The Ramsey Show - App - Fight Through Shame To Financial Freedom (Hour 2)

Episode Date: February 7, 2024

🎵 Live from the headquarters of Ramsey Solutions, this is The Ramsey Show. It's where we help you win. Win in your money, win in your work, win in your relationships. The phone number is 888-825-5225. That's 888-825-5225. I'm Ramsey Personality, Ken Coleman, joined by Ramsey Personality, Rachel Cruz, and we are here together for you this hour. We'd love to help you out.

Let's get it started. Oh, one of my favorite cities of the South. We're heading to Savannah. Savannah. Otherwise known as Savannah, but I like to say it that way. You always love a good city accent. I just love it. Savannah's a great city. Ebony is there. Ebony, how can we help? Yes, thank you for taking my call. How y'all doing?

We're doing great. How are you? Awesome. My question is, I am finally starting to make money and I am trying to figure out how can I finally become financial free. I don't have anything to my name whatsoever. What kind of money are you making now that you're finally making money? What's that number? It'll be $32,000 a year. What are you doing? Marketing company storage clerk for U-Haul. Okay, good.

And do you see a path forward with them? I don't want to don't want to get locked in on that, but I mean, do you see opportunity for promotion there? I do see growth with the company. It's actually a good company. Great. Well, congratulations. How old are you? 36. Okay. Good for you. Good for you. Thank you. Okay. so we, you know, at Ramsey, we always talk people through having a really intentional guided plan because that's probably one of the best things that you can do with your money is what you're calling in for,

but it is to have direction, right? And so part of that is saving, part of that is getting out of debts, investing, homeownership, like all of that is at play so right now do you do you have debt right now i do okay um i purchased a vehicle i had to give it back um something happened to the car and then i have school debt as well because i dropped out of school okay how much um how much do you owe on the car?

$18,000. $18,000, okay. Did you say you gave it back, though? You don't have it? I don't have the car no more. What happened? A company did an oil change and messed up my engine, and unfortunately I could not afford to get the repairs. They were pretty high, so I asked them to pick the vehicle up,

and they came to pick it up. And they're just... Who's they? The car... I don't want to say the company that did it, but it was a company. Okay, like a mechanic. Yeah, so when I was supposed to be legit,

it was a new store, and I went there and they messed it up. So I'm trying to just figure out really quickly, do you not have any, I mean, what are we doing here? Like, you should be compensated for that. They ruined your car. I didn't know until later on down the road that I could have done something. It was too late.

Okay. I found out at the last minute. Okay, but I don't want you to have given that car I want that car back because you own that car and that is an asset how much will it take to fix it I cannot get that car no more

it was car lot has it and that car lot is no longer available in my city okay so it's gone it's gone And that car lot is no longer available in my city. Okay. All right. So it's gone. It's gone. Oh, man.

It was last year. I did that. Do you have another, do you have a car right now? I do not. I'm actually in the process of looking for one, but I wanted to do it cash. Yeah. Yeah. How are you getting to work?

The bus. Okay. Great. Yeah. That's awesome. awesome okay that's good news i know and i don't want to keep harping on this car but it is eighteen thousand dollars of debt with an asset that at least if you get and you can't fix it you could at least sell it for less and try to get something out of it so that happened yeah so we won't stay on that because i want to continue to help you but i would go back and kind of retrace those steps evany because again that that was in

your name unless it was repossessed you couldn't pay the payment or something like that happened. But overall, if you can find out a way to get that car back, I want that for you just so you can even just sell it for cheap and make some money on it. Okay, and then you have your student loans. And how much are those? $13,000. Okay, perfect. And any money saved? No money saved. No money saved. Okay, great.

Okay, so what I would do is I would figure out, okay, how can I get $1,000 quickly? That's going to be your first starting point is to be able to get that emergency fund. And I would probably honestly do that before you save for a car. I want some cash in the bank that's just cushioned to the side um and again this may look like um working a part-time job at night for a little bit uh yeah finding if you can sell something I mean like anything that you can do to get that thousand dollars and I would do that as quickly as possible so that would be the first step I would do then I would probably say I would I would start saving for a car I would have a a goal to get a great used car and to be able to pay cash for it.

And it's not going to be a pretty car. It's not going to be a great car. I'm going to look up some used cars in Savannah. But it's got you. Yes, there you go, Kenny. It's my favorite thing. But it's going to be the best thing, yes, is to get that point of transportation for yourself.

And then the next goal would be to start working to pay this debt down and pay off the smallest amount, which will be those student loans first. And maybe in the meantime with that, this will take you some time, right? This will take some patience and it's not going to happen overnight. In the meantime, again, I would circle back with the whole car thing because if there's any way you can get this $18,000 down, it's only going to be for your benefits. So I would look into that. And then beyond that, Ebony, you wanna start saving up

for a fully funded emergency fund after you're out of debt. And then you can start looking at saving for a down payment and investing. But all that may be a few years down the line, which is totally okay because you're starting somewhere. So that's the overall plan.

It's called the baby steps. And I'm gonna have Christian pick up and give you Financial Peace University, which is our money course. It's seven lessons. So you can watch all the baby steps. And I'm gonna have Christian pick up and give you Financial Peace University, which is our money course. It's seven lessons. So you can watch all the videos, really get a basic knowledge of all of this and every dollar premium. Because the next thing I really want you to do today is sign up for every dollar premium and start budgeting. So you're going to take this income that you're making and actually have a plan for it. And within that, you're going to take this income that you're making and actually have a plan for it. And within that, you're going to be able to see,

okay, here's how much I have for groceries. Here's what I have for that. You can go down the list and really see here are my expenses. And that's going to help you save that $1,000 as well. Because you're going to be able to say, I'm going to save X amount a month towards this $1,000. And you're going to really just kind of be on that plan. And so I'm excited for you. It's going to create new habits and kind of be on that plan and so um i'm excited

for you it's going to create new habits and kind of a new way of looking at money for you but i think that you're you're at that point i could even hear it in your voice when you called in you're like i'm i'm ready to do something and and i think it's awesome yes you're emotionally drained is that what you said yeah we've been crying been crying because I feel like I've done wrong because I'm 36. I have nothing. I feel really, really, I'm not going to cry right now.

And it's really bad. Like I should be further off as far as financially. And it's just, it's a little stressful being, you know. Yeah, that's, yeah. Let me just be your friend though for a second. And that's, that's a lot of shame.

I should have, I wished I had. Right? We all have regrets. And no one is perfect with money. But I want you to be able to say, okay, from this point forward, I can do something. And you're only 36, right? People call us at 56.

You can still be a millionaire. What you got? Well, I was going to say, if you save about $4,500 to $5,000 up, you can get a decent car. But I would also say if the bus is safe and it's convenient, I'd keep stacking cash. And one little encouragement I want to add on to what Rachel said, Ebony, you're going to get through this debt quicker than you realize. And if you start just basic small investing, you're going to be a millionaire by the time you're 65. I hope you hear that because it's true. We're going to

guide you. You can do it. Yeah. Hold on the line. Christian will pick up and give you that stuff. This is The Ramsey Show. Welcome back to The Ramsey Show. Thrilled to have you with us. I'm Ken Coleman. Rachel Cruz joins me. We're here for you. 888-825-5225 is the number. You got a money question, you got a work question, you got a relationship question. We'll take them all because they're all interconnected. 888-

825-5225. Ann is now with us in Salt Lake City, Utah. Ann, how can we help? Hi, Ken. Hi, Rachel. Wanted to get your thoughts on a potential, kind of big decision that me and my husband have that might set us up. But to give you a little backstory, we're both 35. We're kind of at baby step six.

So we don't have any debt. We're really just putting a little bit extra towards the mortgage at this point. We have some money set aside for the six-month savings. So kind of working our way through. We've been listening to you for about a year, so it's been good. I'll say a lot of, yeah, a lot of, I think, our success is, at least my success anyway. My mom's pretty smart financially, so I take a lot of her advice. On this potential decision, though, she's not very much on board. So I wanted to get maybe a third opinion.

Okay. Well, we'll give you our thoughts. That's right. I promise you that. We don't know how much it'll help, but go for it. All right. Give us the scenario. Of course.

Of course. It turns. So right now, we bought and took advantage about three years ago of the really low interest rates. We bought our home that we have now. we bought and took advantage about three years ago of the really low interest rates we bought our home that we have now um obviously we've made some equity on it now uh with prices going up we bought in a pretty decent area so we have probably um i think probably about 350 that we could get out of equity if we were to sell so that's kind of where we're at right now. We owe quite a

bit because obviously we're only a few years into the mortgage. We did go with a third year, which of course I regret now, but that's in the past. So we're kind of at a standpoint to try and decide to sell, you know, take quite a bit of amount out of the equity, buy something for less in a more rural area, which is something both me and my husband, you know, are interested in, or stick with the mortgage at a really, really low interest rate. We got a hold of a 2% interest and, you know, kind of just stay here and ride it out or pay it off early, right? So, obviously, listening to a lot of the conversations and tips that you guys have, I lean towards sell, take the equity, take some of our savings and buy

something where we'd be mortgage-free. My mom says to stick and don't lose the 2% interest because we'll never see that again. So curious yourself. Okay. I'm not going to talk about the money side. I'll let Rachel weigh in on that. But it sounds to me like you guys want to live in a rural area. That's kind of the life you want to lead. Yeah. Well, that's the no-brainer. We've kind of got a hobby farm going now. And so maybe delve a little more into that. And can you get what you want for that $350,400? So for $350,000, probably we have about $150,000 saved. That's in a high-yield savings.

That's above your emergency fund? That's kind of the other question is like if we don't do something with that maybe what should we do with those funds okay yeah is that above your emergency fund the 150 uh that includes it includes it okay i would say we we could easily take probably a hundred hundred okay so for 450 000 could you it's amazing could you get what you want in a rural area and where you guys want to live have you looked at houses out there yes yeah i have and uh there's there's quite a bit of availability that um it's a no-brainer and and do what you want to do do it and financially speaking two percent is worse than zero percent i know so poor mom we're blowing mom's advice out

of the water yeah and listen ann and and this is where we're the weird people in the space when it comes to this stuff but we i mean when you own your home there is a it's not even a financial move at that point it is a true emotional spiritual something happens when you don't have a bank in your life there's not a mortgage company in your life ford motor company is not your like you don't have other people in your life it is just you because how much do you guys make a year um so i bring in about 75 and my husband brings in uh 85 is That's amazing. You're living where you want, debt-free. And making $160,000 a year.

Yeah, God bless your mom. And if you said, yeah, what we really want, we probably need to take out a $50,000, $100,000 mortgage, I'd say, okay. I'd say do that, too. Yeah, I'm like... Because you want to live there. At that point, yes.

You would be able to afford that, too. But if you can just straight up do this in cash, I'm like's the dream and like that's what people that that's what you work towards is to have nothing and you guys make an incredible income all day all day i'm living out oh and my my winston would be running for the hills if i said we could live in a world he would be he'd be like yeehaw you just see me back because, you know, she's always been the one to pinch pennies and, you know, don't take out credit card loans and go to school debt-free and stuff. Yeah. It threw me off a little hearing this from her.

That's so funny. Well, and it's good that your mom, you know, has such a positive voice in your life, but also, and you're a 35-year-old woman. Yeah. So mom's not going to agree with everything all the time. Can you imagine? It doesn't matter. Like, she doesn't get a vote, right? And you and your husband, I'm assuming,

are on the same page. You both want to make this move and you guys are excited about it? Absolutely. So Ann, do this. But just imagine 20 years from now, you're talking to Rachel. You see her somewhere. You're talking to a friend and you go, yeah, we had this opportunity 20 years ago to buy this great property, cash, live where we wanted to live. But, you know, my mom talked us into keeping the 2% on this house we have. Could you imagine how much you would resent her? Does that sound silly to you? Yeah, it does.

That's why it's like this internal back and forth. No, no. It's good to get a third party. And what do you want to do? Forget what me and Rachel think you should do. What do you and your husband want to do? Oh, for sure. I think that's been our dream.

I mean, we've worked from, you know, we've been together 15 years and, you know, worked our way through this and kind of. Y'all done an incredible job, Ann. Great job. A little bit of a leverage. And one year of listening to this and doing this plan. I mean, you've made it. You made it through all three, seven baby steps. Cue the Disney music, right? It's time for dreams

come true, pixie dust. Let's go. It's great, Ann. Fascinating. Just have your mom out for a great dinner at the new place. Yeah. I got to ask you a question I think really hits our broader audience, the influence of family. And let's also throw friends in this bucket. You've been coaching a lot of people for a long time. What are your thoughts on this, as to why we have a hard time allowing our heart to overcome the influence of what family members say? Like the heart's totally in. But then it's like, why do you think that is? You know, I mean, I think that there's a level of acceptance we all want. And I think for our parents, from a parent to a child relationship, I think a child, regardless of age, you still are like, are you good?

So true. So you think it's approval? I think there's a level of approval there. I also think, you know, in Ann's case, her mom sounded very wise with everything else. So she probably genuinely thinks, okay, or believes, because it probably is very true that she's a really wise person with money. So I am going to take what she says really seriously. But the problem is, is when all of that starts affecting our day-to-day decisions

and our life decisions and parents, you and kind of court and parents you're not like at that point like yes i understand you're still their parent but you're not their parent anymore you have a you have an adult in your life and you don't get a vote either right so it's um it's interesting isn't it and i do think parents there is something about the relationship i feel like even with my friends and i can say this even about my own parents as better of a job as your kids get older and especially when they start having families of their own and you become more pure like you just enjoy i think you enjoy each other's company more versus like i still need to teach you and i still i'm still being in this role the kid the adult kid always ends up feeling like oh my gosh i remember

dad mom and dad have done they've done a great job with that they i remember even coming to dad about a money question whence and i had been married probably 18 months it's about a mutual fund or something and kid he would not give me the answer he's like what do you what do you and winston want to do what are y'all gonna do wow i was like i have dave ramsey sitting in front of me should i just call the show and like make up a name like this is sarah from dallas what do you think but yeah he i mean that he pushed us a lot of like you you got to make your own decisions. I think inquiring minds want to know. If you and Winston were to move out into the wherever, rural area, what animal would you

not allow on the property? Oh. Do you have a hard and fast? Or is there an animal you'd like to have? I feel like a rooster would be tough, right? Yeah. Waking you up. Three in the morning.

Yeah. What about you? I'll tell you. I'd have chickens though. I'd like some goats. I'd have to bring in a rooster. I'd like a rooster would be tough, right? Yeah. Waking you up. Three in the morning. Yeah, what about you? I'll tell you. I'd have chickens, though. I'd like some goats. I'd have to bring in a rooster. I'd like some goats. I like the little noise they make.

No, what would you not do, though? Cows. They stink. This is The Ramsey Show. Welcome back to The Ramsey Show. So excited to have you with us, America. I'm Ken Coleman. Rachel Cruz joins me.

The phone number is 888-825-5225. So Rachel and I were just talking. We're going to get to the phones in just a matter of moments, but we were just talking during the break. We love getting out amongst the people. I am a self-fashioned man of the people, and I think you are a woman of the people, whether or not you would ever refer to yourself as that.

But I love being out. We love hanging with you guys. We love doing events. And so we're very excited. We're not going anywhere, but we are doing an event. You might be coming here. What are we talking about? Brand new event called Total Money Makeover Weekend. It's May 10 and 11. It's going to be right here on our campus, just south of Nashville, in just God's paradise of Franklin, Tennessee. It's just fantastic. It's a one-weekend event. You're going to crash course on everything we teach about money, every side from the big shovel to getting out of debt, saving, investing, the whole nine yards. So no matter what baby step you're on, this is going to light a fire under you. There will also be a lot of Q&A. So when we're speaking, we're also going to be taking questions live in the crowd.

We love that. Early bird tickets start at just $99, but this is going to be for a limited time. So if you want to get the best deal on tickets, this is it. And the Ramsey Event Center, by the way, brand spanking new, only holds 2,400 people. So it's limited. So get your tickets now at ramseysolutions.com slash events. That's ramseysolutions.com slash events. It's going to be fun.

Yeah, it's going to be a great weekend, so come hang out with us. Let's do it. All right, Henry is up in Las Vegas. Henry, what's going on? Hi. So my wife and me have about $125,000 in household5 in a mortgage, about 35 in student loans, no other debt. So we're foodies. We like to go out and enjoy food. But that's really our only, I guess you could say vice. I got my student loans. I'm comfortable with just paying the $420 every month. She would like us to more aggressively pay off our debt.

And I kind of agree, but at the same time I don't, because I don't want to not live as well. I want to enjoy life. You know, we have about, I think she had 20 something in her Roth. I have about 30, 35 in my retirement. We're putting 10%. So we're doing the baby steps and we're going along the way. We have about 100 in cash, 100K in cash.

So that's about three years worth of it. God forbid we lose everything. We can still pay all our bills to include the mortgage, utilities, and food. So I think we're doing good, but she wants to be more aggressive versus I don't. And sort of we're at an impasse of how to, you know, it's not really about having one person be right or wrong, but it's about maybe finding a balance, right? You know, because it's all about balance in a relationship. Yes. We're not arguing or anything like that, but just trying to figure it out.

That's okay if you are. Couples argue. We're okay with that. Rachel and I like to argue. Ken and I argue. Okay, Henry, I missed how much the student loan payment is, or I'm sorry, how much debt total student loans are. $35,000. $35,000. Okay 000 okay is that all the debt you guys have uh and then the mortgage is 305 and the house is worth about 365 good for you guys um henry i'd pay off the student loans today

okay with that you have a hundred thousand dollars in the bank pay it off today and you have fully funded emergency fund now you guys are and then bump up your investing five percent to fifteen percent of your household income and you guys are freaking gonna do incredible what are you paying what's your student loan payment every month uh 420 you just get a 420 a month raise on top of that yeah that'll buy a nice steak maybe the tomahawk yeah well let's throw another way the hundred thousand dollars though i want to address it because i i so appreciate it but the i so appreciate the hundred thousand dollars but the reason why is that it's three it's a three

year emergency fund and he said in case something happens yeah i was gonna say, for three years, you'd probably be moved and living off the lands. I mean, like if it gets to that point in life that you can't find a job in three years. So I'm just saying that it's an unnecessary amount of emergency funds for that reason. And so use it to your advantage. You guys worked and saved so hard for that. I mean, it's incredible. So use it to benefit you guys in the present. This takes away all the questions on your aggression,

on paying off debt, because it's paid off. It's paid off today. Henry, let me- Pay it off. Yes. And then get a nice bottle of champagne tonight and celebrate. You're debt free. I love that.

And the Tom Hanks day. That's amazing. But Henry, let me throw something out you here. What if you invested that $420 a month? You're a real safety guy and you're a numbers guy. Is this true? Yeah, she's the more aggressive one. Right, but hold on a second.

Yeah, but what if you did what Rachel said? I said spend it. Well, no, you said pay off the loan, but he's still going to have my math, $65,000? Yeah. Okay, so Henry, what if you had $65,000 in the bank, okay, and you had no debt other than your home, and you were able to invest $420 a month starting tomorrow? Extra. How, yeah, extra. How exciting is that? Yeah, with, you know, by the time we retire, we'll definitely be millionaires.

Dude. Oh. Henry, that's not even up for vote. So your cautionary, this cautionary narrative is actually holding you back. And I'm trying to flip your brain on this. You're going, oh, my gosh, I don't want to give up $35,000. And I'm going, you're not giving up $35,000. You are creating total freedom. You're

freeing up $420 a month to invest, do whatever you want. I mean, this is a no brainer for you and you're still safe. Trust me, 65,000 in your emergency fund, Henry, is plenty for you. You know how I know this? Because if you were to get laid off tomorrow, you would be getting a job as fast as you possibly could. You are not a guy who likes risk correct so what are you going to do henry it's your life did we convince you uh you're you've inched closer i don't want to lie to people and say yes 100 but yeah what are you so afraid of So I'm afraid of us getting into a bad situation and my wife craves stability. What would be the bad situation? This is really fun.

Not making fun of me. What's the bad situation? Describe it. We both lose, you know, well, she already lost her job. It's been about nine months. So that's creating a stress for her. And, you know, God forbid I lose my job. I'm been about nine months. So that's creating a stress for her. And, you know, God forbid I lose my job. I'm the stable one right now. If we lose that, that 65 can go real quick.

Okay. But what, wait a second, wait, wait, wait, wait, wait. What has kept her from getting a job for nine months? In the industry of recruiting, it's a little bit difficult right now. Okay. Has she been doing any work? Oh, yeah. She has part-time work little bit difficult right now. Okay. Has she been doing any work? Oh, yeah. She has part-time work, so she has income. Okay. Here's my point. This is what I want to say.

If that were to happen to you right now, you would go get a full-time job, or you would get a part-time job, or another part-time job, and I would say she needs to get another part-time job right now. She actually doesn't have to because you're in such great financial shape, and you can live off your income. But my point is, I'm trying to play this out for you, Henry, that let's say both of you lose your job. You could still not touch that emergency fund if you went and got busy. You may have to use some of it, but you're not going to blow through $65,000.

Yeah. That would be you guys just sitting at home doing nothing. Literally not even trying to work. Yeah. That's even trying to work. Yeah. That's not going to happen. So I'm trying to walk you up to the threshold of hell here, and you look over and go, what has to happen for this? Henry, I love you because I feel like we're usually the ones telling people to slow down.

We're the conservative ones. He's like, whoa, I don't want to pay that debt off. You guys are crazy. We're so aggressive. We're the aggressive ones. That never happens. It really never does. But listen, here's what's great about Henry.

He's never going to make a dumb financial move. No, no. So it's now just building up that muscle. And listen, here's my thing too. The way you guys live and your ability to save what you guys want to do, pay it off. And if you really keep losing sleep at night over that $35,000, then just build it back up. Well, okay. I love this.

Great advice. Let's take the $420,000. Let's round it down to $4 to make easy math. Okay. Over the course of 12 months, that's $4,800. Yeah. forward bank. Easy math. Okay. Over the course of 12 months, that's $4,800. But just taking that loan payment and putting it into savings, you could do way more with the 420, obviously, but you're fine. I would be so happy to get rid of that student loan. It'd be a party. I like the champagne. Yeah, thanks. And maybe the tomahawk is a little too much red meat. I don't know,

but something. Go celebrate. You're debt-free, Henry. Well done the tomahawk is a little too much red meat. I don't know. But something. Go celebrate. You're debt-free, Henry. Well done. But you've got to cut the check first, Henry. Get yourself a Pepsi at AC. It'll help. This is The Ramsey Show.

Welcome back to The Ramsey Show. So excited to have you with us, America. 888-825-5225 is the number. I'm Ken Coleman. Rachel Cruz joins me, and we're here for you. Ryan is up in Raleigh, North Carolina. Ryan, how can we help? Hey, Ken.

Hey, Rachel. How are you today? It's good to talk to you. Good to talk to you. What's up? Thanks. So my wife and I have been followers of yours for years, and I have a question about retirement that I don't know if I've ever heard you answer. Okay.

Between the two of us, we make about 280 base and then up above 300 with bonuses. And that's pretty recent that our income has got that high. So for the past couple of years, we've had to transfer what we were putting into a Roth IRA just into a regular IRA because our income was too high for the limits. And I was wondering if we should start foregoing the IRA altogether and just maxing out our Roth 401ks. Well, you can do a backdoor Roth IRA. Do you know that? Right. Yes, but we're not at baby step seven yet. No, but instead of, yeah, but you take the extra money that we would be putting towards the taxes and instead of putting it towards the mortgage. Wait, say that again. So I didn't want to take the extra money that...

Because if we do the backdoor rock, then we have to pay the taxes that are due on it right away, correct? Sure. Well, if you've converted... Yeah, I got it for baby step seven. Yeah, baby step five, I guess, six, the mortgage. So that's why I'm kind of wondering if it would be better to just... Because we're very happy with our 401k options.

What percentage does that? As well as our IRAs. Okay. What percentage does it get to? If you guys both max out your Roth 401ks, what percentage of your income would that be? Like will you hit that 15%? Well, I think it's 22,500.

So it's about $45,000, which is almost exactly 15% for us, yeah. Okay. And then how much do you have saved total in your 401ks? So our total retirement is probably around $500,000. Yeah, but I'm asking specifically, I'm going somewhere with this, how much do you have of that 500 between the two of you is in your 401ks, the Roth 401ks? I think a 401k is probably 250-ish. Here's why I'm asking that question.

Do you work with a smart investor pro? Yes. Okay. When was the last time you met with them about the strategy? I actually was just talking with him about transferring over our Roth IRA to a normal IRA because our income exceeded the limit. But I didn't ask him about this. So I'm wondering if it's not like this is this is real high level math here, Ryan. But if you guys are making $300,000 a year, then you should be investing over $30,000

together, household income. And in that, I mean, the max, I think it's $23,000 for your 401k. Max Roth is 7,000. So that's right at, I mean, you guys could both, you could max out both of these accounts and do the backdoor Roth. Yeah, you pay taxes on it, but I would go ahead and just do that because you're still within the 15% of your income into retirement.

Well, the 15% for both of us would be 45. 45,000. And we can do 22.5 each into 401ks. Yes. I'm going to throw out to talk to you. That gets you exactly to our 15%. That gets you to your 15%. Right. Which is why, if I can jump in here, I would like for you to talk to your SmartVestor

Pro about, do we diversify? Because you've got a good chunk in Roth. I'm just wondering, not recommending, I'm wondering if it wouldn't be a good idea to do a joint brokerage account here. Gives you some other tax options and you can invest that since you've got so much roth invested yeah do you start to diversify that it would be a question that i would ask yeah yeah but but i'm saying i think they can still do both they might be yeah yeah i'm just throwing it out there that like because my goal for you guys ryan would be to max out yeah the 401k max out the roth by doing the back door and then if you have something above and beyond that,

then that's when I would look into it. Just the diversification there. Because it does give you some... Our Roth 401k gets exactly to our 15%. We wouldn't need to do an IRA at all. That's what he's been saying. He's already there, which is why I'm bringing it up. If we should do all Roth 401k...

Yes, i probably would at that point yeah yep okay yeah because matching with the match beats roth beats traditional so when you look at that if you have the roth 401k uh you could and if your income goes up though ryan i would look at the backdoor roth um if your income grows yeah and you guys have more percentages because it's just a great vehicle. And I don't know. I mean, I have no reason to say this. I just have a hunch in life. I'm like, I don't know if they'll have that forever and ever, amen.

I don't know. It's such a great, easy retirement vehicle to throw some money in. How much do you guys have left to pay on the house? About $300. Okay. It's worth about $750. Awesome. Great job. You should have that done in seven to eight years. Okay. Yeah, that's awesome. Yeah. So I would, yeah, go ahead and do that. And then

obviously if something changes with jobs or whatever it may be, then you would move, yeah, that 401k into just a traditional IRA at that point. But that's obviously not, hopefully won't happen. So sorry, Ryan, I was getting mixed up with my numbers in my head. So yeah, I would go ahead and do your 15% all in the Roth 401k. Now for everyone else out there, the only reason I say that is because it is a Roth. We all, you know, Roth is a beautiful thing. So if you just have a traditional 401k at your job, you go up to the match up to that three four five six percent whatever they give you and then the remaining of your 15 go back go to a roth ira max it out and if you still have percentages of that 15 left go back to your 401k but he has a roth 401k

situation which is awesome yeah very good let's go to harrisburg pennsylvania now where caleb is caleb how can we help? Hey, guys. Thanks for taking my call. You bet. What's going on today? So I'm wondering what I should start saving for first. Actually, my wife and I finish off paying off our debt. There's a lot of things I could save for, and it feels overwhelming

because we don't make a ton of money, and I'm just looking for any advice you have. So you paid off all your debt. Does that include your mortgage or no? We rent right now. I'm 24. My wife's 25. We've been married for about two years. Congratulations.

When will you guys be debt-free? They just did. Well, we have a little over $20,000 on a student loan of hers left to finish. But once you pay it off, you're asking what to save for. Yeah. What are the things you guys are... What do I save for? What are y'all wanting to save for?

Well, we have two used cars that have no payments. Mine's close to $200,000. I don't know how much longer it's going to last. I want it to save for a home. I know we're supposed to save for retirement. We want to have kids. And we make about $3,000 a month. And so it's an overwhelming prospect that I don't even know where to go. I have two months of emergency expenses. We built that up before we started hammering the debt, but I'm just not sure where to go next. Yeah. Yeah. I would bump it up to three months of expenses after you pay off the debt and that'll kind of cover, that can be the first goal is to get that fully funded emergency fund. And then I would see where you are with your cars. I think a car purchase is always a

great thing to be saving for and kind of just, would Kelly Blue book your current car and say okay how much is it I wouldn't do it just because it doesn't have just because it has 200,000 miles obviously it needs to be in a place where the repairs are getting so much and you know it's starting to fall apart on you then I would replace it but I would I mean I would drive them as long as long as you can and some cars nowadays they but they're built so well that they do last I mean and it depends on the type of car may not be that expensive do you have a line item in your budget to rachel's point for car repairs yeah we put a little bit away every month for maintenance and that's done me well so far for tires and anything that's come up okay that's great yeah so i think um yeah saving up saving up for a car, but that'll be a faster goal to save for.

And then, Caleb, after that, so you got your one more month of emergency fund to save to get to your three months, saving up a little bit for the car. And then I would look at Baby Step 3B, and that is where you save up a down payment on a home. So if you're a first-time home buyer, as low as 5%, you can go put down on a house.

But that would be my next goal. And you guys have plenty of time for investing, but I would get those kind of buckled in and then start saving 15% of your income into retirement. Thanks for the call, Caleb. You guys are going to do it. It's going to be fun. Rachel Cruz, thanks for co-hosting. What a great hour.

Thank you, Austin, for keeping the plane in the air. This is The Ramsey Show.