The Ramsey Show - App - How To Do a #NoSpendChallenge in 2023 (Hour 1)

Episode Date: January 4, 2023

Kristina Ellis & George Kamel answer your questions and discuss: What to do with money from a tax return (and why you shouldn't want or plan for a large return), How to do a #NoSpendChallenge in 2023, The right way to buy a home, "How do I manage my money well after getting my first real job after college?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 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 America hangs out to have a conversation about your life and your money. I'm Christina Ellis, Ramsey Personality, joined today by my co-host, Ramsey Personality, joined today by my co-host, Ramsey Personality, George Hamill. We're taking your calls today at 888-825-5225.

Give us a call. Let's talk about what's going on in your world. All right, let's go to the phones. First up, we have Jamie calling from Olympia, Washington. Hey, Jamie, welcome to the show. Hey, thanks for having me. Hey, thanks for calling. How can we help? I know taxes is around the corner, and I'm almost done paying off my car. I'm thinking about paying off my car and putting the rest in a high-yield savings account. I just discovered those, so I just wanted to see if that was a good idea. Well, do you have any debt?

Just the car, and then I'm done. I already paid off my credit card last year, thank goodness. Awesome. What's left on the car? What was the what? What's left on the car loan? $3,000. Okay, and how much money do you have in the bank?

We took a hit doing some car repairs, so right now I have about $700 in the bank. Okay. And what was your question? With the taxes, I'm thinking I might get $4,000 in tax return. I'm thinking I should just go ahead and take out that car note and then put the rest in a savings account. Okay. So let's say in April, you get a return of $4,000. You've got $3,000 left on the car loan. That leaves you with $1,000 and that would leave you with $1,700 in the bank. Correct? Yeah. Okay. Correct. Well, that would be my plan is pay off that debt ASAP. Okay.

Just knock it out. Yeah, just knock it out. Because the next step in the baby steps is to build that fully funded emergency fund. So you'll be able to knock out baby step two, pay off all your debt, and then start working to build up to that three to six months in expenses. So that's pretty exciting. And Jamie, here's another piece of the puzzle that I want to challenge you with. Could you pay off the car before you get the tax return? And you can use that towards your emergency fund.

I don't know if I could do it before. What's your income? I only make about $45,000 a year. Okay. And all of that money, where is it going? Are you doing a monthly budget? Yeah. I'm just now starting the budget.

I had to really dial back on eating out, and that was probably my biggest one. That's the kicker. Yeah, the car repair. The eating out was constant, but the car repair, we had to put $400 into car repairs. Who's we? Is there a spouse? Yeah. Okay. So what's your total household income? Total, I would say $60 altogether.

So your spouse is making about $15. Are they part-time? What are they doing? They're part-time. They only work three days a week about. Is there a way to increase that? What's holding them back? The kids and daycare, to be honest, daycare is just too expensive. But we try to avoid it with our schedules. Okay, so your spouse stays home? Yeah, and then the three days she does go in, it's, you know, the later on when I'm home. So. Okay. And the other piece, when you get a tax return, here's the issue I have with it. You're giving the government a interest-free loan all year long with that money. So another

goal I have for you is to stop getting such a large refund. And I also wouldn't bank on getting a big refund this year because with the tax changes that have come down the pike, they have gotten rid of all the expanded child tax credit. All of the expansions that were due to the economic impact that was happening with the pandemic is gone. And so are you banking on this $4,000? How sure are you it's going to be that number? I'm doing a low, low guesstimate. I think the lowest it will be is $4,000. It could be $3,000, but I am pretty sure it'll be around there.

Okay. Well, I wouldn't plan for it. I would pretend, live your life as if this car debt is needing to come from your future income and attack that thing with a vengeance, even if it means working overtime, selling stuff, continuing to slash your expenses, just in case that tax refund comes in low and now you're like, oh gosh, now I'm defeated because I thought I was going to be debt-free. And so that's how I would approach it.

And I would also maybe work on changing your withholdings with your employer to get closer to zero, where you don't owe anything and you're not refunded much. Is that the better option, just to zero it out, not to get anything back and not to pay? Yes, because that means you paid just the right amount of taxes instead of paying too much or not enough. If it's not enough, you owe money. If it's too much, you get the refund. That's how taxes work. It's not a gift from Uncle Sam. Okay, so I've just it's too much you get the refund that's how taxes work it's not a gift from uncle sam okay so i've just been paying too much okay exactly that makes sense and what about those uh go ahead no keep going i was gonna ask i just discovered um ally bank oh ally yes

those those are scams, are they? No, those are legitimate banks. Here's the magic word you want to see on any of these websites is FDIC. And that is federal insurance that backs that bank. In case they go under, your money is protected up to $250,000

per person on the account. Okay. And so Ally is a legitimate bank there's a lot of other high yield savings accounts out there the ones you don't want to go with is the ones that have credit card companies attached to it because what that really means is that high yield savings account is just a gateway drug to get you into their debt products so stay away from those and they can be especially tempting too because a lot of them have slightly higher rates simply to draw you in like george said they want you to be in their system so therefore you're more likely to

get into debt so that's such a good call out george because we personally just moved our housing fund into a high yield savings account and um it was really tempting we had that conversation off air where it was like well is it ethically wrong to go with a major credit card company that has a savings account um and it's just important to think through that. Absolutely. What kind of marketing are you going to get from that? But yeah, thanks so much for the call, Jamie. Wishing you the best with the car payoff. It's exciting. You're so close. Three thousand bucks left, then the emergency fund, then you got financial peace because you don't owe anyone anything. You've got a pile of money in the bank and you sleep better at night. And it turns out you're less concerned about what's happening in

the White House because your house is okay. And that's all that matters at the end of the day. Absolutely. We can't control Congress. God bless. As we have seen in the last year. But that's a good reminder, Christina, for those. I'm getting a lot of questions about high-yield savings accounts lately because a lot of people, they're comfortable with their bank. They've got their savings. It's making pretty much nothing. And right now, interest rates on savings accounts have skyrocketed. And so I think I'm getting like 3.8% right now. There's some bonuses and things like that you can get. So you can get upwards of

3, 4% right now. So it may be time to move that money into a new online high yield savings account so that you can, you know, you want it to grow a little bit. Never hurts. Yeah. It's always exciting now. We have our money in that high-yield savings account, and we've been getting emails every few weeks saying, hey, it's gone up half a percent. That's a nice feeling. That's nice.

And you can store most of your emergency fund there. I like to keep a little bit in my checking account as a buffer so you have immediate access to it instead of having to wait, you know, a day. But it's a great option to see your money grow. We love that. It's a good word. We'll be right back. This is The Ramsey Show. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី welcome back to the ramsey show i'm christina ellis joined today by george hamill we're taking your calls at 888-825-5225 well i know a lot of people out there are enjoying the beginning of the year. It's such a great time of year to kind of start fresh. There's something really great about New Year's resolutions. I know they're getting a lot of hate right now on social media, but I personally love them.

I love this time to reflect and think through, you know, what was good last year? What was bad last year? And what can I improve on this year? So this month, I'm super excited. My family and I, we are doing a no spend January. I love how fun you make this sound because most people listening are waiting for something actual exciting to be said. And you're like, we're not going to spend money. It's so exciting. Okay. So what's the heart behind this? Well, the heart behind it is really just rebuilding our habits.

So I've been saying that I kind of feel like our budget has been getting fluffy like my body has from all the Christmas cookies. So many cookies. So we're in baby steps four through six, and it's so easy to kind of get complacent in this state. You know, it's easy to kind of go, okay, we are saving a lot to pay off the house, but, you know, groceries are going up. So I'm going to take a little bit from this line item, from our savings and just up the budget. And it's like, before you know it, you're looking at your budget going, how are we spending so much money? It just kind of creeped up. So this is the time where we want to go, okay, wait, we want to go back to when we didn't have money, when we were really, really fiercely aggressive

about things, and we want to just cut back. We want to cut out all non-essentials. So that's really the goal, is to cut out all discretionary spending, anything that's extra. So money will still be spent. You still have to pay your bills. We're not saying, don't pay your bills, everyone. You'll be fine. No, you got to pay the essentials, keep your four walls together, food, utilities, shelter, transportation. But beyond your normal bills, there's a lot of luxuries in the budget. Oh, yeah.

A lot of things you can cut back on. Oh, yeah. Especially eating out, y'all. That last caller was saying that she struggled with eating out. And I was like, I feel you, girl. That has been such a thing for us. We have two small children, a one and a four-year-old. So we've kind of been in the thick of things.

And it's just easy to be like, hey, Uber Eats, would you like to deliver something? And also Amazon. It's starting to become so easy to just click without even thinking. And that's been really eye-opening for me. So it's January 4th. We've been on day four of this challenge. And it's really interesting because I'm already catching these habits that are kind of subconscious, like, oh, I need this. I'll just add it to my Amazon cart. And so it's good to just be mindful about your spending and to just really take that month or, you know, even if it's not a month, a week, I've had some people on social media say that they're just going to do three days. And it's like whatever it is that challenges you to kind of rethink how you're spending,

rethink your habits and really get focused and locked into for this year. I love it. And one thing that I've seen that works really well for any habit you're trying to create, including a no-spend month, is to have a calendar. You can print one out for free for January, do whatever you gotta do,

and you just write a big X through the day where you accomplished it, where we went, we didn't spend any money, we didn't have to, that's a win. And then you don't wanna break the chain. That's what happens as you start crossing out the days. And on the flip side of that, then you still feel like you're winning, even if you have one day that's off. So I had somebody on social media last night say, you know, that they struggled one day, and they felt really discouraged. But I was like, create that calendar, because then you can see

that, you know, you have 31 days in the month, even if you screw up one day, keep going. This challenge is still worth it. So I want to challenge the listeners. If anybody out there is, you know, starting this year and you're feeling like, hey, I really want to get aggressive with my finances this year. Maybe you're a baby step two and you've had that I've had it moment. And you're like, hey, I need to figure out how to press in and get rid of this debt. Or maybe you're like us. You're in baby steps four through six.

You want to pay off that house. And you're, you know, you're feeling the press of inflation, you're feeling your budget get a little bit squishy, a little bit fluffy. And you're like, hey, I want to get serious about this. Now is the time to do it. Join me, join us. I'll keep you posted on my progress. What are your parameters for this, Christina? Can you give us a little insider details? Well, no eating out, no fun fun money and we are going for a 100 a week grocery budget wow what is this 1950 christina how are you affording this people are

going how do you spend a hundred bucks and feed i mean you got a big family yeah so i have a meal plan planned out i have all seven days kind of mapped out i've mapped out how much each meal will cost i'm actually about to share that tonight a a social post. I can't wait because I got reamed for my social media posts saying that it's cheaper to eat at home than eating out. And the average cost was about four bucks a meal at home, 13 bucks eating out. And people are freaking out in the comments going, what did he film? Did he film this in the 1990s? You can't do that in today's America. So I can't wait to see how much your meals are costing you. You've got a family of four. I was talking about per serving, not necessarily four bucks to feed a family of five in one meal. Right. Well, and part of the challenge too is using up your pantry items. So

we're going to be going, we don't have a huge pantry, but we do want to use up those items that sometimes go bad. So that's part of it. And then just being really strategic to figure out what meals can we make with what we have. So, so far this week, I spent $45 at the grocery store. Wow. Where are you shopping? Or grocery store? Kroger for us. Okay. But I'm that nerd that's going around like with my calculator, writing everything out and measuring everything out so that it like actually fits within it. But again, that's a good discipline because I think we've gotten a bad habit of just kind of, you know, getting what we need and, and kind of being a little bit lazy about it. So it's forcing and challenging me to go back and go, no, I really need to go to the store with a meal plan, with a list and stick to my list so I can stay within those parameters.

That's big. And when you've got a spouse and they agree to this, it's easy because you have an accountability partner who is happy to call you out at every corner. But if you're single, you got to find a friend who wants to be on this journey too. They're out there. Friends, I mean. You can find them. You can find them. Find them on social media.

They're all over our page. Join the Ramsey Baby Steps community on Facebook. Oh my goodness. There's hundreds of thousands of people in there who are ready to cheer you on. Heck yeah. And you can come to my page. I am Christina Ellis on Instagram.

We've got a whole community of people who are doing the challenge together. And it's been really fun even for me just to see people chiming in. I asked how everybody was doing last night. And, you know, just to feel those raw emotions with other people. Some people are like, yeah, I'm winning. And other people are like, this hurts and it's hard, but I love it. And that's kind of where that excitement comes from is that I'm not doing it alone. And I feel that enthusiasm from other people. So it's a challenge. I love this.

I already had to pack my lunch today, George. Oh, my goodness. I know. That's incredible. I know. I've been eating. What'd you pack? I kind of just did a mishmash of leftovers.

This would make all the people who like their food separated kind of grossed out. But it was like all of our leftovers. There are people I found out who are anti leftovers. They just will not eat leftovers. Whoa. I'm like, what kind of privileged existence do you have where you can just say no and throw away the rest of the food? If I did that in my household, mama camel would not be having it. I'll tell you that much. We ate leftovers for days and it was great. Oh, leftovers are my favorite. So me and my wife did this, Christina. We are celebrating almost a one year anniversary of our debt-free scream we did on that stage just about a year ago.

I remember that. That was such a great moment. And she had the idea of doing the no-spend month. And I texted her because I was like, I don't remember what we even did, the specifics of it. So she said she shopped our closet. So instead of shopping for clothes, oh, yeah, I forgot I bought that. That shirt still has the tags on it. Maybe you should try wearing that.

So get creative with clothing. She would even borrow clothes from friends. She made sure she had all the makeup and beauty products she needed. We would watch movies at home instead of going out to the movies, eat at home. We could get a nice little steak dinner at home instead of spending, you know, 10x that eating out. That's so great. And another really key thing before you start is to analyze your spending before you jump into this. So go back through the last month's budget and, you know, see what did you spend that was non-essential. So add up those line items, add up those transactions, and then figure out your total. And that's what you can save during

this month. And that's pretty exciting because then you can set a goal, you know, perhaps that's going to be enough that you could knock out, you know, your smallest payment and your debt snowball, or maybe that's going to be an extra payment on your house. So, you know, use that as motivation to get excited and kind of create a why. You know, this month, it's not going to be easy. There are going to be moments where you're going to really want to spend money

and having that why clear in your mind where you're like, I'm doing this because this house is going to get paid off soon, or I'm doing this because I am getting free from debt. You know, have that vision clear in your mind. And like you said earlier, it's like if you have a bad day, you know, it's okay. Don't then give it up and say, ah, you know, not worth it quitting now. Like use this as a challenge. The real goal is to change your habits. It's to change how you're relating to money. And really pay attention. I mean, you mentioned the word budget. Most of y'all probably are going, I haven't even really done

a budget. Well, we'll make it really easy. Every dollar is a free app that we created. You can do this in under 10 minutes. You can track your spending and you'll want to throw up at first, but stick with us. Start doing the budget. Three months later, you build the habit, you've got your why, and all of a sudden you're accomplishing your goals. Heck yeah. So exciting, y'all. Join us. I'm stoked to be on this journey with you guys. You've got your why. And all of a sudden, you're accomplishing your goals. Heck yeah. So exciting, y'all. Join us. I'm stoked to be on this journey with you guys. We'll be right back.

This is The Ramsey Show. We'll be right back. welcome back to the ramsey show well it's january that means you're probably about to buy a gym membership that you'll use two times max. That's a personal attack, Christina. I have used it two times though so far. Do you feel seen? Yes. For most people, January is the month of failed resolutions. But you deserve the change you want to see in your life and you can make those changes with the right tools. Want to crush your financial, personal, and career goals? We've got you. If living paycheck to paycheck isn't your jam, get the plan that over 10 million people have used to destroy debt and build actual wealth

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We're taking your calls at 888-825-5225. Let's go to the phones. Next up, we have Mike calling from Boulder, Colorado. Hey, Mike. Welcome to the show. How y'all doing? Happy New Year. Happy New Year.

Thanks for calling. How can we help? Well, I just got married. My wife and I just found your guys' system through our church and just wanting to call to see if we're making the right choice. We're purchasing a new house, or we're having a house built, I should say. Well, congratulations on your... A lot of excitement, Mike. This is big. Big life changes.

Thank you. Yes. So where we're at right now is I have a house and she has a house. We're selling both and going to have a house built, uh, a lot of equity in my house and, uh, own it. Um, she has her house, but, uh, she has about a hundred, a hundred to maybe 120,000 in equity, depending on what we can sell it for. And, uh, we already purchased, we already, uh, went under contract to have a house built. And that total cost of that is $800,000. Whoa. Yeah.

That's a nice house for a newlywed couple. How much equity do you have in your house? Well, I just put my house on the market yesterday, and we're listing it for about $650,000. Okay. And you said it's not paid off. So what's left on your mortgage? No, it is paid off. Okay, you just said you had a lot of equity.

I didn't know if it was paid off or not. Okay, so you would get that minus fees. Right, and then we have her house to sell, and then we would be taking her equity and my, my equity and all of our money and putting it towards the new house. So we're going to have to carry a home loan. Um, and it's, we're thinking it's roughly going to be anywhere from 80 to about a hundred thousand. And we're, I'm just one, like I said, we just found your, your guys through our church. So I'm just kind of wondering if we're making the right choice. Well, I love that you even have that question. And I'm curious, you just found us through your

church, but yet you've seemed to have an aversion to debt already. Where did that come from? How did you decide to pay off your house and learn that? Oh, my granddad. I don't know. I just come from, I come from a family that were, you know, manual laborers, carpenters, coal miners, and just people that just kind of were frugal with money. So common sense, hard workers. Yeah. I just kind of always, um, you know, my dad always just taught me, uh, you get paid, you fill up your truck, you pay yourself a little bit and then you put the rest of it. So that's kind of what I've been doing. That's awesome.

It's what we believe, you know, God and grandma's way of handling money. So that's just great that your family instilled that in you early on. And I love that you're asking this question. I think a lot of people would be going, it's just $80,000 to $100,000. But the fact that you are like, I want it, God, I don't like it. Yeah, that's a small mortgage for most of America. So way to go on that front. Do you guys have any other debt?

She does have a car, and I believe her loan on her car is, I want to say, $16,000. Okay, and that's it? So, yeah, pretty relatively small. But, I mean, just looking at our finances, and we sat down before we even went under contract with our builder to build the new house. We think that we would be fine just figuring what we make and kind of having a five-year plan.

We could hopefully have this house, the new house, paid off within five years, if not sooner. Have you guys combined finances yet? We're currently getting ready to do that, yes, sir. Okay. That would be step one, is combine finances. What will your household income be, or what is it? Um, I make roughly anywhere from 125 to 130 and she is around 75 to a little over 80, depending. We both work extra, work part-time, uh, over time. And I have a little side business as well. So. Way to go. Well, here, here's my thing, Mike. You guys could clear this mortgage in way less than five years. You could do it in under two. Yeah. If that. Yeah. Especially with the habits

you already have. You've done this before. I think we made the right decision. I guess we're kind of one of those people that you never know what's going to happen. So that's why we're like, well, if it would be with us, no equity in $800,000, I'd be like, no, sir, we're not doing that. That's wise. When's the house going to be done? The house will not be built until we won't get the keys in probably until this July. Okay. So you've got seven months. My goal would also be to keep saving. So pay off this car loan. So combined

finances, pay off the car loan. Then we're saving up a fully funded emergency fund of three to six months of expenses. Beyond that, the rest of this money can go towards this new house and you're going to continue to save over the next seven months, right? Oh, yes, sir. So the goal would be how much can we save? And a cool stretch goal would be to be able to pay cash for this property when the time comes, even after the debt's paid off and we have the emergency fund. Yeah. Yeah. That would be a cool stretch goal. If you don't get there and you need to take out a really small mortgage and pay it off quickly, you're going to live. But you guys are just so driven and doing so well. That would just be my goal for you if I

was sitting down kneecap to kneecap coaching with you. Okay. And Mike, do we stop any retirement? I mean, I've been putting anywhere from, I mean, I think I've been putting 15, if not more, into retirement. Do I need to stop that or bump that back down to what you guys recommend of 15? Do you guys have enough cash right now to pay off the loan? Of what loan? The car loan. Oh. How much money do you guys have in the bank, liquid?

Well, I don't know how much. I mean, I think she has around $8,000 in the bank. I think I have roughly $15,000 in the bank. Man, I'd pay off that car tomorrow. That's just my emergency fund. Well, if you're following the Baby Steps, you said you're new to the program. The way we lay it out is Baby Step 1, $1,000. You've got that. Baby Step 2, pay off all consumer debt from smallest to largest. You're going to be able to do that

tomorrow. Then baby step three is save up three to six months. So we would tell you to clear all cash except for $1,000 for baby step one. Everything else goes towards that debt. Because think about this. You just freed up the car payment. You guys still have money left over. You have an amazing income. That emergency fund is going to be there in no time. And so I would pause investing and save for that house unless this week we can clear all of that and have the emergency fund. So you may need to pause temporarily to help create that margin. And Mike, stay on the line. Austin's going to pick up the phone and we'll put you in Financial Peace University. I know you're new to the program. You have such great money principles, but this will just help you have some clarity on the specific steps and action items to take next.

A little gift for the newlyweds. I like that, Christina. How nice of you. So thoughtful. We'll be right back. This is The Ramsey Show. Thank you. Welcome back to The Ramsey Show. I'm Christina Ellis, joined today by my co-host, George Camel. Give us a call at 888-825-5225. Next up, we have Andrew calling from Atlanta, Georgia. Hey, Andrew, welcome to the show. Hey, how are you? Hey, we're doing great. Thanks for calling. How can we help? Yeah, my question was, so I've been out of college for about six months now. And ever since I've been working in my first career. And now that I have a lot more money than I did coming in every month in college, I'm just not sure how to utilize it in the best way because it's a big step up for my

part-time college job. I love it. What was your degree in and what's your job? Yeah. So I'm in tech sales here in Atlanta and my degree was in marketing and sales. That sounds about right. Way to go, man. What's your income? Yeah. So depending on commission, I would say before tax and all of that between 68 and 72. That's a fantastic start. Way to go, dude. Yeah, that's a great start. Super proud of you. All right. So you haven't had this kind of money to manage, but you obviously have some real-life expenses. Have you been managing those all right? What's the kind of main pain points you're feeling?

Yeah, everything's going good so far. I was able to thankfully graduate without any debt, so I don't have anything major to pay off like that. The biggest thing is I'm looking to actually get married in the next year and a half and just trying to best prepare myself now financially so I can walk into that feeling comfortable financially. Way to go. Well, the key is having no debt and having a big pile of money. And that's the key for you. And so do you have a reliable car? Do you need to upgrade anything in that space? Yeah, I think, I mean, my car is probably like from around 2010 and

every once in a while you'll take an information once a year, but I feel pretty comfortable with it. Well, you could create a sinking fund in your budget, which just means we're putting a little bit of money aside every month because we know the car isn't going to last another 10 years potentially, right? Right. It could. What kind of car is it? It's a Honda. isn't going to last another 10 years potentially, right? Right. It could. What kind of car is it? It's a Honda. Oh, it'll go another 10 years. Just fine. That's what's up. Yeah.

So that's one thing to think about. And Andrew, you have no other debt, correct? So no student loans, nothing else? Exactly. Yeah. So thankfully I've been able to be debt-free coming out of college. That's wonderful. Do you have anything saved right now? Yeah. Right now I haven't been sure what to do with all the money. So I've just been kind of putting it into all one bank account.

That's great. That's a great problem to have. Just in a savings account? Yeah, it's just a typical savings account. Okay. And how much do you have in that account? Around 17,000. And then I have some investments in the stock market from high school and while

I was in college. Okay. Are those in single stocks? You know what they're invested in? Yeah, they were actually gifted to me in a few different single stocks. Cool. Well, one thing I would do is cash out those when you're ready, because there is going to be some tax implications based on the growth of that account. So I would work with a tax pro if you're not already. And also start investing in your work retirement plan. Do you have one over there? Is that the same thing as a 401k? Yes. You've got a 401k through work? Yeah, I do. And I've been contributing everything that they all match so far. So up to the match, how much is that?

I think it's 6%. All right. And is there a Roth option with the 401k or just traditional? Not that I know of. I'm fairly certain that it's just that traditional 401k. Okay. Well, you're in the space. So when you walk through the baby steps, you're out of debt. You've got the fully funded emergency fund with that 17k. So you're on to four, which is investing. You don't have kids, I assume, right? No, not yet. So that's baby step five is saving for college. Then baby step six is paying off the house early. So I imagine you'll be a homeowner in the next few years at this rate once you're married.

Yeah, it's definitely something that I want to consider. And I have one more year with roommates now. So I've also been considering getting a house maybe in the spring and then renting it out. But I'm not sure because that's just a really big commitment. Are you talking about this spring or next spring? I was potentially thinking about doing it sometime in this spring, early summer, and then letting me and my roommate and like renting it out to my roommates to build up some equity in the house to take into marriage. And you would live there as well, correct?

Exactly. So I would live there, but I would also rent the extra available rooms to roommates. But I'm not sure if I want to have to put all of my eggs in that basket. Yeah. And that's a huge factor too, is if you're thinking about that home purchase, spring is coming up quick, a down payment is going to be key there. So $17,000 is great. About how much money are you thinking about spending on a house? Yeah. So, you know, being in the realm of where I want to with a commute, I'm looking to be in the price range of about $270 in for a house. So I just want to, I'm willing to spend whatever, but I definitely want to be able to retain a little nest egg in

case of emergency. I'd be really worried to go all in on a down payment. Sure. Well, some great parameters for you as you begin this process to make sure that you're not doing something beyond your emotional boundaries and financial boundaries is to get it on a 15-year fixed rate mortgage where the payment is no more than a quarter of your take-home pay. So that really helps you dictate how much down payment do I need. Ideally, you can put down 20% or more, which helps you avoid private mortgage insurance, which is just extra money you throw away to the lender to protect them in case you can't pay. So that's what the 20% threshold will help you do. And do

that on a 15 year fixed. We have a great mortgage calculator at ramseysolutions.com you can use to figure out those numbers. But that's going to help you walk into this with a lot of wisdom and a lot of patience. And there's no rush to be a homeowner tomorrow. You're doing great. You're going to get there in no time because you don't have debt. You've got a pile of money in the bank. I would increase your investing to 15% of your household income. Now, if you want to save up that down payment quickly, you can kind of hold off on increasing the investment. That's a choose your own adventure there in the baby steps. Call it baby step 3B. 3B. And some people like to bring their investing down. Some like to do 15%

while saving that down payment. But if you're a gun hoe on getting this house, you might need to pause the investing for a short period of time. Would you say pause it altogether? In your shoes, when you're not in a rush to buy a house, I would personally just wait until you're married to make that decision. Because guess what? Your new spouse is going to go, I don't like this place. I would have chose different cabinets. And so I get that you want to rent, you want to build some equity. You're going to have the rest of your life to do that.

And so I wouldn't just be in a rush to do it. There's nothing wrong with doing it the right way, like I mentioned with those parameters. But if I'm in your shoes, you're young, you got time on your side, you got a great income. I would ramp up your investing to 15%. You can max out a Roth IRA outside of your employer. Then you can get that match, of course, and increase your investing there. Well, and Dave often says to wait a year once you're married to buy a house so you can know how close you want to live to your in-laws. Oh, yeah. That can be a dicey one. There are a lot of factors that play in at that point.

I'm just so proud of this guy. Andrew, way to go, man. You have such maturity for a guy in his 20s. We talk to people 30 years your senior who are not talking like this. I love it. Hey, stay on the line. We're going to get you a copy of Baby Step Millionaires because I absolutely foresee that this is in your future. The fact that you are this young and you're already making your plan, this is how it happens. Just getting intentional, getting aggressive, and having a plan. This is how you see these millionaires. We're getting callers on the Millionaire Theme Hour that are in their 30s. They're like early 30s. And our debt-free screams on the stage. We're going, you paid off your house? You guys are 29 and you have a paid-for

house? Yeah. It's amazing. And I think Andrew is going to be one of those people on that stage just a few years from now. Absolutely. With his new spouse going, we did it. We did it. Screaming out there debt-free. And I think that's just, that's so exciting to me. I know you care a lot about Gen Z. I get super stoked about Gen Z and millennials because, you know, so often, you know, they're not thinking, I feel like our generation gets a bad rap, you know, that we're not responsible, we're not this or that. And it's like, we see these people coming in here who are so aggressive and they're out there doing it. And it's exciting. You know, I want to catch these kids while they're young because it's like, this is how they can build wealth early. This is how they can have financial

freedom all throughout the 30s and 40s and 50s and the rest of their life. That's just so exciting. Well, they get a bad rap because most of the perception about these generations is from social media. And the good ones, they're not hanging out on TikTok all day. They're busting their butt working three jobs to pay off debt, to get the down payment. They're working. And so they're out there and we get to meet them and talk to them every day. And it is so encouraging to know that there's a lot of hope for the future. And there's so much cynicism, Christina, in the news and just the world feels heavy and the economy and inflation and it feels like nothing's ever going to get better. And yet I talk to these people and I go, oh, it's going to be okay. It's going to be okay. Our generation is going to be okay. We can have hope. We can have

excitement. There's still so much good out there. Well, that puts this hour of the Ramsey show in the books. Thanks to everyone in the booth. Thanks to you, America, for listening. We'll be right back. This is the Ramsey Show. Do you love a good day, Brandt? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from the Ramsey Show on YouTube. Go watch and subscribe to the Ramsey Show channel on YouTube.