The Ramsey Show - App - Keeping Debt for the Tax Deduction Is a Stupid Plan (Hour 1)
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Live from the headquarters of Ramsey Solutions,casting from the Dollar Car Rental Studios,
it's the Dave Ramsey Show, where debt is dumb, cash is king,
and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice.
I'm Dave Ramsey, your host.
Thank you for joining us.
Open phones this hour as we talk about
God's and Grandma's ways of handling money.
It used to be called Common Sense,
and now it is a highly rated talk radio show
with about 16 million of you out there.
Thanks for hanging out with us.
Open phones at 888-825-5225.
Andrea is starting off this hour in Canada.
Hi, Andrea.
How are you?
Hi, Dave.
I'm well.
How are you?
Better than I deserve.
What's up?
Thanks for taking my call.
I just had a question for you.
I am a nurse, and I was working for one employer under a different pension program than what I'm working under now. And since I have
terminated my employment a little while ago with that employer, I have money sitting in that
pension. I received, it's not much, I was only there for about two years, I received a letter
in the mail saying that I have until today to let them know what I want to do with that money. And I'm looking for some advice if I should take out that money and pay off debt
or what I should do with it.
Well, I'm not that familiar with Canadian tax law, so I don't know the answer.
If you were in the States and you took that out, you would be taxed on it
and likely penalized, too.
And I suspect that's the same thing there.
So the information that I've got is that, so there's $14,900 lump sum.
And what my accountant suggested was that to take half of that money and send it to
the CRA for income tax for next year.
If I overpay, then I'll get a refund and then keep the other half, defer it and leave it with the pension,
or take out $6,300 in cash and put $8,500 in an RRSP, which I have existing for retirement savings plan.
Can you not roll it over to the RRSP and not pay taxes on it at all?
I think that you can because it's tax sheltered, the RRSP.
Yeah, yeah.
If you can roll the whole thing in the states, you could roll the whole thing into an IRA.
And if you can do the equivalent of that and not pay any taxes, that's what I would do.
Okay, so don't take any of it out and use it to pay off debt.
Well, it sounds like everything you're taking out, that your government is going to take 50% of it.
Yeah, you're right.
Yeah, and so I don't really want to have anything where they take half of it and pay for my free health care.
Right, so yes. So, yes.
So roll it into the RRSP.
Yeah, that way it keeps their hands off of it.
And so the only way in the States, again, I'm not an expert on Canadian tax law,
so I may be answering you wrong,
but if you have the ability to not let the government have a big chunk of it
and you can get it into your control and your ownership,
which is in the States we would roll it from a lump sum pension distribution into an IRA.
And there'd be no taxes on that.
You own it.
You die.
It's with you.
It's with your estate.
When it's in a pension, you die.
You lose the money.
It stays with the pension.
And so it's always good to take pension money with you.
And generally speaking, if you invest it well, you can earn more than the pension would have paid you had you left it in there.
And so I don't cash out retirement to pay off debt when the taxes are going to be 30%, 40%, 50% on that.
And it's the same thing as cashing out a retirement plan when you were to leave early.
And I don't want to do that either.
I only do that to avoid bankruptcy. and you never mentioned that you were there.
I don't think you're there.
Skyler is with us in Stillwater, Oklahoma.
Hi, Skyler.
How are you?
I'm pretty good.
How are you, Dave?
Better than I deserve.
What's up?
Okay, so here's the problem I'm running into.
I was blessed enough to have found the seven babys about three weeks ago, thanks to a friend.
And I was doing my budgeting, and the net I make at my current job is about $20,000 and some change yearly.
I can't hardly even start Step 1.
So I started looking for other jobs, and I found one for selling health care for a marketing firm in my area.
But the job is commission-based so if i don't
do well on sales i won't be able to make much money leaving and i'm not sure if i should leave
my current job since i've been here for six months okay and um well the uh the thing you want to know
is can you make money at it?
Or is this some kind of thing where they just hire bodies and throw them against the wall to see who can live through it?
And basically, a lot of companies in some of these fields will hire people just to get them to sell to all their friends and relatives,
and then they run out of clients and die off.
That happens in the insurance world all the time. The typical life insurance salesman is out of the business.
Eighty percent of them are out of the business in a year.
Because they work what they call, the industry uses you up and has you work what's called your natural market.
Meaning sell to your friends and relatives.
And after that, you're out of luck.
Because you don't know how to prospect and you don't know how to get new clients, and we're not providing you any new clients.
So if that's what they're doing, no, you don't want to do this.
But if this is a legitimate thing, I've got a friend that sells medical devices,
straight commission, and he made $300,000 last year.
So straight commission is not a bad thing if there's something here to sell,
and you can sell it, like a lot of it.
You can make a lot of money.
So straight commission in and of itself is awesome.
It's basically the ultimate self-employed, right?
But if you're honed in on one thing and, you know, basically they're using you up and they're running a mill where they're just cranking out humans through there,
and you're just the next one they're going to crank out,
you're going to make it 90 days, and then you make a little bit of money,
and then you'll be done, then you obviously wouldn't want to do that. So what you've got to do is more investigation on how many of your salespeople are there?
What percentage of them have been here more than a year?
What does the average one make?
What's the best one make can i talk to one of the ones that makes a lot uh stuff like that uh if we don't have anybody
that's been here more than a year uh move on do something else okay because they're just they're
they're cranking people through you see how i I'm talking about this? You understand what I'm saying?
Yes, sir.
And so you said you're 20?
Yes, sir.
Okay.
And what is it you want to do?
Truth be told, as cliche as it sounds, my plan is to be the first one of my namesake to get out of poverty altogether.
How?
I grew up in a household of four, and my parents' parents were poverty,
and I grew up where my family's household income for two parents was a little over $30,000 yearly.
Okay.
What career do you want to do to get out of poverty?
Finance, truth be told.
It interests me the most.
Something where I can spread pretty much what I've learned from you to help others.
And that's the end goal.
I plan to attend college this coming year, and I've got scholarships that will pay for it.
That's good news.
Okay.
All right.
Well, I'm thinking, honestly, that you can probably cut grass and make more than you're making now and own your own lawnmower or open a dog walking business or write apps or I don't know.
But I kind of think you may have a little bit of an entrepreneurial thing going on inside of you. Hold on, and I'm going to send you a copy of, let's just put him in Financial Peace University.
Let him go through that, and sign him up for a copy of Ken's new book.
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Enter promo code SAVEDAVE and receive 50% off your first month. That's puretalkusa.com. Marianne's in Cleveland, Ohio.
Welcome to the Dave Ramsey Show, Marianne.
Hi, Dave. How are you?
Better than I deserve. What's up?
That's great. I guess I just needed some advice.
We are in steps four, five, and six.
And I feel like when we started out doing your program, we were kind of Dave-ish.
It took us about 24 months to pay off our debts.
And that was with being out of work for a little bit.
And now that it feels so good to be debt-free,
so we're trying to pay down our house,
and we've paid down probably about $75,000 over the last 14 months.
Wow.
That's impressive.
It's been exhausting, and it feels so good.
But, Dave, how do you, number one, how do you stay motivated to not stress yourself out so much?
Because I feel like I mentally put this goal in place to have the house paid off.
Okay, now once you finish Baby Step 3 and you have your emergency fund in place,
and then as you said, you're simultaneously doing retirement, college,
and paying extra on the house.
That's baby steps four, five, and six.
Once you do that, we turn the gazelle off.
Okay?
I know, but it feels so good.
No, no, no, no, no, no.
You call me because you're stressed,
and the only reason you're stressed is you're stressing yourself.
Yeah, yeah.
So let the foot off the
gas just a little bit this is a gonna be more of a marathon than a sprint baby step two is a sprint
it's like wide open right and baby steps four five and six is a is a marathon. And if you sprint the first mile of a marathon, you're not going to finish.
Right.
Okay.
And so, you know, you've got to have a steady rhythm here.
Get yourself in a steady rhythm.
You want to hit your times, meaning if you're looking up and you run the first mile too slow,
you speed up a little bit.
But you don't want to run so fast because you're excited that you burn up burn yourself up
and can't finish the race and and that's what i'm afraid of for you so just we're not saying relax
and go back to your old ways we're saying be on a budget any money we can find above four and five
kids college and retirement we're going to throw at the at the house but we're not uh beans and
rice rice and beans.
You know, this is when you save up and pay cash and go on a vacation.
This is when you move up in car a little bit and pay cash.
And this is when you, you know, there's a level of enjoyment.
And yes, that enjoyment does slow down.
Maybe step six, but it's better to run the race properly and finish the race.
That's true.
Okay.
Well, thank you.
That makes me feel better.
I just, I don't, it feels so good, Dave, to be.
It does.
With no death.
It does.
And how much is left on your house?
$40,000.
Oh, you're going to be there in no time.
I know.
Just take a couple, gulp a couple breaths in.
You can see the finish line.
Yeah.
Okay.
It's so close.
And you're out of breath.
But if you'll just take a couple deep cleansing breaths, you can run on through that finish line.
You're going to be out of debt in maximum two years, but probably a year.
Yeah.
If you go half as fast as you've been going, you'll still be done in a year.
That's true.
You're okay.
All right.
Thank you.
Thank you.
Appreciate you calling.
Open phones at 888-825-5225.
John is in Canada.
Hey, John, how are you?
I'm doing well, Dave.
How are you doing?
Better than I deserve.
What's up? Thank you very much for taking my call.
Sure. So a quick snapshot. I'm 32 years old, married for 10 years. I have two children.
I make about $200,000 a year. Wow. Good for you.
Thank you. I do not have any consumer debt.
I have three properties, including my primary residence.
And I am in hardcore millionaire mode where I just want to get to that status.
Good for you.
I'm reading Chris Hogan's book right now, and because I don't have consumer debt, I was basically wanting to know whether the debt snowball rule would apply to mortgages as well.
My primary residence, it's worth about $800,000.
I owe about $587,000 on it. My other two properties are both worth around $300,000 each, and I owe in the low twos. And basically, I just want to continue to feel motivated. I don't
know if paying off a rental property even makes sense. And I know some people would say, you know, because you write off the interest.
Maybe you don't, but I also write off my home interest because of the type of job that I have.
So what are your thoughts on what order I should attack things in?
Okay.
Well, let's deal with that last statement first.
So what is your tax rate?
What percentage are you paying? About okay all right and so if you send them interest of ten thousand dollars send the bank
ten thousand dollars of interest on any of these properties you can take that as a tax deduction
am i correct correct and that would save you $4,600 on your taxes.
Is that correct?
Sounds about right.
So in what world is sending someone $10,000 to save $4,600 a good idea?
You're right.
Okay.
So we're not going to stay in debt because the interest write-off is some kind of sophisticated, smart thing's a stupid thing you take it but you take it when you can take it because you got to
pay it anyway but you don't keep the debt because you're trading a dollar for a couple of quarters
here and that's not a plan and dollar for a 50 cent piece it would be which one makes sense to
do first i mean never yeah but but you know we're the deduction doesn't come into
it in other words because both of them have the deduction and so uh the only reason generally
speaking uh all things being close i'll pay off the house first your personal home first because
something happens inside of you spiritually when your personal residence is paid off. There's a sense of solid, a sense of foundation.
Your rentals are so small in comparison,
though I might reach over and knock them out first.
I guess for me, I agree with you.
I guess for me it was just that same feeling that you might get
paying off your principal residence.
You might get a similar feeling by saying,
I have a free and clear property and I'm that much closer to being a millionaire.
The thing is that you're going to be able to pay off both rentals before you could pay off your home.
Mathematically.
Yes.
Mathematically.
Mathematically.
But you're going to gain cash flow by paying off either one because you're not going to have the payments anymore.
That's right.
That's what it amounts to, including your personal residence.
So either one's okay.
It's not a slam dunk.
I'm, you know, these are small enough rentals.
I'm probably putting them first.
Let me kind of give you a different example.
If you owed $100,000 on one of your rentals, I'd definitely put that first.
Right.
Just because you could sense the progress reach over knock out one be done you
know but it would be tiny in other words in comparison one-sixth of your residents but that
that's the way i kind of think through it so yours is is not such a slam dunk but i'm probably going
to go ahead and knock the rentals out first if you owed 400 000 on one rental and $500,000 on your home, I'd pay off your home first.
I would not.
So do you do the debt snowball?
Well, in this case, maybe and sort of.
But, you know, in baby step six, maybe and sort of.
In baby step two, always.
So, hey, good question.
Thank you for joining us.
Open phones at 888-825-5225
howard is following us on youtube says dave what are your thoughts on having an emergency fund
greater than six months of expenses it's not the end of the world but i mean if you earn uh if it's
ten thousand dollars extra sitting there and you earn 1% instead of earning 11%, you lost $1,000.
If you do that 10 times, you lost $10,000.
Like 10 months or 10 years worth.
So, you know, you're just losing money after that.
There's not a reason to, unless you have a specific reason in your life to.
This is the Dave Ramsey Show. We'll be right back. In the lobby of Ramsey Solutions, Joe and Shelby are with us.
Hey, guys, how are you?
Hey, Dave, great.
Welcome.
Where do you guys live?
Inola, Oklahoma.
Cool.
And that is near?
Tulsa.
Tulsa.
Okay, cool.
Welcome to Nashville.
Good to have you guys.
And all the way over here to do a debt-free scream.
Yes, sir.
Love it.
How much have you two paid off?
$79,000.
$79,000.
And how long did that take?
13 months.
13 months.
Very cool.
And your range of income during that time?
$135,000 to $170,000.
Cool.
What do you guys do for a living?
I am a mom to our two boys, Brooks, who's three, and Wynn, who is 15 months.
All right.
Very cool.
Good.
I'm in medical sales.
Good.
Very good.
Fun.
Well, congratulations, you guys.
You're doing well.
So what kind of debt was the $79,000?
Yeah, Dave.
So we decided to get a little weird and went ahead and paid off our house.
No way.
How old are you two?
I'm 27.
32.
And $79,000 paid off your house?
Yeah.
Wow.
You didn't owe much on it.
That's great.
What's this house worth?
About $120,000.
Wow.
So you're making $170,000 a year.
You live in a $120,000 house that's paid for, and you're 32 170 a year you live a hundred twenty thousand dollar house it's paid for
and you're 32 and 27 yep unbelievable looking at weird people you guys are rock stars wow
how does that feel you're so weird man it's such an amazing feeling i just think back to
that day where we walked into the lender's office for
that last time and just how overwhelmed with god's grace and emotion that we were it was just such a
weight lifted that we didn't even realize that we had wow i mean you paid off your house we did
i mean you you i mean you know how many 27 year olds-olds? None? Wow. Yeah, I don't know any so far.
People, your friends, you know, your contemporaries are looking at you like you're a unicorn or something.
Oh, wow.
Amazing.
So, how long have you all been married?
Three, whoa, no.
Four years in July, Dave.
Okay, all right.
What?
Shelby, Joe's here to help you through this.
I've had kids since then, so. It's all good.
It's all good.
Okay, so three years into your marriage, approximately, you look up and go, we could do this.
What made you do that?
Yeah, Dave, so looking back, you know, we were both fortunate enough to have great parents
with a lot of common sense, which fortunately they instilled in us as well.
God blessed us abundantly.
Abundantly might be a stretch, but with enough athletic ability at least to get through college debt-free.
I drive a lot for work.
Came across your show one afternoon.
Mentioned it to my mother-in-law, who shortly
after gave us the total money makeover, read it in a couple days.
Wow.
Six months later, we were leading our first FPU class at church.
And that kind of started us down this road.
So just game on.
Yes, sir.
So you were both college athletes.
Yes, sir.
In what sports and where?
I played soccer at TU, University of Tulsa.
Okay.
And I was a baseball player, graduated Arkansas Tech.
Okay.
Wow.
Good for you guys.
That's a lot of work.
You work hard for those scholarships.
Yes, we do.
And it's also rewarding and it's fun.
But I served on the athletic board of the University of Tennessee.
And I don't think I, as a fan, grasped how hard the student-athletes work for that little bit of money that they get.
But they do get the money.
And they do get the benefit of having to get the benefit of getting to compete and to do that.
And so, very, very cool.
Well, congratulations, you guys.
So you get out of school debt-free and common sense from the parents.
And so when I come along, it's like, well, yeah, of course.
Let's do this.
It really wasn't like I had to talk you into it.
It's kind of like, oh, this is just the way you should do it.
Right.
Yeah, essentially.
It kind of fit with your life.
It did.
Absolutely.
And Shelby, credit her for being a great wife.
After reading that, I mean, she was game on immediately as well.
Very cool.
Here you are.
Yes.
What are you going to do now that you're
debt-free what's your what's your way you celebrate this oh goodness come on the dave
ramsey show what are you gonna spend some money on to enjoy well now that you've done a nice
vacation or a car upgrade or uh well actually dave he uh sold my six-speed GTO and upgraded me to a minivan.
So we have that.
But I think future-wise for us, just being able to renovate our house eventually.
Okay.
So that's the next thing on the agenda then.
You've got to have another goal in front of you.
Absolutely.
Wow.
Way to go, you guys.
What do you tell people the key to getting out of debt is gosh uh for me i would say it's all about contentment um just be happy with what you
have and really just kind of putting those blinders on and not get caught up in the comparison game
of what others have that you may not and just know that god has a purpose for your family and you guys specifically
okay cool cool shelby gives a great church answer and
no i'm kidding she's spot on um for me it's you know very simple spend less than you earn
automate everything you can um i think this is ultra important especially in our age bracket
if you will is really understanding and grasping uh the opportunity cost and getting on the same
page with your spouse towards those long-term goals and you know day-to-day of if we're working
towards that long-term goal or working away from it. And you touch on this in your books and FPU,
but really grasping that we're simply managers and it is all God's money.
So we certainly want to give him all the glory that he's able to provide.
Amen. Very cool, guys. Well done. Well done.
How much does the self-discipline that it takes to compete at the collegiate level apply to something like this?
Were you able to tap into some of your old athletic days?
The same rivers in your brain?
Right.
I feel like for both of us, we're very competitive people naturally anyway.
And so just having that goal in front of us and something that we can strive
towards i feel like that was just i don't know just easy for us you pay to compete at that level
is repetition is uh uh you know a lot of practice a lot of sweat all with the idea that it's going
to pay off right you know it's a delayed pleasure game and uh you know i'm going to hurt now so i
can win later correct and uh that that i'm gonna hurt now so i can win
later correct and uh that that kind of that same river in your brain is what you tapped into to
ride down to do this right definitely hebrews 12 11 is spot on you know and yeah it's i would tell
anybody that that sees the sacrifices there it's in the middle of going through their journey, that it is 100% worth it.
Like Shelby said earlier, it's a weight lifted that you didn't really even know you had.
It's indescribable.
12.11, for those of you listening, is, come on, Dave.
Wait a minute.
No, no, no.
Don't do it.
Don't do it.
Don't do it.
Don't do it. No discipline seems don't do it don't do it
no discipline
seems pleasant
at the time
but it yields
a harvest of
righteousness
I found it
there it is
okay
it's stuck
back there
somewhere
okay good
that's where
I got better
that's where
I got live
like no one else
so later you can
live and give
like no one else
it comes right
off that scripture
that's where
that idea came
from
it's delaying
pleasure to win
you know pay
a price now
be in pain now so you have the joy of winning, not the pain of defeat.
And that's what you guys are doing.
So, well done.
Very well done.
You guys are rock stars.
This is so fun.
So proud of you.
Thank you.
Who's your biggest cheerleaders?
Oh, I'd say our family and church family.
Yeah.
Cool.
We got a copy of Chris Hogan's book for you, Everyday Millionaires.
That's definitely the next, Everyday Millionaires.
That's definitely the next chapter in your story.
And how ordinary people built extraordinary wealth and how you can too. 27 and 32 years old.
Paid off their house, baby.
$79,000 in 13 months.
We're going to go 135 to 170.
Joe and Shelby from Tulsa, Oklahoma.
Let's hear a debt-free scream.
Three, two, one.
We're debt-free!
I love it.
I love it.
Well done, you guys.
Very, very well done.
Man.
Okay.
So that tells you two things.
One is there's a whole group of these millennials that can do things once they decide to do it.
And they're rock stars.
They're an amazing generation.
The second thing it tells you is regardless of your age, you can do this.
Why are you staying in debt?
Why? Why do you staying in debt? Why?
Why do you believe you're stuck when you're not?
This is the Dave Ramsey Show. Our question of the day comes from Blinds.com.
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Blinds.com.
Valerie's in Mississippi.
Dave, we've attempted to start your program several times,
and every time we almost get our $1,000 emergency fund built up,
something happens and we have to start over.
Whether it be some type of medical emergency, car or home repair, it seems like we never get past step one.
Sick and tired of being in debt, but it's very frustrating when you can never get past baby step one.
Any words of wisdom you can provide would be appreciated.
Yeah, that is frustrating.
It's hard.
Well, a couple of things. One is you need to probably add some obvious categories to your budget that you are now calling emergencies.
Every budget of a person that owns a car needs a car repair category in your monthly budget.
You set aside money monthly for a car repair category in your monthly budget. You set aside money monthly for a car repair.
If you don't have any car repairs that month, let that build up in an envelope that says
car repairs or a sinking fund set aside in your every dollar budgeting app.
Okay.
Meaning a separate little miniature savings account for car repairs is building up.
Okay.
But you're going to have car repairs.
Cars are going to break.
Tires don't wear out suddenly they wear out a little bit every time you drive the car it's not a sudden thing and so that that's what you've got to do
this and you know stuff like sick kid if you have kids sick kid is almost a category in your budget, depending on the age of your kids.
I've got five grandkids, five and under, and those two family units, my two daughters' family units,
their job is to pay the Porsche payment for the pediatrician.
They spend time almost every month with one of those or the other running over with something.
Usually it's not life-threatening, but it's just sick kid.
And that's, you know, you need to put that in your budget.
Thirdly, you need to be doing a budget.
And I kind of think you're sort of ishing your budget.
You need to really write down every dollar that you are going to make this month needs an assignment on paper before the month begins.
Every dollar needs a name.
That's why we named our budgeting app EveryDollar.
That's why it works so well.
Before the month begins, every dollar has an assignment.
Every dollar has a name.
Six million people are using that.
It's free.
Go hook it up.
Go use it.
You're going to love it.
Okay?
Now, the last thing is that if you're doing a really detailed budget
and you've got proper categories in your budget
and you're still
having trouble getting traction it might be an income issue
throw an extra thousand dollars on the pile every month by working extra
delivering pizzas or something driving uber whatever right you throw another log on the fire, the fire will get hotter, in other words.
And so that can be what it is. But until you're organized properly and in detail and you have the proper slots in there,
you know, that's what's going to happen.
Now, depending on the age of your home and the age of your cars,
your car repair or your home repair category might be small.
But if you're driving a couple of hoopties
and your house is an ancient thing falling apart, a money pit,
you're going to have to have a pretty substantial category line item in your budget
because, hey, crap's going to break on these two things.
You just know it's coming.
Kirsten is with us in Phoenix, Arizona arizona hi kirsten how are you i'm good how are you doing better than i deserve what's up so my husband and i are between baby step three and baby step four we
have the fully funded emergency funds but um we're trying to save up for a down payment on our first
house and i was wondering should we put all of what we're saving into that down payment right now,
or should we split that between that and our retirement?
Okay, so you're debt-free and you have your emergency fund in place.
Yes.
Okay, and the only question is, do I back off on retirement a little bit
to more quickly fund my down payment?
Is that right?
Yes.
That's fine if you
want to i wouldn't do that for longer than three years okay but uh but but if a lot of people do
zero retirement when and they call that baby step 3b i actually picked that i stole that from one
of the communities somebody mentioned it years ago ago in one of the chat rooms or communities
or Facebook groups or whatever, and I saw it, and I thought, yeah, that makes sense.
It's kind of we're going to push pause on the baby steps, in other words,
and insert a little miniature baby step, baby step 3B, before we move on to 4.
Now, sometimes people move on to 4 and do a little in 4 and then just load up 3B,
or sometimes people go full on four and then save
their down payment above that any of those are fine uh the point is don't but i don't want you
to be out of retirement zero retirement for an extended period of time like three years or
something okay okay yeah it would just be for like a year. Oh, I'd do that for sure, for sure.
And then, of course, when you purchase, you never take out more than a 15-year mortgage,
and you never take out a payment that's on a fixed rate,
and you never take out a payment that's more than a fourth of your take-home pay.
Will is in Los Angeles.
Hi, Will.
Welcome to the Dave Ramsey Show.
Thank you.
How are you, Dave?
Better than I deserve.
What's up?
So my wife and I are in Baby Step 2,
and we're really loving the EveryDollar app.
And, you know, it's great because we're putting everything we have,
you know, a name for everything, like down to the pennies.
And what we're coming up to is, like, for instance, going into May,
we have everything.
It tells us what we should have at the end of the month,
but the frustrating part of it is the paycheck doesn't really land on the first of the month.
Like, the first of the month will have maybe, I think, next month is like six days before.
So now we have to carry over that first week into May,
and I don't know if I'm planning it right correctly in the middle,
or whatever advice you can give would be great.
Well, I mean, the app is set up on a calendar month, obviously,
and so that's your struggle.
But you do need to get, if this is the normal pattern,
the normal rhythm of your paychecks,
you do need to get a six-day pad built.
Yeah, we get paid weekly.
Yeah, okay. do need to get a six-day pad built yeah we have we get paid weekly yeah okay and so um oh well
you're going to get a you're going to check on the last day of the month then yeah like next month is
typically for us it's weird because it's it's almost like a fifth paycheck if that makes sense
yeah you have two magic months a year it is a fifth paycheck you have two magic months a year
and um the frustrating part is like okay well you budget all you budget all the money that you have Two magic months a year. It is a fifth paycheck. You have two magic months a year. And May's one of them.
The frustrating part is like, okay, well.
You budget all the money that you have coming in in that month.
Correct.
In May, you budget all the money you have coming in in that month.
Are you short six days of income or six days of expenses?
No, no.
And I've gone over it twice, and that's the frustrating part of it because it tells us, let's say I have $1,300 extra at the end of the month.
Well, I'm like, great, that should go to debt,
but going into the next month we need about three to cover that.
To cover six days?
To cover six days?
Yeah, because rent falls on the first one month.
Oh, okay, well just move some of that stuff back to the 25th and you're fine.
Oh, move it back to the week before?
Yeah, your expenses.
Okay.
Should I do it at, like, should we just do it, because we budgeted out for the month,
should we just focus more on two-week intervals and just go from there?
No, I would lay it out and look at the whole thing the way you've done it,
and just where you're running trouble is because you're paid weekly is if you happen to straddle,
or in this case you ran three or four days, five days deep into a week before you get a second paycheck into May.
And so, but what you need to do is just if you'll set things out up to go out five days early
and that'll pull them into that other month, that'll help you take care of it.
That'll tell you what the remaining, after that, what's remaining after $1,300.
Maybe not much.
Yeah, not much.
If you're saying bring in, so the due date, you're bringing it in five days?
Yeah, pay it five days early, like the 25th instead of the 1st.
Gotcha.
I gotcha.
No, that makes a lot of sense.
I'll give it a try.
Thank you very much.
I appreciate it.
Your landlord will never be mad if you pay him five days early.
Hey, thanks for the call.
We appreciate it.
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