The Ramsey Show - App - I’m Ready To Do the Work & Make a Better Future for My Family (Hour 1)

Episode Date: November 19, 2021

Debt, Education, Investing, Home Buying, Career As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started:  Debt Calculator: https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE

I'm Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm George Campbell, Ramsey personality, host of the Fine Print and Entree Leadership Podcast. And I'm joined today by the wonderful Rachel Cruz, bestselling author, host of the Rachel Cruz Show, all around great person. Rachel, how are you? Doing great, George. This is our second time hosting together. We were such a fan favorite. We're back. The votes are in. The votes are in. I wish that was a true story. It was just the luck of the draw this time. But I do enjoy hosting with you two of our money personalities together. We're like the Avengers.

Avenging debt, I guess, in the student loan crisis. Take over the world in the student loan crisis. I love it. I'm here for it. We should. It's a free call this hour. Open phones, 888-825-5225 is the number to call. Hopefully Kelly gets you through and we can have a conversation

about whatever's on your mind, whatever you're worried about, something maybe you're excited about. Maybe there's a decision you're trying to make and you just need some affirmation from some friends. We are those friends today. That's right. That's what I love about this. It's everything around your life, right? I mean, obviously through the money lens for a lot of people, but money touches every part of our lives, so it adds in the relationships. It adds in the stress and the anxiety. It adds in everything, so it is life.

I mean, in and out, day in, day out. I love it. Well, let's get to it. Here's what we're here for. Sean is on the line in Los Angeles. Sean, welcome to The Ramsey Show. Hi, thanks for having me. Absolutely.

So I'll get to it. I just bought Hi, thanks for having me. Absolutely. So I'll get to it. I just bought a, my wife and I just got married, did for our honeymoon and all that stuff. Everything was good. Congrats. We just bought her a car cash. Thank you very much. So we just bought her a car cash, and then we ended up out of vehicle. So we have about, maybe like $11,000 saved after everything, and then I'm going to get $6,000 back from the other one.

So I'm wondering, do we go, like, you know, do I kind of try to spend it all on something and try to get something a little more reliable, or do I nickel and dime at, like, $5,000 and throw the rest of it? The only debt we have is a student loan, so I'm trying to tackle that, too. So I'm not really sure what we should do. Yeah, well, I don't like the word only debt. It's the only debt I have. How much is this debt, this student loan? It's pretty steep. It's like $57,000,

but we're good earners, and we had it mapped out. It's just something unfortunate happened. You know what I mean? Yeah. How urgent is this car purchase? It has to be done. Yeah. I mean, yeah. I mean, we both commute for work so we gotta do it and you have one car right now one car yeah okay so you need another car for the job and you have eleven thousand dollars saved in cash is that all of your savings everything liquid cash you have right now yeah it was all we we had kind of um i had planned on just throwing that straight at the debt and then and then this came up so now but we do have i'll get six thousand back from from everything else what's everything else uh my insurance you know you know we crashed okay so they'll write you a check for six grand you're saying

yeah okay all right that helps we got all the details down rachel yeah i mean sean if i was in your boat because of the student loan obviously you guys need a car i mean that is we talk about your four walls transportation is is one of those. So I'm not against, obviously, you getting a car. But no, I would not spend all of this on the car because you can still get a reliable used car. I mean, you can, I mean, it's amazing. Honestly, four, five, $6,000, what that will get you. No, it's not going to be a beautiful car. It's going to be an older one. But you go get a Honda Civic or a Toyota Camry. There are cars out there that their reputation is to be reliable.

And again, it may not be the thing you want to drive for the rest of your life, which is fine, but going ahead and getting a car as inexpensive as possible. So again, I'm talking $4,000, $5,000, $6,000, and then keeping $1,000 for your emergency fund and then throwing the rest at this debt. So I really would concentrate on that. And the great thing about $4,000, $5,000, $6,000 cars is they really don't go down in value very quickly.

So by the time you guys are out of debt, in three more years, you guys can upgrade to an awesome car and that time is going to fly so quick. So I would put as much money towards the student loan, Sean, as possible. And sorry, I'll add this to Sean, you know, you and your wife, how long you guys have been married? What just, I mean, really recent you said? Oh yeah, October. Yeah. Oh, October. Okay. So honestly, this is kind of a fun,

fun may not be the right word, George. I love the word fun. So everything feels fun to me. This could be a really unifying goal for you and your new wife to experience something together as a newlywed couple and any couples, but especially when you're newlyweds, to have something that you guys are sacrificing and working towards together. There's something really unifying about that that you get to experience early on in marriage. So I would almost look at it like that, that, hey, you know, it sucks that we have all this student loan debt, but man, if we attack this together, there is this bridge between you two that gets built in such a quicker way when you have a unified goal. Yeah. And Sean, I'll tell you, I drive a 2009 Honda Civic with body damage. So it's exactly what Rachel's saying. And I paid $6,000 for it back in 2017.

Still drives perfectly today. And we have the money to get a new saying, and I paid $6,000 for it back in 2017. Still drives perfectly today. And we have the money to get a new car, but I'm like, that's fine. And I kind of like that it has some body damage. You get a little ding on it, you don't care. So let this be a memory that you guys look back on and let it fuel you to go, gosh, I hate this car. I wish we had a nicer car. Let's pay off this debt ASAP so that we can get that nicer car. But what happens is people get a nicer car and they get comfortable with their student loans

sitting here like a pet and they never pay them off. And so I want you to get these elements on this. What was that? Yeah, we're hardcore on it. We had already planned on it. I had mapped out the next six months to take care of it. It just something came up and I'm like, I don't know if we should, you know.

Totally. No, I hear you. You're going to pay off the student loan in six months. Yeah, that's awesome. That's, well, hopefully. Wow. That's going to pay off the student loan in six months. Yeah, that's awesome. Well, hopefully. Wow. That's the idea. What's your household income?

Together we do like $165,000. Oh, heck yeah. This thing is definitely gone in six months or less. And guess what? You can then sell that car for probably about what you paid, if the market is what it is. Perfect. And you can upgrade before the year is over, before 2022 ends. Awesome. Thank you for the help, before 2022 ends. Awesome.

Thank you for the help, guys. Absolutely. Thanks so much for the call. Cars are so interesting because there's like this level of, like a standard of living, a level of luxury, this thing that cars have become. It represents something. Like Dave's opener of the show is the BMW is now the status symbol of choice. And it is.

I'm like, and what, I don't know, I just laugh at myself sometimes because i can be that i want a tesla that's my i'm not a car person but whenever i see a tesla i'm like man i want a tesla so bad and i'm like a car gets you from point a to point b yes you know i'm saying like like if you go to like the utility of it if you just look at the utility of it and then like you said too the nicer the car a little bit more the more stressed you are the more you're thinking oh gosh i gotta keep it clean i don't if something happens right it becomes this this uh it fills your emotional tank where it's like oh it doesn't need to right because it's just stuff so there's cars are just fat they're fascinating there's a and there's a big

spectrum especially with guys i mean guys calling into the show yeah it's always they want the nice car and they want to impress the buddies and they got to have this the premium features yeah so i would be curious i wish we could like take a poll like instagram on the radio but we can't but i'm like okay for like the the longing for a new car especially for a guy is it do you think george more of the perception of what it brings or is it that you just like nice things and you like to get in to a car and it smells good it's's all new technology, like it's fun? It's both. I wonder what percentage it is for most people out there.

I think it's a bit of both. But I think if you're an I Am Legend scenario and you're the only person in the world left, I don't think you're that worried about what other people think about your truck. That's so true. So I think part of it is you want to go with your buddies and go, hey, dude, check out these rims I just got. If I ever get a Tesla, George, if I ever get a Tesla, I'm going to say, George, come look at my Tesla. I will be one of those people that tells you. I love it.

Well, hey, folks, it's a free call, 888-825-5225. I'm George Camel. That's Rachel Pruz. We'll be back with you real soon. Imagine a world where people never have to worry about money ever again. At Ramsey Solutions, our mission is to teach people how to get out of debt, build lasting wealth, and be outrageously generous. And that means we have to take on the toxic money culture that says you need debt to get ahead. Well, we're okay with that. We've seen millions of lives changed, and we will continue to create digital products and services to help people transform their lives. If you want to join me and the over 1,000 other team members on this crusade,

we're currently on the hunt for web developers, UX designers, SEO and content marketing specialists, all kinds of digital help. Together, we'll disrupt the toxic money culture in America today. To get more information on these open opportunities, text CAREERS to 33789. Text CAREERS to 33789. Text careers to 33789. Or if you want to learn about our other job offerings, we'd love to talk with you. Text careers to 33789. This is The Ramsey Show. I'm George Camel, host of the Fine Print and Entree Leadership Podcast,

joined today by Rachel Cruz, host of The Rachel Cruz Show, all of those you can find on The Ramsey Network. Well, I've got a question for you. Is it too soon to start talking about Christmas? I know Thanksgiving's still a couple weeks away, but here's the deal. Me and the rest of the Ramsey team are already in a Christmas frame of mind. And it's not just the Hallmark movies, Rachel. A big reason for that is that we're already giving away cash as part of our Christmas cash giveaway.

We love being generous around here, especially with Dave's money. It's my spiritual gift of mine to give away Dave's money. So here we are. Every year we celebrate Christmas with our Ramsey Show listeners with our Ramsey Christmas Cash Giveaway. It's become a tradition of ours. And this year we're giving away $500 every single week and a grand prize of $5,000. You can enter every day to increase your chances of winning. Just go to RamseySolutions.com slash giveaway to enter,

and you can go ahead and get in on the giving too. We've got all kinds of life-changing gifts for your family and friends and our famous $10 sale. That means you can shop over 40 of our best-selling books and envelopes for just $10 or less. Get books like The Total Money Makeover, Dave's number one bestseller, and Rachel's newest book, Know Yourself, Know Your Money, both on sale for just $10. That's a good deal. This year, forget the one time, use presence

and gift a lifetime of hope. Shop the $10 sale at ramsaysolutions.com. Mike joins us in New York City. Mike, welcome to the Ramsey Show. Hey, guys. Thanks for taking my call. Much appreciated. I have a two-part question. The first part deals with my pension. I am forced by my employer to put in 6% of my total earnings towards the pension. And I was curious as to how you guys and Dave think about that 6% as it contributes to the entire 15% that you recommend for retirement savings? And the second part of my question deals with my current TDA, my tax for annuity. It's a 403B. And currently I'm putting in 9% of my gross. And it's a fixed guaranteed return of 7%. That's what I'm guaranteed. I guess it was

negotiated through the state legislator that I'm guaranteed to do 7%. I was told that this is very rare and it's a great deal, but I've also been told by you guys that opening up a Roth IRA is a really good choice. So I'm debating about moving my finances from my 403B into a Roth IRA, maxing that out $5,000 or $6,000 a year. I forgot what the max contribution is. And then whatever I've left over, putting that leftover towards the 403B annuity with a guaranteed fixed as 7%. I just wanted to know what you guys think about that second question as well. Okay, cool. So let's start with the first question. The mandatory 6% contribution, is that coming from your own salary? This is not something that the employer is contributing on their part. Yeah, it's from my own salary. It comes right out of my paycheck.

I have no choice in the matter. So they're just forcing your first 6% out of the 15% essentially. Exactly, because I'm part of New York City and part of the state. The pension contribution is mandatory. Okay. Yeah, I mean, I don't see anything wrong with counting that as part of your 15% since it's coming out of your paycheck. Yes.

Right. So, yep, that will be included in the 15. And then whatever is left of that, looking like you said, I get the 403B. What percentage are you putting in the 403B? So I'm putting in 9%. So if I do the 6% for the pension and another 9%, that gets me to my 15%, right? Yes. Well, my knee-jerk reaction

all the way i just love the roth ira i mean it is it is tried and true and it grows tax-free and usually you can get more i mean another they're guaranteeing seven percent but with the roth my husband i even just looked at our stuff the rate rate of return? Yeah, it's just, you can get more even just in the market. And so that's where I tend to lean, Mike, to go ahead, like you said, that you need your correction. I would do that. I would do as much as I can in that Roth IRA, but then whatever is left after you do that $6,000,

$5,000, $6,000 when you max out that Roth, if there is anything left, I think you just walked us through it. I'm like, that's exactly right. I would put the rest in that 403B. Yeah, I guess I'm calling just to confirm I'm doing the steps correctly. And I think I am. I guess my only concern was what if something, you know, if you look at the S&P 500 over the last 30 years, I think it's what an average rate of return of around eight, eight and a half, which is obviously higher than 7%. The only great thing about the 7% is that it's guaranteed. It's set by the state legislator. I

have literally zero risk of loss at all. So that's why it's like, oh, that's pretty unique and unheard of. So that's why I was questioning what percentage should I only put one or 2% towards that fixed rate of return and then dump the rest into the Roth IRA. And you are saying yes it is in fact worth it yeah I think it is because I think you're going to get I think you're going to average out more than seven percent over this how old are you Mike I'm 37 okay so yeah I mean you you still have you got plenty of time a few decades and so I would because again I think that while the market sure it goes up and down it's it it's done great. And so, I don't know. Another piece of this, Rachel, is the control factor. In the Roth IRA, you're going

to have control of what funds are invested. I don't know, Mike, how much control you have over the options in this 403B piece. If they're guaranteeing that 7%, I don't know how they're guaranteeing that or if they have full control. What's the situation there? So great question. So from what I understand, the fixed guarantee return 7%, that was negotiated through my union and collective bargaining through the state legislator. So 7% is locked in place. Now that is an option for me. In addition to that, I also have options of playing around with the market, doing equity, diversity funds. I can sort of spread my contributions however I want. But currently, I'm putting it all in the bucket of fixed return.

Does that make sense? Got it. Yeah, yeah, yeah. Yeah, and what I would do, too, is you can bounce this off of one of our smart investor pros in your area, a financial advisor who can just go, hey, this is what's going to make the most sense for your age, for what your situation is, and your goals. They can walk through all the nitty gritty, the nerdy numbers with you

to help you make that decision. But if I'm you, I'm going to the Roth IRA, and whatever's left over, it's not a bad plan to throw some money in that as well, especially with the guaranteed rate of return there. So thanks for the question. Appreciate that. Matt joins us next in Houston, Texas. Matt, welcome to The Ramsey Show.

Thank you for having me, guys. How are y'all doing today? Doing great. How can we help? Awesome. So my wife and I are new to the Baby Steps. We're currently on Baby Step 2, trying to pay off some of our debts. And before we got on board with the whole program, I had invested during the pandemic. When the market crashed, I invested into some stocks, which I'm learning now that it's not the best option to have. So what we're trying to figure out is if it would make sense to go ahead and pull out our current investments, obviously take out what would be tax-free capital gains and put that aside for the end of the year, but then utilize the other funds to pay off some of our debt.

I'm just wondering if that's a good idea or what you guys would suggest we do with that. Yeah, I like this plan so far. How much debt do you have? So we currently have about $75,000 in debt, 50 of that being student loans. The other two are car loans. Okay. And how much is in this investment? Total in the investment is around $21,000. Okay. So we're not going to knock out the debt completely even by cashing these hours, but it'll help kickstart this process for you.

Right, right. Yeah. Yeah, that's the thought process to at least get that going. I mean, we also have around $11,000 in savings, and that's kind of like that's our limit right now is my wife just gets a little weary when the bank drops a little bit, especially with my job. I'm prone to injuries because I teach tennis. And so, like right now, I'm dealing with some injury pains and a hernia.

And so that extra money, she doesn't want to go below that just in case something happens. But again, you know, any guidance on that situation would be helpful for us as well. Yeah. Well, your first question, Matt, I would. Anything that is not retirement, I would cash out and throw at the debt because you're going to be able to go and invest double, twice, three times as more when you have no payments. Like when you guys are completely debt-free and you have an emergency fund, suddenly you're going to feel your income be able to be like, oh my gosh, this is amazing. And then you guys have time to go and invest more into things like retirement. And that security gland is flaring up over here.

But if I'm you guys, I'm going down to that $1,000. That's going to give you $31 total to throw at the debt. And the sooner you get rid of this debt, that's when you have true security, true financial peace. So I think you guys have the hard conversation about using this money and savings to kickstart this debt and really start to paint the picture of what you want that future to look like. Rooting for you guys, this is The Ramsey Show. Thank you. I'm George Campbell. Next to me is Rachel Cruz, and this is The Ramsey Show. It's a free call, 888-825-5225. Let's have a conversation about your life and your money.

What's on your mind? Let us know. Let's have a little about your life and your money. What's on your mind? Let us know. Let's have a little fun Friday conversation about it. Agnes decided to join us in New York City. Agnes, welcome to The Ramsey Show. Hi, thanks so much for taking my call. Absolutely. So my question is that my husband and I are finishing Baby Step 3,

so we're getting ready for investing, and we're starting to think about it. Yay. But we don't to think about it. Yay. But we don't know anything about investing, at least not much. And I was wondering if a smart investor pro would be helpful in, you know, when we start to invest in a company for 1K or that's something that, you know, being that it's not there, we're not investing with the SmartVestor Pro, would they still help with that? Yeah, absolutely. Yes.

I, in fact, have a SmartVestor Pro, and I show them what's going on in my company, Ramsey 401K, and every year I'll just go, hey, does this still make sense to you? All the, you know, allocated across these funds, and it takes the pressure off of me to go, okay, good. I'm doing the right thing. I shouldn't be doing anything differently. So absolutely, they have a heart of a teacher and they'll educate you from start to finish. That's why they're there. They're not there to sell you on products. They're there to help you understand where you're putting your money. Yeah. And hopefully, for you guys, you'll have more to invest than just the 401k because you'll take that match. But then maybe you'll open up a Roth IRA like we talked about in the last segment. There are other retirement options out there that they can even help show you.

And I'll say this. I remember when my husband and I, we got married 12 years ago, which is so crazy. And after we got married, we sat down with the SmartVestor Pro that was here in Nashville. And even being Dave Ramsey's daughter, let just say I had so many questions I didn't quite even understand some of it and I kind of felt stupid at first asking some of the questions I was like god these are probably dumb questions that are like super elementary and I should know this but the more I asked and the more he started explaining I was like okay there, okay, there's a level of knowledge you're going to want when you're putting your money

into something, so don't be afraid to ask questions. Honestly. You may feel stupid or like, I should know this. I'm an adult. I pay taxes. I feel like I should know these things. And you don't. You may not.

And things like insurance. I laughed about taxes, but seriously, taxes, investing. It's these niche parts of our financial picture that people that work in these industries, hopefully the ones that we recommend, are kind people. They're going to help you. And they're there to teach you, like George said. And these people eat and breathe this stuff. They do it day in and day out. They meet with all types of people, all income level. I mean, they see it all. So I don't want you to feel inadequate at all when you guys go sit down for the first time. Ask as many questions. I want you to be able to understand

what you're putting your money into. So when you leave that office that you could explain it to someone else, right? Like that you know it so well. So absolutely, I would have a financial advisor in my corner. And do we first, I understand, and do we first go to the financial advisor or do we first try to open it up with the company, the 401k? Well, it'll probably be through, it'll be through your company, but they're going to be able to guide you in it,

like what George is saying. And then other things that you may decide to put your money in, they're going to be able to help you in that scenario. Because you can open up the 401k, and then they can help you select what funds inside of that 401k you're putting your money into. And so that's what's going to help. Obviously, we have a lot of resources at RamseySolutions.com

to help teach you what the Ramsey way is across four different types of growth stock mutual funds. And we've got a new book coming out from Dave baby steps millionaires where he really unpacks his own investing strategy. And I love that Dave does exactly what he tells other people to do. He's not out here jumping on single stocks and telling everyone else to go into mutual funds. So we really try to practice what we preach around here. And those smart investor pros, they're aligned with the Ramsey principles,

and they're going to treat you right. So absolutely reach out and just get some information and get some guidance from them, even if it's for your company 401K. And maybe down the line, like Rachel said, you work with them on another project. Like we did that when we were saving up for our down payment. Oh, yeah. We invested for the long term, and we worked with our SmartVestor Pro. Absolutely, Agnes.

Way to go. Baby step four. Here we come. Feels good. Yeah, that's awesome. Thanks for the you so much. Absolutely, Agnes, way to go. Baby step four, here we come. Feels good. Yeah, that's awesome. Thanks for the call. Josh joins us next in Seattle, Washington. Josh, welcome to The Ramsey Show.

Hi, thanks for taking my call, George and Rachel. Yeah. I'm a small business owner out here and we've built this business over 10 years and done fine, but the last couple of years we've just gone gangbusters, made more money than we've ever made. And we've, through that, my wife and I have accumulated a good stockpile of cash just in regular savings accounts. And we're looking to build a house in the next couple of years. So for now, I've just left that in savings accounts. It's been piling

up and we're getting a half a percent of interest, which is the very highest rate we can find around. My question is, should I be doing something else with that money? It just feels wrong, especially with all the talk of inflation, the reality of inflation. I'm not worried about hyperinflation, but there is a reality right now, especially in the building cost world. Or should we just sit on that, you know, depending on when we're going to build a house, probably starting as soon as next spring, just sit on it and wait, wondering what you think we should do. Yeah, it's a great question. I'm just curious, Josh, what do you guys do for a living?

Just what's gone crazy? What kind of business? Sure, yeah, we're in the gun and ammo business. Awesome. Very cool. That has gone crazy, for sure. Very cool. Yeah, so I'll say if you guys know you're going to be building in the next three years or less, four years or less, I would just keep it where it is, Josh, which I know hurts.

My husband and I, we did the same thing. We had saved for longer than even that and kept it just in like a money market. And we look back and Winston was like, I guess that was the right decision. You know, we still talk about it because it was over a longer period of time. But especially if it's three years or less,

our rule of thumb at Ramsey is really five years or less. And so in this case, anywhere from three to five years, if you know you're going to be building in that time, I would just keep it where it is. Even though I get it. Like, you're not making a ton back, I know. But it's kind of the safest route. It's just the money that you have.

Because if something dips, if something happens, and you guys want to go and build, and you don't have the time to let it regain where it was, then that kind of sucks. Yeah. When you have that tight time horizon of we want to build at this date, that's where I start to get real nervous about putting it in the market for a short period of time. Josh, how much money is this? In our personal savings accounts, about $500,000, $550,000. And then we're a little heavy on the business right now.

Another $250,000 in retained earnings in the business, which is a lot more than we normally keep there. Are you guys investing, though, Josh, for retirement and all of that? Are you doing other stuff, or are you just really focusing on just saving this up? Yeah, we've been doing 15% of our take-home pay. That raises a good point. I guess we haven't. We just continue to do that off our base salary that we pay ourselves. I've not done that out of this excess. And perhaps that is a portion of it that we should take and then set aside for long-term investing. This excess we've just

piled up in cash and along the way paid another $400,000 for a piece of land that we'll build on. So that's debt-free and ready to build. Yes. Yeah, that's what I was going to say, is that you can use that. No, I would use what you have to do is put as much away to the house as possible when you guys start building for sure. Should we take 15% of that and invest it? Is that considered part of our income on which we should be doing investing? No, I wouldn't. If you guys already are investing on just the income you bring in. You said you're doing it on the take-home pay though, right?

The investing? Well, we're doing it on our base salary. So we've paid ourselves for years. We take 15% of that out of our regular $130,000 a year or whatever and invest on that. Out of all this excess, we've done zero investing. No, I think that's fine. Because, again, you're saving this money for the house to build. So that's what this money is a lot of coaching.

It's allocated to a different goal here. How much house are we talking, ideally, for you guys? Probably, the build probably costs somewhere within $800,000, $900,000. Okay. I mean, you guys are so close to being able to pay cash for something like this. Awesome. You just kept saving up with this business, crushing it like it is, and you waited two years. I mean, that could be a really cool stretch goal for you guys. Yeah.

You know, and I think if we sell our current house that we're in, it'll definitely be able to cash flow. And that's another question in the back of our mind is do we keep that as a rental or do we sell the current place and, you know, just cash flow the whole build. Yeah. If you're able to cash flow the whole build, I would keep it for a rental. Yeah. I would.

If you got a paid for property and that's pretty cool, man. You guys have done really, really well. Congrats, Josh. That's awesome. I just love hearing stories like that, Rachel. You guys have done really, really well. Congrats, Josh. That's awesome. I just love hearing stories like that, Rachel. It's awesome. It warms my heart. It warms my heart.

To see people go, yeah, we got like $800,000 in cash and we're crushing it. I know. This is what we like to hear. Awesome. So thank you so much for the call, Josh. Way to go. This is The Ramsey Show. We'll see right back. You're listening to The Ramsey Show. I'm George Camel, joined by Rachel Cruz today.

And it's a free call, 888-825-5225. Call us up. We'll talk about your life and your money. Michael joins us in Phoenix. Michael, welcome to The Ramsey Show. Yes, hi, George, Rachel. Thank you for taking my call. I hope you guys are better than you deserve.

We are, for sure. How are you doing? Well, pretty good. Pretty good. So, a couple questions. Well, one major. A little bit of background. Just became homeless back in September.

Due to some unforeseen circumstances. Sorry to hear that. But I'm a single dad, two kids, trying to build back better, if you will, and I have a great job, but don't know where to start, really. I've got my emergency fund in place, got into a cheaper car, got into a cheaper apartment, and just really trying to take control of my finances so my finances aren't taking control of me anymore. Yeah. Well, it sounds like you're doing a lot better than you were not long ago.

So you're in an apartment now. You've got somewhere safe to stay, and the kids are safe? Yep, absolutely. And you've got the job. What's your income? Don't know the annual, but $26 an hour. I'm a truck driver. Truck driving, $26 an hour.

That's great. And is child care a part of the equation here? No, negative. Okay. Good, good. And is child care a part of the equation here? Negative. Okay. Good, good. And you have debt? I don't know how you would label consumer debt, but creditor debt. Okay. How much debt is owed currently? Student loans, car, a couple of hospital bills, right around $30,000. $30,000. Okay. And you've got an emergency fund in place. How much is in there?

About $1,200. $1,200. So you've got that baby step one going, that starter emergency fund, and you have a reliable car, and you've got a place to stay, and you can afford the rent there? Correct. Okay. Well, you're honestly, I'm impressed. It sounds like you've been through a whole lot in the past, I don't know, a few months. How recent is all of this? September.

Wow. Man, you are resilient. Yeah, Michael, you've done an amazing job. You know that, right? Well, it's my kids. I work for my kids. I love my kids. Yeah.

Well, it's a good why in there because what you've been through is, I mean, it's hard. It's really hard. And especially if you're the sole provider of that, I know the weight that that feels and that responsibility that you feel. And I feel like the thing that sucks about money is that, you know, your past decisions, they do follow you. You know, you're having to face these things that you're like, man, I hate it. But you have not let it completely just overtake you or define you. I mean, you really have, I hear it in your voice of, I'm going to do something different because what I did, it didn't work.

And so I'm willing to change and do the hard work to dig myself out of this. And I just think that's like, it's just really impressive and really brave to make big changes like this in your life, Michael. So I just, I want to encourage you in that. And that this debt, it is, is it all in collections? Because you were talking about creditors? Correct. Yeah, is it all in collections because you were talking about creditors? Correct. Yeah, it's all in collections. Okay. Well, one positive note in some of that, maybe not as much the student loans, but the other stuff, there are chances that you can negotiate with them when it gets to this point.

And once you get some money, let's just use like one of them for an example. How much would you say is on the car, for instance? $16,000. $16,000, okay. So, you know, working to get some cash, and sometimes they will settle with you, and to say, hey, it's been X amount of time, and here's what I have. What's the best thing you can do for me? What's the best deal you can do for me? What's the best deal you can give me? I mean, there's always that strategy as well. That is a possibility,

not that it's all in collections, but if that doesn't work, then obviously kind of just chipping away at this and it'll be, it'll be a marathon. You know, it's not going to happen overnight, like we say around here, but getting those quick wins of paying off that smallest one is going to be exciting. What is your smallest debt, Michael? About a thousand. Okay. Awesome. Well, you got $1,200 in the bank, so you know you can do it. You know you can work and save that. So that'll feel real good when you hit that first one out. Yeah. So if you're following the baby steps, we talk about the four walls. And it sounds like you've got those covered.

That's food, utilities, shelter, transportation. Once we have that covered, you can move on to that starter emergency fund, which you have. And then next up, we're going to list those debts from smallest to largest, depending on what's going on with the creditors. And like Rachel said, the older the debt has been in collections, the better chance you have of settling. And so if I'm you right now, I'm going to work my tail off. Maybe that means taking a second job, doing anything to increase income and cut down expenses to create that margin so that we can save up $8,000 and go to that car loan and say, hey, I've got eight.

Are you willing to take that today and be done with this? And a lot of the times they'll say, we'd rather have some of the money than none of it. And they'll take that, and that can be knocked out in the medical bills, especially. A lot of those can be negotiated down, especially with hardship and income. So do your research and be proactive communicating with the creditors. Call them once a week, give them updates. I want you to bother them more than they bother you. They're going to want you off their back instead. And so you've done an incredible job. Obviously, I want this debt out of your life as soon as possible so that you can really start

to create that new financial future for you and your kids. How old are the kids? 14 and 12. Wow. Awesome. That's awesome. And are they in school? What's their situation? School full time. Okay. Awesome. That's good. That frees you up to be able to work. Are you back home every night with this trucking gig?

Oh, yeah. I'm local. Okay. That's great news. Well, you know, the good news is the trucking industry is in high demand, and so you might even look into what other jobs are out there. Can I increase this income? Is there overtime? I know that can be difficult in the trucking industry with regulation. But just doing whatever you can for the next, you know, maybe it's two years to knock out this debt, especially if you can settle some of it. It could be shorter than that.

And once you're through with that, you get that fully funded emergency fund of three to six months of expenses. And then you can rest easy at night and start investing for your future. How old are you? 36. 36. Dude, you've got your whole life ahead of you. You've got a whole new life to start, a new legacy to build with these kids. And I mean, you know what to do and I think you're going to do it. You're a resilient guy. Nothing's going to stop you at this point from where you were to where you are today and where you're going to be. That's right. And my kids have a full life ahead of them and I want theirs to be better than mine. And it will, Michael. I mean, honestly, yeah. I mean, you're literally making, doing the steps right now to what we say around here all the time is changing your family tree. And that's exactly,

exactly what you've been doing. Do you feel more hopeful today than even three weeks ago, like as you start really making progress and you save and you're feeling kind of the traction of this working? How does it feel now? I was able to pay off a creditor last week, and it felt amazing. Amazing. It's discouraging when I can't do it every week, but it gives me hope. Yeah.

Man, that's awesome. Well, you keep taking one day at a time. Keep busting your butt for this family. Clearly, that's your why. So let that why fuel you along this journey and start to dream of what that future looks like and what it looks like to maybe be in a home one day or be doing the job you really want to do and the kids going to college and just start to dream about that future, and that's going to keep you going every day. that's what you need right now is that daily motivation uh listen to this show for motivation get a community around you if you

don't have any right now some friends who can cheer you on along the way some family that's really going to help you get through this journey no thank you absolutely michael thank you so much for the call we are cheering you on my friend yes what a good dad I know I'm just impressed by this guy and it sounds hard like the road he just explained I'm like oh that I mean it's hard and yet choosing to say okay

I'm going to do this I'm going to figure this out get another job find an apartment I mean all of it that's so courageous to me because there's a lot of, you know, and I get it, but there's some,

it's just like, oh, I don't even know what to do. They're stuck and they can't move. It's almost like they're paralyzed by fear, but really, no, really digging in and said, okay,

I'm going to do something different and I'm going to change what I've been doing, which is uncomfortable in the first place, let alone his life situation. So I think it's amazing. Call us up or come visit us

to do your debt-free screen. That's right. From homeless to debt-free. That's a cool story. That's inspiring, man. Absolutely. Well, fun hour, Rachel. Thank you so much. Big thanks to James Childs, our producer, Kelly Daniels, our phone screener, and you, America. We appreciate you listening in. We'll be back with you before you know it. Until then, spend wisely, save intentionally, and give generously. This is The Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Ramsey Show.

If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register. We would love for you to come to Nashville and tell Dave your story.