The Ramsey Show - App - Is Debt a Problem? (Hour 2)

Episode Date: May 29, 2024

From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by my good friend and colleague, Ms. Jade Warshaw. And we are here to take your calls at 888-825-5225. You call us and we'll talk about your life and your money,

and we will give you our opinion. Some take it, some leave it. I hope you take it. We think it's in your best interest, but we're biased. Keith joins us up first in San Francisco. What's going on, Keith? Oh, Ken Kupan, how are y'all doing today? We are doing well. What's your question today? So I'm 37 years old, just recently divorced.

I make $96,000 after taxes. That includes 100% disability pay that I have. I'm about $105,000 in debt at the current moment. A large majority of that debt is a $62,000 vehicle that I have. That vehicle is currently at a trading value of $12,000. Do you roll negative equity? What happened? It's an electric vehicle. I don't know what happened. I've been trying to get rid of it for the longest time. Even if I sell it to a private party, I will only get about maybe $22. What kind of car is this? Just to warn people.

What is it? A Kia EV6. Kia. Okay, EV6. Kia. Okay, you got a Kia. Yes. All right. And you bought it for how much? I bought it for $62,000.

And it's worth $20,000 now? I'm confused. Yes. When did you buy it? No, you're not. Well, you can be confused. It's crazy. I bought it back in 22.

And in two years, have the value dropped yes yes by like 40 60 something percent yes i am i've taken it to about three different dealerships when they ran it they're like how did this happen did you have high mileage on it does it have issues wear and tear there's no everything is perfectly fine with it. I have about 30,000 miles on it. There's no damage to the vehicle. There's only 30,000 miles on it? Yes.

Wow. I think there's a mix of things happening here, Jay. Number one is the EV car market has taken a hit. There's a lot of saturation. There's been people kind of going away from the EV side, car manufacturers. There was an overproduction. Then there's the Tesla battle against the other EV cars,

and Kia apparently is not up to snuff in the EV world. So I'm sorry, Keith, you're going through this. Let's try to figure out a solution here. So what other debt do you have? Another portion of my debt is I did debt consolidation and also a um a personal loan about probably two years ago everything happened two years ago okay about two years ago i did that consolidation everything that's another 30 or 40 000 right there was two years ago the divorce

oh yeah i love it was this like a post-divorce, like I'm just going to implode my life? Like did it just, did you cope through spending? No. To recover, I was paying $1,500 per month in child support for about a year and a half. Okay. But that doesn't, where does the car payment fit into this when you went and bought this car? So before the divorce, before everything happened with the child support, I had a bright idea that I would go ahead and sell the vehicle that I currently, um, possess. Um, so I sold that vehicle off to try to get out of bed. Um, it did not work out because she was unwilling to work

with our, um, agreed parenting schedule schedule so I had to go out and get a vehicle at that time. I had the bright idea like, hey, you know what, if I get an electric vehicle, it'll all work out. Everything will be fine. I could pay the vehicle off within three, four years. That didn't happen. You allowed a good reason to make you

make a bad choice. It's a good reason to need a new vehicle but we go crazy when we say we need a $62,000 new vehicle so you got the $62,000 from the Kia and then you got the $40,000 that's all rolled together in a consolidation you did um I'm guessing that was what like credit cards and other types of things like that odds and ends correct and my credit card debt that I have is pretty minimal I believe it's maybe about $5,000 or so. Okay, so that accounts for the missing five.

Listen, nothing is minimal at this point. Everything is taking my breath away, Keith. So let's try to get you out of this. Sorry. Because I don't want you, there is hope for you yet. You have a great take-home pay of $96,000. That's $8,000 a month. What are your total monthly expenses, just to cover the bills and your minimum payments on your debt? Okay. So remember, I live in California. So I have a two-bedroom looking at $2,225 for rent. Electricity, we're running about $250 for that. Water, probably like $35. So what do you have left when it's all said and done after you've paid for?

You make the minimums on your debt. You pay your rent, your utilities, your insurance bills. How much is left each month or how much should be left? If I only do necessities, I will have about $1,500 left. Okay. So that's our magic number right now because let me show you the math on this. $1,500 left. Okay. So that's our magic number right now, because let me show you the math on this. $1,500.

Let's say you applied that extra on your smallest balance using the debt snowball. That's $18,000 a month toward your $105,000. $18,000 a year. Now, basic math says it's going to take you over five years at that point to pay off your debt. Can we agree that sucks? I do agree that sucks. So what if we could put two thousand or three thousand

a month toward the debt four thousand now we're talking right so i right and i looked at that too and i'm going to say a very bad word here okay uh-oh i was looking at following i know i was don't even say no bankruptcy okay you said you, did you say you're 100% disabled? I'm 100% disabled. So that will give me $3,655 per month saved because they can't put that into the bankruptcy. No, I'm not talking about with the bankruptcy. I'm talking about your income now. You said that you're receiving that, but you're 100% disabled.

So you can't go out and make more money? Is that what you're getting at? I can't. No, I'm employable. Oh, you're employable. Great. So can you do something to supplement? My question that I'm trying to get at is, can you do something to supplement this already great $96,000 income?

I have attempted to ever since, I would say november of last year uh with trying to find something that works with the parenting schedule because i can't you know break away from that obviously um i'm already facing it's a whole nother story i mean you got this great electric vehicle what about doing some of these driving apps i have uh tried multiple times that this area is so saturated. Okay. No one is hiring right now for it. That is a problem. Yeah. Listen, let's just show you the math on it. If you can get an extra $2,000 in net take-home pay, that would mean you could put that $1,500 plus the $2,000, that's $3,500 a month. That's $42,000 a year towards your debt. Now we're debt-free in two plus years. Now we're talking two and a half years, you're completely debt-free. So that's what we need to figure out. That's the

gap. There's no way around it. You're not going to go into more debt and try to solve this. The only way is more income and less expenses. Is there any savings anywhere? Did you guys have stock that you can sell off anything? No. And also the quote-unquote retirement that, um, it's in, it's locked because you can't touch it. Uh, so whatever saving, whatever 401 that I have, um, I can't even mess with it. Well, I wouldn't, I wouldn't suggest you mess with your 401k. I just didn't know if you had any liquid money anywhere that we could apply towards this. Yeah. You're underwater in this car by a large portion. We're talking 30 grand potentially. I would still see how much you

could get for a private party if you did it the right way. And maybe that would get you closer because getting rid of this car would get rid of half of your debt. So that I think is we got to solve for that first. But beyond that, we got to make more and we got to spend less. And so I don't know what you can do in San Francisco to do that. I know it's crazy over there, but you have to find a way and bankruptcy is not it. There is hope for you yet, Keith. Hang on. We're going to send you Financial Peace University. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw. Open phones at 888-825-5225. Jade, I think it's time for a come to Jesus moment here on the show. A little hard conversation, if you will. Yeah, a little real talk. About debt. Yes.

And the normalization of debt and how over time it has robbed us of the so-called American dream. And not just any debt, George. Today we got to talk specifically about credit card debt. Ooh. Because I think, you know, it really hits people a certain way. debt george today we got to talk specifically about credit card debt oh because i think you know it really hits people a certain way if i want to guaranteed lose followers on social media all i have to do is start talking about credit cards and cutting up your credit cards and people just scatter i've complained about this for a long time because our friend dr john deloney

he'll do a clip on you know tiktok or instagram and he'll it'll be a clip from his show and he'll just be looking at the camera like you are not a burden and it's like 10 million views everyone's like oh my gosh it's what i needed to hear then i do a video and i'm like hey guys what if we just like didn't use credit cards and stuck to debbie and they're like kill him it gets four views and they're all haters like i don't understand what people's obsession is with credit cards. I don't either. And so I posted a meme that basically says, well, I won't tell you what it says. Let's play it, Kelly.

Let's show them if you're watching on YouTube or elsewhere. Let's show you the meme and Jake can give you the caption. So basically, it's when someone tells me that they pay off their credit card debt every month and it's you know all these shady looks from michael jackson mariah carey alia janet jackson like prince they're just like yeah right like you don't pay off your credit card debt and so i posted that kind of a little side eye a little little shady little snark and number one it went viral but number two people went bananas they got they were mad at me well just like janet sometimes you go viral for the wrong reasons you go listen

i don't go viral for those reasons but like the comments behind this were i knew i was going to catch shade for it but i didn't know this what are some of the comments give us the spark notes here of the sentiment okay so one person says i don't spend more than i have which is a responsible mindset we get that one a lot okay and then there's other people saying things like hey it's possible it's called budgeting and after all we get points oh okay so you budget for things that you're not paying for that makes sense and this person said oh i faithfully do i pay back my cash and i pay paid off to get the points so the the sentiment here is jade absolutely not i pay off my credit card every month to which my

comment was listen the country's in over a trillion dollars of credit card debt somebody's lying like one of y'all one of y'all is lying based on data about half of the people are lying half the people are lying and so then or we just get the loud half that's apparently doing it quote perfectly right and so then it was like a day later cnbc came out with this um report that said average consumer carries six thousand two hundred and eighteen dollars in credit card debt so as more borrowers are falling behind on their payments yeah and and and we just know, George, this has been a crazy economic time with inflation

and prices going up, prices of insurance going up, prices of home buying going up, prices on everything going up. We have seen more people default to credit cards. And in many cases, not to just go out and wild out, but to really just to make ends meet. A lot of people feel like, I don't have a choice, Jade. I gotta-

They're just putting their expenses on them. on yeah i gotta lean on credit cards and so my point is people are going into debt and people are not paying off their credit card balance and it's just a matter it's a house of cards and for a lot of people yeah today you might be paying it off every single you know month or whatever but all all it takes is for one ball to drop. And suddenly it's like, oh crap, I can't pay off my balance. Because when I look at $6,218 in credit card debt, that suspiciously sounds close to somebody's monthly budget that they've just been floating, right? And so my point to this is, you know, I was talking to, I don't know if it was you, George, or if I was talking to John, but I was saying how when it comes to debt,

we really kind of pick and choose. Because if you talk about student loan debt, people are ready to grab pitchforks and like, yes, I hate student loan debt. It's the worst thing ever. How could the government do this? The government needs to forgive this. Yes, and people are quick to say how much they have

and why it sucks. But some reason, George, when it comes to credit cards, people are like, no, that's good debt. Like, I don't want to talk about it. Don't take my credit card away. And they're very secretive about the fact, you know, if they have a balance or if they don't have a balance. Well, you know, what's funny is people brag about their credit card companies. I mean, American Express and Capital One is getting all this free marketing. Nobody's bragging like, I got that Sally Mae card, it's titanium. And yet we do that with Apple. Yeah. It's insane. Yeah. I don't get it. I'll never understand it. So this number, I talked about this in my book, Breaking Free from Broke.

I devoted a whole chapter to credit cards. Yes. To try to convince people that there's another way. I even outlined eight different character archetypes. One is called the perfect spender. That's the person you just described as I pay it off every month well here's the problem every study shows that you spend more when you use someone else's money and pay it back later yeah that is human nature and don't tell me that you've somehow you know transcended that and become the perfect human i don't believe it no i don't believe it we know it's not true i mean like you said there's enough studies that show that when you use cash it lights up the pain centers, you feel it, and then it goes down a step when you use a debit card, and then it goes down another step when you use somebody else's money on credit. And so we do know that that's the case.

But it's just interesting to me. I think that we have to, you know, the first step to solving a problem is admitting that you have a problem. And like I said before, if we're willing to say that we know, okay, car loan debt, that's inconvenient. Student loan debt, that sucks. We also have to accept that credit card debt is also holding us back in the exact same way that those other debts are holding us back. The only difference is we keep choosing to go into credit card debt and we're really defending the very thing that's strike attempting to victimize us like we'll defend the creditors and we'll defend chase freedom and american express till the grave oh yeah here's what's crazy i don't get it the delinquencies are up yeah and part of it we can

all look point fingers at inflation all this stuff but credit cards are one of the most expensive ways to borrow money the current average apr isR is 22% now. And then you wonder why you can't get rid of it. I mean, it's a plague once you get into this debt and the companies, they're going to try to get you to spend more. They're going to try to get you to carry a balance. They're going to try to get you to pay another fee, whether it's the annual fee, the late fee, the interest, you name it, they're going to get you. That's right. It's their whole game. It's why they changed from cashback into points. Because now you get 10,000 points and you think you're winning like it's Chuck E. Cheese. That's right. Turns out you get a sticky finger on a warhead for 10,000 points. Not a sticky finger.

And getting you to Boise for that. So it's a major, major problem that I think we're going to need to have. There's going to be a crisis. And it's not happening at 1.12 trillion, which is the current credit card rate yeah it's it's got to hit a limit where people go enough is enough i mean it started as a result credit card delinquency rates are higher across the board the new york federal and trans union found that over last year roughly 8.9 percent of credit card balances transitioned to delinquency so we're starting to see that we've started to see car loans go into delinquency. People are realizing, okay, I've been trying to float my lifestyle with options that aren't sustainable. And that's why what we teach is so relevant. Because at some point,

you can't take it on any more debt. Like at some point, you look around, you're like, I can't float this. I've got a million balls that I'm juggling in the air. And that's tiresome. Like at some point, you go, okay, I just need to stop. I need to simplify my life. I need to pay off this debt. I need to stack up some savings. So if I do come across on a hard month, there's money there waiting for me. And there's a way to live life with more peace and credit. It's just not the answer. I've lived on both sides of that coin and you think that your freedom is in credit but they could care less about your freedom and i was that guy i mean when i started here in 2013 i had my my mx delta sky miles because i was

going to get them and get my free flights and i had my discover cash back i was getting five percent that rotated on restaurants and dining out. And I was broke up to my eyeballs. And here's the thing, that's $6,218. Most people that call on the show, they go, well, Jade, it's minimal debt. I just have, it's about $6,000 in credit card debt. And here's the thing. All that takes to get there is $17 a day. It's $518 a month you put on that card. That's what adds up to $6,200. And guess what? You pay the minimum, it's going to be even more. The balance moves up faster because you're making that minimum payment. So here's the key. Debt snowball. Smallest balance to largest. I don't care about your freaking interest rate,

whether it's 3% or 22%, pay it off smallest to largest balance and then cut up the cards. And if you can't do that yet, just do a pause. 30 days, no credit card challenge, put it in the freezer, lock it up in a safe, and use your own money. And pay for things now. And see if it doesn't cause more pain. And see if it doesn't increase the amount of money you have in your budget every month. That's right. And if you're not the perfect spender, I wasn't the perfect spender.

But it caused me to get my income up so I didn't have to rely on credit cards. So that's an option for you as well. That's right. You get that emergency fund in place. You don't need Capital One or American Express anymore. You become the bank. You are a very gracious lender. What's in your wallet?

Freedom, baby. This is The Ramsey Show. I'm George Camel, joined by Jade Warshaw. This is The Ramsey Show. Open phones at 888-825-5225. Well, Jade, it's back by popular demand. Five years after we launched it

and then a pandemic happened. The Live Like No One Else cruise is back. Full throttle. That was pretty good. Not bad, huh? You fooled me. I thought we had a sound effects guy

in the booth. I toyed with whether to try it or not, but I'm glad I went for it. It really panned out for you. march 22nd through the 29th of 2025 you've got time to budget for it if you're in baby step four or above meaning you're completely debt-free you have an emergency fund and you want to celebrate this is the ultimate debt-free celebration cruise we'll have dave ramsey all of the ramsey personalities, special guests from musicians to TV chefs to magicians to comedians. We've got it all.

And we're going to be taking over the entire cruise ship. That's going to be a spectacle to behold. Oh, yeah. A spectacle. About 2,400 Ramsey fans and the personalities crew. And we're stopping at some incredible spots. Turks and Caicos, St. Thomas, Puerto Rico, the Bahamas. George, you get to bring your Speedo.

I cannot wait, Jade. It's time. Me and Borat, we've been holding down the fort for too long. It's time. I promise you that won't be happening because people will be getting refunds if that was the case. So listen, here's the deal. This thing sold out back in 2020 in only a couple of weeks. So the cabins are booking fast. VIP upgrades are already sold out. The suites are almost sold out back in 2020 in only a couple of weeks. So the cabins are booking fast.

VIP upgrades are already sold out. The suites are almost sold out. So go ahead and book your cabin at ramsaysolutions.com slash cruise and begin to plan for the ultimate debt-free celebration of a lifetime, March of 2025. That's ramsaysolutions.com slash cruise. Can't wait. Love it. I got to work on my base tan before I get out there, Jade. That's right. I'm burning easy. All right. Grant is in Indianapolis up next. Grant, how can we help you today? Hey, it's an honor to talk to you guys. You as well. What's going on? Well, I'll give a little backstory. Just over a year ago, we have three kids within two years of each other.

And over a year ago, my wife was pregnant with our third child, and she went into multiple seizures. In her head, her brain stopped sending signals to her legs, and she is still in a wheelchair. It's been over a year. And after the baby was born, I stopped. I was able to continue working up until October last year. And I was blessed enough to get paid at least half my salary up until the baby was born. And then my wife and I decide she can't really take care of the children because she's still having seizures. And so she went to work and I am a stay-at-home dad and I already had a side gig of mowing lawns so now we're in season in Indiana so but I can't afford child care so I literally put on a head lamp and mow commercial properties at night and I'm just trying to figure out how to up my income

or what can I be doing while I'm still home to get ready to go back into the workforce in five years because it's just daycare for three kids within two years of each other. Yeah. So what's the current household income between your wife's income and yours? My wife brings in $2,800 a month and I bring in $350 a month with my mowing. Okay. Oh, you guys are rock stars, number one.

I feel like you've just kind of wrapped your arms around the situation and said this is what it is and we're going to start solving problems and doing whatever we can with what we have. And so kudos to doing that because this is not – You are the boss. Yeah, both of you are, both of you are, this is amazing. What is she doing for work? Right now she's works in customer service, helping people with their 401, their retirement plans. Okay. And is she doing that? How many hours a week? 40 hours a week. Okay.

And that's her, is that her take-home pay or her gross pay before taxes? That's her take-home. Okay, good. So you guys are taking home right now, and you're $350,000. Of course, you've got to pay some taxes on that, but that's about $37,000 take-home. Yeah. And so you're going, we need more money. Is this enough to cover your expenses right now?

Do you guys have any debt? What's your financial picture? So we have no debt. My business has a little debt. It has a mower to pay off, which I plan on paying off next month. Sadly, I got the loan right before I took the financial peace class with my wife. But that will be paid off next month. Do you guys have an emergency fund?

We have $6,500 in our emergency fund. Good. So are you guys making enough to make ends meet and you're just trying to increase it or are you having a hard time paying the bills every month? We are barely making ends meet. we have the EveryDollar app, and we crunch the numbers as hard as we can. We have combined home and auto. We've found cheaper Wi-Fi because she has to have Wi-Fi for the work because she's able to work from home. So $500 would change your world, $500 a month. Yeah, just $500 a month would change our world.

We'd be able to save a little bit more. Are you guys getting a big tax return every year? We did it. Tax refund? Sadly, we did last year, or this year, based on last year, because my wife had two kids last year in February and December. And so, and, but we also didn't know if my wife or the baby was going to make it. So we did no adjustments to our tax.

So we got 8,000 back. So we paid off adjustments to our tax. So we got $8,000 back. So we paid off. I had a small school loan. Got that paid off. And I would say smaller than like $1,400. And then we had a medical bill. Obviously, you're not going to get that again this year. But even if it was $6,000, that suspiciously looks like $500 a month that could go back

in your paycheck. Okay. And so that's something to look into if you're going to get another big refund. It sounds like you guys are doing all the right things to try to trim down this budget because the only thing you can do is spend less and make more. Yeah. So there are ways you can make more. How much time can you devote to some of these side hustles?

The hard part is not, I could go get a lot lot of jobs but i can't mow during the day so i well because what are you making per hour yeah you said you're making 350 a month right right now that's also a question i had for you guys so i can grow consistently if i don't have other side jobs because i will do like landscape jobs at night and stuff too on the side what pays the most out of all the things that you're doing, what pays the most? The lawns? Lawn is kind of, mown lawns is bread and butter guaranteed $1,000. Landscaping, I can make more if I did more.

But the problem is nobody wants me to do their landscaping in the middle of the night. So I can only get away with it because I'm doing it at a critical problem. so i think we need to find a different job that has nothing to do with landscaping or mowing because you need something that works at night right so i would look into your other skill set even if you don't have a specific skill set even doing you know pizza delivery at night or instacart or uber amazon flex some of these other jobs where you can kind of just turn on the app and go at night, which is when people are using them. That's an option. And then you're not limited. Are you handy at all? You sound like you are. I'm a hard worker. I can work hard.

I'm wondering if you start a little handyman business and as people are off of work, you charge 50 bucks an hour to change light bulbs and screw some things in and build Ikea furniture and do whatever. Because there's some guys that do that in my neighborhood. They are booked out. I'm like, hey, can I get some help? And they go, yeah, three weeks. Yeah, hire them to come hang out, mount the TV on the wall,

hire them to come fix whatever. And you could literally do that, like George said, from four to... Nights and weekends. Yeah, from four to whatever. And then when it gets late enough to where people don't want you in their house, then you can go and, you know, do some of these driving apps. I've given some of these guys dinner

because they're there, you know, when I'm at home. No, I don't want them there past eight. We hang out. Well, that's the problem. My kids go to bed at eight and I can only really start doing work at eight, nine o'clock

because it's hard. My wife can... My wife's a boss, but we just haven't gotten there yet. Yeah, I understand. Okay. Well, listen, I think you, I think you keep doing what you're doing and you're slowly replacing it with what George said. And you're kind of trying to do that handoff to where you're getting more hours back and you're able to do more with those hours.

Just because to George's point, I just, at night, you're very limited with lawn service. Plus who wants to hear a lawnmower at 9 p.m.? I'd be reporting that. Grant, here's a resource for you that will help. Number one, I'm going to send you Ken Coleman's book From Paycheck to Purpose and his Get Clear Career Assessment. But I'm also going to give you one thing in the meantime. Go to ramsaysolutions.com slash side hustle.

I built a quiz that helps people figure out the right side hustle for them based on how much time they have, what talents they have, and their target goals. So anyone listening out there can go use that, ramseysolutions.com slash side hustle. It'll start to point you in the right direction of what makes sense for you with your situation. So I hope that helps, Grant. You guys are warriors, man. Pulling for you guys. You're willing to do whatever it takes, and you got nothing but respect from me. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Here's your

friendly reminder as we head into summer come visit us here at the ramsey solutions headquarters just south of nashville tennessee make us a part of your trip if you're driving or flying somewhere we love to see folks we got a beautiful audience here today in the lobby and most people jade are shocked when they walk in because they think we do this thing out of like a double wide somewhere i don't know i don't know why but we we created this beautiful headquarters a fan experience for you guys because we wanted you to celebrate you and your debt-free journeys. And as you build wealth, we made it a great experience with free coffee, free baked goods, a little museum timeline wall, and all kinds of goodies.

So bring the family on by. The show is free. We're live one to four every day. And you can jump on RamseySolutions.com and plan your visit there. Nolan is up next in Cedar Rapids. What is going on, Nolan? Hey there. Hey.

So I've been a listener for a long time. My parents were Dave Ramsey followers, and so I'm familiar with the process. However, I've made a series of probably poor, uneducated decisions, and I'm getting married in a little bit less than a year from now. I'm 19 years old, and I have about $35,000 in debt. Okay. What kind of debt is this? So that's compromised of I have a car loan for $23,000. I have student loans, which I'm not paying yet because I'm still

in school for about 6,000. I have a consolidated loan, which was a credit card when I first became an adult and also tuition for my EMT training. Um that's about $3,000. And then I have, most recently, a credit card with $1,900 on it because my fiance and I had a car wreck and had to end up pitching in to help each other out with that. Do you guys not have insurance? No, we do.

So this was her car. So I was mostly helping her because she's having some job trouble right now. But her parents didn't inform her that she is only limited liability. And so when I heard her parents say that on the phone, I was like, oh, crap. So you stepped in to save the day by going into two grand of credit card debt at 22% APR. Right. Now, I am on a payment plan because the credit card that I have has like, it's really not that great, but it's like $5 a month flat fee, no interest, pay it off in six months.

What? For like auto mechanic things over $ thousand dollars all right we're not doing any more debt we got to learn we got to learn our lesson here i don't care what they i don't care what it is are you working right now i am yeah how much do you make so i make a base salary of 50 000 good um and then significant commissions on top of that, depending on the month. So what's a good month look like? What do you take home on a good to normal month? A month usually looks like $6,000, $7,000 a month.

And where's that money going towards? What's causing you to take out debt at this rate at so young when we were making $6,000 a month? So I just started this job. So before that, I was only making like 1,700 a month. Got it. Okay. So... I'm in my third month. And you're in school full time? I wasn't making that for the beginning. Yes, online. Okay. And what's your living situation? Are you renting? Are you... Tell us more about that.

I'm living at home great well I was about to move out just because I everybody was trying to tell me that I should have the experience of living on your own before you get married you should but let's let's take if I'm you I'm taking advantage of this moment you're 19 it's not like you're yeah you're not 31 so you're 19 years old I'd stay at home for a while and I would get this debt cleaned up. And financially, I don't even see you having the money right now to buy an engagement ring to help pay for a wedding. You're 19. I think you've got time to just take a breather and clean up some of this debt before you make that next step.

And then because once you're engaged, there's's i mean more money comes along with that yes we're already engaged so you already got a ring yeah i mean okay we decided on like a 500 ring because we decided okay later when we're in a wedding is the venue already booked the dates already set the invitation sent out yes oh so we're already in it. Yeah. We gone. How long have you guys been together? A year and a half, two years. All right. All right. All right. So we're in it now. Who's paying for the wedding? Kind of both of us. We're both pitching in and then my parents are, they have a little fund that kind of help us out. What's the budget? We're trying, we're doing it small. We're staying

below $6,000. Below $6,000. And how much of that are you on the hook for? Probably between the two of us, probably $2,000. So $1,000 from you and $1,000 from her? Yeah. If you were to look at it like that. Okay. And is she bringing any debt into this? No. Okay okay she doesn't have a credit card which is why i ended up putting it on mine good i'm glad she doesn't have a credit card and then i also did that because with not living at home right now i don't so i don't have an emergency fund right now that was my next step with this job was to start building that up no your next step is to get rid of this debt while you have no bills. Right. And so that's what my, when I had to fix her car, I was like,

okay, well, I guess instead of setting $2,000 aside this month, I'm just going to have to do that next month. No, you didn't have to do anything. You chose to do this. Well, yes. I, I mean, I stand by my decision decision here's the way we would teach going forward but I'm going to give you I'm going to give you the blueprint going forward because what you what I want you to accept out of this and I know you had good intentions all the time I said it earlier this hour we have a good reason and we use that good reason to make a bad choice and so you had noble intentions but going into debt there's always a way a better way and so going forward um because

i think your heart was in the right place you just made a not the best choice well you also bought a what twenty five thousand dollar car while making 20 grand a year yeah you're just yeah you're just you're turning to debt um more in places where you shouldn't have to turn to debt and we're going to teach you to where you're never going to have to turn to debt again. So your first things first is you just need a thousand bucks saved. So when you get paid your next paycheck, a thousand bucks, set it aside. And then that's kind of like your rainy day fund, if anything should happen. And right now you're, you're a one is then you got to save up for the wedding, right? Because that's happening come hell or high

water so it's a year from now so you have a year to pay off your debt so let's call it 35k is your debt another thousand for the wedding that's 36 grand total so you need 36 grand of net income on top of your expenses to knock all this out before you get married right correct which is kind of possible you're living at home possible So this is very much possible. Your expenses are what? How much do they add up to a month for everything that you have to cover? Minimum debt, payments, your bills. Give or take $900 to $1,000. Okay. So let's say you bring home $6,000.

That's $5,000 a month you could throw at the debt. Now, obviously, you take taxes into account. Right. But even $4,000 a month, your debt's cleared in less than a year, and the wedding's paid for if you can throw all the debt. So that's your A1 goal. You're not spending a dime. We're not going further into debt.

We're cutting up the credit cards. Every extra dime we can throw is going toward our smallest debt, regardless of the interest rate. And if you want to go faster, pick up a little side hustle. I do. I do photography, and so I've shot a few weddings, some concerts, stuff like that. Good. Okay, great. First up I've shot a few weddings, some concerts, stuff like that. Good. So first up is the credit card, next the consolidation loan, then the student loan,

and then the car loan. But the biggest thing I want you to take away from this is you're not going into debt anymore. Like this turns over a new leaf, right? I don't care what the intentions are and how good of a person you're trying to be. You do not take on the burden of anyone else and you don't take on any more burden on yourself. Yeah. You've made a lot of adult decisions at 19 years old. Yeah. It's been like a mountain on my chest and I've always been somebody who thought that I knew what I was doing and didn't seek help from others until this, probably this past year that started to wake up for me. And so with this being said, I wasn't even going to help my fiance, but they didn't know what to do because her parents wouldn't help her. My parents offered help a little bit and they did, which was so kind of them.

But, um, she had paid the week before her accident, she had paid $2,000 to fix her car and then the accident. And so I was like in a scramble to help her because she has rent and all that stuff to pay for herself is she working full-time she is yeah well close to full-time as many jobs as many hours as they'll give her on a weekly basis good well hey nolan hang on the line as a little pre-wedding gift i'm going to send you my book breaking free from broke and i want you and your fiance to read it, and you're going to vow to never go into debt again. Let's give them Financial Peace University, too, as a wedding gift.

Yes, there we go. There's some wedding gifts for you coming your way, Nolan. This puts this hour of the Ramsey show in the books. We'll be back with you before you know it. Thank you.