The Ramsey Show - App - It’s Impossible To Borrow Your Way Out of Debt (Hour 1)

Episode Date: April 21, 2023

George Kamel & Jade Warshaw answer your questions and discuss: "I can't afford my apartment and don't know what to do",  Why John Cena's daily driver is a Honda Civic, Pausing investing to pay for kids' college, "Should I use my savings to pay off my house?" A gambler describes his cycle of taking out debt to pay off more debt. Support Our Sponsor: Neighborly Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET 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 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 Pod's moving and storage studio, it's The Ramsey Show, where we help people build wealth, do work they love, and create amazing relationships. I'm George Campbell, joined this hour by Rampage Personality, Jade Warshaw, and we're taking your calls at 888-825-5225. This is the show where we tell you the truth, even if it hurts your feelings a little bit,

because we love you enough to see you win when it comes to your money and your life. And so if you're ready for that, you need a second opinion, you heard something from your broke brother-in-law, you saw something on TikTok, Jade and I are here to spit some facts. Ooh, yes. Drop some bars, some knowledge.

We'll see about that. That's a big promise, Jade. You ready to go? Yeah, I'm ready. Let's do it. Let's kick it off with Sarah in my hometown of Boston, Massachusetts. Sarah, welcome to the show. Thank you so much for taking my call. Sure. How can we help?

Well, we recently came across the Ramsey Show and all the personalities about a month ago from a referral from a co-worker. Awesome. And it has already helped tremendously in keeping me a little bit grounded. I am in a situation recently where myself and my two children, I'm a single mom, recently and unexpectedly had to move out of the house that we were renting for the past seven years fairly quickly. So now I am in a situation that I can't afford the apartment. I can't afford the rent that I'm paying now. It's quite a bit more, and I feel really stuck and overwhelmed,

and I don't really know how to move forward going from here. What are you paying for rent right now? Right now I am paying $3,300 a month plus utilities. And how much are you bringing in monthly for your income after taxes? After my take-home pay after my car payment and insurance come out is $5,900 a month. And that's after, you said that's after insurance and car? After insurance and car payment are taken out. What about before the car payment, though? What's your car payment?

$600. Ooh. I know. Let's talk about that a little bit. Let's see if we can alleviate that. How much is that car worth? I bought it two years ago, again, when I was paying much lower rent. And I paid, I paid I think 36 for it

at the time right now two years later I owe 27. In my mind there's a couple of ways to go with this and if you like the apartment you don't want to uproot your family and move yet again the answer lies within that car note. Okay if I were to say that the apartment is not great for the money, it was the only option choice that we could find at the time that accepts, that is an actual three bedroom and accepts pets. They're pretty much non-existent, but I look every single day to find something cheaper that I would move out of this place and break the lease immediately if I could. When's the lease up? It's up in January. Okay. And we can't make it that far.

It would be a long time. So I, you know, again, and I'm then looking at the situation of, you know, do I break the lease and move into something cheaper? But then you have the issue of... Sorry to break in. How old are your kids? My son is 17. He still has one year left in high school. My daughter is almost 19. So they need their own rooms. How soon do you think they would be out of the house? Probably not soon.

They'd live at home through college? They do. They do. Okay. And I'm sure my son will be wanting to start college after he graduates next year. Mm-hmm. I still think that the answer, because even if you're moving around, your car note is still a huge issue and it's still in position in your budget right now.

Do you have any other debt? I have, coming up in September for my daughter, there's an 8,700 school loan that will start needing to be paid back. Other than that in the car, I only have maybe 800 in medical and 500 on a credit card and that's it. Well, there's only one way out of this and it starts with you saying, I'm going to quit borrowing money, which I know is hard because right now you're pinned against the wall and you're going, well, my credit card, I got to use to cover the bills, right? No, I actually don't use credit cards. That's great.

I don't have any other credit card bill. I don't. This was for like a couch purchase, and there's actually no interest accruing on it at all. I have like four years to pay it off with no interest. Let's not let that hang around though. Part of that mentality is what got us here. It's going, well, zero interest. I can play the game. I'm going to beat the system.

It's going to be okay. And here we are and we can't breathe. Right, right. And so it sounds little to me, but it's a big moment where we say never again am I going to borrow money. Sure. And so part of that is cutting up the card, closing the account, paying the 500 bucks. Let's move on to the $800 medical bill And so part of that is cutting up the card, closing the account, paying the $500.

Let's move on to the $800 medical bill. Let's get that out of our life. All those little ankle biters is going to give you some clarity and some breathing room to go, all right, I'm going to attack the next biggest debt, the next one. You know, I do have money in savings. How much? $5,300. $5,300?

$53,000. Whoa. What? Hold up,300. $5,300. Whoa. What? Hold up, hold up, hold up, hold up. Sarah, how can you bury the lead like that? We're out here feeling sorry for you. Okay. Okay, so this is where I'm not good with my finances. I've literally gone from one end of the spectrum to barely paying a rent to paying 300 times more.

Let me give you, I'm going to give you a plan right here. I'm going to give you a plan right here. I'm going to give you a plan right here. You got $53,000 in savings. We're going to walk through the baby steps. And that's what this all goes back to, Sarah. So you're going to start, you're going to keep, and just walk through the steps with me. You're going to first start out by setting aside $1,000. That's step one. Then you're going to take the extra money that you have you're going to pay off this debt the car the 8700 that's coming up whatever debt you have laying around you're going to get yourself debt free and then whatever's left on that you're going to use that to build your three to six months of emergency fund that's how that works

now do you think that if you freed up got rid of that car payment and freed up that six hundred dollars a month that you could hang out in this apartment at least until january and then you can reevaluate so you're not breaking a lease do you think that that would change your life i think it would um i'm not sure i i have that constant not a fear the answer is yes it's six hundred dollars no or six hundred dollars yes you're adding that into your monthly cash flow of course that's going to change your world and you have no debt and no payments the answer sarah is it is yes you're going to sleep so much better at night and you're going to have pretty well on your way you know you're going to have a decent savings uh account there you're probably going to need to add a little bit more to it, but that's the answer. You're debt-free tomorrow with a pile

of money left over, and now you have your greatest wealth building tool back in your corner, your income. You make six figures, don't you? Gross salary? $124 salary. Yeah, and yet we're sitting here broke. That's a problem. You make great money. You work so hard, and there's nothing to show for it because we've got payments out of our eyeballs, and we've got sky-high rent. So you may want to look into moving further out. Could you move further out, outside of the city? I could.

I am outside of the city. Rents are pretty sky-high everywhere, and I think being limited to a three-bedroom that accepts pets is pretty much nonexistent. It's out there. I'm going to keep searching three-bedroom that accepts pets is pretty much non-existent. It's out there. I'm going to keep searching. I'm from that area. I know it stinks to have to move further.

It might be a longer commute. But if it gives you breathing room in your budget and you've got no debt, you are going to survive. You're going to make it. Cheering you on, Sarah. Thanks for the call. This is The Ramsey Show. I'm Ramsey personality, George Camel. Joined this hour by Jade Warshaw.

We're taking your calls about life and money at 888-825-5225. All right, Jade, the team likes to throw some videos at us. I don't know that I've seen this video. Have you seen it? I've seen parts of it, yes it yes well it involves a man by the name of john cena you heard you can't see me that's all i know you can't see that's what i'm talking about he he's invaded pop culture with that epic move and we've got a video from him that ties to personal finances and i wanted to play it for all the nice people out there and get your take on it. You ready? Let's see. Yes. Roll film. My daily driver is a Civic Type R. Shut up.

It's got tech. It's manual. Shut up. It's reliable. The car is stable at 100. That's every day. That's what I can catch you on. Dude, it's a 2020 and it's got a third pedal.

My dog. And at 145, it's stable. Like, it goes. It's got seats in the back. I can actually pick people up. Yeah. You know, if you have a purse and a Countach, you're screwed. That's why I can't have one.

They're a little bit rough around the edges. The clutch is a dogfight, and it's really tough to get those things running right. Like, they're always in the shop. It's always leaking some sort of fluid somewhere. Yeah, same. So if I actually need to drive a car on a distance that's more than, like, 10 miles, it's the Civic.

Boom. You heard it right there. The clutch is a dog fight. You know, we lead different lives when he's like at 145, it's stable. I'm like, what's he, oh, he's talking about miles per hour. Oh no, we lead different lives when he says my daily drive. Cause I don't have, I open up the garage george is one vehicle in there that's mine and that's true that's when you know like i that's how i define true wealth and you're like which car do i want to drive today man it's a good place to be what i love about it is a guy like john cena got multiple millions of dollars he could spend on a car and he goes uh i'm gonna do the practical the practical thing he loves the car it does exactly what he needs it

to do yeah no frills and it's a let's be honest it's a nice car this is not your average civic he's souped up souped up for sure probably you know a 50 grand 60 grand civic yeah but i think most people have this thing in their mind of like when you reach a certain echelon of success whether whatever that is in your mind definitely movie stars or sports athletes you kind of assume that they're driving the lambo you know 24 7 rolls royce yeah but i mean i kind of like when i see somebody who's clearly i mean we can just we're judging here but based off of the outward career that we've seen we're like yeah he's got some money it's kind of cool that he's just like yeah i'm gonna drive a civic and guess, if you're driving that, like he doesn't have a car loan on the Civic.

That just feels insane to me. I don't know, George. I bet, I think we would be shocked at how many celebrities do not pay cash for their purchases. Wow. I would love to check into that. You've seen the stories of like, Adele buys $40 billion mansion with a more, and I'm like, well, she can do what she wants. Yeah. she makes more money a second than you'll make in your entire life so that's a different scenario but i do like seeing celebrities who are like look they're just like us they're reasonable people i love that watch their money yeah you know what there's also that side of it that you know what i'm not mad at john cena if if he if he does have a nicer vehicle because he's worked it. He's got the money if he's paying cash. Yes.

The problem is we look at celebrities and go, well, how do they handle money? Well, that's how I'm going to do it. And it's usually to justify our own stupidity. Yes. And that's a big problem. Because we know now the average car payment on a new car, Jade, now rose to $730. Painful. It's insane.

Painful. Yeah. And there's no correlation that says the more money you have the better manager you are of the money that that doesn't exist a lot of people think well if you have a lot of money you must be managing it well or you must be making great choices and it's usually just the opposite usually it's more money more problems you know well you're just temporarily out earning your stupidity until it catches up with you yes because it always catches up it may be a retirement when you realize oh i'm broke but we made six figures our whole life what happened oh it catches up just

ask any mike tyson evander holyfield i don't want to ask those guys i feel like i'd uh they're not going to take too kindly to me you don't want to take the whooping digging into their finances you go up to evander and tell him you've been you've been mismanaging your money i just saw mike tyson fighting the dude still got it he oh heck yeah no I'm scared of him still goodness gracious that was fun it was as a man who's owned a Honda Civic I feel like I'm pretty much like John Cena I've never had one not a huge difference other than size and wealth there we go we can't see you George I'm invisible invisible. Mostly because my skin color is translucent. I got called whiter than Wonder Bread the other day.

Well. It was so far beyond hurting my feelings that actually I was impressed. I was like, that was clever. If you look for the people listening, I'm looking at George right now. He's got a nice olive undertone. It's a sun-kissed olive glow. Thank you. I feel so much better now. You're welcome. Let's get to the calls before we get taken off the Mediterranean. It's a sun-kissed olive glow. Thank you. I feel so much better now.

You're welcome. Let's get to the calls before we get taken off the air. Megan is in McAllen, Texas. Megan, welcome to The Ramsey Show. Hi, thank you so much. Thank you for taking my call. Sure. So my question is about how to pay for college.

I have a good 401K. I have about $900,000 in my 401. And I want to keep contributing to that. I follow the baby steps. I've got all the baby steps done. Everything paid off except the mortgage. And I just don't have anything. I think I have $7,000 saved for my son's college. So should I press pause on my 401 and cash flow his college, which I could do if I didn't contribute, or maybe just contribute what my company matches, or should I have him do a student loan? Have you considered, is he planning on working while he's in college? I don't know.

I mean, I've considered that. He will work during the summer, but of course a summer job for a teenager only makes him about $2,000. You know, grades are the priority, but that could be an option, I suppose. What if I told you that students who choose to work through college tend to manage their time better? They tend to have higher GPAs? I believe that. That's what the statistics show. What's the discussion been with him? It sounds like you, have you just said, hey, I'll figure it out? I'll figure out a way to pay for this? Well, I started out by saying that because I did not pay for my college. You know, my parents paid for my college, so I wanted to give that to my kids as well.

And he did say to me, he's like, mom, I know I'm going to have to help. You know, I can get a student loan. You know, part of me doesn't want him to work the first semester. I feel like, you know, grades are going to be the most important deal, but maybe I'm, you know, I also don't want to have my head in the sand. You know what I'm saying? Well, what I want you guys to do, I want you to continue to discuss this, but I want you to discuss it as though debt is not an option.

Because as long as it's there sitting at the table with you guys, then the more likely it is that you'll go with that route because it tends to be the easiest route in the moment is to just go, well, you know, working is hard, making these choices is hard. Let's just go with the student loan debt. So I want you guys to both say debt is not an option. And when you say that, you're going to get very creative and you're going to open up your mind to a lot more possibilities as to how to pay for this college. So when's the first bill due and how much is it?

Is he already dead set on this school and he's starting in the fall or what? Yes. Yeah. Yeah. He's starting in the fall. He's already, you know, we already have the housing and everything. I think the first payment for housing will be due August 1st and then tuition will follow that. How far is this school from you? Three and a half hours. It's in San Antonio. Ah, okay. So he's in the dorms over there? Yes. What's it going to cost you? What's that first payment all included going to be for you? The first payment I have enough in his 529. Okay. So the first semester, it's about $12,000 per semester.

Okay. With room and board, which is not like crazy. When I hear some of the crazy. Sure, yeah. And you said you had 7,000 saved for college though. Yeah, well, I have 7,000 in his account and I have enough, you know, I can cash flow 5,000. Okay. For the first semester.

I'm wondering by the next semester, can we have another 12 saved? Between him working and you working. I think with him working and you working because you've cash flowed, you're going to cash flow 5,000 of this right now. So you know you can cash flow 5,000. And over the course of the next semester, is there any way to get another for you to earn another extra $1,000 and for him to earn $6,000? There is. And here's my deal. I know that Ramsey is a three to six month emergency

fund. I like a six month. When I go below six months because I'm a single mom, I start to get nervous. I get poorly. I get that. That makes sense. But here's the thing. We've got to think about how we're going to do this without debt. And that might require some temporary sacrifices, whether it's on you, whether it's on your son. But the good news is you guys can make this happen. It's just going to take some concentrated effort and for you to um decide what you're what it's worth for you yeah i wouldn't pause the 401k and i also wouldn't take out student loans i think there's more than those options go watch borrowed future on our youtube channel with him and come up with a plan because right now it sounds like the whole plan's

on you he needs to have some skin in the game and he needs it fast scholarships, whatever it takes. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour. The number to call, 888-825-5225. You jump in, we'll talk about your life and your money. Listen, paying off debt is smart. Saving and investing is smart. We can all agree on that. But there is one key to winning with money that people overlook all the time, and that is protecting your finances from emergencies. And that is where insurance comes into play. And there are a lot of types out there, but there's only 10 kinds you might need based on what your life looks like today. And our team has built an incredible tool called the Coverage

Checkup. It's completely free, and it will show you which types you need to add, drop or adjust. We'll even rank your coverage list by importance. We'll email it to you and we'll connect you with some Ramsey trusted insurance providers so you can get your plan in place fast. Seriously, this could be the most important five minutes you spend today or this weekend. Donald H. wrote in and said, for anyone who has not completed this checkup, do it now. You never know when something will happen and you never want to leave your family in a bad situation. Go to ramseysolutions.com slash checkup and take the covered checkup today. That's ramseysolutions.com slash checkup. All right, let's go to the phones. We're headed to

Pittsburgh, Pennsylvania. Bill joins us there. Bill, welcome to the show. Hey, thanks for taking my call. I really appreciate you guys and the show you've made. All the difference in the world to me and my family. That means so much. Thank you. You're welcome. My question is, I'm dying to be debt-free.

I just have my mortgage left. That's all I have left. Way to go. dying to be debt-free. I just have my mortgage left. That's all I have left. I've been intentional and just been killing it with paying down. I bought a home in 2019. I had $390,000 on the loan and now I'm down to $103,000. Way to go. Very good. Yeah. My question is, I think I might be going too fast. I've been putting like an average of $6,000 on my mortgage when I only owe like $2,800 with the loan. Okay. So you're doubling up the payment? I'm doubling the payments. And with inflation then now my, my kid has some special education that's required. It's been tough to stick with that,

but I have some cash reserves in the amount of 168. Whoa. Where did that come from? Well, I've been intentional with that too. This is my emergency slash kids college fund that I've put $2,000 a month away in that fund. And it's all in mutual funds and only 30 of that's cash, the rest. Okay. This isn't savings. This is an investment in a taxable brokerage account outside of retirement?

Correct. That is absolutely correct. And so I'm wondering if I could pay off this mortgage and then just throw as much as I can back into it and rebuild this up and accomplish that goal right now. Or I could wait till the new year and possibly knock the balance down another 40 and then take some of this. I just, I really want to be debt free. I'm 58 years old. I've never been debt free. How old is your son? I have two kids, 10 and 12. 10 and 12. Oh, okay. So you've got so much time. You've got plenty of time. So think about this, Bill. You get rid of a $6,000 payment you were making. You'll free up most of that except for property taxes and homeowner's insurance that you'll still pay, right? Right. Let's call that $5,500 a month that you free up. We can now use that to save for college for the next eight years, six to eight years. So you can easily still cash flow college and you're still going to have a

bunch of money left over. Absolutely, even after paying off the house. Now, you will have a tax burden with the capital gains in that taxable brokerage account. That's true. So as long as you account for that in your math, there's no wrong way to do this. If you want to just keep paying down the mortgage, I would do it, but I think the freedom that you're going to feel

of not having a mortgage payment next week, next paycheck, will be so life-changing that you will never look back with regret at what could have been and what about the college. You're going to have your greatest wealth building tool at your disposal to save for college. I agree. And it follows the baby steps because even if he does that, he'd still have enough three to six months set aside and he'd still have a decent nest egg there as know as a yeah he's been saving for the kids yeah i have i put 15 aside and both both my wife and i work we both are putting 15 into the retirement um what's your nest egg to your show and i will tell you thanks to your show um 13 years ago my net worth was negative 280 000 that was my net today it's 1.4 because wow come on bill you are an inspiration bill i love it and you're about to be

have no home payment because you're going to pay this thing off that's exciting i'm dying for that day. Do it. Do it. Okay. Well, that's what I wanted to hear because I just was concerned that because it was tied up in the market a little bit and it's been down, you know, that perhaps I... I think your net gain is still great from investing for that long, even though it's down right now. I know I don't sit there timing the markets. I go, what could give me freedom today?

Right. And I don't think you're going to look back and go, well, my stocks could have been 10 grand higher. Yeah, but dude, you don't have a mortgage payment. That would be amazing. I love it.

You know what to do, Bill. We're cheering you on, man. I feel great about this. Man, I almost had to take my jacket off. I was ready for him to pay off the mortgage right there and then, but there's a lot of hoops to jump through

Alright, let's go to Lisa in Puerto Rico Lisa, welcome to the show Hi Hi George Thank you for taking my call I have a question Regarding the percentage allocation That you recommend To determine how much a home or car I can afford.

My paystab shows a figure as my pay rate, and I understand that that's gross. However, when I file my taxes under earned income, it seems to be slightly lower than that. Yet the actual money that comes into my account for each paycheck throughout the year is much lower. So, which figure do I use to determine how much house or car I can afford? Ah, okay. So, you're talking about our 25% rule for housing? Yeah. Okay. That would be after taxes, but before other deductions. Okay. So, it may take some but before other deductions. Okay. So it may take some manual math to go, okay, we're not including my retirement savings or

my healthcare deductions. Just Uncle Sam takes their cut, Medicare, Social Security, federal taxes. What is that number? Beyond that, that becomes your number you use for the parameters. So your take-home pay. Right, right. Because I consider take-home pay what I get in my, you know, when I add up all the money that came into my account throughout the year. And then, you know, that makes a difference whether my decision was stupid or really stupid. It does. Now with a car, there is no parameter because you're paying cash. The parameter with the cars is that they shouldn't add up to more than 50% of your annual income.

Oh, okay. But as far as payment, we don't do car payments. And so we're saving up and paying cash. Got it. All right. Thank you so much. Absolutely. Great question.

That was good. That one is, you know, we get that sometimes. And it's a smart question because people are going, okay, take home pay. There's a lot of different definitions of that. Yeah, because you can get your check. And for some of us, it's like, okay, my insurance automatically comes out of my check. Maybe an HSA deduction comes out of my check. And you're thinking, do I use that number to calculate it?

But it's really after your taxes. I love how you said that, after taxes, but not after deductions. That's good. And that helps with the mortgage side. But you're right. Take home pay, what you see in your bank account is what you get. If you can learn to live on that and achieve all your goals while investing and paying health care, man, that changes everything. Very good. No lifestyle creep happening there. No. And that's

a big, but I love that Lisa's actually budgeting. Most people, they're not even paying attention. Yeah. These are great questions that she's asking um yeah do you remember doing that first budget and it was like oh my gosh yeah i remember the first budget it was a on a pad of paper let's just get that straight financial peace university with the old school in the work oh yeah the the um quick budget quick starter budget or whatever yeah yeah it was on paper and And I remember being very confused. We had irregular income and it took a couple of months to get it down pat and to get it to where it actually was working. So if you're out there budgeting for the first time, know that it takes some time to get you freedom. And you start to go, what does my budget say? That's the boss. That's it. Boss said, no, we can't afford it right now.

Let's hope for next month. Bars. That's how it goes. And we've got a great free app called EveryDollar that you can download today to help you get started making a plan for that money. More of your calls coming up. 888-825-5225. This is The Ramsey Show.

This is The Ramsey Show. I'm George Camel. Joined this hour by Ramsey personality, Jade Warshaw. Jade had launched a brand new YouTube channel two weeks ago, the George Camel YouTube channel, and it's been so fun to watch, to see the feedback from people. They're saying we've taken Ramsey to the modern era. So I don't know what that says about Dave, but I'll take it. And we've been having a good time over there. So I want to encourage folks that are watching on YouTube. This is an easy access point to go jump over and watch some

of those videos. The team, it's hard to take credit because our team is so talented. When you think about all the writers, the designers, the editors, it's hard for me to go like, that was all me, guys. It's just my punchable face on there that's saying the things. We have a great time. So go check that out over the weekend and binge watch all the videos that are out there. They're very, very good. And George, for the record, I don't think you have a punchable face. Well, that's very kind of you, Jade. You should go to the internet because they have a different opinion. But hey, if you're a new listener and you're wondering what is all this lingo they're talking about, baby step 3B and gazelle intensity, our team has built a really cool tool at ramsaysolutions.com. If you just hit the get started button, we will help you figure

out the next best step for your financial journey based on where you're at today. So just go to ramsaysolutions.com, click on Get Started, and that will help you understand some of this lingo and give you a path forward. The number to call is 888-825-5225. If you want to join the show, it's a show about you and for you, and we're just here to keep the ship afloat. We're the ship captains. That's right. Robert joins us up next in San Diego. Robert, welcome to the show. Hello? Can you hear me? We can. Loud and clear. What's

going on? Okay. All right. So basically, I was calling because I'm kind of going around in circles with my debt. And it's all my fault, but I don't quite know how to fix it. So in a nutshell, I'm about $40,000 in the hole. And, you know, I've borrowed money to try to cover some other money that I've borrowed. And some of it's from gambling, right? And trying to impulsively get money that way to cover money that I've borrowed. And I, you know, but I'm not addictive. Like I don't do it like once every three months with that impulse trying to fix debt, right?

Because I have no other way to get money other than my job. And so I'm just going around in a circle, essentially. And it's just bad. I know I have to stop the one gambling, obviously. That's stupid. But there's just no other way to make any money. Are you married?

Yeah. Have you talked to your spouse about this for accountability? Yeah. Yeah. Yeah. No, she knows. She's done it with me. We're just in a bad spot.

But yes. Okay. What kind of debt is the $40,000? Well, so $30,000 in a school loan forever ago that I've got to start paying, right? And then I've got about $4,000 in just loans. Just personal loans? Yeah, but they're the interest rates that are 100%. You're talking like payday loans?

Payday loans. Yes. Horrible. Okay. Number one, never step foot in one of those places again. No, obviously. But I just, it's, it's, you're right. It's just trying to cover. It's like I have to keep borrowing to fix stuff that I've messed up. No, and that's what we want to change today. You don't have to keep borrowing.

And you're, we got to, when you're in this cycle like this, you've got to draw a line in the sand. No more. You cannot borrow your way out of debt. It's impossible. You can't solve a problem while simultaneously creating it. That's thing one. You have got to sit down with your wife.

No more borrowing money. Two, no more gambling. Gambling is entertainment for you. I'm not, I'm not going to lie to you. If you're doing this every three months and you're trying to do it as a strategy, I don't know if it's medication for you. Stop gambling. And if you're having trouble with that, let's get with a professional on that. So that's thing one, thing two, super duper important.

I heard you say a couple of things that, you know, you said there's no other way for me to make money. And that's just not true. What are you earning right now currently 115 a year okay just you or is that your wife as well no she I mean yeah together we probably make like I don't know 160 this is net not all right gross this is like we probably make yeah we probably make uh I make like 180 both of us. So what I can hear from this, $180,000 a year with $40,000 in debt, you guys are just spending, man. Understood. But some of it, we are.

No question there. I mean, most of this is, well, actually all of it is my debt that I've accrued. Does she have debt? But no. Okay. Do you guys have any savings? It's prior. Say that again Do you guys have any savings? It's prior to,

say that again? Do you have any savings? Oh, if I did, I wouldn't be doing all this. No. Okay. So you have no money in the bank. We're living paycheck to paycheck,

making $180,000 a year. I'm just saying it all out loud so you can hear it too. Yeah. Because I think we need to feel the pain more because you're self-aware. You're going, hey, I know this is stupid.

I know this is dumb. I'm not gambling anymore. But you want to to get out and that takes a point where you have to say i'm looking in the mirror going that guy's the problem and he's the solution and he makes way too much to be this broke man correct so here we gave you the first two kind of in inward things i'm not borrowing money i'm gonna stop gambling practically you've got to get on a budget today and it's a great time because we're getting ready to go into may so we can start creating a budget for the month of may look you have enough money the good news is you earn enough money you don't need to like go out and find a new career like some folks do you earn enough money

your next paycheck covers the payday loan it's gone yeah yeah but my rents do how much is your rent 2400 you make 10 grand take home where's the other 7600 dollars no no i don't i don't make 10 take home you said you made 180 grand a year no no that's the oh you mean between both of us yeah because at this point i I understand that I've paid some stuff off, too. I paid a prior loan off. So what's left? You got the payday loan, 30 in student loans. Where's the other six?

That's another private loan. So $3,500, a private loan, and then the rest are the payday loans. Okay. What is your next paycheck going to be? When? It's going to be Wednesday. No, how much? How is your next paycheck going to be? When? It's going to be Wednesday. No, how much?

How much do you think that'll be? It'll be $1,300. And then how about her? That's my boss' money. She gets $1,000 every Friday, every week. Great. So we're going to have $2,300 in the next week coming in. Yes.

And rent's not quite due, right? No, it's past due you haven't been paying rent because they're not on a budget george i've been i've been paying i've just been paying late exactly and this is a merry go it's because there's no organization here you guys get money and you spend it you get money you spend it exactly so there's no cash flow you've got to get on a budget. I want Austin to pick up after this call. You're going to get an every dollar budget and it's going to be the, you're going to need to pay for the premium version because you need to start planning

how your paychecks are spent. The first, the first thing is getting down all, both of your incomes combined because we're doing this together. You're married and we're going to spend every single dollar on paper before the month of May even begins. Then we're going to go back through and we're going to plan when we actually spend the money. So we know if rent is due on the first of the month, that comes out on the first of the month. But we still have the right amount of money in order to do everything else that we need to do. Does that make sense? You make the budget and then you plan when you actually spend the money in the budget. And that's my question. Yeah, it makes perfectly good sense. But because

I'm in this cycle and I'm like three weeks behind, right? Yep. That's on the rent. I'm going to pay the rent next Monday and then the following week, she's going to let me do two different checks. Right. So then when the first comes around, I'm not going to have the money yet because I just will have paid all this money towards that. And then payday loans are due again. So what we'll do, what you're going to do, what you're going to do first off when you do the budget, we're going to make minimum payments on everything. Okay, just minimums.

And then with any and all extra money, we're going to hit, we're going to make sure we get the mortgage listed first. You said you're three months behind on the mortgage? No, no, no, no, no. Three weeks. Three weeks. Okay. So let's get current on all the bills we're behind on.

What else other than the rent are you behind on? Just electricity. I can pay that. That's not that big a deal. And then I am in a bankruptcy currently, but I pay that every month. It's chapter 13. So that's going to be coming up on the 10th, but I pay that and I don't miss that.

And then I'm just behind on these, this loan. I want to get, I want to pay it off. You guys got kids, Robert? I have a child with my other wife. Okay.

I think you both need to go to Gamblers Anonymous because I think you don't think it's as serious of a problem as it is. Everyone listening is going, these people make $200,000 and they filed for bankruptcy because they're in this payday lender cycle. It doesn't have to be this way, man. Hang on the line. We're going to send you every dollar premium. Use the paycheck planning tool and that to help you get on board. And we're going to send you Financial Peace University. Both of you go through this together. Scorched earth. We're not eating out.

No expenses. We are getting a plan to get this money paid off. This is The Ramsey Show. Hey, what's up, guys? It's Jade. If you love the show and want a deeper dive on your money journey, we have a weekly newsletter that gives you trending and helpful articles and tips on following the Ramsey way. Just go to ramseysolutions.com today to sign up for our newsletter.

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