clear, I want a crystal clear answer for how much we're putting every month to get there. Okay. So that's going to help you get some clarity around this. Well, let me tell you this, Chase, one more thing, and this is to all new parents. The greatest gift you can give to a newborn is not their own room. The greatest gift you can give to a newborn is a house with peace in it. And if you have a house that's a little bit too small or a lot too small, but that house doesn't owe anybody anything, then you can find laughter and joy. It's everywhere.

If you have a house that's full of electricity and angst and worry, because you don't know when, what bill is going to come when and how and all, and I've got to, then you can have all the square footage in the world, man. And that's not the greatest gift you can give to your kids. So solve for peace there,

brother. And that means if it's going to take two years for you to save up, I like the idea, George, you put a challenge on him. Save up $2,000 a month, $24,000 for this year is over, plus the other money you have, you can get into a small house. Y'all be great. And if you need to upgrade and you're not ready to buy a house, then you need to upgrade your rental.

Yeah, go get a nice rental. Find a two- or three-bedroom rental that you can afford on that 25% parameter, and that'll give you the peace as you begin to save up. But don't be in a rush to buy a house just because you had another kid. That's right. All right. Will is in Seattle up next. What's going on, Will?

Hey, guys. Thanks for taking my call. Sure. How can we help? So my wife and I, I guess we're about ready to start baby step four, five, and six. Awesome. We have no kids, so I don't know what that means for one of those baby steps. You just skip it for now.

Okay. But we do want to start saving up for a home and putting a good at least 20% down on a home. But the next kicker is I don't have any retirement benefits through my employer, so I don't know how I can manage How to start investing. at the same time. Yeah. Well, as long as you have earned income, both of you can open a Roth IRA. And the max contribution there for the year right now is seven grand. And so what's your household income? We combined gross 85,000. So 15% of that's 12,750. And so you wouldn't even max out both Roth IRAs, but that would be where

I would start if I was in your shoes. And both of you are working, and even if she wasn't, you could do a spousal Roth IRA for, let's say there was a stay-at-home parent, they can still contribute to that Roth IRA. So I would go ahead and at least open those two up to start your investing. And then beyond that, you said you wanted to save up for a home? Correct. And so you could do both at the same time. Now, some people, this is what we call baby step 3B. If you're going to be saving up for a home in the next, you know, you can get that down payment in less than two years, you could pause investing during that time. And so some people do 0% and just save up aggressively. Some people do up to the match and then save. Some

people do 15% and then whatever's left, save up for the down payment. So I love the idea of you investing 15% and finding other ways to get that down payment money. Cause I love the idea of you investing earlier rather than later. Yeah. Okay. That's it. So when, what are you going to buy this house? What's the trajectory look like right now? We currently have nine thousand saved outside of our emergency right and we want to um we don't know what how much we want to afford and but the minimum is 20 down love that and like you said maybe that two-year range of holding off on investing is enough to get a sizable down payment. Yeah. It depends on how aggressive you are and how, you know, you guys sound young. How old are you two? I'm 33. She's 32. Okay. Awesome. I'm just the kind of guy I like to be invested. You know, once, once I got out of debt and got the emergency fund, I was like, let's go, let's start investing.

I'll figure out the down payment on top of that. But I like the idea of building for the future as you save up that down payment, if possible. And I don't know what the Seattle market area is like. I imagine it's wild. And so you better be working with a good pro out there. And again, if you jump on to ramseysolutions.com slash real estate, our team built this really great hub with free tools and resources to help future homeowners, help people with buying and selling, all of those things. Tons of articles, calculators, you name it. So jump on there and start dreaming together.

Sit down with your wife and go, hey, what is the actual plan? I don't want to just hope. I want to go two years from now, we're buying this freaking house, come hell or high water. And those are the people that actually do it. So we're cheering you on, Will.

Way to go, man. Loving all these young people, John, just getting through the baby steps, buying a home. I'm seeing a trend here. Yeah, I like this influx of millions of younger listeners who are like, well, my parents, the path they gave me is not right. I want to do this thing right. And so debt freedom, getting an emergency fund, then buying a house, that's the order, not the other way around.

That's how normal people do it, and normal is broke. This is The Ramsey Show. This is The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. If you missed it, we've extended our Cyber Monday sale, and that means you can get prices as low as $8 on meaningful gifts for everyone on your list. We're talking about- Can we still call it Cyber Monday?

I think it's still the week. It's like, you know, you celebrate, like, it's my birthday month. We're giving Cyber Monday a week. That's the most millennial thing I think you've ever said. Your birthday month? That's a thing. Well, I don't say that. I get a high five.

I think young women, it's considered themselves to have a birthday month. I don't know if we gendered this. Continue. Just keep digging the hole. I've just never heard a dude be like, man, it have a birthday month. We gendered this. Continue. Just keep digging the hole. I've just never heard a dude be like, man, it's my birthday month. Come on. I think James does that sometimes, actually. He's the type. But no, we have a Cyber Monday sale and we extend it because we know people's

budgets are different. We want to give them more time to talk about it with their families, figure out their Christmas gifts, and I'm not mad about it. Give me a deal longer. Let's go. Prices as low as $8. Best-selling hardcover books and assessments for $12, audiobooks on sale for $8, and for the first time ever, and John, you know this, when you launch a book around here, they don't just immediately put it on sale. So I launched my book in January, Breaking Free from Broke, and it's on sale this week for the first time, $12. Epic. That's a deal. So go check it out, ramse ramsay solutions.com store check out all of our

cyber monday week deals and if you're listening on youtube or podcast click the link in the show notes all right andrew is in nashville just down the road what's going on andrew hey how's it going good how are you good good hey uh thanks for taking my call and uh first time caller but i've been listening to you guys and i just kind of want to ask a question about getting a car uh i i've been driving my grandpa's car it's got 300 000 miles on it it's like 20 years old and it's uh about the part it's kind of getting close to breaking down the dealership wanted what four grand to fix it and I didn't know if I should like use that four grand to fix it or or go and finance a car I've been doing pretty good without having any car payments for the past few years and I've been able to save up a small amount of money compared to where I was you know a few years ago barely having anything in savings.

How much do you have saved? $2,000. So you can't afford to fix the car or buy a different car? Yeah. And you definitely can't afford to finance a car. So I would say let's take financing a car off the table. Leasing a car is off the table. Let's say you live in a world where you have to pay cash for the car that

you want. What would you do? So the one thing I've talked to my parents that I have considered, I do just have to save up a little more. My mom has considered selling me her old car for about $3,000. Done. That's it. Do that. End of story. Is it a better car than the one you're driving? Yes. I'll take it. Do that right now. that's a very kind thing figure out somebody to give you a thousand bucks for your granddad's car and write your granddad a letter and tell him thank you so much for this amazing opportunity that he gave you and then buy your mom's car and call it and then you got to get back on the wagon start saving up your money again. Do you have any debt? Okay. Just about $3,000 in credit card debt. That's about it. How much do you make? I make, it's a good question because the hourly equates to about $48,000 a year, but I work a lot of overtime and I wait tables as a

side gig too. If I were to guess, maybe closer to like 55-ish a year. Are you living on your own? Yes, sir. Why do you have no money? Well, I'm new to the saving thing. I've always kind of blown every penny I had. And once I realized how much money I was saving, I used to have a car payment that was like $400 a month. I'm also a big advocate of going to concerts and traveling a lot.

That's the nicest way I've ever heard it. I'm a big advocate for the poor, for the least of these, for traveling and going to shows. By the way, you're talking to two guys that go to way too many concerts. I'm with you there. And John likes to get the good seats. I do. I'm too cheap for that. I'm kind of bougie.

So we go together. We don't sit together. We do not sit together. I'm in the cheap seats. Because I like being in the mosh pit, and George likes to save his money. But listen, I had about 15 years where I went to no shows so that I can go to whatever show I want and sit wherever I want for the rest of my life. Do you get the difference?

And so you make $55,000. Even if you made a concert fund for yourself, you get two shows a month. As long as you're going to marathon or exit in, you're not going to like, you know, sitting in the Lexus lounge at Bridgestone, right? You could afford to do that and still be, you'd be debt free in six months.

Have your mom's car, have your credit cards paid off, have several thousand bucks in the bank you make 55 000 bucks a year you're not scared of hard work you just are scared of paying attention to every dollar yeah i would i would say that's a great way to pinpoint it yeah because you're seeing about what four grand come into your bank account every month yeah but then you have almost nothing to show for it at the end of the month and And what I want to see is, hey, I live off two grand, I save two grand. And if you can do that, you'd have $24,000 in a year to get a sweet car instead of hoping that mom, dad, grandpa, grandma have a car they can hand down to me. Now, listen to what George just said. If you figure out how to live

off $2,000 a month, what's your rent right now? $1,500. Okay, it's $1,500. Yeah, do you have a roommate? No, I live by myself. I think it's time to get a roommate. I probably would. I had roommates all the way up until I was married, and I could not afford $1,500 in rent in Nashville.

So I would get a roommate, and that'll cut your rent in half. You might pay $2,000 total total. So that's a thousand bucks, but that's a lot closer to that 25% parameter, which will free you up to actually have money to put away toward your future. But let's say you don't, let's say you just say, yeah, whatever. I'm not getting a roommate. You pay 1500 bucks a month,

all your own. And you spend another thousand bucks on your food bills and your, your advocacy for the concerts and the travel that still gives you 1500 bucks a month eighteen thousand dollars a year you can save do you see how fast that is man yeah just with paying attention and i'm going to give you another life hack pay off the card and cut it up close it and here's the deal for year, live with your own money, with a debit card, with cash. And if you hate it, if you have less money than you did before, you're doing worse off financially, go open up all the credit cards you want.

But promise me for one year you'll do this experiment. Just use your own money. That changed my life when I did that when I was 23. And it's what got me out. I had $4,000 in credit card debt. I had $36,000 in student loans. I was out in 18 months, never got me out. I had four grand in credit card debt. I had 36 grand in student loans. I was out in 18 months, never looked back. Didn't have credit cards since.

And I'll also tell you this. How old are you? You told us earlier. How old are you? 28. 28. Okay. There's two.

There is Early Rage Against the Machine and Nirvana, two small bands that my buddies were going to see in a show, and I didn't go. I was like, nah, I'm fine. And I wish I could have those shows back because they're gone now. Other than that, dude, your bands, you might miss them. They're going to come back, and they're going to come back, and they're going to come back.

So it might be for the next year you're going to miss a few shows. That's fine. You'll live. And there'll be one or two that you wish you got to see when you're my age, when you're old, and it'll be like, oh, man, and life's gonna go on but you're gonna be free dude you're gonna be free you gonna make it happen yeah man i think it's great that you say rage too because uh rage was the one band i that was like i have to see this band and then that's it and i got to see rage once so i see what you're saying so you already did it man so you already did it the fomo is real in the music it's real but also life moves on and

you realize i'm fine i'm fine okay so do this hang on the line and we're going to hook you up with every dollar it's the best budgeting app in the world but you got to promise me in front of millions of people you're going to actually use it do you promise i promise all right we got you hooked up you should be able to get rid of your granddad's car, buy your car from your mom in cash, get rid of the $3,000 in credit card, and have yourself five grand in the bank. You should be able to do that by March.

Yeah. It's coming up pretty quick. It's pretty quick. But can you imagine having a car that you can rely on $5,000 in the bank and you don't owe anybody anything? Mm- anything. And now you're off to the races. Okay. And then a year later, you can upgrade that car. This is not your forever car. I love, love, love talking to young men and women who are not afraid of hard work and aren't afraid to grind it out, but are trying to figure out how to deal with this money thing because nobody

taught you. So we got you. And I'm going to give you one more life hack, Andrew. This is one I personally use. Hyper-specific spending hack because you're in Nashville. Do615.com. I pay five bucks and they send you free tickets to events for that five bucks a month. I haven't told John this. He's very upset right now.

But there's your spending, your fun money, Andrew. Five dollars. Do615. Hashtag not sponsored. But I love it. I get free tickets to comedy shows, concerts. I'm going to sign up right now. Ryman, Zany, you name it.

For $5 a month. And that's what I do now for fun. Done. The show comes through. Looks interesting. I go, hey, you want to go to this show? Great. I spend $5 a month.

There you go. You can still have fun. You can have your cake and eat it too and be an advocate of the arts. This is The Ramsey Show. Our scripture of the day, Psalm 16, 5 and 6. Lord, you alone are my portion and my cup. You make my lot secure. The boundary lines have fallen for me in pleasant places. Surely I have a delightful inheritance. Les Brown once said, in the end, it is the person you become, not the things you achieve, that is most important. Love that. Character matters,

my friends. Jake is in Dallas, Texas. What is going on, Jake? Hey, George. Hey, Dr. Deloney. How are you guys today? We're doing better than we deserve, man. How are you? Just about the same, sir. Hey, I appreciate your time. And Dr. Deloney, just a quick note, I caught on about a year and a half ago and it has transformed my parenting in ways I never thought I could have imagined. So thank you for the work that you do in my personal life. Well, I appreciate you, man. Thanks for being in our gang, dude. We're better for having you here. Well, I appreciate that. Hey, um, I, I've got a question for you guys. Um, my wife and

our two kids, we moved down this way, uh, several months ago. We do well financially. Uh, we had this, this plan, this long-term financial plan, working on the baby steps and things. And then my wife and I mutually agreed through a lot of prayer and consultation here lately that the best thing for our family, for protecting our peace, would be for my wife to stay home and keep the house, keep the kids, and just be, you know, the most full version of our family that we can be. And so what do I do when our plans shift so dramatically and how do I navigate this situation? George, we'll talk to you about the money side. I want to always challenge anybody who makes decisions when they say like, hey, I really want to do this thing.

Either they do it from like YOLO, like, or I feel passionate about it. I really want to do it. Or they use words like I feel called to it or I've been praying about a lot. Often they don't do the math. Right. And so sometimes people have made decisions in the past, like racked up a whole bunch of student loans

or a bunch of cars or a bunch of credit card debt. And they feel like they're getting some call to do something or they feel like they're being tugged in a certain direction, but they've made decisions in the past. As Paul Thomas Anderson once said, like, you may be through with the past, past isn't through with you. So I like that you guys have this idea for how you want your family to feel and be. My first question to you would be, can you afford to make this move? We can if we move back to where we moved from, which was a lower cost of living, still a great area, but a much lower cost of living, which we're prepping to do. The house is going on the market soon. We're already looking at

renting or downsizing the home to make it fit well beneath the budget. Okay. So you'd be living off just your income. What is that? Yes, sir. So W-2 income, I make $130 a year. And then 1099 income, I make $40 a year. And why is that not enough to stay where you are? Just the insane cost of living. When we moved down this way, we bought a house based on the income between both of us. We've got a little bit of student loans, no car loans or anything like that. So how much debt do you have total? So our house, we owe $390,000 on. And our student loans are $30,000 between my wife and I.

And how much do you have in savings? We have $16,000 in savings. Okay. So- How many kids? Two. Two. If you got rid of your debt, would that allow you to live off $170,000 a year and still afford the mortgage? Or did you just bite off too much mortgage? We bid off a mortgage that we can very well afford on both of our incomes.

Okay. But it would be tight, very tight. The student loan payments each month, I have such a low interest rate on them that they factor out to be $82 a month is our payment on it. So I can pay it off. But the student loans aren't the thing holding you back from making this plan happen. You just bought way too much house, assuming we're going to both work forever. Help me with it too much, though. You make $170 a year, and you bought a $340,000 house.

That's not too much house well the mortgage is 390 what'd you buy the house for uh we bought the house for 450 and we put what is that 60 60 000 yeah so what's your take-home pay just you with all this money and then what is the actual mortgage payment per month yeah great great question so So my take-home pay, my W-2 take-home pay is $60, $100, $60, $200 a month is what we make. and two installments. I get a check for half of it in January and then half of it in July. And then through my W-2 as well, I have a guaranteed bonus that comes in June. Okay. And what's the mortgage payment? Mortgage payment is $3,100 a month. Okay. So I would go up and add up, all right, here's the extra money from the bonus, the 1099 stuff, divide that out per month to go, if I had this in a savings account, because I'm going to count it as you're getting this income every year, the 1099 income. So I'm going to count that and then do an after

tax, but before other deductions, like don't count your 401k contributions, your health insurance costs, take that back out and then make that the take-home pay. Because based on our parameters, if you can bring in about 11 or 12 grand a month, you can keep the house. If not, I would downsize and stay as close to the area you want as possible. But you can definitely do this. Again, it turns into a math problem when you go, can my spouse stay home? And it's one of the reasons we worked so hard to pay off our house in our early 30s so that my wife, she just stayed home this April from a nine-year career at Ramsey. And there was no stress about it because we pre-decided that we wanted options in our life. And, you know, taking on the mortgage that did

you in right there with 400 grand. And again, it was reasonable. You guys didn't do anything wrong. You're doing a lot of things great, but if you want options, it's going to take some sacrifice. Absolutely. And we, part of the reason that, you know, to Dr. Deloney's point, we feel, we feel like this is the right move. We feel called in a sense is that we, we don't feel like this is the place for us to be. We came down here, we tried it. And so we are, you know, we're ready to move back and just have the peace back, just have the happy home back where we're not hustling so hard just to keep up a lifestyle that we'd rather not have. I love it.

Can you do me a favor? I want you and your wife, I want you to get a babysitter, and I want you to do it, not your wife, okay? Okay. It'll be more meaningful that way. Just trust me. You go find a babysitter, and I want you to take your wife okay it'll be more meaningful that way just trust me you go find a babysitter and i want you to take your wife out for breakfast and i want you to do two things number one

i want you to commit to not ever using the words just get back to because the life y'all had in this other home before you moved is over it's gone and what often happens is people try a new thing. They move, they try a separation in their marriage. They have a third kid. They do all these other things in this sense of, I just want to get back to the way things were. But now you got two kids that are going to be older and they're going to be starting soccer and karate and whatever else. Right. And your wife is going to transition from professional guru to, hey, mom, can I have a snack?

Can I have a snack? Can I have a snack? I don't care who you are. That's a transition identity wise. And you are going to have the peace every day of knowing my wife's a co-earner. And if my boss tells me to do that, then I'm just going to leave. That's going away, right? So it changes you.

Not for the bad. It just is different. And so I want you all to commit to never saying, let's just get back to, and then the beauty of this breakfast, I want you to dream together about this one question. How do we want the house to feel like when I walk home every day? And how do we have peace in our home moving forward, not trying to get something that doesn't exist anymore back? And what that will force you to do is, all right, hey, like you do bring homework sometimes when you're stressed. And so could you just go to the gym on those days for 30 minutes before you walk in the

door? And I'm going to be at home and have no adult interaction at all. So can we have 30 minutes where there's no phone, no computers, right when you walk home, we're going to put the kids down and you and I are just going to chit chat. Yes, absolutely. Right. So I want you to begin to plan and dream those things as you move into this new world. Is that cool? Yes, sir. Absolutely. I love it, man. Well, congratulations on you. Give it a shot and you guys are united in what comes next. And that's the way to do it. Awesome. Awesome, awesome. Thanks for the call, Jake.

That puts this hour of The Ramsey Show in the books. Until next time. you