The Ramsey Show - App - How Can I Pay Off Debt and Build My Savings? (Hour 2)

Episode Date: February 6, 2024

🎵 Live from the headquarters of Ramsey Solutions, this is The Ramsey Show. It's where we help you win, specifically with your money, your work, and your relationships. All those go together to live that meaningful life, to have the life that you've dreamed of. 888-825-5225 is the phone number.

I'm Ken Coleman. Jade Warshaw joins me. And we are here for you this hour. 888-825-5225. Let's get it started right out of the gate with Milwaukee, Wisconsin, is where Emily is. Emily, how can we help? Hi, thanks for having me on.

You guys are really awesome to listen to. It's been great. Well, thank you. What's going on? I had a question. My husband and I, we've been together for 12 years. We're high school sweethearts. We've been married.

It'll be two years in June. Okay. Just only question that I have is we, i guess like 2021 i bought a house uh we didn't have him on it because his my mom kind of helped and uh said you know just have you on it because your credit score is higher than his his is lower you're gonna get like a lower loan so and you weren't married yet right no we were engaged and now i see that was dumb later like because things didn't work out no that was right we agree we agree with mom i agree with mom on that oh okay all right um but so now now um now when i had like my uh had to

pay property taxes i'm like oh it's like in my old name. It's just me. Should I add him to the deed? Is that going to affect anything? If something like happens, would it go to him? Because I talked to my mortgage lady, and she said that it's a marriage estate, so if anything happens, it'll go to him. But would it matter if he's on the deed or not since we're married now i would definitely add him to the deed um it makes him an owner because right now he doesn't own it it's he's not an owner of your house only you are um and so for that reason and i kind of flipped the script in my mind i'm like if if i met sam and he had a house and i was like hey can can you put me on the deed? And he said, no, that would definitely affect me. It would affect him because he'd be on the moon. I was going to say,

I believe that you would smack him right upside the head. Yeah. So just I think for you guys to really feel like one unit and one, I would definitely add him to the deed. And then it does strike up a bigger conversation of just you know with what did you say you talked to a lawyer or real estate about this uh her mortgage professional mortgage person yeah yeah and she says if i were to do that i would have to go to the attorney and rewrite the deed and it cost maybe uh some money to do that yeah she's like you really don't need to do that because it's marital property so he has half that's true that's true i wasn't sure i you know i would put his name on it um i'm the type of person i just like stuff to be sealed

tight i want both people's names on the deed i'm i have a will and in the will everything is specific so if you don't have that now that you're married for sure everybody needs a will but now that you're married for sure the two of you need to get a will um separate that lists what each other wants and you both need to make sure you have life insurance those are the three things that are really important uh when you join life and join finances and they're just three things that really say listen i love you and i want to love you well in the in those ways. Emily, I did a – And we actually just got term life insurance. Oh, good.

That's what I'm talking about. That was really helpful. Oh, good job. I completely agree with Jade. If you're looking for what we think, that's it. And it's just the right way to do it. And it's easy and it's not that expensive. That's right.

This is not one of those convenience issues. You just never know. Here's the other thing. You never know what the state legislator is going to do. Are you keeping up with that? The will and the deed will take care of all of this and get it snapped up nice and tight. Brianna, if I got that right, in Superior, Wisconsin. How can we help? Hi, thank you for having me. You bet. Did I say your name right? Yes, you did. Oh, I'm hooked on phonics. It's very exciting. Thank you. Thank you for letting me know that. How can we help today? So I'm just trying, so I'm 20 years old and I'm trying to find the best way possible that I can pay off my debt and hopefully encourage my boyfriend to do the same.

Let's start with just you. That's two different calls. That is, that is. But look, I'm glad that you're looking out for your guy as well. Yes. Tell us a little bit about your situation. So like I said said i'm 20 i ended up taking out a credit card and a loan right after high school so probably a year after high school so i was 19 pretty much my whole childhood my

parents have kind of were like you know being an adult you'd take out credit cards you take out loans and i thought that that's what you had to do to jumpstart your life as an adult. You're not alone. Give Jade your smallest to largest debts. Can you walk us through all those one at a time, smallest to largest? So I have two bank credit cards. So the first one that pay off is $500. That was my first one that I took out. I have a second credit card that is $300 to pay off. And then I have

a store credit card that is also $300 to pay off. Okay. What about this other loan? Um, so I have a four-wheeler loan that I ended up taking out, uh, when I was 19. So a little over a year ago, um, it was $3,500. I think with, um, maybe a four, 6% interest rate. I haven't checked it. Is it still $3,500 or have you paid it down? So my boyfriend actually ended up taking out the loan himself, but my parents were telling me, if you really want to help your credit out,

you should probably move that four-wheeler loan onto your name. What? So we did move it over it ended up uh we uh we ended up having to pay the full amount and start from scratch oh wonderful advice way to go mom dad come on now okay so now you've got the $3,500 four-wheeler it's back in your name where it started yeah you've got the two credit cards for 300 and the credit card for $500. Is there anything else? Student loans, cars? Hopefully. I do not have any student loans or cars. Luckily, my parents bought me a nice car when I was in high school, so I still drive that.

Is it paid off? Or are they making payments for you? They're the ones that they making payments for you they're the one that are they're the ones that are making payments for me um okay i want to i'm going to ask more about that um do you know what the car is worth by the way i'm just curious um it's a 2016 outback so it's probably i think i checked it's probably around the six to eight thousand dollar mark okay on kelly blue book okay especially the $8,000 mark on Kelly Blue Book. Okay. Especially with the miles on it. Okay. Here's the thing. You've got a lot of debt to pay off.

It's not a lot. You know, you're 20 years old, but it's a lot for a 20-year-old. What are you earning real quick? Just tell me what you make every month. So I take home about $2,200 to $2,500 a month. Okay. All right, tell you what, Brown, we're running up against a break,

and I want Jade to be able to walk you through how to knock this out. Thanks, Ken. We've got to do a quick commercial break. When we come back, it's Jade and Brianna, and we're going to show her how she gets out of this debt pretty quickly. So don't move. This is The Ramsey Show. Welcome back to The Ramsey Show.

I'm Ken Coleman, and Jade Warshaw joins me this hour. Thrilled to have you with us. The phone number to jump in is 888-825-5225. Our question of the day is brought to you by Neighborly, your hub for home services. Winter is rougher in some areas of the country than others but there are things that make sense to do no matter where you live oh that's right oh yeah thank you james all right no it's okay but this is live radio and i'm okay with it james our

fearless leader reminded me we still have brianna on the line where would we be without you james well someone reminded me to remind you so it wasn't even me probably in the line. Where would we be without you, James? Well, someone reminded me to remind you, so it wasn't even me. Probably in the ditch, that we would drive the truck right into the ditch. Okay, so we'll skip the neighborly question of the day for right now. We'll get back to it. I know you all love to hear me read, but here's where we were. Okay, so let me set us up. James, thank you for reminding me, or Austin, or whoever. Okay, so Brianna called in. Yes. And she doesn't have a ton of debt. I think I heard a 500, a 500, and a 300.

Something like that. Some credit cards, not a lot. Very low. And then she's got a $3,500 four-wheeler loan, and I think that's it. Yeah, we started talking about her income. Right, so now Jay's going to walk her through how she's going to pay this debt off. So Brianna, are you still there? Yep. All right. Okay. Take it away, Jay. Okay. So you had just told us that you're making $2,500 a month, correct?

Yep. Okay, good. And what's your living situation? You're living with the boyfriend or no? Yep. Okay. I'm living with him. And you guys are splitting rent or does he like own a house or something? So we live in what they call luxury flats. We're actually paying pretty cheap rent in our area. So separately we're paying $600 a month. Okay. So that's pretty cheap rent in our area so uh separately we're paying uh 600 a month okay so that's pretty cheap okay yep so in total it's um almost 1200 for a studio okay great so you're not like overly extended on your um on your rent per se um yep i would like if it was six here's the thing six

hundred dollars in normal life is great uh when you're making 2,500 it's it's a little more right so that the cure the cure here is you're not going to find anything cheaper than 600 so you've got to get your income up for more reasons than just the rent also so that you can start making headway on paying off this debt what is your what's the job because i want ken to jump in here because i can tell you right now the formula is find more work so that you can increase your income so that you can pay off these debts quickly because at the end of the month after you've paid your bills uh i don't know why i want to say your name wrong brianna after you've paid your bills after you've bought groceries

after you've done the things that you need to do how much money do you have left over um so for the week i probably have around 250 250 each week each week yep okay. So right now, I mean, that's not actually, that's not bad. You can take that. You should be done with, you know, one and a half, one and three quarters of the credit cards, right? Because it's two $300 ones. So you could have the majority of both of those paid off this month. And then next month, you'll pay off the other credit card and then you just walk on down the line and it's going to take you uh six seven months to pay off the loan that you have and then technically you're out of debt but then what i want you to start thinking about real quickly is what it looks like because i you know your parents can do what they want to do but i hate that they're in debt on your account on your at your expense so you might want to ask them

about listen what are your plans plans to paying off this car? Or I'd like to be in a situation where I'm not causing you to be in debt on my behalf and figure out what that looks like car-wise. Maybe you buy them out and you're just done with it and now you own the car outright. But I would be looking into that since you've said, you know, here I am. I'm on my own. And if you're on your own, then they don't need to be in debt for you. That's just Jade's two cents. Ken, take it away. I actually agree with that. I think it's time for you to grow up. And it's a very nice gesture that they made, but they're not

making good financial decisions. I mean, they're the ones that recommended you get a four wheeler or finance the four wheeler or whatever that nonsense was. So I agree with Jade on that. Let's talk about the bigger shovel. This is the term that Dave has kind of popularized to say we've got to get more income so that we get out of debt faster, save, and invest at a much greater rate. That's something you're interested in, yes or no? Yeah. All right. What do you do now for work? I am an automotive detailer.

Okay, automotive detailer. You're making how much an hour? Um, I currently make 1750, uh, plus steps. Okay. And what's your long-term ideas? I'll bet you've got two or three or maybe four ideas of what you would like to do. Cause I know you don't want to stay in auto detailing. Is that true? Yeah, I really like the job, but it's kind of iffy. In the summertime and fall and spring, people were pretty booked up. So it's pretty much a point you face. What would you like to do? I mean, if you could try something totally new next week and you didn't have to commit to it for the next 30 years of your life and you knew you weren't going to screw up meaning

you were going to do fine you're going to enjoy it what would you try um probably something in the woodworking or welding industry um very interesting Yeah. I love that. And you know what's interesting? There's a tie-in to the fact that you enjoy detailing cars. The operating word here for you, Brianna, for a long term for you is you're about details. And when you're working with your hands and your eyes to get into details to make something look aesthetically pleasing. So that could be the woodworking or welding something that's fixing something or designing something. That's really appealing to you, yes? Yeah. That's great. So here's the deal. I want to see you making steps. I want you doing exactly what Jade told you to do, okay? But right now we're looking to pick up maybe a second or a third job. I don't think

you have to have three jobs, but I would tell you a $20 to $22 an hour job is around Superior, Wisconsin, and it's not going to require a college degree. And that's going to change our situation really quick. But that's short term. Long term, I want you going, all right, what does it look like for me to move into woodworking or welding? So I'm going to give you my book called The Proximity Principle. And here's what it says. In order to do what Brianna wants to do, she's got to be around people that are doing it

and in places where it's happening. So in the next 30 days, I'm going to challenge you. All right, I'm going to give you the book. It'll inspire you to do it and tell you what to do. But it's just as simple as you getting around somebody that's in woodworking, somebody that's in welding. Hey, how'd you get into it? What are the qualifications?

Do I need to go to a trade school? The answer is yes for welding. I'm not sure about woodworking, but if you've got some natural talent, you start doing some side projects, helping out a woodworker, maybe being an assistant where you get paid. Now I've got more money to pay off my debt to get my emergency fund fully funded, but I'm learning the trade of woodworking. Or I'm going to take a welding school after I get out of debt and after I get the emergency fund fully funded, and I'm going to pay my way through welding school, and I'm going to come out and I'm probably going to be starting

in the $55,000 to $65,000 range with a path to six figures and maybe owning your own welding business. Come on now. Brianna, now I just talked a lot. What are you feeling? What are you thinking? I mean, it's 100% possible. I just need someone to kind of give me a little shove in the right direction. I'm shoving you.

I'm shoving you. If I shove you anymore, I'm not a gentleman. Yeah, I was about to say, we're going to have to call the cops. That's right. Well, I got my friend here. She's going to keep me in check. What I am saying is I absolutely believe that that path is possible for you. I'm going to give you the book, which will stay with you as some accountability.

But what I'm saying is you need to decide which one of those paths. And the way you decide is by hanging out with people that are doing it. And you find out the good, the bad, the ugly, and your head and heart get together and you go ding, ding, ding, or like from family feud. And once you figure out which direction you want to go, you go, all right, what does it take to get qualified? I got an answer. I got a target and I'm going to walk the baby steps right into that next future for me. That, that, that future where I could be a six figure earner, a multimillionaire because you're going to invest

in Baby Step 4. That's good, Ken. It's doable. Hang on the line. We'll give you the book, The Proximity Principle. Close us out with a little rah-rah there to Brianna. You know, I just want to let her know, whenever I have a boyfriend-girlfriend living together,

she's paying $600, but truly it's $1,200. I want to make sure she gets to the point that she can handle that rent on her own because I never want somebody to feel like, oh, we were sharing this place together and I can't go anywhere because I can't afford it. So get that income up, girl. And I'm old school.

Come on, ladies, make that guy put a ring on. Okay. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm Ken Coleman. Jade Warshaw joins me. 888-825-5225 is the phone number. 888-825-5225.

Let's go to Daytona, Florida. And Daniel is there. Daniel, how can we help? How are you doing? Good. How are you, sir? I'm all right. Great. What, sir? I'm all right. Great. What's up?

I have a question. I'm trying to make a decision. I'm 45 years old. My wife is 36. We recently got married this past November. We've been together almost five years. We are about $128,000 in debt between like personal debt and then debt from our businesses. Um, she's, she's a nurse. She had a, uh, a, uh, nursing, a supply store that she had known the business for and that failed. So we have debt from that. I'm a barber and I have a CDL. So I've been the past two, three years, I've been jumping in and out of barbering and trucking, trying to decide which field I want to stay in.

OK. And I'm in the same situation like I'm right now with the debt. I'm scared. I'm a little nervous and I'm about to jump back into trucking, and I really don't want to, but that is like steady income for me. How much more? I'm not passionate about the barbering. Yeah. How much more does the trucking allow you to make than if you were to stay in the barbering?

Right now, I go off the numbers. Last year in barbering, I made maybe about $26,000. And then if I go into trucking and I stay in it for a full year, I can make anywhere from $65,000 to $80,000 depending on how hard I run. But the tradeoff is that I'm in the truck weeks at a time away from home. Right. But I'm jumping in as we go, okay, because we're covering some – this is a work question, but we've got some debt we need to take care of. So if I'm you, I'm going to jump in the truck because it's the quickest route for me to juice my income.

And we're talking about maybe as much as almost four times the income. And you don't have to be in that truck forever, but it is absolutely the possibility. I don't think you have to leave barbering forever. Maybe you won't have much time to do it on the weekends when you're not in the truck. If you do, I'd be cutting hair as that second gig. But if you don't, let's go all in on the trucking to get that income up so we can start to clean up this $128,000 mess. Now, you mentioned your wife is in nursing or was, did nursing school. Is she a nurse right now? Yes, she is.

What's her income? Don't know off the top of my head, but I can tell you what she, her two-week, her last paycheck for two weeks was deposited deposited was $2,500. Okay, so around $5,000 a month? Okay. Yes. And you don't know this because I'm guessing you guys aren't on a budget, or am I wrong? No, you're right.

You're correct. All right. So I'm going to bring Jade in here, and let's walk through these numbers because we've got to pay the $128 off. But do you understand what I'm saying? Are you with me on the trucking thing? That's not a long-term play, but that's your best short-term play? Yes, and I just needed somebody to confirm that because I was feeling conflicted about it.

But hearing you say that, it reassures me. And I get it. You love being a barber, right? Yes. But listen, this time in the truck is going to allow you to figure out, what is it that I'm going to have to do differently next time around to make more than $26,000? Because you're worth way more than $26,000. And so we've got to figure out how to do that better next time around. And it might be, after we get this debt paid off, it might be staying in the truck a little

bit longer to figure out, how do I turn that business into more money? But Jade, I know you wanted to jump in. Because here's what I'm thinking. I'm thinking we have an opportunity to test two concepts right now, Ken. I agree. Number one, for the year just started, right? We're still pretty fresh and new in this new year. If you do the driver thing and you hit somewhere in the middle and you make $70,000 a year

and your wife's a nurse, she's making $60,000 a year. So you're at $130,000. If you live like you're only making $26,000 on that barber money and you use everything else to start paying off this debt and you're out of debt in the next two and a half years or i'm sorry in the next one and a half years you'll you'll know then that when you're done paying off this debt okay i can if we wanted to take the financial hit and me strike out as a barber i know i have this baseline of customers and i can just build from there at least you'll know financially you can do it because you've been doing it for the last year and a half

to pay off debt. So there's part of me that's like, hey, that's really great. Then the other part of me, I'm just wondering, I'm not passing a judgment, but I feel like 60K is low for a nurse right now. Am I wrong?

Am I right? Does it depend on the area? It definitely depends on the area right now. We're not actually in Daytona. We just said that because they ask for the closest major city. It also depends on the type of nursing. What is she doing and where is she doing it? She is a traveling nurse.

She stays local, but she goes to the patient's homes and geriatrics. She just sucks on everything. Okay. patients' homes and, like, geriatrics. She just sucks on everything. Okay, geriatric. So that's, and again, I'm not an expert on this part, but I think the geriatric nursing and kind of that local thing is somewhat limiting. She has definite room to grow in her income. But the point here is what I think can happen, especially in your area, I think you can live off of your income, 70,

and I think you guys can put $60,000 on this debt every year, and I think you're out of debt in a year and a half, two years. I agree. Daniel, how does that hit you? There's one more element to the puzzle. Is it your wife working extra overtime hours? No. It's not? No, I think it's not no we we just found out oh yeah we just found out that

she is eight weeks pregnant so we're expecting another child we already have a four-year-old okay okay so even more fuel under the fire now here's here's here's where this turns this in a frustrating direction possibly for you i want you for until your wife has this baby i want you to pause these efforts because i want to make sure you stack up as much money as possible now here's the thing and i feel like i have to be very very clear on this you're pausing you haven't even started a debt snowball yet but we were gonna we if you hadn't told me about the baby i would have said okay you're doing your debt snowball you're living on you know the 70,000 you're throwing 60,000 a year at this thing um because you what i want to clarify here and be really just hear me so clearly

so many times people call in they've already started their debt snowball and they just want to know where to go next but they're having a baby so we tell them to pause the debt snowball and they just want to know where to go next, but they're having a baby. So we tell them to pause the debt snowball in order to stack up money. We call it stork mode, stack up money until the baby comes, make sure you can pay, you know, for all the costs associated with the baby. And then when the baby's home and healthy, you guys take whatever money is left, throw it on the debt and keep the debt snowball going. In your situation, Daniel, you're going to have to be doubly diligent because you haven't even really gotten started yet you haven't even really gotten on a budget yet and it could be very easy for you to just kind of lull back into your old ways coming off of this call because you're like well

i guess i can't start the baby steps yet i can't really do anything so until this baby's gone so i don't do that okay don't do it i want you to stack up money as though you were going to put it on the debt how much equal intensity what do you think the number is for him i think they live off of his income no no i know but how much does he's saving for stork mode what do you think all of it i think he's not he i don't think he's touching his debt snowball i understand but what's he saving per month based on this you're saying everything outside of their bills? Basically. Okay.

Whatever he would have put on the debt snowball. Whatever you would have put on the debt snowball, you're saving it. Put it in a high-yield savings account, and everything goes well. We're praying baby goes well, mama goes well, everything is good, and all you're on the hook for is your deductible, which is probably $5,000 or $7,000, whatever it is. And then all that extra money that you've been saving up over the course of these months, when everybody comes home safely, you're throwing it at the debt and it better be a lot. Yeah. Now that's 130,000 if you get in the

truck. So, and she's got to work too. And here's the thing. You have got to get in the budget. You've got to budget and save. Those are the two things that Jade's told you to do. Budget so that you can save and then you take on the debt snowball. But I'm going to tell you one other thing, brother, you've got to commit no more debt on businesses, no more borrowing. You took in way too much debt and you can get out of this, but you're going to be gutting it out for a couple of years. That means you're in the truck. And when you're not in the truck, you're clipping some hair. And that's just how it goes until you get out of this. And you can do it, my friend. Appreciate the call. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm Ken Coleman. Jade Warshaw joins me. The phone number if you want to join us here on the conversation is 888-825-5225. All right, now for our neighborly question of the day. It is neighborly, your hub for home services. Winter is rougher in some areas of the country than others, but there are things that make sense to do no matter where you live. That's why neighborly has a helpful winter checklist you can download for free you can check it out at neighborly.com slash ramsey all righty today's question comes from jillian in delaware how do i deal with incompetent workers ken they're always making excuses or blaming someone else for not doing their job the The work that I do depends on them getting things turned in on time,

and I have to chase them down every day. The boss doesn't seem to see what's going on. What can I do? Oh, boy. Okay, this is a tough one in that their lack of diligence is affecting your ability to do your job. So you have one way to take this and that's up. You said the boss doesn't seem to see what's going on. If you were on the phone,

I could get a little bit more detail. So I'm flying a bit blind, but I would be going to the boss going, hey, I'm not playing tattletale. I'm not griping. I'm just telling you what I'm experiencing and I need you to weigh in. And so then you describe, so I'm supposed to do this ABC, but I can't do ABC if this over here isn't being done. And I need your help because it's affecting my ability to get the job done. Can you check into this? Or is there something that, what can I do? That's the way you got to take this to them. And you're going to find out very quickly whether or not this leader gives a crap. That's what I'm wondering. And we're going to find out very quickly whether or not this leader gives a crap that's what i'm wondering and and we're going to find out if in fact um your co-workers lack of diligence really does affect you as much as you think i got a hunch and jade this is why i

love the question of the day but it's so limiting because i can't dig yeah but i just wonder if this person here jillian who seems to be very diligent i'd hire jillian just i would and just tell because jillian's gonna get her job done okay i think jillian could be focused a little too much on what everyone else is doing because it's not up to her standard and it's irritating more than it is limiting her i could could be wrong. Well, if her job depends on, if it's kind of like a flow. Then it is limiting. And they're late on their deadlines.

It may not be. It can cause her to be late on her deadline. That I'm acknowledging. Like if I don't turn in my articles on time. I get it. I'm throwing everybody else off. It might be a situation where it's more irritating than limiting.

And in that case, here's why I'm bringing this up. Because I think a lot of people can identify with this. In that case, you got to do your job and you do your job really really well and it is going to then shine a light on everything else and if that doesn't fix the situation we're moving on so let's roll she can't solve this let's role play this out all right because you be the Because you be the leader. I'm going to be Jillian.

You be Jillian. You know, I just wanted to bring this to you. I'm not trying to be a tattletale. I'm not trying to tell on anybody. But I found it difficult to hit my deadlines. And here's what I'm finding is the challenge. Michael, you know, I love Michael. He's great on the team. But he's consistently late in turning in his projects.

And it's causing me to be late or have to work harder to hit my deadlines and i just i wonder if there's something i can do to kind of make things run smoother or if this is something you've noticed have you talked to michael about it i haven't i you know i i wanted to bring it up because i didn't want to you know do you feel like if you talk to him about it he might be defensive and it might not go so well is there a little bit of just kind of some emotional safety we want to practice here? You know, I've emailed him sometimes and said, hey, I just want to check in. I'm waiting for you to get this so I can start. I need you to detail for me what specifically he isn't doing and how that's affecting your ability.

Can you lay that out for me? Well, yeah, because if he doesn't turn in his articles in time, I'm late. And if I'm late right and if I'm late then I'm looking bad and unless I point back to him right it all falls on me so I don't always want to be saying well it was because of Michael it was because of Michael got it and do you have can you give me three specific examples yes Monday Tuesday and Wednesday and so that's a good leader by the way I'm role-playing the good leader that's a great leader and then the leader's gonna go all right let me talk to Michael let me dig into it and I'm gonna get back to way. I'm role-playing the good leader. That's a great leader. And then the leader's going to go, all right, let me talk to Michael. Let me dig into it, and I'm going to get

back to you, and I'm sorry that you're dealing with this frustration. That process is on me, so I need to figure out a solution. Stay tuned. That's what I want to hear. That's good. That's the good leader, but again, we're role-playing. And so if that's the response, great. Wait. If it's not the response, start looking, handle your business so that you can hopefully be able to control the perception of you if you leave. You don't want to become a thorn in that leader's side because that person, if it's an unhealthy leader, they can end up hurting you as you go to look for something else. So in that situation, you go, I can't fix it. I tried. Let me stay above the fray, protect my image, my personal brand at all costs.

That would be the backside of it if it doesn't help. And a lot of times leaders aren't going to fix it, and that sucks. Let's go to Belton in Richmond, Virginia. Belton, how can we help? Yes. So thank you for taking my call. So I'm 32, single, no kids, graduating this year with my PhD and I need a new car. So my question is, should I be more, I'm sorry, the only debt that I have is my student

loans. It's about 67K. How'd you forget about that? Keep going. And so I'm trying to figure out if I should be more modest with the car and do something under 20k about 100,000 miles or put a little bit more money into getting a newer car that will last longer how much money do you have? I bought 10k saved and I

plan on my goal to save at least another 10 to 15k this year I make 80k a year okay let me give you a couple of And I plan on, my goal is to save at least another 10 to 15K this year. I make 80K a year. Nice. Okay. Let me give you a couple of, I'm just going to give you a couple rules of thumb, and then I want to see how it jives with you.

So our rule of thumb is we don't buy brand new cars until we have a millionaire net worth, a one million net worth. And the reason for that is because new cars, brand new cars, lose 60 to 70% of their value in the first three to four years really quickly. And most of us can't afford to take that hit. Like we need that money. Like we want that money. So that's the rule of thumb there. That's rule of thumb number one.

Second rule of thumb is we say, okay, if you say I'm going to buy a nice used car, we would say that it shouldn't be worth more than half of your yearly income. So in your case, it's just you. You're single. If you make $80,000, $40,000 would be your maximum limit. So that's number one on a used car thing three is we suggest that you would pay off your debt especially if you have a car that works and runs that you would pay off your debt first before you even consider buying another car or a new car or used car and then finally the kicker is this is thing four we would suggest that you pay cash for whatever you do get so you've got four guidelines there

um i think the first one we can tick off the box like i think we can both agree that you buying a brand new car right now is probably not a good idea yeah so we can take that one off the list and that which means we can agree and i think we can both agree on the idea that 40 would be or 40 000 would be the max, right? That's half of your income. That's a little bit more than what I was thinking. Exactly. So we're in agreeance on that.

Next thing is, can we agree that whatever you get, you pay cash for it? Okay. I'm hitting the resistance. I like it. I like it, Belton. Okay. So let's start with that. Let's agree that you pay cash because here's the resistance. I like it. I like it, Belton. Okay. So let's start with that. Let's agree that

you pay cash because here's the thing. There's two thoughts to this because you're going to go off of here and do what you want to do. But the last thing, you know what it feels like to have $67,000 of debt. The last thing you need to do is go back into debt or add any debt to that. Correct? Right. Yeah. So let's solve the problem the problem in your financial life right now is debt and i always say you because you're making a good income you're getting the phd you're doing all the things right but the glaring obvious problem here is that sixty seven thousand dollars of student loan debt that's standing out i always tell people you can't solve a problem while simultaneously creating it so if you want to solve this problem of debt belton

you've got to decide i don't borrow money anymore and I'm not going into debt anymore. And that includes the car. You said you've got 10,000 saved and you can maybe save another 10 or 15 more. That's $25,000. Where I come from, that's a decent bag. That's a nice car. Yeah. Belton, I'm going to jump in real quick. What are you hedging on when she throws that at you and you're going, I don't know. What's holding you up from going, I'm all in? I guess growing up, it's about being that cash poor thing

and not having cash in the bank versus putting it all on something. But it's not yours. It's not yours. As long as you owe $67,000, you don't have any money. You still owe $57,000. You see what I'm saying? That's just basic math. So what I would suggest you do, keep $1,000 saved, pay off that $67,000 as quickly as possible, save up cash and pay cash for a car.

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