The Ramsey Show - App - How Do I Get Started Investing and Building Wealth? (Hour 3)

Episode Date: May 5, 2023

George Kamel & Rachel Cruze answer your questions and discuss:   "Should I increase my emergency fund for inflation and potential layoffs?" "How do I start investing at a young age?" "I'm $200k in consumer debt. Should I declare bankruptcy?" "Put my TSP in a Roth or traditional account?" "Should we use some of our emergency fund for investing?" "My mom gifted me my sister's car but still wants me to make payments..."  Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Enter The Ramsey Cash Giveaway for a chance at $3,000! https://bit.ly/TRSgvwy Shop our bestsellers during the $10 Sale! https://bit.ly/TRS10Sale Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pod's moving and storage studio, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Rachel Cruz this hour. The number to call is 888-825-5225. You hop in, and we'll talk about your life and your money. And if you're listening to this show, I'm going to make a wild assumption that you hopefully enjoy it. And if you do, let me remind you that this show is no cost to you. And so here's the only thing we would ask

of you that's also free. Hit the like button wherever you're hanging out. Consider subscribing. Hit that button as well or follow if you're on Spotify. And leave a review on the platform that you're listening on and let us know what you think of the show. And share it with a friend. A lot of the times people say, oh, yeah, a friend told me to listen to it. They sent me this episode. They sent me this call or this YouTube clip, and it got me on board, and now I listen

for motivation. So appreciate you all doing that. It helps us spread this message and spread the hope and impact we try to make every day. All right, let's go to the phone lines. Hayden is in Salt Lake City to kick us off. Hayden, welcome to the show. Hey, thanks for having me. Absolutely. What's going on? Yeah, I just have a question. Last year, I was on Babysit 2, and I just had a feeling that with all the tech layoffs and everything that were happening and the market, so I had stopped doubling down on debt, and I went to an emergency fund. I built

that emergency fund up to six months now with some of the spendable income that we have, and I just want to know if I should continue to pad that up with inflation being crazy, or if I should go back into diving into debt, or even putting some money into my Roth or my future investments. How much debt do you have? I currently have $75,000 in consumer. All right. And what's in the emergency fund? $30,000.

Okay. And that's all the liquid cash you have currently? Yes. Okay. So, number one, we're doing the baby steps out of order. And so I would encourage you to stick the plan. And right now you're making this decision, it sounds like based on fears, which some are legitimate, right? There could be layoffs in the tech space. Correct. How likely is that to happen for you? I don't really know. That's the scary part of it.

Have there been layoffs at your company? There was. There was one round, but I made it through that. I'm just not sure if there will be another. Okay. What kind of consumer debt is this? I just have a truck and a travel trailer. My family, both of my children, are under school age,

and I was in the military for 10 years, so my wife and I, we traveled where we met in Europe, and it's something we wanted to continue to do with our kids before they went into school, and it's just an affordable way because I can work from the road, and so that's why we wanted to continue to do with our kids before they went into school. And it's just an affordable way because I can work from the road. And so that's why we went through and decided to get a travel trailer and a truck to pull that. Oh, and you got a loan on both of them. Correct. Okay.

And you're still traveling right now? Yes. We travel probably two weeks out of every month, especially during the summertime when the weather's good. Okay. And what's the household income? Household income, we are grossing about $200K, and I net about $170K. Okay. So how quickly could we pay off this consumer debt?

I think if I stopped padding it, my emergency savings, I could have that RV paid off by the end of the year. And then the truck probably paid off shortly after that. My wife's in grad school. And by the end of next year, she'll be making anywhere between $90,000 to $100,000. And then we just want to take all of her income and toss it towards all the remaining of our debt. And I just, yeah, my big question is with inflation, everything else, do I pad up my savings, my emergency fund a little bit more just to make sure that we're

recovered for six months? Or do I just say, hey, no more savings and let's just start tossing this everything we have at bed? Yeah, Hayden, you may not like our answer because we really do go back to the baby steps because it's just the proven plan that has worked. And we have found that when you don't have debt, not only financially are you freed up, but so many other places of your life you are freed up. And so what I would do if I were you, I mean, according to the baby steps, I would take all of your savings and I would throw it at the truck. Is the truck the, what's the, what do you owe on the truck? I owe 51 on the truck and 23 on the travel trailer. Okay.

I would pay off the travel trailer today. I would take that savings and pay it off. And then I would work with, yeah, your wife to say, okay, what can we do to get this 51 paid off? And then start going back to your emergency fund? And I understand the fear of, hey, if something were to happen, but do you think just let's just paint a worst case scenario. Let's say you did, say you were laid off, okay? How quickly do you think you are marketable to go get another job? I think pretty quick.

And I don't know if my situation is unique. Because since I was in the military, I do get a VA disability. And I know you guys are big on don't count on the government, don't count on the paychecks. And I don't want to do that either. I don't know what those people in D.C. are going to do. My wife is using my GI benefits to go to grad school. So she gets like a $2,000 a month stipend. That's great.

And then I get my VA disability. And the VA disability covers 100% of our consumer debt and our mortgage. And so if that went away, if I got laid off and that went away, I would still have that VA disability and my wife's monthly stipend for school. So you're still able to survive without dipping into the emergency fund. Okay. So then that's another reason why I'm like so confident to say

to use the savings to pay it off, to pay off your consumer debt because you guys are good. You have so much padding around you with all of that that I would focus Hayden completely on this because what's amazing to think about that if you guys paid all this off

and then your wife goes and makes another hundred grand and you guys are bringing in, I mean, you know, close to 300 grand. You guys are gonna be able to get emergency funds so fast. You're gonna be able to invest so quickly. And you guys may even say, look up like, hey, let's upgrade the trailer, you know, and get something nicer. You know, like there's just so many possibilities that happen, but not having payments is going to help you get there faster. So we are all about following those baby steps because they work. So Hayden, if I were you, I would pay off the trailer today.

Again, teaching that going all the way down to that $1,000 emergency fund and you guys attacking the truck after that. What's the payment on the trailer? Currently the payment is only $250, and I've been putting $350 a month on it since we purchased it last year. So I've been always paying a little bit more on, on the RV and on the truck as well. I just. Okay. Are you investing at all right now? Uh, no, I backed up all my investments. The only, well, actually the only investment I have is into

HSA. My son's got some medical conditions. He was born very early. So we just want to make sure we have something good over there in HSA. We have probably about $10,000. Well, we have $11,000 sitting there now. So we'll cover out of pocket for the year if we needed to with insurance. And what's encouraging, Hayden, if you guys paid that off today, you'd have $350,000 extra a month to throw towards the truck on top of the truck payment you're making too. Yeah, you're paying $350,000, add that up. And so here's what I'm seeing, Hayden, just based on the numbers. You could have only $45,000 left in debt. If you use $29,000 of your $30,000 savings towards the debt, making $200,000 with a freed up payment, you're going to pay off that $45,000 within six months

max if you go hard at this thing. Then we build back up the emergency fund. Then you have true safety. Right now you have the illusion of safety. And so if you have this kind of scarcity mindset where like it all could come crashing down. Well, if that's the case, then having no payments is the truest form of security. And so you're going to get there with this income. Your wife's going to finish grad school and have that great income. You guys are going to be back to a great financial spot. But temporarily, it's going to be scary.

But we were rooting for you, man. This is the Ramsey show. Hey, you guys, health insurance costs are only moving one way and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of over $11 billion in medical bills since 1981. And CHM has also helped them stay true to their values and avoid miles of red tape. And CHM support goes far beyond meeting financial needs.

They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event. So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. This is The Ramsey Show. I'm George Camel, by rachel cruz who is also my co-host on smart money happy hour so if you're looking for some fun some levity some entertainment with a healthy dose of financial teaching kind of it's kind of a do it all yeah a spoonful of medicine a spoonful of sugar makes the medicine go down i think that's what smart money happy hour is that's what it

feels like and people are loving it. Kids listen to it. They're like, I listen, my 10-year-old loves it. And then people are like, I'm 75 and I love listening to you guys. So something for everyone with Smart Money Happy Hour. We're all there. We're here for it.

So check it out this weekend. You can binge all the episodes that are out there every Thursday. All right, Claire joins us up next in Seattle, Washington. Claire, welcome to the show. Hi, thank you for having me. Absolutely. What's going on? So I'm turning 18 years old this year, and I really, really want to learn more about investing

and where to start. I work as much as I can with school. I have some money in my checking account, some money in my savings account, but I've heard so many different options about investing in IRA, doing real estate, all of this, but I'm just turning 18 and I really want to know what you guys recommend for young people looking to start investing. That is awesome. Way to go. Well done. So you're graduating soon? I'll graduate in a year. I'm going into my senior year this year. Okay. And what are you doing for work? I work at a small cooperative in my kind of small town. It's like an agriculture store almost. Okay. And what do you make there? A little over $16.50 an hour.

Cool. And how many hours are you working? It usually fluctuates week to week between 16 and 20 hours. Awesome. Way to go. And is your GPA solid? Yes, 4.0. There it is. You're amazing, Claire. Because I was just thinking in my head, Rachel, you know, people who work 15 to 20 hours while in college have a higher GPA than those who don't. And there we go.

And you proved it. Okay. So you are a rock star, number one. Do you have any debt? I do not, no. And how much do you have in checking and savings? Savings, I haven't really been sure what to do with it. So I have maybe around $700. In my checking account, I have over three grand. Way to go. Gosh, you're doing so well. Okay. So I would set aside a little bit of that for kind of a starter emergency fund for you. Obviously, you don't have a ton of expenses now. Are you living on campus or on your own? I still live at home.

I'm enrolled in a local community college, so I live at home, and it covers my tuition. So I am still at home not paying anything for that. That is awesome. Great job. Okay, so let's talk about investing. I think the Roth IRA is your best bet right now. Okay. Invest into that in a good growth stock mutual fund.

You can diversify it across the four types that we talk about. We have a great investing guide on our website. I'll make sure Austin gets you a link over to that that can help kind of unpack this at a deeper level than we can do on radio. But I think trying to, I don't know that you would max it out with the income that you have, but getting to that Roth IRA and consistently putting money away is going to be your best bet at 18. Okay. I don't think you need to worry about all the other stuff and all the noise you're hearing. You can stick to a Roth IRA. Once you start your career, you'll probably have an option for a Roth 401k. And that's another great place and start doing 15% at that point.

Yeah. Once you graduate, Claire, I mean, having some cash on hands between graduation and entering the real world and career, it's always good just to have some because you may be moving, who knows what kind of, you know, if you take a job. Could be deposits, you might need to get a car car upgrade that's right so maintenance just kind of having some cash for that transition just thinking through that and then once you kind of get settled which i have a feeling you'll probably settle pretty quickly because i think you know what you want in life you're very you're very proactive so once you yeah have that first job and you're settled in to where you are and got your first apartment whatever it is and you're renting, that's when, yeah, the 401k, I would look into something like that. But for now, I'm with George,

I think having cash on hands and looking at a Roth IRA, I think it's going to be your best bet. Yeah. And if you want to help setting that Roth IRA up, you can get connected with one of our SmartVestor pros, which they don't work for Ramsey, but they are vetted investing professionals that we trust. And if you go to ramseysolutions.com, click on Trusted Prosros, which they don't work for Ramsey, but they are vetted investing professionals that we trust. And if you go to RamseySolutions.com, click on TrustedPros, you can connect with one in the Seattle area and they'll get you started there. Way to go. Awesome. Let's go on to Brandon in Dallas. Brandon, welcome to the show. Hello. Can you guys hear me? You sound great. Yes.

Awesome. Hey, I have a question. My wife and I have gotten ourselves in a really bad spot. So we have about $250,000 in consumer debt. That's credit cards and personal loans. We're just not sure what to do. We don't have enough income to pay all of our minimum payments. And so we're not sure if we should file bankruptcy or just stop paying until we can afford to settle, or we're just not sure where to go from here. What caused y'all to go $250,000 in credit cards and personal loans? Well, it's everything you guys say not to do. We decided, I decided, I should say, to flip a house and then buy two more houses with a lot of leverage right when interest rates went up. And

we ended up taking a really big bath on these three properties and we lost money on all three of them. I'm so sorry. Yeah, it's definitely been tough. And on top of that, during that time, I was so focused on that that I'm in real estate and my production pretty much went to zero during that time because my mind was just so wrapped up in that. So that's where we're at. And we're just really not sure where to go from here. How old are you guys? I'm 28.

My wife is 27. We have a two-year-old daughter, and we have another that's going to be arriving in October. Oh, my gosh. You know, it's wild, Brandon. If you're familiar with my family's story, that little baby that's going to be born, that was me, and my sister was two years old when my parents filed for bankruptcy. And through real estate issues. I mean, dad did exactly what you did, but on a massive scale.

And they called all of his notes. And if he was sitting here today, I think his empathy would be at the highest level because he was literally you 35 years ago, which is pretty wild. So I have such like a heart for those kids, your kids and your wife and all of it because I know you guys are under a lot of stress and I know there's probably a lot of shame and embarrassment and you feel a lot of the weights. And so I hear all of that. So my question would be, how much did you make when you were in real estate and in your head was not all over the place with these other rentals and you were so focused on it, what were you bringing in?

So, I mean, I would average probably somewhere between nine and $10,000 a month. My wife also works. She brings in about five to $6,000 a month. Okay. And what is the case today? What's kind of the average month for you guys? So, so right now she is still bringing that five5,000 to $6,000 a month. I've just rededicated myself to real estate as of last week. So right now it's nothing. Ideally in the next, if I'm realistic, maybe 90 to 120 days, we're going to start seeing some proof from all the work I'm doing today.

Okay. Yeah, Brandon, I don't think, you're not bankrupt, but I would say catching up on those minimum payments is your number one goal. And Brandon, in your future here for the next probably two to three years, you're going to be doing

more than just real estate. I mean, you're going to be doing side hustles at night. You're going to be exhausted. You're going to be exhausted because the amount of effort that you guys are going to put into this, because I believe you can, to get out of this hole, it's going to take a lot. And you're going to be really uncomfortable. And it's going to feel like

a sacrifice because that's what it's going to take to get out of this. And you guys have to, I was going to say, promise us, I mean, more promise yourselves that you align in the sand is drawn. And for your kid's sake, you will never ever go back to this again. That debt is off the table 100%. Because if you keep dabbling in it, and Brandon, I'm telling you, you're gonna go right, you're gonna look up again,

you're gonna be right back in this position. So you guys need a mindset shift, you and your wife, and draw a black and white line and say, never again, we're not doing this. And for the next three years, our lives are going to look a whole lot different. And it's going to be really hard with those babies at home. But Brandon, you're going to be able to do this. You guys are going to be able to get out of this, but it's going to take a lot of work and a lot of sacrificing your lifestyle for it to put every penny possible to go towards this debt.

Yeah. Brandon, you said it was $250,000 total? Yeah, but I do have kind of a wrench to throw in it. So I guess two questions. Number one is total debt payments, we have around $6,000 on top of living expenses of around $9,000. So number one is we're just not sure, like, how do we actually cash flow this thing? Like, what do we let go?

Okay, here's what I'm going to do, Brandon. I'm going to gift you guys Financial Peace University and Every Dollar Premium to get on a plan. But looking at the math on this, it's just a math equation. Can we throw $7,000 a month and be done in 36 months? It comes down to something that simple. Hang on the line. We'll get you those resources. Well, if you haven't heard, we are doing something around here that we've never done before. So right now, all of the Ramsey personalities are leading a Financial Peace University class,

including myself and George Camel. We are all doing it. So we want you to join our virtual Financial Peace University class. We are so excited about this because you're going to learn how to handle money, how to pay off debt, how to build wealth, all of it. And we are going to be your personal cheerleaders

in the class. Plus, you are going to be in a community of thousands of others who are going to do this class with you. So we are so excited about this because we know what this class does. We know the lessons that are in it, the content that is in it will help you understand how to handle money and truly change your life. You're going to be in a different place with money from when you started to when you are

done. So my class actually starts this Monday coming up. So you got a couple of days to sign up. So go to Fpu.com. That's fpu.com. And my class is going to be so fun. So you should come and join my class. Wow.

Shade was thrown right there. George's class later in the summer, I think, will be fun too. But mine's during a lunch break. I think yours is too later in the summer. So Rachel's is Mondays and Wednesdays at 1 p.m. Eastern time, 12 p.m. Central time and that starts Monday. And what's cool is

there's nine lessons. Normally it's nine weeks. We're crunching this down. No, I think mine's one p... It is. Yeah, you're right. Sorry, George. You know my class

better than mine. Questioning my time zones? No, I'm sure. I was like, Central time, Eastern time. I know, I'm terrible at that. Okay, but it's gonna be so fun. It's great.

So we're gonna meet, let's see, four or five weeks, twice a week to cover all nine lessons. So we're contracting it down to make it more palatable for those that want to get through it. This is kind of a bootcamp version with us as your coordinators. And mine starts June 20th. So if you want to start later on in the summer, mine will be Tuesdays and Thursdays. You don't need to start later. You need to start on Monday with me. I'm going to say, if you're ready to go through FPU, do not wait for me. Rachel's going to be a fantastic coordinator.

And my class will be taped so you can rewatch if you need to, if you can't do that time. Or Jade Warshaw is doing a later time during my dates as well. Yeah, hers starts on Monday as well. So if you're ready to go and just, you can go on FPU.com. You can see all the different classes, the different times, do what works for you and your spouse if you can can bring them along but it's gonna be awesome about this i know i think it'll be really fun and we've got thousands of coordinators all across the

country that have been leading classes and so we're like how cool would it be if we all led a class uh during the summertime which is traditionally a time when people may be uh you know putting hitting the snooze button going going on vacation, overspending, and we want to get you on a proven plan. It's the same thing I went through 10 years ago that helped me go from broke to millionaire when I first started at Ramsey. And it is incredible.

And I'm not just saying that because we are in the lessons as well now, which is really cool, but it's seriously life-changing content. The accountability where you have to show up every week, it really helps you actually follow through with this. So highly recommend it, fpu.com, go sign up this weekend. All right, let's go to the phones. 888-825-5225 is the number to call. Isaac joins us in San Diego up next. Isaac, welcome to the show. Hi, Rachel. Hi, George. It's a pleasure to be here and a huge fan of Smart Money Happy Hour.

Oh, thank you. Thanks, man. How can we help? Of course, of course. So just a quick question. I found out, me and my wife, we both put 15% towards our TSP, our retirement. My question is, I found out that the 5% match that we get apparently only goes towards traditional. So my question would be, the 15% that we're putting in, do we continue to put 15% all in Roth, or do we switch it between half traditional, half Roth, or all traditional, now knowing that that 5% is locked in traditional? I would continue on with the Roth under 15%.

Okay. It's normal. That's a legal thing with the IRS, where the match has to be on the traditional side, and it's not an issue. All that means is that 5% portion, when you go to retire, you will have to pay taxes on that when you withdraw it. But it actually creates a really – it's actually, from a long-term financial planning standpoint, it's good to have different buckets with different tax implications. Because you might go, hey, we want to tap into the tax-free money first

based on our brackets and income and taxes, and then we're going to tap into the traditional side later. So it actually allows you more flexibility in retirement when you have different buckets you can pull from. All right. Well, easy answer. I appreciate your help. Absolutely.

Great question. Way to go. Both investing 15% into those thrift savings plans. So good, Isaac. So thrifty. All right. Let's move on to Erica all the way in Anchorage, Alaska. Erica, welcome to the show.

Hey, thank you guys so much for taking my call. I'm a little nervous right now. Oh, it's just us. We're your friends. Just little old Rachel and George. I know. I'm a huge fan. So a little backstory. Two weeks ago, my husband and I made our final mortgage payment. So we're on baby step seven. Yay! Good job, Erica. Well done. Thank you. It hasn't sunk in yet. So I feel like by the end of this month, when we don't have next month's payment, I'm going to be like, oh, wow, there's no mortgage payment there.

So great. We keep that. That's awesome. So we had a $30,000 emergency fund because I wanted, basically it covered like a whole year of expenses. So now without that mortgage payment, my husband and I are discussing pulling $10,000 from that savings now that it's offset without that mortgage payment and starting to do a little investing. And I wanted to hear your thoughts on that. Is that smart or not? Well, have you been doing any investing up until now?

So, yeah, we've put about 30% of our income into retirement. So this $10,000 is just kind of like play around investing into whatever we decide online. How much do you guys make a year? About $150,000. Do you feel like from a lifestyle perspective, you guys are, and I know it'll probably change with the office mortgage payment but are you guys enjoying your lives because investing 30 percent of your income and then after taxes and giving and all that do you are you guys happy with your lifestyle yeah I mean I set up a bunch of different accounts so we're like saving for future things um and then we're going on a trip this month so I feel like we aren't like inhibiting anything with our life. So yeah, we're not, we're not struggling with pain, you know, all of that,

but this is kind of just like taking that leap of pulling that much money to do that, which kind of scares me a little bit, but my husband's like, let's do it. We can make a lot of money. And how's he planning on making a lot of money with this 10,000? So this 10,000, there's a mine opening up where it's going to start operating. So we want to buy into that where the price is really low right now. And with it up and operating, it's going to increase. Okay. Did you say a mine? Yeah, it's a graphite mine. Okay.

I'm not up to speed on the mine industry. Have you guys done your research? I know I'm very ignorant when it comes to mines. I know that's probably shocking. But have you done research? Have you seen a pretty consistent pattern with people that have done this? Like, does it feel like a risky investment

or is this like a shoe in like, oh no, everyone in Alaska knows that this is like a great, easy place to put your money? I think, yeah, I think, I mean, I feel like it's safe, but it's just taking that much money from savings to throw into this well you guys i'm kind

of like yeah well y'all have enough in your emergency fund though minus the ten thousand right like yeah you're playing you have a paid for house erica you're fine just think about this if that would you emotionally even though it would hurt be okay financially if this ten thousand dollars was burned in a bag and you could never get it back again would you be okay financially yes but obviously that's so we don't want that scary but yes we don't want that but but you guys have a paid for house i mean you're in a place that you i mean yeah take it i i just don't i don't want to put my own hard-earned money in something until i know like oh yeah there's for sure a pretty much guaranteed uh over the long term it will will appreciate. Appreciate. So again, if mines do that and you know,

yeah, this feels not like a crazy risky investment, then I would feel comfortable. But again, even if, I'll say this, even if it was a risky investment, you guys can take the hit. You know, even if it went under, I just wouldn't want my money going to something that I wouldn't do it to.

We're close to half a million right now. Okay. So the key is you don't want these kind of fun, play money investments to take up a lot of your net worth. And right now it's not a huge amount, but maybe you cut back and go, we're going to do five grand in the mine and five grand into a taxable brokerage with mutual funds. And we hedge our bets there. That feels safe. Yeah. But I don't know anything about mine, so I don't know what to tell you. I don't know. Did he see an Instagram ad for this? I guess there's a lot more questions to ask, but we'll save those for another time. Thanks for the call.

Way to go on Baby Step 7, paying off the home. Congrats. That's an amazing accomplishment. This is The Ramsey Show. Our scripture of the day comes from Proverbs 25.2. It is the glory of God to conceal things, but the glory of kings is to search things out. Walt Disney once said, when you're curious, you find lots of interesting things. Reminds me of the old Ted Lasso quote, be curious, not judgmental.

There you go. Now, guys, if you're not attuned to the Ramsey newsletter, you got to get on board. This thing's completely free. And we are talking about budgeting in this one coming out on Sunday. And if you don't know, a budget is a great start to meeting your money goals. And as you probably figured out, making a plan is one thing, sticking to it, whole nother animal. So we've put together our best easy to follow tips to help you not just have a budget, but have a successful one. So go sign up for the Ramsey newsletter at ramseysolutions.com slash newsletter, and you'll be inspired with these 15 practical

budging tips on Sunday. Open phones at 888-825-5225. Kevin is up next in Houston. Kevin, welcome to the show. Hey, thanks for having me. How are you guys doing? We are doing great. What's going on? So as of a couple of hours ago, I just completed Baby Step 2 and 3 in a matter of clicks. Sold a bad investment property.

Wow, Kevin, congrats. How did that feel? Yeah, thankfully from the sale, I had enough to finish off student loans and fully fund about five months of an emergency fund. Oh my gosh, Kevin, well done. Big day. That's exciting.

Thank you. It's a great Friday. So the question is, I had been, I mean, the house sale's been a little bit in the making, but I had been thinking about like really sale has been a little bit in the making but i had been thinking about like really trying to give back after all this my dad actually helped me a lot with this investment property and through some of the pains of it um so the question is more about

like kind of how much to start giving back and whether or not it's too much like i was considering trying to do like even just honestly this month doing like a thousand dollar donation to kind of a church organization that he's really active in, kind of in my mom's name. Oh, that's so kind. As kind of a first step for starting to give back. But I don't know if that feels like too much right off the bat or I don't know. It's weird to balance suddenly having extra income. Yeah, for sure. So how much do you make a month? Per month, I make around right now $4,400 a month after taxes, but that's going to go down once I

increase my retirement contributions. Okay. And how much do you have? You said you have five months of the emergency fund. Do you have any other savings or is that it? Just the $1,000 that's there right now. Okay. Yeah, that's great. There's no real parameter for giving. I'm wondering, could you do it monthly and just have a regular donation you make?

Yeah, I probably could. It feels different for me, but I mean, I guess in the long run, it's still money going to the organization, right? Yeah, I mean, I think, honestly, I'm like, if you feel like I really do want to give this money and you're able not to get behind on bills, like, you know, Scripture says that to take care of your own household first. And so there is something to be said about the wisdom of making sure you're not, you know, you're going to be able to pay your light bill and stuff, right? I mean, like your basic needs and necessities are covered. And if you have $1,000 extra margin this month, you you're like i want to do it then yeah then do it but i would i would also to george's point there's a habitual action to be taken a habit to be produced when it comes to giving and that's and that's really the that's the heart change where this becomes a part of your rhythm every month that you give something to somewhere so if you want to give a lump sum

this month to this organization in your mom's name for $1,000, and it's not going to put you financially in a hardship, then yeah, if you feel led to do that, then I mean, I would, Kevin. I think that's great. And then I would look at next month to George's point and say, okay, let's say I go down to $4,000 a month. I want give 400, 10% of that. So $400 a month, I'm gonna practice giving. Is that gonna be to an individual? Is that gonna be to an organization? Is that gonna be a tithe to my church? How do I wanna use that $400?

But letting it be a habit, but that's part of what you do because we always want people to be giving, saving and spending consistently throughout the month, regardless of really where you are in the baby steps. So that giving is a really crucial piece and spending consistently throughout the month, regardless of really where you are in the baby steps. So that giving is a really crucial piece to winning with money long-term because it just changes you.

I mean, it really does. There's a heart change that occurs when you are someone that gives and lives with that open hand and money can easily become a quote-unquote God in your life. It can be a level of, oh gosh, if I can just make this income, everything will be fine. A lot of value is placed in it. There's just a lot there. And

when you give, it kind of puts all that in check where you're like, okay, I'm actually letting some leave my hands and I'm not just hoarding it. So it does something to your heart too, Kevin. So that consistent giving, like George was saying, every month, we are fans of. And the fact that you're even asking this question tells me that you are a generous person and you will continue to be, especially now that you're out of debt. Rachel, you've said give a little until you can give a lot. And when you're out of debt, you can give more, which is an awesome thing. Love it. Love the question. All right. Let's wrap up with Brian in Los Angeles. Brian, welcome to the show. Hi, thanks for taking my call.

Sure, what's going on? My question is, my mother gifted me my sister's car, but my sister wants me to pay $100 a month to my mom to pay her. What? Yeah, and it's like $10,000. So she gifted you a car loan. What is your sister driving? She has her own car, like a Lexus.

I'm just driving her old car. So why are you now obligated to pay your sister's car loan? That I don't know. I thought it was just going to be a gift and just pay $100 a month. So what happened with your sister's car? Was she paying the payments on this? That car? No, that car is fully paid off.

She got into an accident with her previous car and then got this car paid off. And then they gifted it to me since she bought a new car. And they're not even using this car. I'm so confused. There's no debt on the car. There's no debt on the car. And she wants you to pay and she wants you to pay there's no debt but it's not her car anymore it's not her car yeah so i don't know if i should just it's under my name too so i don't know if i should return it sell it and get a new car and what is the legal obligation

to her at this point the car's paid off your name's on the title. She has nothing to do with this car. Is she angry because she wasn't gifted a car? Wait, wait. Why did your mom give your sister's car away to her?

Why didn't your sister just give you a car? There's a lot going on here. I guess my mom wanted to put it under my name so let's say if i get into an accident they can't sue or go through the insurance to get into my mother's house if i were to get sued in that case again i'm a safe driver but are you on your own insurance yes okay i pay my insurance now so you're on your own insurance. You're not on your parents' insurance.

Yes. And sister's upset because she paid off the car and then you got it for free. Yes. That's really where the rub is. It's emotional for her. She's like, wait, wait, wait. How come he just gets it for free and I had to work to pay that thing off? Right.

Does she have a new car loan now? She has a new car. With a car loan? With new car loan now she has a new car with a new with a car loan with a car loan yes so she wants you to pay to basically pay her car loan off because it's not fair that you got it for free that's what it sounds like yes okay that's a classic bitter sibling right there that's classic behavior well the truth is you have no obligation to pay her and i wouldn't and if she wants wants to destroy this relationship over this, that's on her and it's not on you. You had nothing to do with this.

Your mother gifted this to you out of her own volition. Yes. Okay. Right? Okay. Yeah. Does this shock you about your sister? Is there a pattern of like, oh, yeah, that makes sense?

Or is this so out of the blue of like, I cannot believe she's making me do this. This is not like her. It makes sense and it upsets me, but I just have such a good relationship with my mom. It's just my mom is like the mediator between us. Like I don't really have conversations with my sister. Oh, I'll give you this, Brian. This is $180 therapy. Ready for this?

Don't triangle people. So your mom needs to get out of it. It's between you and your sister, okay? Or between your sister and your mom. Y'all don't need to be triangling this relationship. That was free therapy right there. Dr. John Deloney, I'm sure, would back me up on that. Good stuff, Rachel.

What a conundrum and a nightmare of a situation. Oh, my goodness. Well, that puts this hour of The Ramsey Show in the books. My thanks to all the guys and gals in the booth keeping us afloat today, to my wonderful co-host, Rachel Cruz, and to you, America. We'll be back before you know it. Until next time, spend wisely, save intentionally, and give generously. Hey, it's Rachel Cruz.

If you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to ramsesolutions.com and click the get started button. We'll help you figure out the best next step for you based on your specific situation. That's ramsesolutions.com and click get started.