The Ramsey Show - App - How to Escape Living Paycheck to Paycheck

Episode Date: December 11, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show. We help people build wealth, do work that they love, and create actual amazing relationships. I'm Dave Ramsey, your host, George Campbell, number one best-selling author, host of The George Campbell Show on YouTube. Ramsey Personality is my co-host today. The phone number here is 888-825-5225. Tony is in Chicago. Hi, Tony. Welcome to The Ramsey Show.

Hey, guys. Thanks for taking my call. Sure. What's up? Hey, so I manage a special needs trust for my mother, who's 67. And currently, the money in that account is about $170,000, and it's all sitting in cash. And I got a call from the bank today asking if I, you know, they kind of encouraged me to invest it in different ways.

And I recently saw a video of you talking about the risks of bonds and I wanted to call and ask your opinion on how I should best feel about this. Yeah, I would not do any bonds for sure. Your mom is in a special needs trust what's her what's her issue she has multiple sclerosis has had it for 30 years and is in a nursing home oh wow okay and the 170 is all the money she has in the world um plus about a 10,000 and a checking account, but yes. Okay. That's it. All right. And how much are you using?

Uh, is there a burn rate on it? Are you using it for her care? I have not touched a cent of it in the few years it's been active. Well, since I established it. How is she being cared for? Medicare, Medicaid. Okay. All right. Cool. All right.

Cool. All right. So to the extent we can leave it alone, we can invest it in something that has a longer time horizon to be safe. So just like a good growth stock mutual fund, if you leave that alone five years, you're pretty safe. Okay. So I certainly wouldn't put all of it there. I'd be looking for a mix between high yield savings for a big chunk of this. And then the other chunk, I might do something as simple as an S&P 500 or sit down with a smart investor pro and just pick out some very, very calm growth

and income type funds. But all of those funds would be, you know, in the last year, they would have paid 20%, but the last year the market was up 30%, which is crazy. That's not normal. But in an average, they would probably pay out 10%, where the market's paying out 12%, where a high-yield savings is paying out 4%. So, you know, I'm going to invest some of it, not all of it. I'm going to invest some of it, not all of it, to the extent I'm comfortable I can leave my hands off of it. Okay. What does the next one to two years look like as far as short-term costs?

I really don't know how to answer that question. I don't foresee any major costs. But, you know, like, for example example she just had a bunch of dental work done that wasn't covered uh but we were able to pay that without having to dip into this special needs trust so things like that maybe but otherwise i'm not sure okay yeah i mean if it was me i'm probably putting like a hundred in some mutual funds with a smart investor pro that have a very low volatility very calm funds okay and uh then i'm gonna put the other like uh 70 into just high yield savings but that will at least change your income instead of making uh four thousand dollars on that hundred you you might make

twelve thousand dollars on that hundred that kind of thing. I understand. Okay. Outstanding. But you want to be able to access it when she needs it because that's the primary thing it's for. So, yeah, at Ramsey Solutions, just click on SmartVestor Pro and find one near you that you like and sit down with them, and they can teach you some things you can do. Bryce is in Dallas. Hey, Bryce, what's up?

Hey, Guy. Thank you so much for answering my call. Sure. How can we help? Well, I ran into a recent situation. Let me just get into it. But basically, I've driven a 2018 Ford F-150 for about seven years. We ran into an engine issue to where the second cylinder within the engine busted. After taking it to two mechanics, I got the same verdict that it's going to cost about $15,000. It's going to require a whole brand-new engine replacement. And so just considering my options, these two top things have been entering my mind. Either, one, I pay the $15,000 to go ahead and get the engine replaced.

This is an F-150 that has about 127,000 miles on it, or I can go toward getting a new vehicle. Uh, and the one that I'm currently, let me, maybe I have a lot of numbers that I've just been working through, but let me just give some details, but it's the exact same vehicle, exact same model. The only difference is it's a brand new year. Um, considering the down payment that I would make and the vehicle trade-in value that I got from a dealership comes out to about $25,000 going in. The vehicle price

quoted at is about $40,000. And the current APR rate is 1.9% over 60 months. So ballpark, that's $15,000. You want to go buy a brand-new truck? Is that what you said? Yeah.

I'm considering either buying a brand-new truck versus getting into it. Dude, you're broke. You don't go buy a brand-new truck when you're broke. No. Okay. Okay. This 2018, if it was running is worth what 2018 i mean if it was worth running i mean it's if it was running it's 10 000 11 000 ballpark

yeah so that's what you get you get a 20 000 or 10 000 truck you got notes on this truck right uh before it paid off. Okay. And so you want to use this as an excuse to do something stupid and go in debt and buy a truck you can't afford. No! How much money do you have saved up? About $20,000 saved up. And what's your income?

$95,000 a year. Okay. And that $20,000 you have saved, does that include your emergency fund, or is this just your car savings fund is $20,000? That's emergency fund, $20,000 you have saved, does that include your emergency fund, or is this just your car savings fund is $20,000? That's emergency fund, $20,000. Okay. Buying a new car is not an emergency, honey, by definition. It's a Bryce wants a new truck is what this is. That is true.

There's no emergency here. All right. So let's backtrack a little bit if you if you get a different car you need to get about a ten thousand dollar car that you can pay cash for okay okay um that that's the wise thing to do in your situation because car payments are a mathematical ball and chain that will 100 cause you to not build wealth and stay middle class the rest of your life. If you invest into a good mutual fund, what you were getting ready to put into that truck, you'll be wealthy.

Okay. That's what I want you to do. And I'm not against truck. I got a nice truck. I drove a nice truck to work today. All right? Yeah. Yeah, I know. Yeah. Yeah. I know.

Yeah. Yeah. That's not the point. Now, let's backtrack on one other thing, too. Fifteen thousand dollars for a new engine in that truck is as a nine. Somebody's running you up a flag. So you need to look at a couple of other things. Number one, I want you to hit two more good mechanics, and I want you to consider two possibilities to fix the truck

before you make the decision to get rid of it. Number one possibility is buy a salvage engine from a junkyard on a truck that was totaled, but the engine's perfect, and the engine has 10,000, 15,000 miles on it, and you can buy that for pennies of what you're talking about, or do something like a factory rebuilt motor not a brand new motor like a jasper brand as an example they rebuild them and it's half of what you're talking about so you do not need a brand new engine in a 2018 that's asinine fix that's a bad repair so you need a used engine or a rebuilt engine in the 2018 then you decide if you're gonna keep it or not no new trucks price if you want to be rich this is the Ramsey show

George Campbell Ramsey personality is my co-host today Bill is with us in San Diego. Hi, Bill. How are you? Bill? Hello, Bill. I'm here. Hey, how are you? How can we help? Hi, I'm good. How are you?

Good. How can we help today, sir? All right. So my wife and I combined, we make about $500,000 to $600,000 a year. But we still somehow are unable to save as much as I believe we should save. So that's my problem. I mean, our monthly expenses are about $30,000 a month, and then add taxes to that.

So we pretty much even out every year. And I believe when we make $500,000 to $600,000 a year, we should be able to save more. I would agree. I think the $30,000 a month expense is your clue. How much of that is debt payments? Well, it's on two properties. One is primary residence and one is an investment property.

And the debt payments on the mortgage are added to about $12,000 a month. Yeah. Why do you need $18,000 a month to run your household? Well, about $8,000 to $9,000 go to charity for a good cause. And then the rest, like I would say about $10,000 is for groceries, utilities, for the car payment, and a little bit for, you know, towards... Why do you have car payments when you make $600,000 a year? Say that again? Why do you have car payments when you make $600,000 a year? Say that again?

Why would you have a car payment when you make $600,000 a year? Well, one of the cars is paid off, or the other one is a lease, so we make about $750 a month for that one. We have a bigger family, five people, so it's a relatively bigger SUV. Well, which you could have written a check and purchased and should have instead of leasing and renting your car for $700 a month.

So, you're giving away $100,000 a year in that $30,000 a month budget. You said $8,000 to $10,000. So there's where $100,000 of it goes, right? Yeah, easy. Yeah, it could be more than that, $100,000 to $120,000, yeah. Okay.

And you've got a car payment. Yes. Which we would not have. And what do you guys do for a living? I own a business, and my wife works with a company. She makes about $100,000 and the rest is my income, and I own a service-based business. Okay. All right.

The way you're discussing this, the language you're using is very general. It's not precise about the numbers, which tells me you're kind of just throwing this over there and just shocked that it disappeared. So if I woke up in your shoes, you've got a level of disgust, says this is not okay is what you're saying. We make this kind of money. We shouldn't have no money. We shouldn't have a car payment.

When we make 600 grand, we should have just bought the car. Then what I would do is simply do a detailed budget with your spouse and come into agreement of what we want to give, what we want to save, and what we want to spend and what we want to spend it on. And every month before the month begins, every dollar has an assignment exactly. But it kind of feels like, Bill, I went through a period of time in my life where I thought I could out-earn my stupidity, my lack of organization, my lack of detail, and you can't. If you had a person working in your business that was managing

a section of your business as poorly as you are managing your finances, you would fire them for incompetence. And so you got to kind of treat it that way from an emotional standpoint and do a detailed budget. And it's funny, Dave, as people make more, especially people who are good at making money, like Bill's good at making money, you're good at making money. You think you can just solve the problem by, well, I'll just make more money. As long as we don't overdraft, we're doing okay. But when you do that budget, you realize if this was a business, you go, we are wasting a lot of money in this business. We could be doing a lot better if we cut the spending, get out of this debt. We might need to sell this investment property. It's not a blessing right now. Might need to downshift some

of our giving a little bit until we get back on track. So that's the kinds of things you, the levers you'd be pulling if this was a business, you need to treat your household the same way. Yeah. Every, you know, you need to detail it out and then stick to it. And both of you, you and your wife have an agreement. You're both looking at it. You're not bringing it in, slapping it down on the table and declaring, I have done a budget. You people will live on it.

That won't work. Now you get your wife involved in the disgust. It's not okay that we make this much money and we have no money. It's not okay that we make this much money and we don't invest. So generosity is awesome. Investing is amazing. Enjoying money, yes, you should. All three things. But very, very, very, very, very, very intentional. And right now you're not intentional. You're kind of throwing a bale of dollars over the fence and then coming back to see what's left later

and after the family devours it. And so it may be you downshift your giving. Your giving is pretty heavy. I'm not against generosity in any form. I tell folks to do it all the time. But if you're doing zero investing and you're giving 20%, you may need to adjust that, at least temporarily. But I think you got some lifestyle issues. And I think you guys just kind of walk around, do whatever you want, because you make enough money. And I think if you'll just

actually pay attention and say, say no we're not doing that no that's crazy that that's a that's a we're spending what on that yeah yeah and you start actually telling the money what to do you'll very naturally uh tighten this up a little bit dane is in houston texas hi dane how are you hey i, I'm doing good, Mr. Angie. How about yourself? Better than I deserve. What's up? All right. So me and my wife, I'm the only one that works out of the family. We've got two kids. The only debt we have is our house. We owe about $141,000 on it.

And we were going to continue paying towards the house and paying it off sooner, but we were wondering, should we sell the house and move farther inland away from gallaston bay so our insurance ain't so expensive my flood insurance is about three thousand a year homeowners with fires about two thousand and my windstorms around fifteen hundred should we sell the house what that we have a 2.7 percent interest on and move farther in for a more expensive house with a higher interest rate or stay? Well, in a sense, you have a high interest rate now because you have a hurricane tax.

That's true. In a sense, because of the location of the property. Yes, sir. You know, it's causing you pain i can use causing which because you asked the question well i mean the only thing wrong with moving is that you're going to not going to get the same rate next time well whoopie doopie when rates come down you can refinance we but we marry the house we date the rate so rates are temporary yes sir and if you're going to pay this thing off the next few years if it's at 140 and you, we're going to aggressively get this thing down to zero in the

next five years, the interest rate's not going to matter that much. Right. Yeah. We planned on paying the house off that we're in now within the next five to 10 years. Yeah. And if you bought one the similar price range, you could do the same thing, but you didn't have all the insurance cost. Right. So I wouldn't go just upgrade and house and get a way more expensive house and get a way bigger mortgage just to get out of this tax and insurance it's not necessary um yeah buy a similar price range if your payment goes up a little so what but i'd buy similar price range and make the move here's the way the best way to handle this sometimes times is look out 10 years 20 years and say where do i want to be okay if you if you have this house paid for 20 years from now what is that insurance cost going to do it's going to go up every year

yes sir or it's even going to be worse it's going to be like florida it's going to be hard to get at all right right um and this and the house is going to go on up in value there's no question about that but you live in this constant you're in a storm zone is what it amounts to so 10 years from now if you move inland and you pay it off you're going to have more normal taxes more normal insurance and you're going to see a appreciation just well. So where do you want to live 10 years from today with a paid-for house? That'll answer your question. This is The Ramsey Show. This show is sponsored by BetterHelp.

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Abby is in Des Moines, Iowa. Hi, Abby. Welcome to the Ramsey Show. Hi, happy to be here. Good to the Ramsey Show. Hi. Happy to be here. Good to have you. How can we help? Well, I need help with this credit card situation that's a part of a bigger problem.

But my husband and I separated about three months ago. Two months ago, we stopped paying credit cards, and I just found out that before they go into collections that we might want to start paying them again. We just owe so much. We just have been overwhelmed and have not had good advice. So that's why I called you. You're currently still separated? Yes.

Why? Well, we were working together and at his construction business and let's just say like everything came crashing down his anger and my um not feeling safe from like past trauma all happened at once I moved out to my cousin's house and when I came back home he had moved back to his home state and we're talking we're having weekly finance meetings and I believe God will restore our marriage, but we've got a lot to work through.

A big part of it is finance. He shut his construction business down and moved away? Well, we were at the end of a really long project from not heaven. He shut his construction business down and moved away yeah and how are you working um i am now yes what do you make well i'm working three part-time jobs now just got offered a full-time job. So right now I'm making like maybe $2,000 a month, and I'll be making like five or six here in January. Good.

Good for you. Okay. Thank you. And so you're going to get your own place. You're currently living with your cousin, but you're going to, or is that right? I'm kind of couch surfing. Yeah. But I mean, if you're making five grand a month, you're not anymore, right?

Well, the thing is, is my credit just went from like 750 to the 500. So I don't even think I can get a place. Oh, I think you can. Like a rental. You think so? Sure. Okay. You're making five grand a month. Yeah. I think you can. Like a rental. You think so? Sure. Okay. You're making five grand a month.

And you need to. You don't need to be homeless and divorcing and broke. Get a stabilized situation where you're safe and you have a home of some sort, a little one-bedroom studio apartment. It doesn't have to be anything fancy, but get some stability. And then you've got home of some sort, a little one-bedroom studio apartment.

It doesn't have to be anything fancy, but it gets some stability, and then you've got $5,000 minus rent, minus electricity, minus food to work with towards your debt. And now we've got a thing we can project into the future. Does that make sense? Mm-hmm. Couch surfing doesn't project into the future. No. That's what I'm saying.

So how much credit card debt do you have? Let me look at my spreadsheet. And is your name on all the cards along with him? Yep, $42,000. $42,000. And what's the plan for you guys to pay this off since you're separated right now? Have you talked about that? Is it equal

split payments or what yeah we're talking about it and the talks has been like 50 50 but the other major debt is owing subcontractors and so that's where we've struggled like who do we pay first or how do we even like make a plan but so when he closed his in his uh construction company he was not profitable well if he didn't pay his subcontractors honey he wasn't making a profit okay unless he has a pile of cash somewhere no okay if he has no money and he still has bills outstanding that means he lost money on the deal right right yeah did he just blow the money and never paid the crew how much do you how much does he owe subs hehmm. All right. So here's what you need to do. Do you have a car payment also?

I do, but my car just, I owe five. It's worth five. The repair is seven. And where I'm considering moving, I can get everywhere around on a bike because it's warm enough all year. So I'm like, I might sell it. Wait a minute. Where would you move this warm if you have a $5,000 a month job starting next month?

So that's where I would be moving to, the job. Why would you consider you are doing it? You don't have to consider moving. You're going. Oh, thank you. No, I mean, you take the five thousand dollar job where is it north carolina okay coastal why would you not do this um i am i just have this weekend i visited i just got the offer talking more details this week i've just been yeah okay yeah it's not really

considering i mean you're couch surfing working three part-time jobs. You have another option to move to North Carolina and have a $5,000 a month job. Yeah, you're going. You're broke. So you got to get your life back. You got to get control. You have control of no variables right now. So this has got to be, the anxiety, the stress must be horrendous for you, honey.

Yeah. Okay. So here's what we're going to do we're not going to worry about the subs and we're not going to worry about the credit cards right now you need to get moved and you need to get uh into an apartment a little one-bedroom studio of some kind something basic and you need to figure out your transportation when you've got food shelter clothing transportation and utilities covered, then we can talk about how to settle these credit cards. But you don't need to start making payments on them. You're broke and homeless and divorcing.

We've got to fix some of those things before we worry about a stupid credit card, okay? So just put those on the back shelf right now. They're not going anywhere. They'll definitely take money when you call them back six months from now or four months from now. Then you decide what's going to you and your husband start talking and decide what's going to happen with the marriage. If there is a divorce, you'll have to split these bills up some way or another. I don't know what. And the divorce decree, the divorce judge will approve your all's plan or tell you what the real plan is if he doesn't like yours. And then you can go in and start working your way through this debt, and you can probably settle it

for pennies on the dollar. At that point, you're going to be six months behind. But you don't need to be paying these bills while he sits at his cousin's house doing nothing and while you're couch surfing no no i wouldn't pay any of these bills until it's in an agreement of us getting back together or in an agreement of uh uh the divorce how the divorce is going to go down we're kind of in a storm mode and there's a lot of unknowns until you have an agreement one way or the on this, you don't pay it because you're going to be the only one paying it. He's not. Yeah. You're not going to make much progress trying to do this on your own

in the midst of this storm. Exactly. So just pause until you got the next step. Whew. Yeah, that's exactly how it works. Well, folks, we just launched a brand new tour. Dave Ramsey, that's me, and Dr. John Deloney are hitting the road, coming to a city near you. It's the Money and Relationships Tour. We're putting a new twist on these events. Before

the event starts, you're going to tell us the subjects you want us to talk about, and we're going to talk about those subjects that night. We're going to custom build each one of these. Louisville, Kentucky, April 21. Durham, April 23. Atlanta, 25. Phoenix, May 5, Fort Worth, May 7, and Kansas City, May 9. You're going to laugh. You're going to learn. You're going to cry. You're going to change your life. Come to one of these events. They're going to be a lot of fun. It is the Money and Relationships Tour. Dr. John Deloney and me, Dave Ramsey, ramsaysolutions.com slash tour. Check it out. Or if you're on YouTube or a podcast, click the link in the show notes and make sure you get out there. These are going to be really, really fun. They're selling like crazy, by the way.

Tickets are not super expensive. If you want something for a stocking stuffer for Christmas, just order this and print off the ticket and stick it in the stocking. And that'll be a nice thing. Hey, honey, look what we're doing. And it's a gift that keeps on giving because then you go oh my gosh i forgot we bought tickets to the event six months later let's go yeah yeah and they're selling really really fast so if you want to go you probably need to go and get your tickets or you'll get that other thing called FOMO this is the Ramsey Show george camel ramsey personality is my co-host today today's ramsey show question of the day

is sponsored by why refi when you're trapped in a maze of defaulted private student loan debt. It's hard to find your way out. But YRefi can offer you a lifeline with custom refinancing based on your ability to pay and a lump sum payoff option that you could qualify for at a discount after 24 months. Go to YRefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states. Today's question comes from Carl in Wisconsin.

My wife and I are looking for guidance on how to best allocate our investment funds. I'm 50 and self-employed. She's 35, currently a stay-at-home mom, and has an IRA that was rolled over from her previous employer. We're wondering if it makes sense to max out both of our IRAs, or if we should just focus on my IRA and invest the rest in a non-retirement account. Could you give us some advice on the best strategy to balance our retirement planning and other investment goals? A lot more details I'd love to know here, but let's, I guess we can assume they're in baby step four. They don't have debt and they have an emergency

fund. Fair assumption here? Fair assumption. Okay. So they both have access to the IRA. I would love for them to be investing on the Roth side. And 15% of your gross household income is what you want to be investing. So if it's a hundred grand household, we would be investing $15,000 total. So she's got an IRA, you've got an IRA. He's saying, well, should we just focus on mine and do the rest in a non-retirement? I would rather you take advantage of those retirement accounts, which means maxing out both IRAs, if you can, before moving to a non-retirement taxable account. And then focus on getting your house paid off so that by the time you hit retirement and she hasn't, you know, you're 50. So you got nine and a half years, 59 and a half, right, to start withdrawals without any penalties. By the time you get there, nine and a half years from now, you have a paid-for house.

And somewhere along the line, you might look up and do some non-retirement. But right now, you need to be putting 15% in Roths. That simple. And good growth stock mutual funds. I agree, George. So people say, Dave, you know, well, Dave, is it 15% of my income and 15% of her income? How do you go about splitting what goes where? Absolutely.

Is it just we both do 15%? Yeah. And that becomes 15% of our household? It's 15% of the whole household. Yeah. So you add everybody's income up times 15%, and somewhere that number has to go. So in your case, it's like, in this case, she's a stay-at-home mom, so it's one household, one income. And she's stay-at-home mom so it's one

household one income and she can do a spousal Roth IRA yeah so go ahead and fund fully fund two individual Roths but if you're working and you got a Roth 401k too whatever you got to do to get to 15% if you can't get to 15% and you've maxed out everything then you would do some non retirement because it's your only other option but do we not take advantage of a roth and do some non-retirement option because it's age differentiation no no absolutely not wouldn't do that jamal is with us in washington dc hey jamal what's up hey hi dave how you doing better than i deserve man how help? Um, I'm new to the country. I'm 25 married when my wife, she's 22, very young. Uh, I came two years and a half ago from Italy and between things that happened throughout like our engagement, this isn't that, and like my lawyer payment for the

green card, um, we racked up around $10,000 in debt. Um, She has her student loan that will not kick in until like 2026, which is like around 30,000. I'm a very hardworking and I hate debt. I just picked up your book. I'm already on page 40. So I just wanted to know how to get out of the situation to start like bumping more cash flow into our pockets and make sure that everything goes well from now on.

Is she also from Italy? No, she's an American citizen. She's born here in D.C. Okay. I think I would just begin a marriage conversation about what our dream is. What's our dream? We have that. We have that.

And she came from money, and her idea is, like, people have debt. She never got, like, very educated on money. So it was always given to her. So like people have debt, it's normal. That will be fine. And I just hate that idea. I don't want to owe anybody anything. I didn't owe anything. Stop, stop, stop, stop, stop. That's not a dream. People always have debt and I'll always have debt. That's not a dream. That's a, that's a hopeless debt. That's not a dream. That's a hopeless person. That's not a dreaming person.

Exactly. I hate debt and I try always to get out of debt. That's not the point. Why is it you hate debt? You hate debt because you don't want to steal your life because you want to be able to build wealth so you can be outrageously generous and have a wonderful life. Yes. That's the dream.

Not we're always going to have a car payment that's not a dream that's a surrender to my dream honestly to give my kids what i didn't have yeah but you led the conversation with your young wife your young self by saying i hate debt that was your dream that's not a dream either i hate debt because it steals my dream now what is your dream i want to be a multi-millionaire and i want to be outrageously generous and i want to be able to change our family tree i came to this country the country of opportunity for that reason i want to go big. That's my dream, not I hate debt. You see the difference? Yeah. She says, debt's always going to be here.

You say, I hate debt. And this is what you discussed when you're trying to have a dream. That's not a dream. Neither one of those are a dream. And you're not going to get very far with just saying, I hate debt. And so, like Dave said. The point is, it's not persuasive. You need to cast a vision. And that's what Dave working. The point is, it's not it's not persuasive.

You need to cast a vision. And that's what Dave's saying. You need to do for your own marriage. Sit down with her, maybe a dream date and go, here's where we want to be. We want to be debt free millionaires. I'm an immigrant. I want a different future for our kids. Is that what you want? You know, we're 20 when I'm 35. I want to be worth two million dollars, have no debt and be able to give money away and change our family tree and send our kids to school with zero debt because you're sitting here with looking at thirty thousand dollars worth of debt because your family didn't have a big dream they had a crummy vision i don't want to live like that i want to live big and get our own board with that then you say okay how do we get to be what's the best way five and a multi-millionaire, we get out of debt. Oh, we increase our income. Oh, we watch our spending.

Oh, we're generous in our current world. All of that. That's how it works. Jordan is in Salem, Oregon. Hi, Jordan. How are you? Hi, I'm well, thank you. Thank you for taking my call.

Sure. How can we help? I was wondering if compound interest still works the same across multiple accounts as it does in one account exactly the same if they're invested the same then yes okay um if you're earning or you can do the math if you're earning, and here, you can do the math. If you're earning 10% and you have $100,000, 10% would be $10,000. Does that sound right? Yes. If you had a single account that was only $10,000 and you had 10 of those,

10% on $10,000 would be $1,000. Does that sound right? Yes. If there were 10 of those, that would be $10,000 would be $1,000. Does that sound right? Yes. If there were 10 of those, that'd be $10,000, right? Yes. It's exactly the same as if it was one lump. Okay. You see how I did that? I do. I like to hear that. Okay. Some people call him a genius. I call him my boss. Well, I saw the video where if you have $100,000, it starts to grow exponentially. So then I was like, oh, we're really close to that, but it's all spread out. So does that still apply to us?

Now, George's point earlier makes a lot of difference. That's assuming they're all invested at exactly the same rate. So if it's spread out on a bunch of different mutual funds and some of them are underperforming, then that's a problem. But that's not a compound interest equation problem. That's an investing problem. An allocation issue. Yeah. So if I've got 10 different mutual funds and they all earn, they all grow at a 10% rate, that's the same as having one mutual fund that grows at a 10 percent rate, to George's point earlier. But if you add it all up in one nest egg and everything's invested equally, it's going to grow at the same rate. Exactly. Exact same rate. So yes, if you got 100,000 total across a bunch of accounts, you got 100,000 growing for you. That's awesome.

Yeah. Very good for you. Good question. You're going to be great. And by the way, rule of 72s tells us if you divide an interest rate into the number 72 it tells you how many years it takes for it to double for a lump sum so a hundred thousand dollars at 10 percent 10 into 72 will be 7.2 years to double so if you got a hundred thousand bucks and you're invested at 10 percent in seven years you'll have 200,000 in 14 years you'll have 400,000. In 14 years, you'll have 400,000. In 21 years, you'll have 800,000. In 28 years, I'm doing this quickly, you'll have 1.6. 1.6. I told you he's a genius. 30 years from now. So that's how you can start to run the numbers out in your head pretty quick and go, yes, this is all worth doing, boys and girls. And very little of that money was the money you put in.

Compound growth did the heavy lifting. And 90% of what's in your account at retirement, if you start now, boys and girls, will be growth, not money you put in. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey personality, number one best-selling author of Breaking Free from Broke, host of the George Campbell Show on YouTube, the the ramsey networks and of course ramsey personality he's my co-host today christopher is in richmond virginia hi christopher how are you hello mr ramsey thanks for taking my call sure what's up i i i've heard you yell at quite a few people about

whole life policies uh i have a universal life policy, and when I started hearing how terrible the whole life's where I looked into it, and I don't think it has all the same bad things to it that whole life does, like the cash value doesn't go away when I die. Yes, it does. It would pay out with the policy.

Yes, it does. I called the company and asked them. They said, no, it does not. Yes, it does. Well, they sometimes will claim they can set it up in such a way in very few policies. I called the company and asked them. They said, no, it does not. Yes, it does. Well, they sometimes will claim they can set it up in such a way, in very few policies. Do you have a universal B or A? I think so.

What? I don't know if it's A or B. Okay. A B, a universal B works like this. You pay, let's say you bought a $100,000 policy, and you build up a $20,000 cash value. Okay.

Universal B charges you for $120,000, the face value plus the cash value worth of insurance. So you're purchasing extra insurance that makes it look like you get the cash value upon death, but you don't. You're just buying more insurance in B. That's all that you're doing. The equivalent of the cash value amount. The cash value amount in 100% of universal policies disappears at death 100% of the time. Okay.

Always. The other thing was that whole is 20 times as expensive. What? The other thing you said was that whole is 20 times as expensive. It's how they're structured. It's how they're structured. What? The other thing you said was that whole is 20 times as expensive, and I just did some comp shopping, and my universal policy is about the same as that, but now it would cost me to get term right now. I've had it for a while, but...

Well, there's one of two possibilities there. One is you did your comp shopping with the same stupid company that sold you the universal, and they generally have very expensive term. If you go to Zander Insurance and comp shop, you'll probably find it to be a lot less because they're shopping among a bunch of different companies that specialize in term, and it's much, much cheaper. The other possibility is universal life works like this. The premium go that the portion of your premium that you're paying monthly that buys your life insurance goes up every year.

Your premium stays the same, but let's say that let's just make up a number. Let's say your premium is a hundred dollars. And the first time time the first year you bought it you were 26 and you're uh and of the hundred dollars uh ten dollars went to insurance cost and ninety dollars went to the investment later on as you get older the amount going towards insurance goes up okay because every year you're older you're more likely to die and so what can happen with a universal policy that can't that's worse than a whole life even is the lines can cross and actually the insurance cost becomes more than the premium and they'll start using part of your cash value to cover the insurance cost because you're upside down in the policy.

And then that thing, it'll actually disappear. It'll actually deteriorate and kill itself. It turns in on itself mathematically. So what's happening is that you were doing more investing in the old days, and now almost all of your premium is simply buying insurance. Now, in the term insurance world, Christopher, there's term life insurance, which means the length of the term. So you can buy a one-year term, a five-year term, a 10-year term, a 15, a 20, a 30-year term,

and if it's level term, the premium stays level throughout that period of time, which is an average of all the years before pure insurance technically speaking would be annually renewable once a year the insurance premium goes up because you get older and every year you're older you're more likely to die percentage wise does that make sense so an art is what that's called, an annual renewable term, and the cost of insurance goes up every single year. It's not level when you buy an ART, and that's what's built into the universal policy is an ART. And so the universal, the cost of insurance, more of your premium is going to insurance every single year, thereby less is going to the investment. And that may, if you've had it for many years, now you're just buying insurance.

You're not putting anything into investment. Or worse, you're not even covering the cost of the insurance, and they're using up some of your investment to cover the difference because you've crossed the lines on it. And if that's the case, then that would also explain why you find term insurance to be about the same cost, because really all you've got now, honey, is term insurance, because the ART is raised in price every year and caught up with the actual premium that you've been paying. I'm dizzy. It's exhausting. And here's the thing, I've never heard of someone who isn't selling insurance, say, their whole life, or Universal is good.

It's only coming from the salespeople. And so the people that get swindled by this, it's usually from a friend who explained to them, the wealthy do this, they invest through their insurance policy, and you can borrow against your own money tax-free, and they explain all these crazy loophole quote-unquote advantages. So in the financial planning realm, fee-based financial planners, investment advisors like our SmartVestor Pros, anywhere you go to for financial planning help, the only people that tell you to buy cash value insurance are people that sell it

no one else tells you to do it no one in the entire the rest of the financial world looks at it and goes buy inexpensive term insurance 10 15 20 year level term and do your investing anywhere else don't put it in this crap. Because what ends up happening, see, let's go back and revisit the barrel of fish hooks I just unpacked a minute. Because it's frustrating as crud. When you were 26 and you bought that $100 premium I was talking about a minute ago, and I made that number up, okay? You bought that because you wanted some insurance and because you wanted some investments and the irony is that the rising cost of insurance through the years eats up all of your premium so that the very reason

you bought it instead of buying term was to have an investment and it doesn't occur the longer you hang on to it the higher chance it will implode on itself yeah Yeah. It eats itself out. And so the very reason that you did it is systematically annually disappearing. That's the irony of how bad this is. It just sucks. And with Universal, there's flexible premiums. But here's the thing. If it's not enough to cover the insurance, they take it from your cash value. Yeah.'re not winning they always win and again the insurance is going to go up every single year because it's the equivalent of an art built in now the truth is on a 15 year fixed uh level payment right you're paying more in the early days than you would for an art because all the 15 year is is the average of the ART but less because ARTs have low persistence very few people keep them

and they drop them because they go up every year and they get oh god I gotta get out of this thing but they keep the 15 so it's cheaper for the insurance company to run the 15 so they give you a break so it's less than the average of 15 ARTs. And it's simpler to manage. There's no investments and cash value to deal with. But you're still paying it. You're still paying for the coverage. This is The Ramsey Show. I've been doing this show for over 30 years,

and some of the saddest calls I have taken are from situations that are completely preventable. Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible. People that call in and their spouse has passed away suddenly and they don't have life insurance. When you have to think through how am I going to pay my bills in the middle of all that grief, it's terrible. So life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Zander shops among a gazillion different companies.

It doesn't cost much. Just have to admit that someday you're not going to be here. You got to say it out loud. And you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of stinking pizza. To get a free quote, call 800-356-4282. That's 800-356-4282 or go to zander.com.

Well, Christmas is right around the corner. And if you're shopping for yourself or you're looking for the perfect gift to help someone get their money in order, now's the time to shop and get up to 30% off on our best-selling products. The Total Money Makeover is 30% off. Building a Non-Anxious Life is 30% off. And Georgia's number one bestseller, Breaking Free from Broke, is even on sale. So check it out, including the classic Questions for humans card decks from Dr. John Deloney for couples, friends, and parents, 12 bucks, all at ramseysolutions.com slash store, or click the link in the description on YouTube or podcast. Nicole is with us in Denver. Hi, Nicole. Welcome to the Ramsey Show.

Hi, good afternoon. I wanted to ask you about prenups. I'm very recently engaged, and I'm walking into this marriage with about a $400,000 Schwab investment account. Hmm, okay. How old are you? 30. How long have y'all been dating? Three years. Okay. My fiance and I are in very different financial situations. He doesn't have much of a savings account. And the reason I have this investment account, my father passed away, left me quite a bit of money. And my mother has helped grow this account

to a significant amount. So by adding, I don't know if that's something by adding to it and investing and things like that well my money that she has invested very smart lady but i don't know what i should do with that account or if i should bring it to the marriage or not okay um when i first started doing this show 35 years ago i told someone that if you need a prenup you don't need to get married if you can't trust them with four hundred thousand dollars you don't need to trust them with your life right and i don't want to come into this marriage feeling as though i'm harboring a resentment or being perceived as non-committal or anything like that. The reason I ask you, two reasons, I feel like this account is not mine. I think it would be set up for me in case of an emergency.

I have a significant health condition that may resonate. Why is it not yours? You told me it was yours. It is, but because my mother has grown it so significantly. Are you going to stay married to your mother, or are you going to marry him? No, I'm marrying him. Okay. Then maybe it's time to be married to him and not your mother.

And you and him manage your health condition and your future and your money for the good of you and him and the next 40 years of your life, 50 years of your life. We're managing that together. It's very sweet that mom has been helpful, but her days of controlling your life at 30 years old, you're a grown woman, are over. Sure. So now that changes it. So I would want to share every bit of my life.

If you're going to get married, you've got to go all in. Okay. Okay, and that's what you asked. my opinion and that's my opinion i would tell you to do that the only time i tell someone to get a prenup is if there is an extreme amount of wealth on one side and 400k is not extreme but if you had if you had 15 million dollars and he had not a nickel, then I tell you to get a prenup then because, not because of him, but because of his crazy relatives. The crazy relatives come out of the woodwork when you marry a rich woman, you know? And it's like, and so you control them with a prenup.

You go, I can't do anything about it. I mean, it's not, I don't have any access to it, the prenups. And it just shuts down the crazy relatives and sends them back to the cave they came out of and so um that that's the only reason i do that is it gives you some relationship management stuff and i'm trying to keep someone from getting just conned completely but i don't think you're being conned you've got three years in this in this relationship you're 30 years old you're not a baby child and you're not been you know we go you know i met him in las vegas two weeks ago and well that's a whole different story right that's not you you're very precise you're very wise you're very even you're very careful does

he know about this account? He does. He doesn't know the exact amount that's in it. And I was also thinking maybe we would reserve this account for our children in the event that we did get a divorce. Well, let's talk about it. Sure. Let's talk about it. Let's say, hey, if something ever happened,

I'm going to claim that I brought this money into the marriage if you divorce me, and I'm going to try to keep it. I'm going to make sure you don't get it. But you don't need a prenup to do that I brought this money into the marriage if you divorce me, and I'm going to try to keep it. I'm going to make sure you don't get it. But you don't need a prenup to do that in most states. In most states, it was assets you owned when you came in. But I think there's something to be said here. It makes you think about, okay, are there parts of the way he handles money that you don't respect? Well, see, that's a red flag.

That's something to be handled in a pre-marriage. I see your point's a red flag. That's something to be handled in a pre-marriage. I see your point. Not at all. Just we have different finances, so I don't know how to combine or not combine things. I want to be smart. Well, when you say different, you don't mean he's irresponsible and you're responsible. No.

He has quite a bit of student loans last he just entered the workforce after um being in the military and getting his doctorate degree so he hasn't been working cool doctorate in what he's a chiropractor okay so he's getting ready to start making some money and he's got two hundred thousand dollars in stinking student loans yes yeah. Yeah. Well, I would not want to use the $400 to pay those in the next 30 seconds, but four or five years from now, I might use some of it to knock the rest of that out, if you haven't knocked it out. But I think you guys need to roll up your sleeves and knock it out and then leave the $400 alone.

That would be a plan. That's a good plan. Yeah, but hopefully you can do that. But if he's saying, oh, I'm going to be in debt for the next 30 years just because that's the way it is if you're a chiropractor, that's a different discussion. That's not a prenup discussion. That's a I-don't-get-married discussion.

Yeah, if your financial responsibility gets him to be lazy or entitled, that's a whole different discussion. He doesn't sound like lazy or entitled, though. He goes for it. He went and got his dadgum doctorate. He's been working his tail off. So I'd go into this with arms wide open right now, unless you have reason not to be. Yep. Yep. Eyes wide open and arms wide open.

Just like Creed said. All in. All in. All in. All in. Leave it all on the field. All right. Danielle's in Columbus, Ohio. Hi, Danielle. How are you? Hello, Dave. So I am just stepping into the Ramsey way. I'm about to start my budgeting. And I now have a stable income of $42,000, which includes my housing and my food for at least half the year. I have side hustles, which I haven't calculated. It's going to be at least $15,000. I have $16,000 in credit card debt, $7,000 in my car, and $35,000 in school loans.

My question is, now that I have this new job, previous to this, I was on Medicaid insurance, and they're offering health insurance but i really don't want to do it it just seems too expensive i'm 31 years old i'm healthy i just you don't qualify for medicaid honey if you're working medicaid is welfare yeah i know so that's what i was before but now you can't you can't get it now exactly so you have to have health insurance I have to yeah you'll go bankrupt okay you have your appendix out and you know you're going to get a $62,000 bill it'll bankrupt you so I mean it's just like car insurance just because you haven't had a wreck

doesn't mean someone else is going to hit you all right you can be a great driver and so you need health insurance now and always and do you know how much it's going to be is it six hundred dollars a month yeah something like that it's we have they're offering us united health care i mean you can shop around with our friends at health trust financial and see what the marketplace insurance would be versus the employers and see what's the better deal for you but it's a non-negotiable and it just has to go in your budget and if other things have to be sacrificed because of that then that's what you'll have to do for now if they have uh four or five different plans under united and they probably do just take

the cheap one and the higher deductible and all that kind of stuff. That's all fine, but because I'm not worried about a $5,000 or $4,000 deductible. I'm worried about a $62,000 problem. The number one cause of bankruptcy in America is medical bills. So you have to guard against it. So look for that HDHP. That's a high deductible health plan. It'll come with an HSA, which is a great way to save for those health expenses. And that'll be your best bet.

Keep the premium low, but it'll transfer a little bit more risk to you with the deductible. Yep. 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 healthcare 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. Coming up December the 18th, one of your favorite shows, our annual giving show. We take calls from folks who are proud of some giving that they did and want to tell us the story,

or they are proud of some receiving that they did. Tell us, and they're going to tell stories that make our eyes leak. December the 18th, our annual giving show. Don't miss it. Also, coming up at the end of this segment, we will jump the show over to the Ramsey Network app for the remaining portion of today's show. And the Ramsey Network app is a free download. You can do that there anytime you want.

And you'll get the entire show there, plus audio, video of everything. And you can search the show. You can send us emails in there. You can search the show by subject so you don't have to listen to 26 hours to find out what we say about whole life, life insurance, or whatever it is that we're harping on that day. So check it out. And if you're on radio, of course, stay tuned.

Wherever we are on radio, we're still there on radio. And Thomas is in New York City. Hi, Thomas, how are you? Hello, gentlemen. Great. Thank you so much for taking the call. I have a quick question. I don't know if I have to get into a lot of detail. I'll answer your questions. My mother's financial advisor has been trying to persuade her to buy something called structured notes. And I've looked into it, but I wanted to get your opinion on how that, if that's a good investment product versus, you know, buying a five or 10 year structured note or just taking that same amount of money and putting it into a, you know, a mutual fund that tracks the S&P 500 or something along those lines. Is that something you're familiar with?

And do you have an opinion on it? So thank you. Yeah, don't do it. Don't do it. Okay. And I'm real. How old is your mother? My mother is 81

okay all right here's the thing a structured note is a bond propped up with a derivative okay and the here's the way bonds work if you buy a bond and and the interest rate on the face of the bond, you buy a $10,000 bond and it pays 3%, okay? When interest rates go up above 3% to 6%, the $10,000 bond becomes worth less. Does that make sense? Yes, it does. And when the interest rates go down,

the $10,000 bond becomes worth more than $10,000. So in a rising or high interest rate environment, you have a good chance of losing money on bonds. They are not safer. The financial world has, I'll be kind, has mistakenly said that bonds are safer than equities. And in general, they're not, particularly in an interest rate environment that's as volatile as the one we're in right now. We don't know what interest rates are going to do in the next 12 months. With a change in administration, with a change in move in the economy,

I hope they come down, which would make her bonds in this case worth more. But the derivative portion of this is a high-risk play. And why in the world he's putting her in a volatile instrument at 81 years old with a high risk play it just sounds weird to me i i think that's i think that's irresponsible well my best guess it's high costs and fees that go to the financial advisor yeah that's why i would choose that product if i was this guy i go well i'm going to make more money off this one than putting her in a simple mutual fund right that's my understanding that there is a high fee involved with that with that particular product okay probably i mean we're not positive we don't

know that we don't know which product he's got in front of her but um how long has he been taking care of her in quotes uh god a long time third of 20 some odd years yeah and what is she invested in now do we know um well she has a 401k that she and i don't know what that is exactly and she's just mutual funds and i don't know exactly what the mutual funds are she's got mutual funds that she purchased through ubs and she's got mutual funds that she has in her 401k she's got mutual funds that she purchased through UBS, and she's got mutual funds that she has in her 401K. She's got a combined net worth of about $400,000. Yeah, I think I would just stay right where she is. Just stay where she is?

Just stay with the mutual funds? Yeah. I might not stay with the financial advisor, but I'd stay right where she is. Yeah, yeah, I know. I know. I was thinking about that myself. Okay, thank you. Thank you, Thomas.

We appreciate you calling. Open phones at 888-825-5225. Jill's in Dallas. Hi, Jill. How are you? Hi, I'm good. How are you guys? Better than I deserve. What's up? Okay, I just have a question because I'm new to managing money. I was married for 15 years and recently finalized a divorce. I'd love your opinion. I don't know how much house I can afford or what would be wise to spend on a home. Are you out of debt? Yes, sir.

Good. Okay. How old are you? I'm 40. How long were you married? 15 years. I'm sorry. It's a hard time of year with a broken heart.

Well, it's all good. It was a long time coming. You're surviving, but it's not all good. I'm sorry you've been through this. Thank you. All right. I mean, we teach folks to get their home paid off as fast as possible, and in that vein, we have a standardized guideline that we use,

which is super conservative for house payment. Well, I have cash is what I'm wondering. How much cash do you have? So I have $1.2 million in mutual funds. You buried the lead there, Jill. Wow. Okay. You have $1.2 million in mutual funds.

And what else? $750,000 in a 401k. Okay. And my monthly income. What else? Well, my monthly income for the next seven years will be $18,500. Was there a family property that sold? When we got divorced, I got money instead of property.

Okay, good. Yeah, you did. And you'll be making over $200,000 a year. Yes. And you'll pay cash for this house. Assuming he pays the bill bill this is alimony and child support alimony is yes is the 18.5 but i do have the 1.2 and the 750 yeah and and is he in good shape financially can we count on this 18.5 yes all right are you going to develop a

career or what's your plan well 17 of that is um alimony i make a tiny bit just a part-time job i have two kids how old are your kids um they are 14 and 11 okay so what are you going to do the next 10 years of your life i really don't know i'm a teacher by trade in Oklahoma that doesn't make any money. Okay. Well, it doesn't mean you don't get the alimony if you went into this classroom, right? Right, no. Okay. All right.

Just as a part of your healing, I want you to have the dignity of making some money somewhere down the line. You don't need it, but it's going to be good for you to feel that you are sustaining yourself in addition to all this money, okay? Okay. Now, how much of the 1.2 are you thinking about spending on a house? Well, I don't know. I don't know what's wise. No, I ask you.

You've been thinking about it. This isn't your first rodeo. I mean, some days I think like $300,000 would be really modest and it'd be enough space for us. But then I get kind of starry-eyed and there's pretty homes for $800,000. So I don't really know. My thing is I don't want to put myself in a predicament down the road that I think, oh, my gosh, I bought too much house. I shouldn't have done that.

Well, too much house would be a payment you can't afford, and that's not a problem. Okay. The house is going to go up in value, and if you ever want to sell it, usually you can sell a house if it's a decent house, right? You're not stuck in it. So if you pay cash for a $700,000 house and you wake up a few years later with regret, you could sell it. Okay. And then you still have $500,000 left over plus $700,000 in a 401k plus $18,000 a month, right?

Mm-hmm. It feels to me that's very safe to be in the 700 range okay that's very safe okay thank you i value your opinion a lot well i mean it needs you need to work that math out and feel very safe about it not just just because dave said so and work with a good agent jump on ramsey solutions.com slash agent and start shopping around and see what you can get for that amount and if you're happy with it yeah get a get a uh real estate one of our Ramsey trusted real estate agents there. They'll help you. They'll do a good job of helping you work through the decision making on this as well. This is The Ramsey Show.

There's a time in your life and in the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner you can rely on, Churchill Mortgage. Churchill is Ramsey trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget.

Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American dream of home ownership today at churchhillmortgage.com. That's churchhillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLS consumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. If you like this show, help us out by sharing it, following us, subscribing, whatever the format is your listing allows you to do. Oh, and also you could leave a nice five-star review. I mean, come on, be generous.

We need your help. It helps spread the word, by the way, when you do all of those things, and you guys are spreading the word, and we really, really appreciate you telling people about us, especially when you tell people nice things about us. Thank you. Elliot is in Denver. Hi, Elliot. Welcome to the Ramsey Show.

Hello. So I'm in a bit of a predicament with my kind of housing after the end of the year. I've been going to school or going to college on and off the last like 18 months or so for meteorology. But in between there, I worked as a aircraft ramp agent, so like a baggage handler at the airport here in Denver for six months at a airline that had high turnover. So I actually worked my way up all the way to where I was a supervisor, but I liked the work, but I liked the work environment or not the things that I would do with the job working with the, with the planes and stuff, but I didn't like the kind of business

corporate environment of it. And so I decided to go back to school, and that didn't quite work out as well as I thought it would. And so now I am no longer getting any financial support for school from my parents, which was previously they were paying for my school, and now I'm being kind of told that I am expected to move out of their house at around the end of the year, and I don't really know what to do right now. I have like $800. Things didn't work out at school. What does that mean? I wasn't able to pass a math class that I was taking.

Why? Because I wasn't good at kind of managing time with mainly like the homework assignments. Do you have a learning disability? No, I have like ADHD, but I'm not sure if that's a learning disability or not. That wouldn't keep you from passing a math class. Yeah. Why did you not do your lessons? It's kind of getting distracted by things that I realized when you're looking back now I shouldn't have.

You're so vague. Stuff like. I have no idea what the crap you're talking about. Are you telling me you've been drinking and smoking dope and partying and you're flunked out of school so your parents are throwing you out? I've never been that kid. It's just, you know, finding it hard motivationally um sometimes to just like do work that um but i just i have decided that like i'm not going back to school okay and you're moving out so how can we help you so was there was there an agreement with your parents where they said

here's the deal we're going to pay for school and you're going to go to class and pass and that will allow you to live here and we will pay for school if not here's what happens if not and now we're at the if not sounds like you agreed to this now now you're moving how can we help you so i just am not sure like in terms of like with um work like getting a job here is i'm able to do that but it none of the jobs that i see that i can get would really pay for the because the cost of living in denver is so high that sounds like you can't afford to live in denver what were you making on the ramp job um i was making 22 50 an hour you can get a roommate in an apartment in denver out on the out on the edges of denver towards the airport which is not anywhere near denver but um yeah yeah move out of town get an apartment with a roommate and making three or four grand a month right

and then crank your and then crank your hours up and work your butt off you can make it okay but you need you need can you get back on over there um i think i could try or another similar operation like that yeah jump in for sure because that's a that's a known quantity i'm not saying you need to be doing that when you're 35 but for right now that'll get some money coming in and let you get stabilized and get yourself established as an adult, working on their own, paying their own bills, which is what your parents are demanding. And then you can reset and say, okay, while I'm doing this, what do I want to study? And how can I study it? And start taking some night classes to go be something else.

But I would get my feet on the ground over there at the ramp, start throwing some making some money and i'd be working like 60 80 hours a week because i'd be scared i'd be hungry and you're going to have to deal with this underlying problem of time management and responsibility being hungry is a motivator you don't have to worry about being motivated being homeless is a motivator you want to pay you want to pay, having the lights cut off and it gets cold in that apartment because you didn't go to work, that's a motivator. You will suddenly be motivated. You don't need to look for motivation at that point. It'll be finding you.

It's called survival, dude. It's called sustainability. And, you know, you don't have the option of not being motivated when you need to eat and keep the lights on and not be homeless. And so that's what you're set up for for and that's going to be good for you you're going to you're going to learn some good things about elliot that elliot can work and elliot can stay on the job and elliot can keep focused and elliot can push through what because elliot freaking has to now and um i think it's gonna be wonderful for you it's gonna be the best thing ever happened to you maybe. I kind of like your parents.

I think they're pushing you out of the nest and saying, fly, little eagle, fly. Otherwise, like Dave says, you become a turkey. Yeah, if you stay in the nest too long, eagles become turkeys. That's science. I can't explain it. It is science. It's definitely.

It's evolution. Is it de-evolution? It's de-evolution de-escalation yeah fly a little turkey fly i mean fly a little eagle fly you're gonna be fine but you're gonna have to get your button gear like yesterday and uh if you can't get more than 40 hours at the airport uh next door there's a place called ups and they'll let you throw boxes it's christmas. They desperately need your help over there. The Amazon warehouse that's out there in the middle of nowhere,

this looming beacon of light for Americans purchasing things, will hire you in a heartbeat to work in their warehouse right now. They are stepping and fetching. It's Christmas time. And so you're not going to have time to worry about motivation because you're going to be at work all the time that helps i've i found that when i'm distracted by work i'm rarely bored and i'm rarely broke that's a good combination my grandmother used to say there's a great place to go when you're broke toe work so it's wisdom uh you know

here's the thing uh this could be the best thing that ever happened to you in your whole life if you decide it is uh and you know no excuses no excuses go get it go get it open phones at 888-825-5225 diane is in phoenix hi diane welcome to the ramsey show i'm short on time go straight to your question. I hear you. I hear you, Dave. Thank you. I hope you guys are having a blessed day. I have an annuity question. My mother recently passed away. I'm the executor of the estate annuity. The beneficiary was my sister. Not a problem there. However, my question is, my mother, when the contract, the annuity came mature last fall, and my 91-year-old mother had no idea what to do or what they were talking about

or what they were asking her for, had to make a choice of taking a lump sum or monthly payments for the next 10 years. Doesn't matter. It doesn't matter. She died. When she dies, the beneficiary gets a lump sum well that's not what they're telling me and that's why i'm calling god gonna get a lump sum oh no no they they don't have a choice they're trying to con you absolutely they do not have a choice

they're trying to get you can they let you can elect to take payments but you are not forced to stick with her contract she died The beneficiary gets a lump sum. Okay. What is my next step? They're just telling me there's nothing I can do. Tell them there is something I can do. I'm going to the insurance commission and file a complaint on you crooks. There you go.

That's what I needed to know, Dave. And I'm walking into my lawyer's office right now as well to talk about this same subject. So, thank you. I really appreciate that you absolutely bogus dadgum insurance people so they they love to get you on payments rather than giving out the money they don't want the money to leave them their control and so they're like presenting two options and acting like you only have one nope now they will offer you payment option a contract again as a beneficiary. But never, you're not forced to take it and never take it.

Time to get out of Dodge for your sister anyway. Take that lump sum and invest it. Yeah, and do something good with it that's not leaving it with them. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show. We help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, number one best-selling author of the book Breaking Free from Broke and star of his own YouTube show, The George Campbell Show on the Ramsey Networks. He is my co-host today. Open phones at 888-825-5225.

Jessica's in San Francisco. Hi, Jessica. How are you? Oh, hi. I'm good. How are you? Better than I deserve. What's up? Not much. I was just calling in because I want to clean up my finances a bit, so I started trying the baby steps, and I got my $1,000 saved. Good. But now as far as paying off all my debt, I just feel like I don't even know what all my debt is, and how would I determine, like, okay, this is everything I owe and this is the right way to go. Because sometimes I just feel like things pop out of the woodwork that I'm not

even really aware of or that aren't on my radar. And I'm just like, it just feels like I cannot, it doesn't seem realistic that I could pay off all my debt, to be honest. Well, you don't even know what's there. So of course it's not. You got to know what's going on of course it's not you gotta know what's going on with the boogeyman under the bed then we can deal with them exactly it's like what is out there it's scary what do you think so far is out there why do you not know where your dad is i feel like maybe some of it's from when i was younger, and so I wasn't as concerned, I guess. Like how much younger?

Like college age, maybe from 10 years ago. How old are you? I'm 34. I just turned 34 in November. So like you had a credit card in college, didn't pay it, and forgot about it, and now it comes up. Yeah, something like that. I had a lot of dental work done that I could not afford, and I'm not even sure where those bills are or if anybody is still even trying to collect on them.

Okay. What about more recently? That stuff, I do know about it. And so like I have some credit card debt. I have some of those like, you know, when you can pay like four equal payments without interest, some of those things that I've done. Buy now, pay later, after pay type thing?

Mm-hmm, yep. So I have about $3,000 of that. Mm-hmm. You have a car payment? I have some credit card debt. Car payment, yes. And what do you owe on your car? I have two.

I owe $8,900 on the car that I'm using, and I only owe $700 on the car that was'm using and i only owe 700 on the car that was totaled um but it i still had to pay that down from about two thousand dollars so it's almost okay so we have a very we have a very solid list with the possible exception of some college misbehavior that could pop up later right that i assume went to collections and they contacted you a while back and they haven't heard about it in a long time they gave up why don't we work on what's in front of us first right let's take that list you just gave me and let's just make that list and make that your debt snowball okay how much money do you make um i make about take home every two weeks about 2300

what do you do for a living? Medical billing. You said college. What did you study in college? I went to college for a psychology degree, bachelor's. I was going to be a teacher, and then I decided that was not for me. So I got a job at a skilled nursing home, and I've just been working there ever since. Gotcha. Okay.

Yeah. All right. So I think I'm hearing, and you tell me if I'm missing this, okay? Because I could be. I'm not trying to be insulting. But I think I'm hearing someone who has avoided doing math at all costs. Probably. Probably. I mean, every single month I tell myself okay gotta do it no i'm just saying so math math and therefore finance and therefore debt is intimidating yes okay so i really want to encourage you because you're going to have so much fun

this is a whole new chapter of your life you're going to blossom and bloom like you never have, because what we're asking you to do is not that difficult. And when you stand on top of it, instead of laying under it, when you have power over your money, rather than it constantly being intimidating to you, you're going to feel like you have scored a touchdown in the Super Bowl. Right. And that's what I want. You can do it. You can do it.

I know you can do it. I'm trying to take that step, and I'm like, oh, no. But listen, as bad as your dread is, the victory is going to be even more. Right. The victory is going to be so much sweeter than the dread is dark right now. You dread this. I mean, you call me up, and you're like, I've got to deal with this. Maybe this guy will make me do it. You know know i don't blame you i get it but i'm promise you

you don't have much debt you already got your thousand victory okay seven hundred dollars pay it it's over right right this month you got that much wiggling room in your budget this month. It's living rent for your head. It could just be gone. And quit buying crap on the internet on four easy payments. Yeah. Period. You got to take that off the table, Jessica. No more borrowing.

It's like, oh my God. You're not in Congress. Quit buying stuff you don't have money for. Right. Do you have an ex in your life? An ex-boyfriend, maybe? No, I have a current relationship, and he's better with his money. We do keep our finances separate.

We're not married or anything. So you have an accountability partner then. If somebody looked at you and said, do it, Jessica, do it. So that can be your phone a friend. You go, all right, I'm about to do this. Talk me off the ledge. Abandon cart. Right, just forget it.

And then I'm going to give you some life hacks jessica number one to take the guesswork out go to annualcreditreport.com you can pull your credit report for free don't pay for it from all three bureaus and it's going to list out all the debts they know you have the amounts who it's with and that will give you a very clear picture and who to contact when you want to go call those old ones back and fix them but before you call them oh i see before you them, I would just clean up these little ones. You got, you know, ones are right in front of you. 5,000 bucks, 6,000 bucks changes your whole life. Yeah. I mean, like by summer, well, yeah, you have to, you have to be on a budget and you have to tell your money what to do you have to take power over this it's had power

over you for too long it this being money you need to make money your slave it is a wonderful slave it is a horrible master yeah and it's been emotionally kicking your butt you feel inept regretful hung financially hung overover most of your life, and it's time for you to go, oh, no, no, no, I'm going to whip this thing. It's going to get under my control, under my heel. I'm going to put my heel on the neck of money and make this money behave, and you're going to look like Rocky. Have you ever had $10,000 in the bank before, Jessica?

$10,000 just sitting there? Just once. Imagine how that's going to feel when you've got $10 before, Jessica? 10 grand just sitting there? Just once. Imagine how that's going to feel when you've got 10, 15 grand sitting there. You're investing for the future. You're done paying for the past. You'll feel like a grown-up. Right. And I actually feel, yeah, I would love that.

I've only had that feeling once. I did make a purchase. I bought my house. But it was like, okay, closing costs and stuff for that but i would like that again i feel like i am under the heel and just like behind and behind and behind yeah and it's just yeah i don't i don't feel like a grown-up like you said i just feel yeah like a kid who doesn't know and i listen i've been doing this 30 years and i can talk to you six months from now and you're going to have a completely voice tone

change. You're going to walk different. You're going to feel so freaking powerful. It's going to be unbelievable when you do this. I'm so proud of you already. It's amazing. Hang on the line, Jessica. I want to send you my book, Breaking Free from Broke, and it comes with three months of every dollar premium because I want to help. I want to see you win and I want you to call back and share your debt-free story. So hang on the line. Christian's going to pick up. We'll get you that book. Every dollar premium is the budgeting app, Jessica. This is The Ramsey Show. George Campbell Ramsey personality is my co-host. You know, the fun thing, George, about talking to Jessica is we know when she gets that every dollar premium that you sent her,

that she downloads that, you know, you can download it at the App Store for free and Google Play for free, that when you start telling your money what to do, it does give you, it's an old word we used to be back in the 80s, you're empowered. You know, this is empowering. We don't say those words anymore, but, you know, I want to be back in the 80s, you're empowered. You know, this is empowering. We don't say those words anymore, but, you know, I want to be empowered. But it does, it gives you power. It gives you a sense of confidence, a swagger when you're telling your money what to do. Well, I remember seeing a study with, you know, weight loss,

and it was saying the number one indicator that you're going to make progress is the daily check-in on the scale. It's that scary thing, you don't want to do it. You do a daily check-in. And it's same, it's true with your money. You look at the money, you look at the bank account, you see our expenses, you see the income and you go, all right, I'm taking control of that one day at a time. And over a month you go, oh my gosh, we just shaved off 400 bucks that went to our debt. What if we do that every month? And so it's these tiny habits that you start to create to build the muscle that does that's what the budget does download every dollar for free at the app store or google play it is the world's best budgeting app bar none trish is in

st louis hi trish welcome to the ramsey show hello hi so my question is a little bit of a marriage debate between my husband and I. I say that I am being a good steward in planning for the future with our money. My husband disagrees slightly. We are at baby step five. We have only our mortgage left. Our necessity bills are 40% of our take-home income. And I still struggle to spend any money because I'm like, well, one day we'll need a car, and I'm sure one day we'll need a vacation, and so I'm

still extremely tight with our budget, and I just don't know either a guideline or a rule to enjoy what we've accomplished. Yeah. Well, you've self-identified exactly what needs to happen, right? I mean, number one, you are not spiritually superior. This is not a stewardship issue. You're just a saving tightwad. You've got a sinking fund for your sinking fund. It gives you joy to save money. There's nothing with that but it's not doesn't make you spiritually superior

you get joy from saving money my wife does that she loves to save money well and and i enjoy giving so we are a family of like see a need meet a need i didn't i didn't cause you i didn't call you greedy i just said you enjoy you're a good saver and and and good savers have trouble enjoying spending i'm a good spender i have trouble saving but i have to intellectually rise above and say both are necessary and as an act of my intellect as an act of my will i'm going to save money because that way i've got more to give and more to spend um and i have to have a system and it makes me do all the smart things dave needs to do sharon needs my wife is like you she needs a system that makes her enjoy some of the money. Okay.

And I guess my worry with it is always if a year from now I need a new vehicle, I don't want to take out a vehicle. No, you're not going to. You're not going to. You need to look at it, and you guys need to discuss, do we plan to buy a car in one year? Gotcha. And if you do, then you say, how much are we going to spend on the car above the value of the current car we're going to need ten thousand dollars oh

extra right and it won't be a giant surprise yeah and and so what what does that mean one year from now that's 833 a month right in your budget that's a sinking fund, saving for car replacement. Not vague, a targeted, detailed goal that gave us an exact number. Not this vague fear, oh, I might need to buy a car. No, you will need to buy a car someday. It's just a matter of when and how much. So let's put a number on it. Put a number on it. And then is it wise, because the emergency fund, so my entire adult life, I've always kept some money in a savings account.

Usually I aim for about $20,000. It's bigger than that now because we wanted to keep six months of our spending in it. But I've never used my emergency fund. I haven't either. Because it hurts me to even think about using it. I haven't either. I cash flow emergencies. I don't even touch the emergency fund. haven't either because it hurts me to even think about you i haven't either i cash flow emergencies i don't even touch the emergency fund okay all right and that's what i i guess i'm always concerned something that i've not planned for will come up yeah and then i don't

want to look back and be like well we shouldn't have took that vacation or we i shouldn't have bought new furniture well if you look at it and you say, if I buy this furniture or go on this vacation, I can't fund my kid's college and I'm never going to pay off my house. Well then, yeah, we should not have done that. Right. But, but so the thing is when you start actually, you are fretting about an unknown. Turn it into a known and kill it. Okay. The known is Christmas is in December. I need to be ready for Christmas.

The known is I need a car on this date. And if I go on vacation, I won't be able to get that car. So we're not going on vacation. Or we're going to get a different date on the car so that we i go on vacation i won't be able to get that car so we're not going on vacation or we're going to get a different date on the car so that we can go on vacation i don't care but you're constantly looking at and just being intentional and when you give every one of these things a date and a dollar and convert that into your monthly budget, you're going to get peace. Okay. But it's all this vague, generalized worrying in the fog of your brain that doesn't have specifics to it that's driving you nuts. Yes.

Okay. That makes sense. I appreciate that. Thank you. I think you're awesome. I think you're doing great. I'm proud of you. You did really, really good.

And what you're working through, the emotions you're working through are very normal for people as you learn to handle money properly and learn to see it in its proper perspective. And over time, you learn to sort of be more open-handed and let go of that scarcity sort of paranoia, what if mindset? Well, here's the thing. The more wealth you have, the less you have to worry about some little thing taking you out. But when you're broke, every little thing could be the thing that takes you out. I mean, think about when you're stinking broke, you got $30,000 in credit card debt, $80,000 in student

loan debt, $35,000 in car debt, and you're living paycheck to paycheck. You have no money saved. Every little thing that can go wrong well your life looks like a freaking country song a flat tire is a panic attack everything is a bad deal you know everything's a mess but the further you get towards savings and away from debt the more margin there is to where little stuff you like she said she hasn't touched her emergency fund i haven't touched my emergency fund in god 25 or 30 years but i've got the wiggle room in the budget to absorb what that says is i've got the wiggle room in the budget to absorb a lot of life stuff that people call emergencies so they're not emergencies they're inconveniences then and so you know heat and air goes out well that's 3500

bucks uh okay we'll just pay for it. I mean, you know, put it in next month, send me a bill, and I'll send you a check. And, you know, but if you can do that, then you don't have to touch your emergency fund. But that normally would have been an emergency. And you start getting higher quality stuff. You take care of the stuff. And so you don't have as many emergencies as you get away from that. And, you know, the weird thing is even spenders, I mean, I'm a spender by nature. We've talked about that, Rachel, is we spend differently. Spenders spend differently when they, you know,

when we don't have this need to buy something. It's weird. You're not desperate. It's weird. The desperation screws up everything in this money thing it really does that's a great discussion trish thank you for bringing that to us i really appreciate it because i think that's very very normal and we have parameters around giving you know 10 is a good baseline 15 for investing and baby steps four five six but

spending feels like the squishy one where people go d Dave, is this too much? What should my fun money be? And they want Dave to say $300 and no more. We were not going to do that. I think what you're always looking for on your spending as a ratio, what are you spending on the car as a ratio of your income and your net worth? What are you spending on the vacation as a ratio of your, if you're spending 50% of your income on a vacation, well, that would be dumb butt, you know? So you're looking at ratios, and that tells you if you're out of line and in the ditch or not. This is The Ramsey Show. Thanks for joining us, America. George Campbell, Ramsey Personality, is my co-host today.

Austin's in Seattle, Washington. Hi, Austin. Welcome to The Ramsey Show. Thanks, Dave, for having me. My question is, what's the best way to deal with a uncontested divorce with my wife? In what regard? I just finished paying off all of my credit card debts yesterday and the only thing I have left is my current renting lease. Your current what? My current lease from my townhome. Okay. So you're a tenant. Okay.

And are you both on the lease? Yes. Okay. And you have a car loan. Yes. Are you both on the car loan? Yes, we are. Is there any other debt in the family?

No. Is there any money in the is there any money in the family uh i have about three thousand dollars and i have two thousand set aside because the thousands emergency fund and you're staying in the lease yes and you're staying in the car? Correct. Okay. All right. Well, I mean, if the uncontested divorce decree says that you are to be responsible for the lease and you are to be responsible for the car, and as long as you are, she's's okay i would not recommend that to her though okay because she still has the liability even though the divorce decree says you are supposed to take it if you don't pay the lease or you don't pay the car loan for any reason

they can come after her regardless of what the divorce decree says okay so the only way to get her off of that is to get her off of that now who's the car loan with um mountain america credit union call them and ask them what you've got to do to get her name off the loan okay credit union probably will work with you to just remove it versus refinancing exactly or refinance it into your name and and have a new loan with them in your name uh what do you owe on the car um about nine thousand dollars what's it worth about six thousand okay so you're in the hole all right and um what do you make um about five thousand a month okay so you could pay this down pretty quick yeah okay and then call your landlord and ask the same thing

we're getting a divorce and i need to get my wife off of the lease can i re-sign the lease please what's the rent payment each month um 2100 why are you staying there uh it was the first place that i found that could take us in the time frame when you were two no i mean why are you staying there after the divorce when's the lease up uh march okay well you could just move in march yeah and you probably should that's awfully expensive for you by yourself right are you wanting to stay there long term to where if you got a roommate it would be sustainable um yes i would but i would also like to start going to a home yeah eventually yeah well as

far as the divorce decree goes uh when you redo the lease in March, make sure that her name is off of it if you're going to stay there. If you're going to move, obviously she's not going to sign the new lease when you move, right? So her only liability is from now until March. I wouldn't screw with it for that. I'd just go ahead and just pay the three months of payments, and then you're not going to end December. You probably already paid December, so January, February, March, and just pay the, you know, pay the three months of payments. And then you're not in December's and probably already paid December. So January, February, March, and you're done, right?

Right. Yeah. And then, and then call the credit union and get her name off. That's the cleanest way. A lot of people don't do those things in a divorce because, and then they look up four years later and the car gets repoed. Want to stop paying. And, or because you got

sick or something and couldn't pay and then they go after her and you don't want that and she doesn't want that and you can't do away with that with a divorce decree it doesn't have the power to undo contract law so you got to get her off the loan okay would putting more money into the car kind of help yeah get that yeah i mean they may ask you to do that they may ask you to put a couple grand towards payment and if i put a couple grand towards it will you you know reset the loan with my name only on it but i wouldn't offer that i would just ask them to take her name off first see what they say okay okay have you got a local have you got a branch a local branch for that yeah yeah i do go down there in person it'll make a big difference

make a big difference sitting in front of them it's a lot easier to tell an email no than it is a human i mean that's true yeah you get the the emotion in there and explain the situation and a credit union especially they'll have a bigger heart than you know kind of a big name corporate bank who doesn't care because you're an account number to them yeah if you told me this was city bank i would say you're screwed good luck that's why you don't do business with wells fargo bank of america city bank fifth third because they'll just look at you and go, you've got to be kidding.

You want us to help you? You're the customer. Nah, we don't do that kind of stuff. That's what you'll hear. John's in Monroe, Louisiana. Hey, John, welcome to the Ramsey Show. Howdy, howdy. How are y'all doing?

Better than we deserve, man. What's up? Oh, nothing much. You see here, I'm 20 years old, and as of Friday, we'll have completed baby step number three. Good for you. Way to go. Oh, thank you, sir. And, well, I don't really, I've been blessed, truly.

My family takes care of my truck for me. They're financially stable enough to do that. And I decided to not. Wait a minute. You still owe money on your truck? No, sir. I said my family takes care of my truck for me. What's that mean?

They pay a payment? Yeah. Yes, sir. Yes, sir. They pay for it. I have no bills. Okay. I'm confused.

Is it your truck? It's in my parents my parents name but they allow me to drive it oh so you don't have a truck okay you're just no they're they're loaning they're loaning you a truck yeah and you're 20 and you're 20 years old okay i got you yes yes it was like a high school graduation present pretty much and uh except that they didn't give it to you yeah yeah yeah yes sir yes sir and uh i don't have any bills except for um i give my family a hundred dollars a month for what i'm for the the expenses and the water and the heat and the the cooling so you live in a house that i make yes sir okay yes. Okay. Yes, sir. And after taxes and my tithe and everything, I make about $930 every two weeks. I get paid every two weeks.

And so this is where my question comes in. My family's in the ranching industry, regenerative agriculture, and I want to do that one day. And since I want to start that business, I was wondering if I should go ahead and start investing my 15% into my Roth IRA right now, or should I put that on hold and put all my money, all hands on deck, into making this business start for me? You make $24,000 a year. Yes, sir. 15% is $3,000.

Yes, sir. $3,000 does not start your business. No, sir. I was going to put that into my Roth IRA. I know. If you put 15% away, it doesn't keep you from starting a business. You need more than that to start a business. You're saying should I do one or the other?

And it's not. The Roth IRA is not enough money. It's not like you're putting $30,000 away. You're putting $3,000 away. What's it cost to start this business? It's the cattle industry. So what I would do is what I've been doing before I came across y'all and completed Baby Steps, I was saving $500 from every paycheck. But how much

do you need to start it? Do you need $10,000, $100,000, $1,000,000? You can really just start with however much a cow costs, sir. That's where I would start. I'd pay cash, I wouldn't touch debt, and I would be investing 15% of my income before investing. So you can buy one cow and put it on your parents' land? Yes, sir. Okay. Start small. Pay cash for that. But I would not do that instead of your Roth, no.

I think you can do both. You don't have any expenses. $100. That's your expenses. You don't make much money, but you don't spend any money. Fifteen hundred bucks a month could go to savings right now. Yep. This is the Ramsey Show.

Our scripture of the day, Colossians 4-5 Be wise in the way you act toward outsiders. Make the most of every opportunity. Our scripture of the day, Colossians 4-5, Be wise in the way you act toward outsiders. Make the most of every opportunity. Conrad Hilton said, Success seems to be connected with action. Successful men keep moving.

They make mistakes, but they don't quit. Danella is with us in Anaheim, California. Hi, Danella. How are you? Hi, Dave. Thank you for taking my call. Sure. What's up? So I just recently got married, and my husband and I have just created our annual budget for 2025.

And we ran into a question. I wanted to see if you had any adjustments for our finances and the strategy that we have to afford a house in the area where we live, where the starting house is around $900,000. We currently take home a little bit over $11,000 a month. We have $60,000 in savings, $50,000 in stocks, and $150,000 in retirement. And then our projected savings for the year is $65,000. So despite all that, it's hard to realistically see how we could afford a house in the area we live? So if you bought an $800,000 house and you put $200,000 down with $65,000 and $50,000 in stock and $65,000, you can't afford a payment on $600,000 making $120,000? With the mortgage calculator, it was projected to be more than half of our monthly take-home does

that include 401k and other stuff coming out or monthly taxes that was including insurance yeah yeah the monthly take-home pay is just after taxes only so do some manual math to remove the health insurance premiums investing and then go, okay, just after tax, what is our take home pay? You said you're making $10,000 a month, right? We're making $11,000 a month. Take home pay. Take home pay. Your payment on $600,000 was $5,000 a month? With a 30-year fixed mortgage. A 15, yeah.

Okay. How old are you two? I'm 26 and he's 32. Okay. All right. um i'm 26 and he's 32 okay all right well um i mean there's not a magic thing to this you're doing a good job saving you're doing a good job thinking about this um you make decent money and you live in one of the most expensive real estate markets in the world anaheim california san francisco california los angeles california san diego california manhattan chicago denver and tokyo and london and singapore these are very expensive markets to live in and um and your household income slightly above average and you live in

an area where the housing is double of average because the median household income in america today is 425 000 that's medium median the middle okay it's 4,000 in America. And you're saying a starter home in Anaheim is $900,000, which I don't doubt. I think you're right. So, and average household income in America is about $80,000. You make about $120,000 or $130,000. Okay, I know you make about $150,000. So you make a good deal more.

But, yeah, so this is not going to happen quickly or easily because you're pushing the edges of all the math or you cause you live in an expensive market you might need to move further out it might need to be a townhome or condo might need to do some renovations but we need to find some compromise or we just go we're going to wait three more years continue to save 60 70 grand a year and you know you're going to outpace the rate of home appreciation in the housing market. So you'll be fine there, but it may not happen as soon as you're married. It may be four years in. Yeah. It's going to take a little while. You've not done a horrible job with your money. You've done a good job with your money and you've done a good job analyzing this, but the reason it feels frustrating or even hopeless,

it's not hopeless, but the reason it feels overwhelming is even hopeless, it's not hopeless, but the reason it feels overwhelming is because you live in a very, very expensive market. And so you may have to make the decision to not live in that market with that income to accomplish your goals anytime soon. And by the way, I've been doing this 30 years. I had this exact same discussion with people in Orange County 30 years ago. This has not changed. I mean, I remember discussing what a 600-square-foot studio apartment in Manhattan cost 30 years ago, and people in America hearing us talk about the numbers, their mind was blown.

No one. Well, that's blown. No one. Well, that's right. No one. You can't live in Manhattan and make half of the national average of income. You can't afford to live there. It costs too much to live there. And so if you're going to make less than average income, you have to live in an area that has an average house price. Ultra high cost of living.

You need an ultra high income. That's it. You can't live in london either um or sydney australia you know these are expensive major cities in the world and it's it's not a bad thing i'm not mad at the cities they're wonderful cities most of them some of them are crappy but um but they're you know they're just super expensive and then you've just got to decide you know am i willing to wait and scratch and claw and get in at the bottom of the most expensive market and fight my way through or do we need to look at a different

location these are your two options because i can't give i don't i can't i don't have a negative critique about something you're doing. Like, Daniela, you're just doing this one thing wrong. Because there's not. You're doing a good job. Your plan is great. The reality of the market is the tough part. Yeah.

Keep it up. Get the income up if you can. That would be the lever I'd try to pull. Yeah. Obviously, if you can double your income, boom, things change. And you're 26, so it probably is going to double. But it's not going to double this week so that it's just a it's a thing and here's the other thing to remember folks about everything in money life is not a snapshot if you take a snapshot of a certain moment in time it's easy

to become hopeless about that moment because that moment might be hopeless but life isn't that way life is a film strip you go one more film strip. You go one more frame over, something's different. One more frame over, something's different. One more frame over, something's different. One more year over, one more month over, something's different. Something's different. Sometimes it gets better. Sometimes it gets worse when you're watching the movie.

But it always has a happy ending if it's Hallmark, right? That's right. Not a great movie, but at least a happy ending. Yeah, everybody's happy. They were happy at the beginning, happy in the middle, happy at the end, and we're all sick of it. But, yeah. But anyway, no, it doesn't work that way.

But the framing, the point is, is that things are going to shift. And as an old mentor always told me, this too shall pass. So there's never been a time in history when a 26-year-old that just got married, it was easy for the typical 26-year-old that just got married to buy a house. There's never been a time that it was just like, oh, well, of course, you know, no problem at all. It's easy. It's cheap.

I mean, of course. It's just like buying a house, like buying a couch. Just go get you one. No, it's always been hard for young couples starting out to buy their first house it's always been a stretch it's always been a tough thing so get it the the key is you want to get your foot in the door get in the game so that you can ride the home appreciation get some equity and then you upgrade over time and one day you'll have a nine hundred thousand dollar home but it won't be your first one perfect that's how you do it boys and girls so it's a great question hon and i think you have

a valid concern and a valid frustration but i'm just helping you define where your frustration is coming from um you can't stamp your foot and say it's not fair that's not going to work that's not a technique and you weren't but some people are uh some people do that it's like it's just not fair what kind of an economy is this it's like greedy people and no it's just life honey and you're just living in the middle of it the county we're in right now is very similar this building is in one of the wealthiest counties in the country so team members that work here they can't afford to live four minutes away when they just start in their career at 26 yeah if you come if you come to work for us at 24, 25, 26 years old,

unless you have a very specific skill that's super high pay, then otherwise, yeah, you're probably not living across the street from this building. You might have a 25, 30-minute commute. Yeah, count on it. You're going to a bedroom community. I imagine you get anywhere in Anaheim is 30 minutes commute. Across the street is a 30 30 minutes commute. Just to walk across the street is a 30 minute commute. Yeah. And that puts us out of the Ramsey show in the books. We'll be back

with you before you know it. In the meantime, remember there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus.