The Ramsey Show - App - I’m 6-Months Pregnant And Facing Eviction (Hour 1)

Episode Date: July 5, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Open phones here at 888-825-5225. George Camel, Ramsey personality. Host of the George Camel Show on YouTube. That's Camel with a K. Very popular show.

As well as, of course, the Smart Money Happy Hour. Co-host with Rachel Cruz. He's my co-host today. Open phones here at 888-825-5225. Kathy starts this hour off in Indianapolis. Hi, Kathy. Welcome to the Ramsey Show. Hi, guys.

How are you today? Better than we deserve. What's up in your world? Oh, I'm trying to get there on your level. I am calling today to ask you guys kind of what you think my next steps might be. I've gotten myself into quite the mess. I have followed all of the rules of never opening a credit card in my life. I'm 27, and I've made it this far without one, and I've kind of gotten to a point where I

am desperate enough that I have been riding the line of wanting to open one this week because of all of my debt problems that I'm having. Yeah, debt problems are always solved by more debt. What do you mean? So I've kind of gotten myself into a predicament with bills that are owed, and my shovel is not nearly big enough, and I feel like I'm running myself into the ground trying to do side hustles and I just graduated in June and started as a hairstylist and the money is just not there like I thought it was going to be and I know you kind of have to get clientele and build up your marketing

and all that stuff and after I signed my apartment lease I found out that I was pregnant. So I'm six months into that journey now, and I have bitten off way more than I can chew as far as what I can afford. Okay. What does your husband make? I'm not married. Oh, okay. Where is the father in the picture? Financially not.

He is excited about the baby and all that good stuff, but financially not contributing at all. Well, I guess I'll just start there. He really doesn't have that option morally or legally. If you father a child in the United States of America you get to pay child support that's how that works so sorry Bubba

you get to step up and participate in the financial side of the equation why does he not work or is he just a twerp I was you know it's more I think it's more of a laziness problem if i'm speaking from my own okay from my own perspective so you have an apartment rent you're not making any money are you behind on your apartment rent yes how far uh at the moment days, and they're wanting to file eviction paperwork today.

After 15 days? Pretty hardcore. Okay. Is this your first time missing a payment? Yes, it is, and that's, I think, why I'm in panic mode. You mean you've never been late, and after 15 days, they're filing eviction? Correct. Yep, and they said that that's just their policy, I guess.

I don't really know how to fight that part of it. It may take four months or something in Indianapolis. I don't know. That may be why they go ahead and get started. I don't know what the law is there, but you need to find that out, okay, because fear of the unknown is more fearful than fear of the known. So you need to find out what the law is in the area, how long it's going to take them to evict you, and what you can do to make that right.

How much is your apartment rent? It is $1,500 a month. Okay. And what are you making with hair? Just with hair is probably about $1,200 a month. Okay. And what about other side hustles? Side hustles included, I've been able to pull about $2,500.

Okay. And you didn't pay your rent. What did you pay instead? I have a car payment that I pay monthly. How much is it? It is $250. Is it current? No, it is not. So She didn't pay yet either. What did you pay? So I have paid my Wi-Fi bills, my electricity, all of my utilities are up to date. Well, you made $3,700. Where did it go? I mean, I understand $500 of that may be going towards those basic bills.

Oh, no, no, no. The total of all of my income is $2,500 a month. Oh, okay. So you make $1,300 with the side hustles. Correct. Got it. That's still a big chunk of change that is unexplained. Yes, and I think part of it is probably the tradeoff with some of those side hustles. So I've been doing a lot of things with my car. So here in the last 30 days is really when it has absolutely crashed. And I think this is kind of just a rough patch for me because I've been able to keep up.

But here in the last 30 days, it's just been kind of a disaster and i've fallen behind in the last 30 days okay here here's the thing um you you have to find a way to make actual money net of expenses so driving your car around with door dash and making no net profit on the door dashing doesn't make sense if that's what's happening after you pay your car expenses, right, like gas. Okay. So you might be better off doing something else. But $1,300 on side hustles tells me you're not working much. You know, I feel like I am not really sure how the money turnaround isn't working out.

I am constantly working as far as those side hustles go, definitely. I know things have flipped as far as building my hair business and trying to get clients in through the door with that. And I've heard that this is a slow season for that anyway because it's been back to school but how many hours are you cutting here um i would say probably about 30 hours a week yeah and you're working about another 20 hours a week so you've got another 20 hours you need to be working a week that's what i'm talking about okay except for the part that you're six months pregnant which makes this very very difficult. I do realize that. But we've got to change, like you mentioned, the shovel equation. And the second equation we have to change is the prioritization. Okay?

The first thing you buy is food. The second thing you buy is lights and water. The third thing you buy is rent. The fourth thing you buy is car payment. So you make enough right now to, I don't know what you're netting on that side hustle, but you make enough gross coming in to have been current with everything. If you had it properly prioritized,

do you follow me? Yes. Okay. So what we've got to do in this crisis situation is we have to figure out where we can come up with fifteen hundred dollars the fastest from all sources and new sources what we can sell and what you can go do from there how old are you 27 okay well kathy it sounds like you're alone and pregnant and scared. You're putting on a pretty chipper face, but if I were in your shoes, I can imagine the terror I'd be feeling.

So here's what we're going to do. I'm going to set up a Ramsey coach to help you as my gift because I've been 27 and scared, and I know how it feels. And tell Bubba if he's going to make a baby, he gets to pay. That's how this crap works. This is The Ramsey Show. This show is sponsored by BetterHelp. All right, so I was born and raised in Texas, and I love the myth of the lone cowboy.

You know, the guy who doesn't need anyone or anything. It's a fun story, and it's a lie. In our self-obsessed society, we're obsessed about our own diets, our own workout routines, our own jobs, our own social media feeds, everything. It's easy to forget that no one can do life alone. And I don't care if you're an introvert, an extrovert, or whatever you want to call yourself, we all have to have a community and a support system to do life with. It's time to shift the focus from doing it all by ourselves to knowing that we can only be well and whole when we ask for help. Therapy can be a great source of help and support for any area of your life. And if you're thinking

about starting therapy, try BetterHelp. BetterHelp is 100% online therapy, so it can fit with your schedule. To get started, just fill out a short online survey to get matched with a licensed therapist. And if it's not the right fit, you can switch therapists at any time for no extra cost. This month, start to build your support system with BetterHelp. Visit betterhelp.com slash Ramsey Radio to get 10% off your first month. That's betterhelp, H-E-L-P dot com slash Ramsey Radio. If you're new to all this Ramsey stuff, go to RamseySolutions.com. Click on Get Started. It's a free service that we have. It'll start teaching you some of the vernacular, some of the words we

use around here, like baby steps and dead snowballs and all that kind of stuff also it'll kind of teach you where you are you take a little little assessment we'll show you right where you are and then what your natural next steps are it's completely free we're not trying to trap you into something we're just trying to help you so click get started at ramsey solutions.com yolanda's with us in atlanta hi yolanda how are you i you good dave how are you better than i deserve what's up well i am calling because um i have a life estate or my mom has a life estate and i am the we nanderman is what it's called i guess when i looked it up and the remainder man yes yes the remainder man and i got concerned because I've heard you talk many times when people call in about having property willed or whatever to them prior to the person's death and the tax ramifications that that involves.

You got it. That's what's going on. You're now the owner of the property. Well, my mom is still alive. No, no, you're the owner of the property. She has rights to stay in the property as long as she's alive. That's a life estate. Okay.

But it's already dated to you. Should I reverse it? Can I reverse it? How long has it been going on? I think it occurred in 20, I want to say 2018. I'm not sure. I think it was. Who did it?

My mom did it. I know. Me and my mom. With an attorney and my mom with an attorney or yes with an attorney okay um i would check your tax pro and ask them and check an attorney and see i don't know since it's been sitting there so long if you can reverse that or not if you did last month you could just flip the paperwork back over and i wouldn't think anything about it but it's been sitting there for three or four years now five years now and i don't know honestly uh and i would make sure i had georgia law which is what's going to apply here because i assume that's where where's the house florida oh florida law oh florida's got some

wicked weird real estate laws florida texas california in the column of weird real estate laws and so uh they're actually weird good most of the time but not always and because it's an income tax free state there's no state income tax there so uh yeah so check out uh yeah i think i'd talk to a tax pro talk to to an attorney, and if you can undo it, I think if you run the calculation on it, you're going to see that it's going to benefit you to undo it. Because basically when you sell the house after her death, you're going to be paying capital gains on everything over what she paid for it. Oh, no.

Because the house was gifted to you. You got her basis for tax purposes. Double check my tax advice because I'm not always right, but on this one I'm right. Okay, let me ask you one other question if you have time. Should I go back to the attorney who set it up? Would that be best? After you've talked to a tax pro and you're armed with knowledge. Okay. it up would that be death after you've talked to a tax pro and you're armed with knowledge okay because otherwise he or she may give you the arrogant attorney answer like i'm never wrong because i have a law degree which of course we all know is absolute horse crap i agree with you

here yeah so go ahead yeah in other words you need to go back to this attorney after you talk to tax pro and go look you're going to cost me with this an extra 40 50 000 bucks in taxes what's the property worth by the way the property is worth 347 and when my mom bought the house and my mom and dad had the house built um the house was built for 40k okay so you got a 300k gain give or take upon her death and um that is a gain you would not have to pay taxes on if she willed it to you now that it's already in your name you're probably going to have to pay if i got my if i got my answer right here uh as a remainder i'm almost positive this is true so three $50,000 swing you're gonna pay you're gonna pay 50 grand in taxes because they screwed this up so yeah i'm gonna go talk to my tax pro verify that dave is not crazy okay which is possible

but um it's possible i'm crazy it's also possible i'm wrong but you know this is going downhill fast george but well it's like going a whole life salesman going i want to undo this policy they're going to try to talk you out of it most likely so that's why you go look because of this my basis is going to be this and i'm going to have to pay taxes of 46 000 bucks because you did this instead she could have just stayed in her own stinking house and left it to me in the will and i wouldn't have to pay these taxes because you get a you get what's called a stepped-up basis upon her death. Your basis becomes what the value of the house is at market value at the time of death. So if she dies and the house is worth $360, you sell it for $360, you have zero gain.

You put 100% of those dollars in your pocket. The way it is now, you're going to pay taxes on everything over what she paid for it or about three hundred thousand dollar gain so it's just it's just dumb but yeah but um double check all of that and if it's true then talk to this attorney about undoing it he or she doesn't want to undo it i'm talking to another attorney about undoing it if i can pull that off five years into this deal in georgia i don't know if you can or not you may be stuck i hope i'm not in florida it's not the end of the world it's not the end of florida i keep saying georgia but yeah you're in georgia she's in florida yeah i'm in georgia yes

i'll get my story straight eventually so a lot of people do life estates because they're trying to avoid probate is that the main reason yes or they just don't know the basics of this basic tax thing we're talking about here and it's a very basic it's not a if it's if it's more than basic about taxes i don't know it because i don't know anything about taxes there's about four or five tax things i know this just falls into the heading and one of them i know uh and it's because i've run into it on different things lots of times over the years but yeah and it's just kind of it's like um i call it street law where someone says yeah we're just gonna give bubba the house while i'm still alive that way sister won't get it you know that kind of crap and this is the that's just street

law and it's street law meaning you think you can just do whatever the flip you want there's no tax implications to it yeah you can give bubba the house but there's gift tax implications and or capital gains implications when you give bubba the house or in this case not bubba but yolanda but yeah but i mean it's uh and sometimes sometimes people do that keep – it's not as much an estate planning thing. It's they somehow get in their head that the government's going to get more if they let it happen through a will. And the government gets less if you let it happen through a will, even if it's a state where the probate tax is a little high. Yeah, probate's still cheaper than that tax implication.

Yes, less than capital gains tax. I don't think there's a state that has a higher probate than capital gains so it's more about control and lack of legal and tax knowledge uh usually than it is some kind of sophisticated argument that um that you're there but you can i mean you can use a life estate if you want to it's okay especially if you're not planning on selling the property. Like if it's a family farm and you were going to 100% it's going to be generational, we're just not going to be selling it, then sure, you know, that's fine. You go ahead and do a life estate and the next generation keeps farming it and the old people get to stay in the farmhouse, you know,

and for life estate, that kind of stuff. Lots lots of people do that there's nothing wrong with that at all uh but but again it's it's in yolanda's case it's handcuffed her big time as to what she can do with this property someday when god forbid her mother passes but we're all gonna pass so was there a right way to do it would you say if, if you want to do it, do a trust, if you want to avoid probate? Is there a better scenario for that? I really would not make avoiding probate my primary goal in life because all probate is is the court system that executes the will.

And so if you leave a will, the will is probated, meaning that the probate court enforces the will. That's all it means. Now, some tax, some states have higher taxes on the size of the estate. And if you can avoid probate with a trust or with some other mechanisms, you're moving it outside of that probate tax. But in an effort to save a 3% tax on probate, you oftentimes can step over into a neck deep into the boiling grease. You know, I mean, it's bad. So you get just completely fried here. This is The Ramsey Show.

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

spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event. So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budgets at chministries.org slash budgets. Thanks for joining us, America. This is the Ramsey Show. George Campbell Ramsey personality is my co-host today. Joshua's in Seattle. Hi, Joshua. Welcome to the show. Hey there. How y'all doing? Better than we deserve, sir. What's up? So I am a 30-year-old single dad. Just got divorced earlier this year.

And I'm in about $38,000 worth of debt of my own. I feel like I'm living paycheck to paycheck, and I don't know where to start to just get out of this. I've reached an emotional point where I'm done. I've had enough. I know I need to set up a budget, but I'm not sure how or anything like that or what the first step would be. I'm so sorry about your situation, Joshua. How long ago was the divorce?

When was it finalized? It was finalized in January. Okay. And coming out of this, what kind of debt is that $38,000? So it is personal loans I took out a while ago and credit card debt. Okay. What's your income? $65,000. Okay. What do you do for work?

I'm a plumber. Cool. How old are the kids? Six and three. You're full-time custody? I have 50% custody. Okay. Well, we can definitely help you and we'll give you some resources as well to, with this process. Number one, getting on a budget. You're right. That is the key. And it's a difficult thing to do. And part of this, you might need to deal with the kind of trauma and the emotional side to just get, you know, you got the wind knocked out of you. And so part of it is just getting back up and going, how am I going to move forward with this new life? And what does this look like? And once we do that, then we can focus on the finances. But it feels like you're just treading water.

Are you able to cover your bills every month, put food on the table? I'm able to cover my bills every month. I can somewhat put food on the table. I've got friends and an adopted family around that they help me out quite a bit with making sure that I'm fed and the kids are fed. That's good. That's what we want you to cover first. Everything else can wait. And if that means talking to the creditors, the credit card companies, the lenders and saying, hey, here's my situation.

Here's what I can do right now. That's okay. How much do you owe in your car? I own my car outright. Good. How much do you owe in your car? I own my car outright. Good. How much is your rent? So I actually have a mortgage, and it comes out to $2,000 a month. And your take-home pay is what?

So my take-home pay is right around $4,500 a month, but then I also get disability from the Navy, and that comes out to $1,500 a month. Okay, so you're bringing home $6,000? Yeah. Right, right at it. Your house payment's awful high, bud. It's 33% of your home pay, And that's left over from the divorce. I just started listening to you.

That wasn't what you signed up for. That's left over from the divorce. But that's part of what's tanking your monthly budget. So, yeah, getting on a written plan will make you feel like you've gotten a raise getting on the budget. Right. So that's going to be very important. But if we take your $6,000 put at the top of the page and uh we take food out first and we take lights and water out second and we take house payment out third your truck is paid for so you just got to put gas and insurance on it that's it and um you know you've got some money here

you shouldn't be like begging food off of friends you're just disorganized you're just disorganized and have the crap beat out of you because it's been a hard year but you've got mathematically you're okay you can you can work through this um obviously you need to cut up the credit cards and stop the borrowing you can't you can't dig it you know you can't dig your way out of a hole you gotta you know you can't just keep get out of a hole while you're digging out the bottom you can't just keep, get out of a hole while you're digging out the bottom. You can't just keep digging. So no more debt, chop them up, get on a written plan, take care of food first, lights and water second, house third. Then you've got money left out of that. I mean, there's two, three thousand bucks laying there to do some stuff with and we can begin to work on this.

And then the other thing too is on the days you don't have the kids, I'd pick up extra time. As a plumber, you can make some serious money in overtime or side jobs, one of the two. Right. And, you know, an extra thousand bucks a month on this debt makes it go away a lot faster. Okay, yep. That's a short-term fix, but it's a short-term problem if we get after it. Do you have any cash right now, anything in savings? I got about $100.

So step one, we've got to get a buffer between you and life, and that's going to be a starter emergency fund of $1,000. And we're going to get that as quickly as possible. We're talking a few weeks here. Then we're going to move on to the debt snowball, which is where we pay off all the debts, smallest to largest, regardless of the interest rate. And we're going to walk you through this in Financial Peace University. That's going to be our gift to you. Nine videos in there. Also with that, every dollar that will help you create this budget.

Income minus expenses should equal zero. A zero-based budget. Every dollar should have a job. And you're going to get to work. And over the next 18 to 24 months, you're going to bust it to get to a place where these kids see your sacrifice and you can put food on the table without having to worry about anyone else. Yeah, less than one month, I want $1,000. Less than a month later, I want two of these credit cards gone.

And so you're going to list them smallest to largest. You're going to knock off the little ones first and get some momentum like George is talking about. Hang on, we'll get you signed up. Austin, I'll get you signed up for Financial Peace University. We'll get you into the class where you're learning how to handle money, and this all goes in your rearview mirror then. And this is the year of life change for you. So some of it bad, some of it good. And we're here to walk with you.

So hang on. Austin will pick up. Joseph is with us. Joseph is in Salt Lake City. Hi, Joseph. How are you? I'm doing pretty good. How about yourself?

Better than I deserve. How can we help? So I'm doing pretty good. How about yourself? Better than I deserve. How can we help? So I'm 21 years old. I just came back from a summer of selling pest control, and I made $117,000. I don't have, I didn't pay for myself to go to college. I don't have any car debts. I don't have any mortgage or anything like that. And I was just wondering what your best

advice would be going forward. I read Dave Ramsey going, growing up, my parents had been helping me through it. And I've got an emergency fund set aside for 10 grand. And I mean, I could start going into investments like Roth IRAs, or I don't know, trying to save for a house, save for a house so I can just buy it after college? What would you recommend I do at this point in my life? So is this your long-term plan? Do you want to stay in pest control? Do you enjoy it?

I mean, I'll probably do it for the next five years. But you said you're going to college. Yeah, I'm going to college right now. I currently go every fall and winter. It's $10K total for that, and I pay for myself to go to college. During the summertime, I go self-pass control. So I'll probably do that for five years until I graduate, and then I'll just get some kind of job.

I'll probably go into a business management degree or something like that. What are you studying in college? I'm studying business management currently. Okay. So do you want to be an entrepreneur and run your own business? Yeah, that was always the dream to do, but, um, you know, just life beats you down sometimes. So going to college right now, cause I know that's a very good thing to do at my age and i can always have that as a fallback but yeah definitely i will go ahead and finish that degree as fast as possible and you've got how much did you have saved out of this 100 grand so i have 117 grand is what i came back with okay um after taxes it'll probably be about 88 grand i'm gonna pay my tithing on that got my emergency fund in the

two semesters and and i bought a car in cash because you know i needed a car good young man our stuff what did you buy how much you spent on the car it was nine grand i got a 2007 ford mustang perfect pt so i love it very good all. So yeah, all I'm going to do is what cash is left after all the different things you listed out there. I'm just going to stack cash. It's college insurance plan. It's ensuring that you go through college. It's ensuring that you go through college. You don't need to start Roth IRAs. You don't need to start a house fund. You need to go through college debt-free. And you've got this lined up. So you pay your taxes, you pay your tithe,

you pay for the car, you set your emergency fund aside, and then you stack cash. And if you graduate from college with 50 or 60 grand in that account, then we can talk about starting to invest then or buying a home then. Just take it easy, man. You're just a go-getter. You're so far ahead of the game. You're a go-getter, man. You're a hustler. It's good. Hustle and grind, man. You're doing great.

Big piles of cash, get through school, then start your investing and house buying. That's what I would do. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dave Ramsey, the Sour, and we are taking your calls at 888-825-5225. Thanks for joining us, everybody.

Tracy is next up in Lynchburg, Virginia. Hi, Tracy. How are you? Oh, Dave and George, I am so excited to be here, and only by the grace of God I am better than I deserve. Good for you. How can we help? George, I'm so excited to be here, and only by the grace of God, I am better than I deserve. Good for you. How can we help? Okay.

So I had my I Had It moment back in August. Since then, I've paid off $15,000. I'm still $70,000 in debt. I make $90,000. I'm 51 years old, and I've been divorced for a year and a half. I work at a company. I've been divorced for a year and a half. I work at a company. I've been with them for, it was, it was an amicable split. It was the best thing for both of us. And, um, God has seen us both through.

So I'm very grateful for having a good relationship with him ending this, but it was what we needed to do. So I worked for a company. I'm still working for a company for 30 years. Back in 2009, they froze their pension, and we got a notice back in September that they are actually terminating the pension, which will take place next year. We don't get a benefits report until March, but I know that we have three options that we have to make a decision for in July. One would be a lump sum distribution. The second is to roll it over.

And the third is to start monthly annuity payments at that time. I have Googled this until my eyeballs want to pop out of my head. There's only 4,000 answers on Google, I'm sure. I know, and I cannot get a clear answer. And I know that I'm uncertain. I know, and I cannot get a clear answer, and I know that, and I'm uncertain. I'm sure there's going to be penalties. No, there's not. No.

All right. You're going to roll it to an IRA. Zero penalties. You're going to take the lump sum and put it into an IRA. Get with a smart investor pro. They'll help you do the paperwork properly. It's a direct transfer rollover. There's no penalties

there's no taxes and it will grow from that point tax deferred you're going to use a traditional IRA that way there's no taxes if you roll it to a Roth it's taxable but don't do that and don't okay that was another question you don't want to make it because it'll be taxable then and you make all of that income because it's going to be a sizable lump sum you've been there a while i've been there a while and i was there 17 years when they froze it yeah but i mean you're going to have it's going to be it's going to be 100 grand plus in it isn't it okay so you wouldn't you would not take the lump sum no you're going to get taxed it you're going to get taxed and taxed and penalties yeah no you don taxed. And taxed and penalties. Yeah, taxed. No, yeah, taxed. At least taxed.

I'm not sure if they close it. If you're penalized, I'm not positive off the top of my head. It doesn't matter. You're not going to do that. You're going to do a traditional IRA direct transfer rollover with your SmartVestor Pro in the four types of mutual funds. We talk about growth, growth and income, aggressive growth, and international. And by the way, this is great news.

It is. I'm so excited. I've listened to you forever. And like I said, a fire got lit under me back in August, and I'm like, I make too much money on my own to be drowning like this. And I'm taking charge. And when that came in the mail, I knew it was the Lord saying, this is good news. So I have a 401k at work. It's a traditional one, and I have $300,000 in there currently. Do I put that in that one, or do I add it in a separate one?

No, you cannot add it to a 401k. That's not an option. Oh, okay. Yeah. I would just roll it to an IRA with a SmartVestor Pro. You pick the mutual funds. You're in total control. This money is leaving this company and will have nothing to do with them ever again.

When you die, that money is laying there. In the meantime, it is earning more than it would have made in the pension. And so it's good news all the way around. But just if you don't have a SmartVestor Pro, go to RamseySolutions.com, click on SmartVestor. You can get a list of the people in your area that are in our SmartVestor Pro program that do things the way we teach. And then you can meet with them and choose among them the one that best suits you. A lot of people call in with pension questions, Dave, and if you have the option, let's say a listener's going, I started a new job, they're giving me the option of a pension

or 401k, we would say go for the 401k because you have way more control over it and it stays with you. Usually, and that's assuming that they are putting something into the 401k since they don't have to put something into the pension. If they give you that option, usually they're doing some kind of really sweet match in the 401k, and the company would rather you go to the 401k. It's better for both of you, the company and them, because the company doesn't have to keep up and manage your investments. Your 401k is your own investment. So that's a good point, George. Very good point. Ryan is in Baltimore.

Hey, Ryan, welcome to the Ramsey Show. Hi, how are you doing, guys? Better than we deserve. What's up? So I got a couple questions for you. My wife and I have been married for two years, and we will be out of consumer debt by the end of February. We don't have a house.

We're currently renting right now from my grandmother. So once we're done paying off the rest of our debt, we'll obviously be saving up for a down payment on our house. Once we're out of debt and we're done throwing everything extra towards debt, we'll probably be making $5,000 a month after our monthly expenses. So while we're doing that, should we be putting that $5,000 roughly into mutual funds or just putting it into savings? And right now we're also investing about $500 a month into two retirement accounts as well.

$500 total, $250 each. Okay. Ryan, how long have you been listening to the show? For consistently about the last month and a half. I took Dave Ramsey's class in high school when I was homeschooled. So I've been kind of like on and off with Dave Ramsey for a while now. Cool. Well, you're doing some good things. You're just doing them all at once and not in the right order.

So if you're walking through the baby steps, you should be putting all of your effort, every single penny of margin towards the debt, which means we're not investing currently. And there was a spot in between. You said, hey, once we're debt-free, we're going to get the down payment. But you were missing the fully funded emergency fund. So do you currently have savings for the emergency fund? We do. So technically right now we do, but I'm kind of not walking through the baby steps originally. We've got about $16,000 sitting in savings. We're actually just going to pay off the car totally. We'll still have, like, $2,000 or $3,000 left after that. I'm sorry, how much debt do you have? It's about $26,000.

And what's in savings? $16,000. $16,000 in savings. $16,000. So if you took that down to $1,000, that would leave that would leave you with 15 you could throw at this debt yep that's what we plan on doing today today yes yeah okay i was now baby step one's a thousand baby step two is pay off all of your debts once all of your debts are paid off baby step three is build an emergency fund so you go back to that one thousand dollar account and you raise it up to

a fully funded emergency fund of three to six months of expenses. Then you start saving for the down payment on your home. Until then, you don't restart your retirement plan, which you stop today. Okay. Because I want that $500 added to that $5,000 and make it $6,000 because you tighten up the budget because I want

and that means you're debt-free in two months and uh then then you build your emergency fund let's call that 15,000 in three more months then you uh I'm making that up but that's if that's what it is and then in three more months you've got it starting to have five four more months you're starting to have a good down payment this time next year you start shopping for houses and you'll have a good down payment with a fully funded emergency fund and no debt. And you restart your retirement at that point. And the reason for all this is not because we're trying to be legalistic, Ryan, not because Dave said so, but because it actually freaking works when you do it in this order with intensity, with focus. And we've seen so many

people do it the right way. And we've seen a lot do it the wrong way. way and six months later they're calling us saying your plan didn't work and we're going you didn't do our plan you did your plan that your version of our plan which is not our plan don't go don't do don't be dave ish which is what we call it go all in on this stuff and i promise you you're going to call us back and say i did it it paid off all the debt we got our home now we have a fully funded emergency fund we're're investing for the future. Man, it gives you such peace and confidence. This has nothing to do with it being the Ramsey way or Ramsey-ish. It has to do with what is the fastest right way to become wealthy. What is the most efficient use that moves you along the process the fastest and the easiest. And that's what this system is, and we've used it for so many years that we've proven that that's the case.

And so, yeah, total focus on baby steps one, two, three, until you get there, then do your down payment, then restart your emergency fund, and you'll be in really good shape. So, well done, well done. This is The Ramsey Show. Do you love a good day, Brandt? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from the Ramsey Show on YouTube. Go watch and subscribe to the Ramsey Show channel on YouTube.