The Ramsey Show - App - Freedom Isn’t Found by Borrowing Money (Hour 3)

Episode Date: May 10, 2024

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by the one and only Jade Warshaw. Open phones at 888-825-5225. You call us and we'll do our best to help you take the right next step for your life and your money. Denise kicks us off in Provo, Utah.

Denise, welcome to The Ramsey Show. Thank you so much. I'm so nervous to be on the's just us i know we'll take good care of you and jade you guys are amazing and i just look up to you guys so much oh thank you i'll let ken know she's no fan i'm just kidding i'm kidding ken i'm gonna get your book there we go ken's not here don't worry he can't hear you. I'm just having fun. How can we help you today, Denise? Thank you.

Okay, so I have a question. Our house, we're needing to get our HVAC replaced. And so we've gotten a few estimates. Right now we're on baby step number two, and we are going to be done paying off our car, which is the last thing that we have to pay off next month. So we're so excited about that. And we're just grateful for the baby steps that you guys have laid out because it's really helped us to be able to get financially ahead, have financial peace.

However, our HVAC is needing replaced. It's going to be about $18,000. Oh, thanks. That's the best quote you got um that's the one that we have um from the people that service that we have a membership with um we are planning on getting other quotes is there a way that you can sorry to cut in is there a way that you can kind of do the heating thing first and then the cooling thing or whichever one is most pertinent to the time of year to spread it out? I hadn't thought about that just because I've been told that it's usually,

like if you need to replace one, the other one usually is needing to be replaced around the same time, and the cost is a little bit less when you do both, but I hadn't thought about that. What is this membership? I'm sorry? What is this membership i'm sorry what is this membership um it's through whipple they're just like a local like um plumbing heating like hvac services and so it's a 20 a month um fee that we pay to them and they come out and like service our ac our furnace um we have like drain cleaning electrical safety stuff that there's like a warranty kind of company or like a yeah repair okay yeah i would get um many quotes because 18 000 just hearing that feels

high i don't know your house and your situation it could be real but that just i would get a lot more opinions okay even if there's a way to like keep it going for six more months to allow you guys to save up, you know, we got to just see what all of the options are before deciding. Cause my guess is you're saying, Hey, are we going to, should we just go ahead and take out a bunch of debt for this? Right. Well, because you know, like originally my husband and I were like going to save our six months of your baby step number three. So save six months worth of expenses. And then at that point start saving for

the hvac and then hopefully it doesn't die in between that time um and if it didn't just pull from that that emergency savings if that did happen however the guy that came yesterday to um do the ac tune-up said that the prices probably will be going up because just because of the rate of inflation and so he said maybe it'd be better if you guys finance. Of course, of course he did. This guy's a real salesman. I mean, come on. I know.

I did tell him, I said, no, we're not going to finance. We're going to save, like we're going to save and then paid in full. So we don't have any debt. And so he said that's, you know, he agreed and said, that's great, but the prices could go up next year. And so instead of paying 18, you might have to pay 21. So maybe it would be better if you guys just did it now. And so I only, I thought about it only, you know, when my husband presented it to me and I thought, I don't know, I don't think, I don't want to like go back

to debt again. Like we're almost hanging off our car. We're not going back to debt again. That's got to be the line in the sand. So how much money do you guys make a year? Our household, including our... So we rent out our basement. That's the only reason why we're also considering this is because we rent our basement. We just want to make sure that it's a good livable place

and we're not having issues with our renters downstairs. Do you need the rent in order to make the mortgage payment? It helps a lot. It helps it so that way I don't have to work because I stay home with my children. And so when we bought this property seven years ago, we bought it with that intent was for me to not have to work anymore. I just wanted to know in case something, like in case you do have to elongate this and in case it does cause that basement apartment or whatever to be uncomfortable. I just kind of wanted that little bit of information.

Okay. What's left on the car? You know, $4,400. Okay, and what's it worth? Which will be paid off by the end of next month. What's the car worth? Our car, our min minivan it's worth uh i'd say like probably 24 so the first the first key is that that that george is getting as we've got to pause the baby steps like this is kind of an on-fire emergency so i

know you're saying oh the car will be paid off by this point but that's to your point that's $4,400 that are now going to be freed up to go towards at least half of this system. What I'm wondering here's another solution that could fix this temporarily is if you sold the van and you netted 20 grand you covered the HVAC and you came up a little bit extra money and got a beater car to get you by until you can upgrade that car? Um, we probably, we could look into that. We just got this minivan cause we had our third child, uh, about 15 months ago. Um, and so we, I don't know if that's, I, I mean, I would definitely like, um um consider it and entertain the thought i just um you can get he's not saying that you have to get a car you can still get a vehicle that fits

everybody it would just be a lot older with a lot more miles on it and it would only be temporary it might be like a six month thing until you upgrade you know to a five grand more expensive van to another five you know so you kind of stair step into back into a $24,000 van, but at least this gets you an HVAC without debt. Yeah. So that's at least one option. What's the household income? I'm sorry, $100,000. $100,000. Okay. So how quickly could you save up $18,000 if you guys cut your expenses down to nothing, you pause the baby steps, maybe he picks up another side hustle, maybe you're working part-time. How quickly could you save up 18 grand? I'd say we could. So I had projected us because I set the goals for our financial goals. And so we were going to have our six-month emergency fund by the beginning of

December. And so that would be about $14,000 that we would have saved up by December. So I think, and so that would be about $14,000 that we would have saved up by December. So probably like another month or two after that. So like I'd say next year by February. Well, I bet you could do it sooner because remember you're pausing the baby steps. So all that money that you were throwing towards debt in that equation,

that's now back in your pocket. So I think you'd still be on track to have this done probably by October or November. So if you got aggressive and this HVAC can live until October and you get a few quotes and now you find one for 13 or 14 instead of 18, well now we're cooking with gas, quite literally. Yeah. Okay. So I would look into all of those options. And as a worst case scenario, I think you sell the van and figure it out. If you need to cover the, if it becomes a true emergency true emergency where hey this thing's out and we're freezing we're too whatever it is that becomes sort of

your scapegoat to get out of this thing and we'll figure out the car borrow from family rent one for a little whatever we got to do to get by but do not go take out a 20 grand loan because some salesman said the price is going up next year yeah he doesn't know that's a that's a classic tactic and he might be right but i'd rather you spend three grand more than go into all this debt and go backwards. So you guys are working hard. Keep working the plan. It works. Pause the steps if you have to.

Cover the emergency, and you'll be back on the horse in no time. This is The Ramsey Show. We'll be right back. This show is sponsored by BetterHelp. All right, so I was born and raised in Texas, and I love the myth of the lone cowboy. You know, the guy who doesn't need anyone or anything. It's a fun story, and it's a lie. In our self-obsessed society, we're obsessed about our own diets, our own workout routines, our own jobs, our own social media feeds, everything. It's easy to forget that no one can do life alone. And I don't care if you're an

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slash Ramsey Radio. Welcome back to The Ramsey Show. I'm George Campbell joined by Jared Warshaw. The number to call is 888-825-5225. Well, Jade, as we like to do, we try to stay hip. We try to keep our finger on the pulse. That's right. And this headline got me that we saw the era of no-show fees is here and it's going to cost you. So this is kind of coming out of this crazy tipping culture. Yes. And now there's a fee culture and that includes the no show fee. Yeah. It's basically you set up an appointment and if you don't show up, you get charged. Right. So it says we all have that friend who texts to say he or she is running late after you were already supposed to

be there. So now businesses have a way of putting those flakes in their place and they're charging people for not showing up. So if you're getting a haircut, if you're used to kind of a low tech operation, then these people can say, no, if you don't show up for your haircut appointment, we can charge you a fee. I know when I get my nails done, they'll make you put a deposit up front. And then if you don't show up for the appointment, they keep the deposit. That's the thing is they go, hey, you got to put a card on file. And if you don't show up for the appointment they keep the deposit the thing is they go hey you got to put a card on file and if you don't show we're going to charge you and one barber in california charges customers up to a hundred dollars double the price of a normal haircut for missing an appointment and on one hand george i get it because you're not just paying for

a service you're paying for their time like there's there's a time element there and i remember when i used to teach lessons it's so frustrating i the way I had it set up, it was like, Hey, after you do your lesson, you pay me. And then I started noticing, you know, people would easily be like, Oh, I can't make it. You know, my grandma was late or I had to pick up the dog from the groomer. And it's like, okay. So then I started making people pay upfront. And it's like, if you miss your lesson, that money is mine. You don't get it back. You don't get it back. Yeah. And so, which is fair for like a small business owner, a solop your lesson, that money is mine. You don't get it back. You don't get it back. Yeah. And so. Which is fair for like a small business owner, a solopreneur.

Your time is money, especially something that you're trading time for money, like a lesson, an appointment, a personal service. That's right. So I can understand, you know, a no show fee for that. But can they, can, George, here's my question. And I want to know what the audience thinks about this. Can it be flip-flopped? Like, can it go on both sides? Because here's my thing.

If I set the doctor's appointment for two o'clock and they say, okay, Jade, and also show up at 1.45 so you can do the paperwork. And if I show up at 1.45 and you don't see me until 2.45, can I get a refund on my time? That would change the game. You know what I'm saying? Yeah, especially in the healthcare world. This happens a lot yeah look they're clapping they're like the dentist's office

the doctor's office hold on why is your time worth something but mine isn't we maybe wait 45 minutes even the repair people they give you that crazy window they say whoa well you know the hvac guy will show up sometime between 1 and 4 p.m the internet guy is like i'll be there sometime between 8 and 5 you You take off work. You take off time from work and then they're like, oh, our technician couldn't make it out there. Couldn't make it out there?

What are you, like, can I get a refund? Can I get some dollars off for my time? That's all I'm saying. Can I give you a life hack? What? I don't know that it's fully ethical, so let me just put that caveat out there. But I use a service,

this is not a sponsor, they're called privacy.com. And it's a way to create virtual debit cards. Okay. So sometimes what I'll do if I'm uncomfortable putting my card info in, but they require it, I'll go make a virtual debit card and then you can set limits. So it can say, Hey, if it charges over a dollar, decline it. But does it do it on the spot? So, so it'll give me a new card number, a new expiration date, three digits all that i input that yes and i can set a limit on that card to say don't let any transactions through it or over a dollar and so it'll get declined if someone tried to run that got it so you're you're hacking the system so that's you know do what you will with that information it's

not none of my business but to be fair i had to cancel a haircut this week and get it rescheduled for today if you can tell america it looks good and my barber because we have a relationship i've been with this guy for many many years he was kind enough to not charge the cancellation fee and because i pay cash he said well if you had a card on file i would have it would have charged you yeah and well i don't have a card on file because i'm a cash guy and he went dang it foiled again uh so you know i think the key here is it's got to go both ways yes and maybe just like you said a little bit of human yes a little human nature to this and sometimes it's kind of the the nature of the beast you you pay the fee and go yep that was on me yeah it says cancellation fee started taking off in 2020 because the businesses

were being so hit hit hit so hard by COVID. It kind of was like, this is a way that we can make sure we're not losing money hand over fist. Yeah, you got to see both sides here. And I think there is a lack of commitment in today's world. And we're so scattered. We're so busy. And we're so focused on ourselves that it can affect. You got to think about how this affects other people.

Well, and your business, too, because it says that customers are actually resenting paying the services for fees that they don't receive. Like there can be a resentment that it's like, oh man, every time, you know, I really did have something that came up with my kids and this guy's been cutting my hair for years and now he's going to charge me. So it can build a resentment

or even if you're the customer and the technician doesn't show up and it's like, you know, I think the takeaway here is show up on time, have grace. Yeah. When people have things that pop up. I think that's the situation. Have some grace on both sides. If you're the business owner, if you're the person, have some grace, be understanding,

but also be a person of commitment. Yeah. Of character if you can dish it out, you better be able to take it. If you're going to dish those fees, I'm going to ask for my money back. You just give me a discount code and we'll call it square. I fight. I fight every cancellation fee. I can count on one finger how many times I've paid one of those bad boys. So there you go. That was fun. Josh is up next in Dayton, Ohio. What is happening, Josh? Hey, how's it going, guys? Good. How there you go. That was fun. Josh is up next in Dayton, Ohio. What is happening, Josh? Hey, how's it going, guys? Good. How are you? Doing well. Hey, so my question is, I just started listening to your show about a week ago. Someone recommended it to me. I was talking about getting out of debt, and I've been listening to it

religiously. So I have about $22,000 in consumer debt. And I kind of already have the first baby step done. I have $5,000 saved up. And I was usually saving $800 a month. Now I'm applying that $800 to all my debt. I'm going to start with my highest credit card, and then I'm going to work my way down. And I kind of have it set up that it's going to be about 18 months,

and I'll be debt-free except for my mortgage. I'm just kind of looking for some more pointers to see if I missed something. This is your guys' career, and I'm just kind of hoping. It's just the $22,000? It's just the $22,000 of debt? Right. And it's all credit cards? So I got four credit cards. I have a car note, and then i have some student loans that are

lingering how much is the car note i owe 5600 on it okay 5600 okay and that's part of the 22 000 and then you told me you have 5 000 set aside so if we're walking through the baby steps real quick for you and any other new listener first baby baby step is you keep $1,000 saved or you get $1,000 saved. And then anything beyond that goes to baby step two, which is paying off all of your debt using the debt snowball, which is what you alluded to.

You list them smallest to largest. Now you said you were paying the highest card first. You got to pay the smallest balance first while making minimums on the rest. Well, I meant the highest APR. So my smallest balance happens to be a 31.49 apr so let's let's reverse that let's reverse that so the way we teach is in the debt snowball you list them by balance smallest to largest and you pay the smallest

balance first and the reason we do that is because it's psychological like you want to get those quick wins and you want to keep going and in the end any interest is negligible honestly and you said that happens to be the highest interest that smallest balance yes okay so that's just a coincidence there okay so you're attacking that if you used four thousand of your five thousand to knock down the debt you'd be down to eighteen thousand and you said you're able to put eight hundred a month right now toward it right correct okay how do we make more how do we create more margins so you can put a thousand a month right now toward it? Right, correct. Okay, how do we make more, how do we create more margins so you can put $1,000 toward it, $1,200 toward it? Oh, I have two kids and a house payment, and my wife, she's getting ready to go through school, so I mean, the budget's real tight anyways. I just downloaded the Everyday Dollar app,

and I put it all on there, and I thought I was was I had a lot more expendable money it turns out I don't I don't know how I was making it this far what's your income uh I make about a net I make 970 a week so my at the end of the year is about 60 or 50,000 what are you what's your paycheck look like every month what's it saying every dollar that you bring home? I bring home right now, I'm getting a raise here, starting June, but it's 970. Per week. A month,

so I think it's a week. So a month, it's 3,880. 3,880. Okay. And the wife's not working. She's home with the kids? No,

she's working. She's a server at a restaurant. Will she continue that while in school? Yes, she is. And that's why I'm trying to get out of debt too. So that way, you know,

she's starting to struggle. I could kind of do my husbandly duty and take care of it. Okay. Well, the key here is margin. You got to cut all the expenses you can make as much as you can. That's going to speed up this whole process. 18 months to pay off 22.

I think we can do better than that. It just feels like too long. It's not that much debt comparatively. And so I want to see you knock this out fast. So hang on the line. I'm going to send you FPU, Financial Peace University, along with EveryDollar to help you gain some tools and you can go through this with your wife. 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

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CHM programs start as low as $98 a month. So learn more today and join at chministries.org budget. That's chministries.org slash budget at chministries.org slash budget. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. You've heard us talk about EveryDollar on the show today, and if you're wondering what the heck that is, that is our budgeting app that our team created to help you make the most of your money and actually hit your money goals. And so every dollar is an app. It makes it super simple to plan your spending, track your expenses,

save for what matters to you. And it's all in a easy to use app. Both people, if you're married, both spouses can be logged into this and have that transparency and accountability, helps you keep a pulse on your spending. So it's not for broke people. It's not for rich people. It's not for nerds or accountants. Budgets are for people who want to win with money. It's that simple. I always say budgets are like toothbrushes. Everybody needs one. Mmm, I like that.

If you don't got one. It's ratchet. Oof. It's funky. It does get funky if you're not budgeting. So download EveryDollar for free in the App Store or Google Play today. Thank us later. All right.

Gunner is in St. Louis. Gunner, what's happening? Hey, what's happening? How can we help today? Yeah, you sound great. Awesome. Fantastic. All right. So I guess I'll just jump right into the question. So I was online and I found several different debit cards that you can get a 1% return on, depending on however much money you spend. And I was curious if you think this might be a good alternative to credit cards, because you can get the rewards, but you can also avoid going into debt. I mean, is it a better alternative to credit cards? Absolutely. Is it worth your time and effort and money? That's debatable. 1%. I don't have a cashback

debit card if it tells you anything. And here's the reason, just mathematics. And so I wouldn't get the card because of the cashback. If it happens to be a thing, for example, I got a Costco membership and I got the executive membership. That's the kind of guy I am. And they give you like 2% cashback. And so if you're doing the math on that, you're going, okay, for every $10,000 I i spend they're going to give me 200 bucks that's what i'm saying it's not that's nothing to get excited about and for how much i actually put on my debit card gunner i'm not spending you know fifty thousand dollars a year a hundred thousand dollars a year on my debit card and so i don't think the cash back would be worth it but if

you're going to do it do not let uh the cash back sway you in any way well there is a negative side to that and i think there is a piece psychologically that if you think if i spend more i get some sort of reward reward in quotes i think we already know that when people use plastic over cash they do spend more and that goes up when it's a credit card versus a debit card but i do think there's something around that that is like okay if there's somewhere floating around in your psyche that the more you spend, the more, like I said, quote, reward you get. I don't like that. And so I, like George said, if it happens to be, if it happens to be there and it's like, oh, I got a little money back, who cares? But I wouldn't go out of my way to select that because like you said, that one to 2%,

it's not breaking anybody free financially. Like it's's not it's not the holy grail to financial peace so what do you think gunner uh no certainly that makes sense yeah that all makes sense i'm not against this i just don't think the benefits really not there especially you know one percent is negligible when you when you're talking about you know let say you have $3,000 of expenses you could put on the card. That's $36,000. So when you start doing the math on this, you're like, okay, I'm going to spend $36,000 in order to get 360. Okay. Is that going to change my life? No. Because if you're making good money, I can find 360 in a single month if I'm just intentional about it. So that's the key. If you're budgeting already and you're not spending any more, that's always the argument with credit cards that I hear, Jade, is, I don't spend any

more than I would have with a debit card. No, that's trickery. That's not true. That's a lie from the pit of hell. I don't buy that for a second. So I like the spirit of the question, Gunnar. I don't think, you know, the biggest part is you can't spend more than you have with a debit card. So you have a built-in fail-safe. So if you want to do it, go for it. But again, I don't think it's going to be worth the time and energy or switching banks and debit cards and all of that. So it's a good question though. We're seeing more of these cashback debit cards pop up. Yeah. I'm like you, George. I don't think it's a bad thing or a negative thing. I just, I think sometimes people, to your point, they don't really do the math and they think, oh, this is something I'm getting. And it says it's a reward

and it says it's a prize. And I think sometimes it can make people go, well, I get the cash back. I'll just go ahead and buy it. I get the cash back, whether credit or debit. And I'm like, wait a second, be like George and do the math. And then you'll think twice about buying those. Thank you, Jay. Be like George. That's what America needs right now. Like George. Be like Mike. Be like George. All right. William is in Iowa City up next. William, welcome to the Ramsey Show. All right. Thanks for taking my call. Sure. How can we help? So I have a couple of investment accounts. One of them has about $18,000 and the other one has about $14,000.

I have one of them kind of earmarked as our three to six months of expenses for the emergency fund. We also have two car payments right now. One of them is pretty low and the other one is a decent amount, but I get that vehicle allowance from work. And I guess my question is, would it make sense to take money out of the other investment account that I don't have really earmarked as an emergency fund to pay off one and a portion of the other vehicle loans. Are they retirement investments or are they just a brokerage you have? Just a brokerage I have. One of them was started for me when I was a baby, actually. My grandpa started it for me. And then the other one was money that my wife and I braved up. And rather

than just kind of having it sitting around as an emergency fund, we asked the investor to put it somewhere where if we needed it, we could get it out within a matter of a day or two. So it's just a regular investment. Well, the emergency fund is insurance, not an investment. So it worries me when anyone puts their emergency fund in something that's volatile. And so if you want your money to grow a little, we're seeing some amazing rates on high-yield savings accounts right now of 5%. And so I would absolutely, even for your emergency fund, if you do nothing else,

move that money over to an emergency fund and just let it grow at 5%. It's not there to grow. Again, it's insurance against life happening. And I don't want that to be volatile to where you lose $3,000 and all of a sudden you have an emergency and it hurts then to use that money. What do you owe on these two cars? So on my wife's vehicle, we owe about $9,000, and on my vehicle, it's probably $25,000. And that's the one that you're using a credit for or an allowance from your job? Yes.

Do you get the allowance regardless of... The vehicle... Yes, I get the allowance regardless, and actually the vehicle allowance covers my payment and my wife's car payment. The allowance covers both the amount that I get. If you get it regardless, if the vehicles are paid off, even if not, I would pay off both of these vehicles as quickly as possible. And I would liquidate both of these investment funds in order to do that. Because that's walking through what I'm telling you is walking through our baby steps, which is our framework for getting people to

financial peace in the fastest, most risk-free way. And so if I were you, I'd say, okay, yeah, I'm going to liquidate both of these. I'm going to pay off the $9,000. And then I'm going to take what's left that I have here. And I'm going to throw it at this $25,000, which is almost enough to clear it. And you're going to be getting those allowances anyway, so you can knock out the rest fairly quickly now that you don't have a car payment. And then in the next two months,

you're going to be completely car debt free and then you can take your cash, all those payments that were freed up in the allowance that you have from work and you can stock up three to six months of expenses and do what George said, which is throw them in a high yield savings account. And that's going to be the most stable you've ever been with that money. Got it. So then at that point, we would be debt free. That's right.

You will be debt free. Think about this. You have 32 in investments. I don't know what you'll owe in taxes on the capital gains of the investments, but let's pretend it's zero right now. And32,000 in investments. I don't know what you'll owe in taxes on the capital gains of the investments, but let's pretend it's zero right now. And $32,000 minus your wife's car, minus $22,000 that we could still throw at it, leaves you with $1,000 left over for your starter emergency fund. Well, now you only have $3,000 left on that car. And with your allowance and a freed-up payment from your wife's car, plus your income, you're going to knock out three grand in what, a month or two?

Yeah, that's easy. Boom. So we're talking about two months from now, you're completely debt free. Then we can restock the emergency fund inside of a high yield savings account, probably over the next five or six months. And now we're cooking with gas. Now we can get back to investing with intentionality and start investing 15% of our income. What's your income household? Right around 125, 130. Yeah, yeah. You guys are going to be baby steps millionaires in no time. Get this, in one year, 15% of 130 is 19.5. That's more than you have in that investment account. And so I have full faith you'll be back to investing in no time. You're going to build wealth. But I think we've been doing a lot of good things at once, trying

to pay off debt, trying to save, trying to invest. But when you do it with folks intensity, you get this amazing thing called progress. And that's the power of the baby steps. So thank you for the call. I hope you do what we said. It will work every time you work it, man. This is The Ramsey Show. Welcome back to The Ramsey Show, our scripture of the day, Proverbs 31, 31. Honor her for all that her hands have done and let her works bring her praise at the city gate. What a beautiful verse in honor of Mother's Day this weekend. Oh, I thought you were reading that for Whitney. I mean, I was, but I didn't choose this verse. The team did a great job reminding us all that it's Mother's Day on Sunday,

so do all the things. Get her the pancakes in bed and the flowers and the card and the gift. Is it bad that sometimes on Mother's Day I just want to be alone? There was a great skit I just saw where it was the best gift you can give mom is 24 hours alone at the bottom of a well just let her do her thing man give me a day peace and quiet a bath a hot

bath like leave leave breakfast by the door y'all go away oh that's smart i'm gonna do that i'm gonna take our eight month old and just be gone the mother the dogs be gone the mothers know they said amen with me lauren hill once said that that strong mother doesn't tell her cub, son, stay weak so the wolves can get you. She says, toughen up. This is reality we're living in. Ooh. Strong words.

That's strong. Strong words from Lauren Hill right there. She's right. Sometimes you need a little Proverbs and Lauren Hill in your life. That's all I'm saying. That's good. All right. Brittany is up next in Denver, Colorado.

Brittany, welcome to the show. Hello. good. All right. Brittany is up next in Denver, Colorado. Brittany, welcome to the show. Hello. How can we help today? I'm calling because I've been very illiterate with the financial literacy and I feel like I have six children. I have a small, four small toddlers. So now I'm just trying to take, I am really trying to get on track, and I'm trying to learn how to budget. And I'm on, like, a housing program, so I pay very little rent. I have no debt, and I'm just trying to see where all my money's going. I'm surprised you got some peace and quiet to make this phone call. You're impressive. I'll forget the car.

Did you say you have no debt? I have none. Okay, excellent. I paid off all my debt, I'll forget the car. Did you say you have no debt? I have none. Okay, excellent. I paid off all my debt, I think, in 2020. Come on. Way to go. Way to go. And are you single momming it?

Is dad in the picture? I'm a single mother. Okay, of six. And is there child support coming in? No. Why not? We don't know where the father is. We separated and he went about his way.

And there's no court that can find him? Well, we have a court order. He just doesn't pay. So I'm hoping soon that we'll get some compensation. And no wages to garnish, I'm guessing. Nope. Girlfriend. Okay.

So what's the nature of your question? You're guessing. Nope. Girlfriend. Okay. So what's the nature of your question? You're here. You're no debt. You've been supporting these six kids on your own. In my book, like superwoman. So how can we help? Well, I do have debt.

I just have like a car, I guess. Whoa, whoa, whoa. Hold the phone, Brittany. You told us you were debt free. We got to start this relationship off with truth and honesty. Debt is money you owe to anyone for any reason. I looked at my notes, and I have it circled. I forgot it. My car is my only debt. What's left on the car?

I think I just bought it last year, so it's still fairly fresh, and I think it's about $14,000, maybe $15,000. Left on the loan? Yeah. Could have been worse. What do you make a year? Last year was about $45,000 to $50,000.

Okay, good. What's the child care situation like for the six kids? They're all in school full-time, so I'm pretty free, but it's just I don't know where my money's going okay so you're making 50 grand your rent is low all the kids are kindergarten kindergarten and above I thought you said you had toddlers they're all kindergarteners they're preschool it's three pre-k and one kindergartner um a teenager he's 16 and I have one that's graduating college next year okay good cool so your next goal if you're following the baby steps, would be to get rid of this car loan aggressively.

Okay. Do you have any money in savings? No, I just exuded all of that because I wasn't working for three months, and now I'm getting back into a job. And the job that I'm getting into pays a little bit less hourly, but I can compensate that with like working extra shifts or something. But I'm just trying to figure out how to budget the money that I'm going to have coming in. So do you have EveryDollar? Do you have the EveryDollar app? I have the app, but I was running into issues that I was not, you know,

it's just I couldn't keep up with it. What do you mean? I do have the app. What do you mean you couldn't keep up with it. What do you mean? I do have the app. What do you mean you couldn't keep up with it? With, like, putting the expenses and all the little categories and with all the keys. So I just really couldn't keep up with it. So once you, okay, let's see if we can identify this problem. So with every dollar, once you set the budget, like once you go in, you put your checks in there in the income section, you put your income income or I'm sorry, you put your expenses, everything you can think to spend money on. It's it's pretty much set. And then as each month goes, there's a button on the bottom that you can click that says copy this budget to next month.

So you shouldn't be restarting every single month. You should be having that baseline of, hey, this is this is basically my life. And each month I go in and make the small tweaks and changes that have to do with that month. So that's thing number one. And then thing number two is, if that's not the problem, then it sounds like you've just not set up the habit of kind of going in there and tracking your transactions when they pop in. Is that right? It sounds like you might need the premium version. Okay. So what I want is, I can't see who's manning the

phones over there but they're going to pick up and i want to make sure you get the premium version of every dollar at least a free trial of it for you to check it out because it does a lot of that automatically for you that'll help this process okay and another question i wanted to ask is because i'm on the housing section 8 housing program and they help you buy a house but in colorado with the housing market so high i don't I don't know if that's a good idea. It's not a good idea. Let's define what they mean by help. They're going to help you get into a house with nothing down, with a mortgage that you can't handle.

And so the right time to buy a house is when you're financially ready, not when the right homebuyers program comes along. And there's so many strings attached to these programs, Brittany, and I want you to be in control of your life instead of having to, you know, be controlled by someone else. And they also, you know, utilize the money to start a business. So I wanted to start a host, like a group home for like, I'm a CNA, so I'm into caregiving. So I wanted to take the money to maybe start a business to have income before I go purchase a personal home. We got to take it one thing at a time.

Let's look at it one thing at a time. A1 is we're paying off this $15,000 car. Your A1 right now is the baby steps. So number one is you don't have $1,000 saved. So we need to find $1,000 quickly. Which you have next paycheck. Yeah, most people get it in 30 days. So put that $1,000 aside.

Then very quickly, we're paying off this $15,000 car as quickly as possible. If you can pick up extra hours, I don't know if you can or not with the way your life is set up. But pay that $15,000 off quickly because then your next goal is you got to save six months of expenses. And for you, it needs to be six months of expenses because it's just you and you've got six kids. And then after that, you're going to begin investing. Okay. And so these right now, these are your goals. Homeownership is not there yet. It might be there after baby step three. If you feel good about your situation, if you feel good about where the kids are going, they're going off to college, like all that stuff. But the more, what you're going to find is the more you're going to begin to work these baby steps, the more money you're going to want to earn.

And the more money you earn, you're going to be off Section 8 housing. So that's the first goal. And being off Section 8 housing doesn't necessarily mean that you went and bought a place. It just means that you can afford rent on your own where you want to live. And I think that's pretty amazing. So that's the goal. Brittany, what is your take-home pay every month? Probably, I think my last job I was making $1,700 a week, every two weeks.

Every two weeks. So you got about $3,400 coming in? Mm-hmm. And what are your actual monthly expenses? What does that add up to? $1,600. So you're telling me that there should be $1,800 left over that you can do whatever you want with? Yeah.

Ah. Ding, ding. Well, all of a sudden, you got $1,000 saved up with your next paycheck. And all of a sudden, you got... Yeah, I could put it that way. I could save $1,000. And once you have $1,000, you now have $1,800. Think about this.

$1,800 times, let's call it, eight months would get your car paid off. I love that. If you stick to the budget. All right. So eight months from now, that car is paid off. Now the next probably five or six months will go toward building the emergency fund. Then we can begin investing. You're not investing right now through your employer, right?

Sometimes, and I invest on my own sometimes because I do like private contract work. So like this weekend I'll go to work and make like 900 bucks. That needs to go toward your debt. Let's pause all investing. You're doing a lot of great things at once, but the problem is you're not going to make progress by doing that. You've got to focus on one thing at a time. Yeah, you are in survival mode, and we want to get you out of that cycle. That's how you find freedom.

So hang on the line. We're going to send you every dollar premium. I'm also going to send you my book, Breaking Free from Broke, to help you gain some confidence and hope that things aren't going to be this way for much longer. Thank you so much for the call. That puts this hour of The Ramsey Show in the books. Thank you to Jade Warshaw, all the folks in the booth, and you, America, will be back before you next time.