The Ramsey Show - App - I’m Caught in the Cycle of Debt With $140 to My Name (Hour 2)

Episode Date: May 18, 2023

George Kamel answers your questions and discusses: Getting out of the credit card trap, "Should I pay off all my debt before buying a house?" "What's the best way to save money online?" from the blog: What Is a High-Yield Savings Account and Do I Need One? "What's the best way to give my sister money?"  "Should I pay off personal debt with business earnings? Selling the car vs. keeping it. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Enter The Ramsey Cash Giveaway for a chance at $3,000! https://bit.ly/TRSgvwy Shop our bestsellers during the $10 Sale! https://bit.ly/TRS10Sale Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm your host, George Campbell, flying solo this hour as the team is off around the world, changing the world, doing amazing things. I wanted to be here with you guys. And the phone lines are open at 888-825-5225. If you want to call in with your burning money questions, maybe you saw an ad on Instagram and it felt like a scammy financial product and you're just not sure. Maybe you're trying to get out of debt and you want to know the best way. Or you

want to invest, but there's so much noise out there, you don't know what to do, who to trust, and you just want to make a decision with some confidence. I want to help you make those decisions today. Janessa kicks us off in Reno, Nevada. Janessa, welcome to The Ramsey Show. Hi, thank you so much. So basically, my question is, I got myself in a sticky situation. I have some financial debt with some credit cards, and I have car payments and everything, and I just want to kind of be the chain breaker of financial irresponsibility, and so I'm looking for some ways to kind of budget and really like make financial decisions properly. I love it. That is a very noble goal and a great why.

So let's talk through this. So you have credit cards and car loans. How much? So my car loan that's left is about $18,000. And then my credit cards altogether is like around $2,000. And then I also have a school loan as well, which I think what's left on that is like around $9,000. Okay. And what's your income? Let's see. So that's the thing.

It's fluctuating because my high school loan i'm a licensed esthetician and so i'm starting out my career basically and i am an independent contractor so it's so up and down i make roughly like around 700 a month you make 700 a month? Yeah. How is that possible? Just because clientele and everything is just so not. But you book appointments, right? I do. Yeah. So you know when you don't have appointments? Correct. So what are you doing when you don't have appointments? So I, for a long time, I worked another job, like I worked multiple jobs. Okay. And usually that helps. I just am tired of being like at the bottom of the barrel, like making $14 an hour to where it just doesn't really make sense. You don't even make $14 an hour now. No. Well, kind of. When I have,

like on my good days, I make... You make $14 an hour, three hours a week. I mean, you're way below the poverty level. Yeah. So right now, we need to get a full-time job and do your esthetician work on the side as we build that up and build up the clientele. And maybe that means we pack out a Saturday full of appointments, and Monday through Friday, we've got a full-time gig. Yeah. And this may be temporary.

Right now, you called in saying, I'm in a mess of debt, and making $700 a month means you can't even cover rent, let alone your debt payments. That scares me. Well, and the thing is, is when I did, like, I purchased my car and everything, I was working full-time. So I wasn't, like, irresponsible and like, oh, yeah, I can afford this, sure. What were you doing before? I was an inch away manager. Okay. Yeah. What were you making doing that? Not very much, like $16 an hour. Okay. So this car that you've got 18 left on, what is it worth? 22. Okay. How much money do you have in the bank total?

About $140. Woo! Currently, yeah. Okay. And that's all the money to your name. That's liquid, right? Mm-hmm. Yeah. Okay.

So our A1 is to go make as much money as possible very quickly. How are you going to cover... Do you have rent payments? No. Where are you living? With my parents. Okay. How old are you? to cover, you have rent payments? No. Where are you living? With my parents. Okay. How old are you?

20. Okay. So here's my game plan if I'm in your shoes. Right now you have the blessing of having very little bills, which is why you've been able to survive. Mm-hmm. Right? If you were on your own right now, you would be homeless, if we're telling the truth. Yeah.

Or finding family or friends to live with. And so luckily, you've got a lot of time on your side, and I want you to have an amazing career as an esthetician. But right now, we've got to clean up this mess because I feel the weight of this, and I bet you do too. Yeah. And so to me, that car's got to go. And that means we're going to sell it for $22,000.

You have $18,000 left. That's going to leave you with $4,000, right? Mm-hmm. And with any other money we can scrape up, we're going to go get a $4,000 car. And can I tell you that car is going to be the worst-looking car you've ever seen in your life? Yeah.

You know how bad that car is going to look. But it's going to get you from A to B, which right now is just getting to work and back home, right? But guess what else that does? That means you have $2,000 in credit cards and $9,000 in student loans. That brings your debt down to 11 total. Yeah. And you already feel that weight leaving your body, don't you? Yes. And now our goal is how do we get rid of that next smallest debt, which would be the credit cards? Do you have multiple or is it just one?

I do have multiple. My biggest one is $18,000, so that's like the chunk of it. Hold on. You said you had $2,000 in credit cards. Yeah, so I have the $18,000 and then, well, I guess plus $300. You mean $1,800? Yes. Sorry.

Yes, $1,800. Oh, you about gave me a, oh, I thought I just had a conniption. I'm so sorry. No,800? Yes. Or $1,800? Sorry. Yes, $1,800. Oh, you about gave me a... I thought I just had a conniption. I'm so sorry. No, I'm sorry. I lost my breath. No, I'm sorry. So your next mall's debt is $1,800?

Correct. If you sell this car, which I think this thing's gone tomorrow. We're going to clean it up, take some nice pics, and we're going to sell it private party for as much as we can get for it. Mm-hmm. Because right now, that car is more than you make in an entire year. Yeah. And it's going down in value every single day.

Or it could propel you towards debt freedom if we sold it. And I want you to have a nice car down the line. When you're debt free and you have an emergency fund, we are going to get Janessa an awesome car when her career is taken off as an esthetician. And so I think right now, we can still work on the esthetician gig, but right now we need something full-time

that's going to bring in a lot of money fast. Yeah. And that might mean three side jobs, or it might mean one full-time job making $16, $18, $20 an hour. Okay. So that would be my next goal is go find a full-time job while doing esthetician work on the side and building up your clientele list. Yeah. Because right now there's a time to be an entrepreneur and work on building your client base. But right now you can't even think about that when you've got debt payments coming out

your eyeballs. Right. And so I just want you to focus on one thing at a time because that's what's helped me get out of debt at $40,000 worth of debt, which is way more than you had. And, you know, I was at a starter salary and I was doing every side gig under the sun. Anyone who would throw a buck at me, I was like, all right, I'll do what you need me to do. And I tried to serve them well and they told their friends and I got more gigs that way. And I think you're going to do the same. Yeah, thank you. I want to help you with this, Janessa. Hang on the line. I'm going to gift you one year of Financial Peace University. If you want to join my class starting June 20th, you can do that. And I'm also going to gift you one year of EveryDollarPlus to start making a plan for every

single one of those dollars. Whether it's $700,000 or $7,000, you're going to have a plan. And right now, that plan is to pay off all this debt while you have the blessing of living at home with very little expenses. So I'm cheering you on. Please call us back when you're debt-free, and we'll celebrate with you. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Camel. The number to call is 888-825-5225. You jump in, we'll talk about life and money. Listen, if you're listening to the show, I assume that you enjoy it. And if you do enjoy it, please consider hitting the subscribe button or the follow button wherever you're hanging out with us. Leave a review, let us know what you think of the show, and share it with a friend. And all of that is not for our own validation and approval and ego. It's so that the algorithm

spreads the word about the show, other people hear about the show, other people are impacted. And if it means one other person becomes debt-free and finds freedom from this toxic money culture, that is a win in my book. And also, if you're a fan of the show, you might like my brand new YouTube channel, where we're publishing new episodes Mondays, Wednesdays, and Fridays, three a week. And they are short, they're funny, they are hopefully helpful as we break down some of these money trends and traps that you all are asking me about, sending me videos about. We just had a video this week about Apple's new trick to get you to spend more through their high yield savings account and their credit card. And we also cover money traps that are keeping the middle class broke. I react to some of Steve Harvey's

money advice from Family Feud. We talk about how your car is robbing you of $6 million. So much stuff. So go check it out. We've got tons of videos out there and thank you to all of you who have already subscribed and those of you who have viewed the videos we hit a million views just in the last month alone so thank you so much the response to this has been incredible and i encourage you guys to go check that out hit the subscribe button and tell your friends apparently kids really love this show i don't know why i would rate it as a pg show you know hey my mom texted me yesterday that she loves your channel. No joke. James Childs, our producer, his mom loves the show. That means the world. Oh my goodness.

So there's something for everyone here, whether you're six or you're 56. Everyone loves it. So I appreciate that. We try to deliver the goods with our amazing team of editors and writers and audio engineers and the video guys. It's a spectacle to behold how much effort it takes to give you guys some great content. Let's get to the phones. Robin joins us in Orlando, Florida. Up next, Robin, how are you doing? I'm doing well. How are you? Doing great. How can I help?

I am trying to figure out when is a good time to start saving for a house. We have $190,000 in debt and we just want to know when we can start saving for a house or if we need to get all of our debt paid before we start saving for a house. I can't breathe thinking about having a mortgage on top of $190,000 in consumer debt. Yes, it's a lot. Doesn't that feel like a lot? It is a lot. It is. What kind of debt is this? $100,000 of it is student loans.

$60,000 is our cars. And $12,000 is credit cards. Okay. And then I have like $4,000 in taxes that I'm currently paying. Okay. And what's the household income? We make currently $190,000 a year. Love it.

And plus extra with all of the side gigs my husband does. That is wonderful. Okay, so the good news is you guys have a big shovel. Yes. The bad news is we have a load of manure to clean up before we get into home ownership. And here's why. It's not because I'm legalistic

and I'm like, you got to follow the rent. You got to, it's because we take too many calls of the Robins that call in and they go, hey, we just got a house. It was our dream. We thought it was going to be this huge blessing and we can't breathe. We have $190,000 in consumer debt.

The mortgage $250,000. By the time the bills are paid, we can't breathe. We have $190,000 in consumer debt, the mortgage $250,000. By the time the bills are paid, we can barely eat. And that is my fear for you guys. Even with a great income, you can out earn your stupidity for a while, but man, it'll drag you down having all those payments. Yes. So what are your monthly payments just on your debt? Just the minimum payments. We just started the Baby Steps this month, but our minimums are, I think altogether, it's like $3,000 is our minimums on all of our debt. Okay, and what's your take-home pay each month?

Each month we bring in about $15,000. Love it. Okay. That tells me there's plenty of margin to start attacking this debt. Yes. Just this month we pay $4,000 in credit card debt off. Awesome. So you're following the Ramsey plan, you're on board, but you're like, hey, I really want to get a house. Do we have to wait till this debt's paid off? Yeah, it's because we're in a weird situation with our house. Our friend slash my husband's boss slash our homeowner is the person that owns the house. Oh, it's all the same person. It's all the same person. That would be like if you're renting. So it'd be like me renting from Dave Ramsey. Yes, and he is great.

He doesn't give us any hard time, and he doesn't care what happens to the house. But I would just like to be out of that situation just so it doesn't ruin a friendship. Well, why don't you guys go rent somewhere else while you pay off this debt? Because the rent in Orlando is ridiculously high. So you're getting a deal right now. And we have a kid and a dog. Yeah, we're paying what he pays for his mortgage. Oh my goodness.

So you want to have the cake and eat it too, Robin. Is that what's going on here? Yes, I would love to. Well, here's the thing. I think the dream of home ownership is on the horizon, but I think we need to pause and go, how quickly could we clean up this mess? Making $190,000, how quickly can you pay off $190,000? What's your guess?

The plan that I originally had, of all the $190,000, it was up to four years to pay it all off. I don't buy it. You guys can do better than that. And that was being very conservative. Can you live off of 90? Yeah, we can for sure live off of 90. So you could throw 100 total per year at 190,000. That's less than two years. Yes, we can definitely do that. So we just have the debt-free timeline. I'm noticing that as we're going. Yes. Of course, there's taxes. So again, this is napkin math.

But I'm going, hey, if you did the extra side gigs, we live off nothing, we pause all investing, we sell everything that's not tied down, how much quicker can we do this? Because think about this. Now the goal is if we pay this off faster, we get into that new home faster. If we get into the new home now,

now we're kind of comfortable while also being uncomfortable because we're stressed, but we have the house, but yet our life kind of sucks. You see the other side here versus 24 months from now, we're in a different place. Do you guys have any cash? Yeah, that's, uh, we just have 4,000 bank account. I cleared as much as I could out without bankrupting us. Okay. The other option here, I don't know that you'll do it. I don't know that you're going to like it, but you could sell the cars and get cheaper cars. We're upside down on the cars. Okay. But still, even if you had to get a loan from a credit union to cover the difference, that would put you in $10,000 worth of debt

instead of 60, right? That's true, yeah. So that still clears 50 grand very quickly. And remember, two years from now, or less now, if we sold the cars, we're debt-free, then we're going to get that emergency fund in place real quick in less than six months is what it takes on average, then we can start saving up for that down payment. And then making 200 plus, how quickly could you save up a down payment if you didn't have any payments in the world? Very quickly. Less than two years. Yes. And I am about to start working

because I'm currently not working. That's just on my husband. I am going to start working in September. Awesome. What do you think you'll make? $52,000 a year. $52,000? $52,000. Awesome. So now think about this, Robin. Two years from now, we're debt-free. Six months later, emergency fund. Less than two years after that, we've got the full down payment, which means four years from now, you're in a completely different place financially. And that's without even your income getting added to this. So there's your options. We can get into the house today and have it be a curse instead of a blessing, or we can hit pause and have some

delayed gratification and go, man, it's going to be such a different picture if we do this slow and do it the right way. And that's what I want for you. I will do that. Should I start saving any money now or should I just wait until all the debt's paid? All the money is going towards the debt. What I found is when I focus on 17 things at once, I kind of suck at all of them. And when I put all of my energy, spiritually, emotionally, physically, mentally, financially towards one thing, that thing gets busted through real quick. And that's what happens. That's why

people follow our plan. It's not a magic plan. It's just because we're stopping doing 17 things at once. And we're going, this debt is gone tomorrow. And that next debt is gone the next day. And all of a sudden, you start building wealth, you start feeling the peace, you become debt free. Thanks so much for the call. This is The Ramsey Show. This is The Ramsey Show. I'm George Camel, hosting solo this hour. Give me a call at 888-825-5225. We'll talk about your life and your money. Our question of the day is brought to you by Neighborly, your hub for home services. With 19 service brands nationwide, their network of providers have trusted local service professionals to handle more than a thousand

different services in and around your home. Visit neighborly.com to find and schedule service today. Today's question comes from Jimmy in Rhode Island. He asks, is PayPal trustworthy to keep doing my online banking? I've been using it for over a year now and haven't had any issues. I noticed they have a PayPal savings now. It has a 4.15% APY. Seems high for just a savings account. Maybe there are some details I'm missing. I want to put $10,000 in it and see what happens. I'm not ready to invest the $10,000 completely. So to me, this seems like a smart move. What are your thoughts? Great question, Jimmy. Okay, so what he's talking about here is using PayPal as a sort of banking system. Now, PayPal itself is not a bank. They do partner with other banks like Bancorp and Synchrony Bank to

provide products like some prepaid debit cards, credit cards, lines of credit, lots of debt products that I would never recommend you go towards. But they also now have a savings account, which is also going to be backed by Synchrony Bank, which is a member FDIC, which means it's insured up to $250,000 per depositor, per account, per ownership category. And so there's nothing wrong with having it as a savings account. I would, however, not use it as a checking account because it's really not a checking account. I would just use a traditional bank to do my checking. And here's why. They don't have the same features. They're not backed the same way.

So really what you're doing is you have a PayPal balance and you're kind of using that as a checking account, which just doesn't make sense from a budgeting perspective, from a personal finance perspective. So I would stick with a checking account. I like to have a local brick and mortar bank or credit union I can go to if a problem arises. I can talk to someone face to face, but I also like to have an online high-yield savings account. Now, I don't trust PayPal, just on a level of there's been too many issues, scams, frozen accounts, money disappearing, eBay scams that are connected to PayPal. And so if I were you, I just wouldn't put my money there as a savings account. You can get 4.15% these days at other places like Marcus or Ally. And again, those are going to be FDIC insured as well. So

your money's safe there, but I wouldn't be using, it'd be like using Venmo as your checking account. It's just not a good way to do it. And you've got to hope you have the money and you can do better than that, Jimmy. But great question. Love it. All right, let's go to Mike in Philadelphia. Mike, welcome to the Ramsey Show. Hi, how are you doing? Doing great. What's going on with you? All right. So yesterday my sister called me and said her car broke down. My wife and I do really well financially, and my sister's been doing great on her own financially.

Her husband passed away probably four or five years ago. So she's a single mom of three, and she says to me, she's like, I don't have enough money to buy a new car. So I said, I'd love to help her out. And I don't know if it's like the best idea. Cause I have probably 15,000. I could just write her a check today. Here you go. I don't, I don't think she wants to buy a $15,000 car.

So she's looking at that $30,000 range and I could give her the money, but I don't have it today. Probably take me another two months to get, to get up to that point. And I don't know if I'd be doing her a disservice and say, Hey, listen, I'm just going to give you 15,000 today, take out a car loan or option B, buy a $15,000 car or, and then, you know, you probably have to sell it in a year or two. I feel like that's kind of a waste of money. So I just don't know.

And I called, I called the Ramsey show because I know you guys like to say, you know, live like no one else. We can give like no one else. I'm just not quite ready to, you know, like all of my bills have been paid and that happened about a year ago. And I'm been, you know, we've been saving, but we're not, we're not at the point where we can just give a $30,000 gift at a moment's notice. Is this the first time she's asked for money? Yeah. She didn't even ask for money. She just said, I need, you know, I need some help. Maybe you could help me look for a car. She thinks she wants to go get a car loan. I'm like, I really

don't want you to get a car loan. And you know, for the position that we're in, I'm almost tempted to be like, okay, listen, get a car loan. And then, you know, I'll give you $15,000 for a down payment. And then in, you know, three months, I'll just pay the loan off. I don't like any of this, Mike. There's got to be another option here. So what's wrong with the car currently? So her car is a 2007 with like 200,000 miles on it and the engine blew yesterday.

Okay, so what's the cost for repair? It was like, I think they said it was like $3,500. Okay, and what's the car worth? Let's say you put the engine back in. $500. It's basically worth scrap. Okay.

It's all pinged up, and she's got three boys. $3,500 in, would that thing run for another 50,000 miles? I have no idea. But we could do that, and I just feel like that's wasting $3,500. So we're going to waste $30,000 instead? On a car? Yeah. I mean, that feels like a crazy jump. Did she say she wants a $30,000 car? Where did these numbers come from? Yeah. So she's like, I want to get, oh, she was looking at a used Honda Pilot. Okay. And you know, like 40,000 miles, relatively new.

It was like in that 30,000 neighborhood. And I'm like, that's a pretty good car. I feel comfortable with you driving it. Like I said, she's got the kids. And honestly, I'd love to give it to her. And I just really haven't been focused on saving cash. So it's like if I just focus for two or three months, boom, I just write out a check. Here you go.

Do you guys have no debt and a fully funded emergency fund? Yeah. Even my checking account is pretty good. So we paid off the house. We don't have a mortgage. Awesome. We don't have any student loans. So, Mike, what's the end game for her?

That's what I'm worried about. What happens when she has another bill or another emergency and she goes, hey, Mike, man. So my sister's been doing great. She's been doing great. So her husband passed away two years ago. Okay. And she's been doing great financially. She's not in debt.

She still has a mortgage and she has a $10,000 emergency fund. So she was saying, I'm going to use your emergency fund. This is an emergency. Okay. And I'm like, yeah, all right. So, you know, maybe she uses the emergency fund to help her out a little, we get a little bit of a cheaper car, but I'm like, I just want to do this. And I'm, I feel like I'm just right at the finish line. You know, if she said this to me in September, I would be like, here's a car, here are the keys. Here's what I would do in your shoes, Mike.

She has an emergency fund. I want her to have skin in the game. And I also don't want her to go into debt. So the condition for you giving her this money, it would be, this is a gift. I'm going to give you $15,000. You use your emergency fund on top of that to get the car you want, but do not go into debt. And you go with her and you help her negotiate and you help her get that car. But want, but do not go into debt. And you go with her and you help her negotiate and you help her get that car,

but we're not going to go into debt. We don't need a $30,000 car because we've been driving around a clunker. It doesn't work like that. I think... What's her income? What is it?

When you give family, like, you don't give family a loan. You just give them... I never said do a loan. I said this is a gift under the condition we don't go into debt for a car. So you're not asking for the money back, but she's also putting in $10,000.

And then she just doesn't have an emergency fund. She rebuilds it. $75,000. So she rebuilds the emergency fund over the next six months, three months, whatever it takes, and we're back. I don't see the problem here. So you think just, like, don't worry about getting the car, really, that she wants, and I think it would be good for her. What's good for her?

Well, so, you know, getting a bigger vehicle that's reliable. Oh, my gosh. And then you don't have to think about... Guess what? An older Honda Pilot with 100,000 miles is just as reliable. You pay for the inspection by a reputable mechanic. It's going to cost you $100, $150. And they go, hey, it's in great shape.

This thing will go 250,000 miles. But this idea that we need to get the 2019 Honda Pilot because it's got the TV in the back, I'm not buying that. And so I think we get the older car that we can pay for in cash. That's reasonable. And I don't want a gift to turn into an able. Use her emergency fund? This is an emergency. She needs a new car.

And then from then on, you go, hey, we're going to set up a sinking fund. We're going to put money away every month because we know we're going to need a car eventually. So that's what I would do in your shoes. You do what you want to do, but I would not go into debt and I would not go buy a $30,000 car and I wouldn't use my money to do it. That would turn a gift into enabling and that part scares me a little bit. But thanks for the call, Mike. This is The Ramsey Show. I'm George Campbell hosting solo today. Keep me company. Give me a call.

888-825-5225 is the number to call. We'll talk about your life and your money. You know what would be awesome? Never having to use my own money to buy stuff. Wouldn't that be nice? And while that's never going to happen for me, it could happen for you because we are giving you the chance to win some of Dave Ramsey's money in the Ramsey Cash Giveaway. All month long, you can enter to win up to 500 bucks or the grand prize of $3,000. For real. All you got to do is go to ramseysolutions.com

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So shop the $10 sale today at ramsaysolutions.com. Danielle joins us up next in Pittsburgh. Danielle, welcome to the show. How are you doing? Great. How are you? Great. How can I help today? So my husband and I are on the journey. We're on baby step number two, and we've paid off about $40,000 in debt. And we're on our car loan now that's about 21 grand. And then we also have, um, a mortgage as well as a second mortgage. It's actually for a building that, uh, my husband owns for his small business. Um, but the question that I had for you guys today or for you,

for that matter, um, is just trying to navigate, you know, paying off this debt, but knowing that my husband's a small business owner, we haven't been touching any of the money or kind of like earnings. We normally only take a little bit out of there as we need. We've been using my income, but we now have, you know, enough money sitting in his bank account, you know, from, you know, his great work that could be paying off some of this debt. I'm just not quite sure how to navigate that. Yeah. So what is this, all these retained earnings for? What's he saving up for with this business? So we originally were thinking about making some changes to the building. But, you know,

in talking about it, it's not going to really bring in extra income and I don't think it's worth it. So the other thing was just trying to like hold onto it, knowing that like, he just really doesn't want to take it out and then we'd be paying taxes on it. And if there's another opportunity, whether it's to pay down, um, you know, the business loan or mortgage that he has on the building, or, you know, if it is smarter to put it back into the building, but I'm like, we're also sitting on this car loan. How is he not paying taxes on it? I think it's just a matter of like normally at the end of the year, we have the conversation. I'm like, okay, here's what we're sitting on.

We want to throw this into his. But I mean, it's not stocks. This is earned income. This is revenue, right? So you've got to report all this on the taxes. Well, I think that's where we tend to meet with the accountant throughout the year to be like, okay, is there anything else we want to be investing in, whether it's putting another barber in the barbershop,

it's putting another chair in, whether it's additional advertising, like we tend to play around with the expenses and say, okay, do we want to dump this back in? Which is where there was the conversation around like fixing up the back room, updating the bathroom, putting in, putting on new asphalt, things like that. Got it. None of it is like immediate though, but that's tends like, that tends new asphalt, things like that. Got it. None of it is immediate, though. But that tends to be what we're doing.

How much money is in this account? Right now, $28,000. And what's your total debt load that's left? You just have the car loan, right? The mortgages we're going to put in Baby Step 6. That's later on. Yeah, so right now the car has just about $21,000. So I would pay off the car today and you still have $7,000 left in his savings account for the

business. And as long as he doesn't need any retained earnings, I mean, you can start chugging away at the mortgage too, but his income counts as y'all's income. And so I would use it towards your shared goals, which includes paying off the house early. Yeah. So I guess the point, too, would be just like sitting beside enough for taxes, knowing that we're using this for personal stuff. But even then, we'd still have enough to pay it off. Is he filing quarterly estimated taxes right now? He is, yeah. Okay.

So I would make sure we have enough to cover this next quarter. But you're for sure going to have enough right now to just pay off the car. Okay. And unless he has a specific goal he's saving towards in the business and some retained earnings for whatever the expenses may be in that business, I would be using it to further yourselves in the baby steps and get that emergency fund in place. Do you guys have any other cash outside of that 28K? No, we've kept it to a minimum, trying to dump it all on debt. So we just have like, you know, our little baby. So maybe the next thing is we pay

off the car. That's 21. We use another five to get our emergency fund going for baby step three, keep fully funding that with future income. And then beyond that, we're going to be at four, five, six. We should be investing 15% of our income into retirement and paying off the house early. And then should we be treating the business loan on the building the same way we treat the mortgage then? Yeah, I would probably focus on paying off your mortgage first, depending on the numbers, if they're equal and you want to attack that business mortgage. But I'm going to just put them all in that kind of baby step six category once we get rid of this consumer debt. Okay. No, that's really helpful. Thank you. Awesome. Thanks so much, Danielle. Great question. We love a barber. I love my barber. He started his

own business and branched off and we need those entrepreneurs in this world today. All right, let's go to Landon in Columbus, Ohio. Landon, welcome to the show. Hey, thanks for taking my call. Sure. Just got a kind of a similar question. So me and my wife, wife's a stay-at-home mom. I make annually 180 plus thousand a year. Awesome. That I have is my mortgage, which I owe $157 on. And then I have a car loan that I was probably young and dumb and bought. I've just followed you guys about five months, and I'm trying to figure out whether I should keep the car and pay it off or trade it in for something less in value and start banging out the house. Okay, what's left on the car loan?

So the car loan was a Chevy Tahoe, and I have a 57 on. And that's your only vehicle, or do you have multiple? We have another vehicle that's paid off, just a Ford Fusion. What's that worth? Paid off, been paid off a little bit now. About $15,000. Okay. So as far as the numbers go, you know, these cars still don't add up to half your

income, which is kind of our parameters for things with wheels and motors in them. So they're not, they're not killing you, but I also feel like you don't need the Tahoe and you're kind of sick of making these payments and you want to be debt-free faster. Is that fair? Right. Our goal is to pay off the house, but we bought the Tahoe so we can haul the family and kids around. How many kids you got? Two kids. You need a Tahoe for two kids? I thought you were going to say you got six kids.

No, two kids. So we don't need it. We can settle for less. A CRV can haul two kids. Right. So, yeah. I don't know if it'd be wise to trade it in and settle for less or just since it's my only dad other than the house, try to hurry it. Well, what would the Tahoe sell for? Probably about what I own. I haven't owned it last long, probably about three months I've owned it. Okay. And how much money do you have outside of that? Do you have any money in the bank?

Yeah, emergency fund and the bank, I have about $17,000. Okay. So if you sold this thing for 57, that leaves you with $0 owed and no car. So I would use some of that money you have sitting in savings to go get you a car, and that might mean you save for another month or two,

and we downgrade to an SUV for now until we have that car. I have another car, so we got that fusion that I was talking about, and my wife's a stay-at-home, so she's not really going anywhere if I'm at work. Have you talked to her about that? That worries me that she can't leave the house because you're at work. That's talked to her about that? That worries me, that she can't leave the house because you're at work. That's what we talked about. Maybe find us a little crappy work traveler car for me

and then she can keep this Fusion. Okay. That sounds better. Maybe spend a little more than like Mama's always got to have the nicer car. That's a rule. Right.

Man, if you're willing to make that kind of sacrifice, it's going to propel your wealth building journey. Okay. So I would get a cheap car for now. Make sure you get a pre-purchase inspection on it. Don't go buying a clunker and then blaming me.

But that's going to set you up for success, set you up to get that fully funded emergency in place, begin investing 15% and get that house paid off. Making 180 with no payments, you're going to pay that house off in probably three years is my guess. And as young as you guys are, it's going to put you in a great financial spot. Thank you so much for the call, man. That puts this hour of The Ramsey Show in the books. My thanks to all the guys in the booth. We got Christian, Austin, Bob, James, Andrew, who knows who else is there? Zach's back there. And you, America,

thanks for listening in. We'll be back real soon. Hey, George Camel here. If you love the show and you want a deeper dive on your money journey, we've got a weekly newsletter that gives you helpful articles and tips on following the Ramsey way. Just go to RamseySolutions.com today to sign up for the newsletter. Again, that's RamseySolutions.com to sign up for our weekly newsletter.