The Ramsey Show - App - One Credit Card Swipe Can Determine Your Future (Hour 1)

Episode Date: June 27, 2023

Rachel Cruze & John Delony answer your questions and discuss: "Should I pause the Baby Steps while I go through a career change?",  How to cash flow the purchase of a vehicle while in Baby Step 1, The best way to pay for graduate school without going into debt, from the blog: How to Pay for College Without Student Loans How you should invest the profits from the sale of flipping houses, Some lifestyle changes you should be aware of when paying off all your debt, from the blog: Living Without a Credit Score Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Here's an EveryDollar deal just for our listeners: get a 14-day free trial PLUS $15 off your first year of premium. Click the link below and start budgeting today! www.everydollar.com/TRS Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Paws Moving and Storage Studio, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am for Ramsey Personality and bestselling author Rachel Cruz hosting this hour with my good friend and bestselling author Dr. John Deloney. And we are here taking your calls. It's a free call anywhere in the country

at 888-825-5225. So first up, we have Zach in Winston, Salem. Where's North Carolina? I know, but. Oh, hold on. We got the phones are all goofed up.

The phones are all goofed up. Hold on. All right, Zach. Hold on, Zach. We're coming to you. We're coming to you. Yeah, yeah, yeah. There you go.

Thanks, Sean. Technology. I was like, look down. I love technology. All right, we're back. Hey, Zach. How are you? I'm good. How are are y'all doing great how can we help yeah so i'll try to make this uh pretty quick i'll just start by saying i should have listened to you guys like two years ago when i called and

i didn't but that's water under the bridge so um i uh have been in baby step two, um, for about two and a half years and I'm almost to the end. Um, looking like maybe October ish. I'll be completely out of my debt. I have about 20,000 left. Nice. Congratulations. Yeah, I'm not there yet, but, uh, hoping to be soon. So my question is, uh, for the past three years, I've done two jobs. I've been in public education. I've also had a job as a field inspector. I have full autonomy with that job, so I sort of set my own schedule. But about six months ago, that became the primary source of income. And so I sort of had to pick one, and obviously I picked that one.

I've sort of been looking for an exit from public education for a while. I've had my real estate license for about a year and been doing that part-time and made the decision to replace public education with real estate. So this summer I'm making that transition full-time. I've had some success since I've gone full-time, but still getting my feet under me. Don't really have an idea of what it looks like. And so my question is, when my school checks run out, because I'm a 12-month-old boy, I get paid through September, should I stop in stat cash to build a buffer until I know what that looks like, or should I continue on and finish baby step two?

Well, you have a job. Besides the real estate, you have another career that you're doing, right? Yes, yes. And the margin with that is about $500 to $750, maybe $1,000 in a good month. And so just not used to having margin like that small, and I just want to make make sure that i think you're going to tell me to keep plowing through i just want to peace mind and but no i'm sure yeah yeah i would i would still encourage you to keep doing i mean even if

there's a career change there for you and the numbers you know even if they go down and they dip down i would still stay the track and i would honestly zach i mean if you can get this paid off by october i mean that's just in a few months. So I'm like, anything that you need to do, even if it's working extra for a month, you know, at night or whatever it is, just to go ahead and get that knocked out. Because once that's done, then that $500 to $1,000 of margin that you're getting, that's going to be all yours to then move on to save up for an emergency fund and all that. So yeah, it's a small setback once those checks run out from your teaching but um but i mean i would still yeah i would still keep going forward

okay i probably would not have quit my teaching job just yet but you've you've already done that you've already submitted your letter yeah yeah And I didn't really have a choice. I had to pick one or the other. I couldn't continue to perform and keep the other job and do that well enough to keep that job. So I had to pick one or the other. Okay, but you're getting paid through September, right? And you're going to be debt-free in October. So it's just one month.

And I have made some money through real estate. And hopefully that'll pick up. I don't feel comfortable saying, hey, I can make this much money a month in real estate. Okay. You're going to find out as a real estate agent, this is 24-7, 365, those who make it. And very few make it.

So I would recommend you do exactly what Rachel said. I'd start driving Uber at night and I would take real estate calls as they come in and as they come in in the morning when I'm driving people to work. I mean, I would do whatever I could that the moment that the September check comes through, that's my last check to pay off my debt. And at least I don't owe anybody anything

as I roll into just having one job and then a business, a book of business I'm trying to build on the real estate side. Yeah, that's good. All right, Zach, thanks for the call. Up next, we have Mary in Chattanooga, Tennessee. Hey, Mary, welcome to the show. Hello. Hello. How can we help? Well, I just got a new job yesterday, and I'm needing to get a vehicle for it. I don't currently have a vehicle. I'll be going from place

to place cleaning and stuff in the county, and so i'll need a vehicle for that i'm kind of wondering uh maybe step one how i can cash flow a used new to me car yeah great question well congrats on the job that's exciting what's the job um it's going to be cleaning i'll be going around cleaning like after they people move out apartments or they build new apartments they come through and paint and do all that stuff and then we come in behind them get ready for the tenants to move in very cool about that's a of meaning. So I'll be learning new skills and all kinds of stuff. Excellent. Way to go. Good for you, Mary. Do you have any money saved? No, I do not. I'm just starting on baby step one. I'm currently in an FPU class and I'm just

starting out on the baby step one. So I have to figure out how to cash flow this. Yeah, that's great. Our locations are on the bus line. Some on the bus line, but most are not. Okay. Yeah, so do you, so you have no other savings, and what will you be making in this job? How much a month? It's going to be part-time, and it kind of varies.

It's almost like a commission thing. And then I'm a 1099 employee, so I get paid, like, it seems like what I'm getting the quote is like 30 to 50 per job okay so and what will you be doing um it like it's if that's part-time how how are you getting to full-time work um well that is the first thing I've been able to get at this point um I do are I do painting and artwork on um as well as another side gig because these are like two small you know side gigs I'm doing right now concurrently awesome this is a new one and i actually just got a call today about another 40 hour week job in addition to that excellent good mary that's great

so mary if you were my friend or sister tell me if i'm wrong rachel i i would tell you because let's say this let's say you went and borrowed um three thousand dollars and you have to pay that back and you're paying back 150 bucks a month let's just make up a number if you and your local community just because you're going to do one to two of these cleanings a day right yes i would i would uber over there and it's going to cost you four or five bucks a trip. And if you add that up over the course of your month, because some days you won't do any, some days you'll do two, maybe even three if you're able to. I would not borrow money, especially this new into a part-time job. I would Uber over there. And if I could take the bus, I would take the bus. But if

I could Uber over there, I know the bus, man, they're so unreliable when it comes to like, I got to be there on a certain time. But man, I would Uber over there. That or Mary, if there's people within this, the same kind of industry, if you will, that they're getting you from as a 1099, if there's somebody that you can partner with and do the cleaning together and say, hey, if it's a two person job, always sign me up and see if that person, if you can at least meet that person, right? Maybe you can take the bus close to their house. Like you can find a way to even carpool. Yeah. That would be it. But I would definitely say don't take out loans and it's going to be really inconvenient for a season, but save up and pay cash for that next car. But congrats, Mary. I'm excited for you.

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Welcome back to The Ramsey Show. If you guys enjoy this show, we just were meeting some people in the lobby, and some of them were like, we listen every day. So listen, if you're someone that does, that loves it, will you please help us spread the word and share the show to people that you know, send it to your friends, leave a review, subscribe, just kind of engage with it because all of that helps out in the world of the internet to get this

message out more because we want people to have hope in all these different areas of their lives and hopefully we can help guide them in their story and in their process so uh okay let's go to the phones again it's a free call anywhere in the country at 888-825-5225. And we have Anna in Huntsville, Alabama. Hey, Anna. Welcome to the show. Hey. I was calling about graduate school where I start in the fall. And I was wondering how y'all would go about that. What program?

For physical therapy. Very cool. Good for you. Physical therapy is really expensive, isn't it? Yes, it is. How are you planning on paying for it? Yeah, how are you going to pay for it? Yes, so I applied for loans and I did get approved for unsubsidized loans. I'm sure you did. I am new to all this, so I don't know much about it, but I was wondering if y'all would advise to apply for direct plus loans. So I would tell you as somebody who took out six

figures from my graduate school loans and was not able to fully take a breath or exhale for years, I can't in good conscience. And I worked at colleges for 20 years and I believe deeply in college. I am saving for my kids to go to school. I believe it is an important part of a democracy. I believe in it. And I can't in good conscience tell you to borrow 75 to $150,000 to get a PT degree, to come out making 75 grand, which is the last average I looked in that particular career. It's going to be brutal. And so I would tell you to ask for,

to defer your enrollment and get about saving money like, like, Oh, like a wild woman and save and save and save and save and pay cash for this thing. I just can't in good conscience recommend it. And by the way, I've worked with physical therapists who do this for a career and in coaching situations, and it's tough because they want to have kids and they want to start families, and they owe so much money

when they get done with these programs. Yeah. Anna, how much is tuition per semester? For out-of-state, it's about $100,000. Per semester? For three years. I'm trying to get in-state

right now since we own property within the state. So it'd be $48,000. What is $48,000 per year? For three years. 48 for all three years or 48 per year for three years? For all three years. Okay. Okay, that's more doable, and I would not go out of state. I mean, when you have a chance to cut your bill in half, that's the smartest way. so even if it's deferring even if it's saying no to that and applying to another college in your state is it in alabama

it is not okay it's in tennessee okay but you have property in tennessee so you think you can get that in state i would not i would not do the hundred grand in a yeah i don Yeah, don't pay out of state tuition. Many, many, many graduate programs will waive that fee. And I would save up and call a counselor and say, I'm going to take a year. I'm going to defer my enrollment for one year. I'm going to save up $50,000. I don't know how you do that. I don't know what your daytime job is, but I'm going to save up that money. And then I've got $50,000 to put down on this program over three years. I need this to be in state tuition. And right now in many programs, I don't know the state of PT off top of my head, but in many, many programs, what used to be our parents and even me, the applicants,

there was way more applicants than there were seats in these classes and many programs that has flipped. And there's way more empty seats than there are applicants. And so they make it feel, it's artificially constricted. So there's going to be programs you can get into. Please don't get your heart set on one program that you have to do it and you're going to pay double what they're offering you, the guy sitting in the seat next to you. Just don't do that. Don't do that. Don't do that. And please don't borrow money to do it please take out cash because even Anna when you look at the numbers of the 48 I'm like that's about eight grand a semester and and I so what I would do Anna is I would even wait a year pause go work somewhere go work in a

physical therapy clinic like go actually be part of it because I think that is one of the problems, John, that can happen is, are you just, had you just graduated in May? Anna, are you just going right into grad school this fall? I graduate in the fall and then start in the fall. Okay. I'm graduating undergrad a year early. Okay, okay.

How much undergrad debt do you already have? Zero. Oh, that's so great. Awesome. Yeah, and I really would. I would pause for me, if it were me, go work somewhere and even work in that field just to get an idea of like, hey, this is what life looks like day in and day out. Because sometimes, I don't know if you feel like this, John, but you can like romanticize

just any career. What happens a lot in teacher education programs, they get all the way through until they do their student teaching and they're like, oh, I hate this. But they're three and a half years in. A lot of programs have moved clinicals to the very first thing you do just for that very reason. Yes, yes.

So, I mean, honestly, Anna, in order for you to cash flow this, make it in-state, that in-state tuition. Don't be, yeah, like John said, so focused on this one program. Look at options and take your time because honestly, this one decision with one swipe of your signature could determine your whole future and a level of stress, of anxiety, of paying back debt, and your career choices, having to make family choices in the future.

I mean, there's so much there, Anna. And when you don't have loans, when you actually are slow and patient through this process, which is not fun and exciting. Like, I get it. I get you're probably very excited about this and you think this is what you want to do. And it may end up being what you do. But taking time and having patience is going to give you different options. And you're actually going to be able to go through this, I really believe, being able to cash flow it. So that's our recommendation, Anna. So thanks for calling. It sounded like you were a new listener,

so I appreciate it. But those loans that had been offered to you, I would throw that in the trash. Well, and one quick thing. Yeah, and that's key. Throw them in the trash. Don't submit them back anywhere if you've already applied for them.

Just before you defer, tell the admissions counselor. Tell them, hey, at the end of the day, I've decided I can't in good conscience take out student loans for this program. I really want to be a part of it. I'm willing to do a graduate assistantship. I'm willing to do work, do work study. I'm willing to do anything that y'all can provide that would allow me to get this to be a part of this program um but i got a cash flow and they may just come up with extra scholarship dollars because they're trying to

make their class there's a whole bunch of other things that may happen that uh as they're trying to shape this class it's worth asking yeah that's a good point is communicate communicate talk to them but but know this communicate knowing you're in the driver's seat you're not they make it feel like you're like please please please like that old mervin's ad, like open, open, open. It is not the case. They need you. They need you. And so be confident when you say,

hey, I can't do it right now. Will you please defer this? Or if we can figure out a scholarship, I'd be happy to come. So good, so good. Well, all right, you guys, Anna is a new listener and so many of you guys listen to The Ramsey Show

even every single day. And you know the stuff that we teach, but you may still feel stressed out and stuck when it comes to your money. Because here's the deal, knowing what to do with your money isn't the problem. It's actually doing it. And Anna is a great example of this, right? Like you give her this information. It's like she knows what to do. But actually following through with it and doing it is what's so important because personal finance is 80 behavior It's only 20 head knowledge And so there is a proven way to change your behavior with money and that is by taking a financial peace university class And this class is different

Is the difference between trying to get in shape versus hiring a personal trainer? I mean you will have a coordinator with you You will have a class around you for the encouragement. And people are such a key part of change. And so having that community, what Financial Peace University can provide is so key. So don't just listen to the show. Actually commit yourself to doing something, doing a process to win. So join an FPU class at ramseysolutions.com slash FPU. Again, that's ramseysolutions.com slash FPU. We'll be back. Welcome back to The Ramsey Show.

I am Rachel Cruz hosting this hour with Dr. John Deloney, and we are taking your calls. So up next, we have Nick in Austin, Texas. Hey Nick, welcome to the show. Hey, thanks for taking the call. Absolutely. How can we help? So my business partner and I built a spec house right outside of Austin and it's currently listed on the market for a million dollars. And if we sell at that price, we'll profit 300,000. And from that 300,000, we're going to cut ourselves each a check of $100,000 and then put the remaining $100,000 back into our business account.

And so I was just wondering, what do you recommend for me to invest that $100,000 to start building wealth? Get out of this partnership ASAP. I was going to say, I wouldn't do the partnership, Nick. Yeah, I wouldn't do that. But that's not why you're calling, so go for it, Rachel. Let me ask you this. How are you floating this note right now? Because you've got a $700,000 mortgage on this thing. How are you all floating that note? It's a construction loan, and we're paying the interest basically out of our own pockets.

What's that note? It's a $500,000 construction loan. We're paying 10.9% interest. But what are you paying every month? What are y'all splitting? We're splitting about $4,000. So two grand, where are you getting the two grand? From my regular job, which I make about $75,000 000 a year okay wait there's no way that there's a 500 000 loan that's 4 000 you're putting in four and he's putting in four no we're just putting in we're just putting in two well they're paying the interest it's just oh just interest okay so man you're making a banker rich man you're You're hooking them up. Okay. Yeah, it's our first one, so we had to bite the bullet on this high interest. Not really, but go ahead.

All right, go ahead. Okay, so Nick, where are you financially? What kind of debt do you have? I have no debt. Okay. Except for a half a million dollar mortgage on a house you don't live in. Except for that. Except for that.

Except for that. Okay, Nick, how much money do you have in the bank? I have about $50,000 in crypto and stocks. In the bank, ready to go, I have about $8,000. Okay. Oh, you're incredible. You watch a lot of Instagram, don't you? How old are you, Nick?

27. Awesome. Awesome. Okay. Here's what I like about you, Nick. You're running and gunning. You're doing stuff. Nick's a gangster, dude. He's awesome. Yes. Okay. Here's what I like about you, Nick. You're running and gunning. Like, you're doing stuff. Nick's a gangster, dude. He's awesome. Yes. Okay. Can we just, like, give you, like, a whole money makeover right now?

Like, if we were to, if John and I were to, like, invade your home, Nick, and you were, like, help me with every part of my money, not just what to do with this $100,000, but my life. Let me approach it this way. Can we, like, just speak in and just... Can I ask it? I'm going to ask it this way. Okay.

How long have you been, has this house been completed? How long has the construction been completed? Two months. Two months. Okay. And if you're like me at all, you've long since spent this hundred thousand dollars.

And probably when y'all are fantasizing about it, it was going to be 1.2 or 1.3, but it's down to a hundred grand. You've long since spent this money in your mind. And every month your chest is getting a little bit tighter and a little bit tighter and you're starting to go, whoa. And so here's what we're offering you you've got your way bro you've got crypto you've got the whole thing you are doing like the tiktok instagram playbook down to the like the t what do do we have your permission to offer you just another vision of what your life could look like absolutely please do all right that's amazing okay so here's what i would do nick i would cash

out the 50 grand out of crypto and out of single stocks. And I would just put that in a brokerage account just to have, because we'll do some stuff with that later, with that 50 grand. I would add the 100 grand to it. So you have $150,000 of your money.

So I would not go back into real estate deals like what you're doing, because it's very risky. And even though it seems like yeah it's a done deal to john's point when you keep taking on this risk and as the market fluctuates if a buyer doesn't come if your friend who i'm sure is a great friend does something crazy and nutty and all of this like i mean there's just so much risk and what you're doing especially if if you continue down this road. There's a greed, Nick, that can start to creep in where it's like, oh, I can do that. I can do that, that, that, that, that, that. And you start piling on this mindset that ends up coming into just a lot of risk and a lot of debt. So I would just stop that

road completely. So after the sale of this, get everything going. And then I would go back and say, okay, I'm making 75 grand. I have $150,000. What's the wisest thing for me to do? I would take a chunk of that because you have eight grand just in savings, which I think is plenty for a three-month emergency fund. Are you single? Are you single? Yeah, I have a girlfriend, but yeah. Awesome. Okay, perfect. So yeah, that eight grand can just be an emergency fund. It's kind of a placeholder over here.

And then I would invest this money, Nick. Do you have a primary residence? Do you own a home? I rent an apartment in Austin. Awesome. Okay. Do you think Austin will be a long-term place for you? Yeah, for at least the next five, 10 years.

Perfect. Okay. So what I would do, Nick, is I would buy real estate with that $150,000. And that could be... It'd actually be $200,000 because I would not put that other $100,000 into some pseudo joint business account that y'all are just going to put down on another house. So split that up. You'd each take $150,000, $150,000, wipe your forehead and go, whew, we made it on this one. We got real lucky.

And then don't ever do speculative real estate again. Yeah. And I would use some of that. I would invest some of it, Nick, maybe 15% of that lump sum. Go ahead and invest it. Do you have a 401k at work? I have a Roth IRA. Awesome.

There you go. Perfect. Yep. I would go ahead and max that out. Go ahead and just put some money in that for the year. Get that going. And then use the rest of this. I mean, I would look to get a down payment on a home.

Because obviously, you love real estate. Austin's a great market. I mean, it's so popular. But I would find something, even if it's a townhome for you that is a 15-year fixed rate mortgage, the payment's no more than 25% of your take-home pay. Put a good down payment on a home and start working to pay that off. Because what I want for you, Nick,

when you look up in five years, for your life to be yours, not attached to a business partner, not attached to all these real estate deals that are out there and you're hoping are gonna sell and that it's gonna end end up, you know, it's going to end up okay because this deal did. Not every deal does.

It hasn't yet, but it might. Oh, that's true. It hasn't even sold yet. It hasn't sold yet. Yep. And I would just be investing. And then on the side, Nick, once your primary home is paid off,

then I would say, okay, yeah, you're a smart guy. So start saving up some money on the side and get you a small rental. Like go find a condo or an apartment or something, something small to buy to dip your toe in and actually own the real estate instead of doing all this flipping and new construction. Actually own it, get equity in it

and play the real estate game that way versus what you're doing is what I would do personally. Let me tell you, like in my house, this is me and my wife and my kids. I am right now putting money in a money market account every month. I'm just hoarding cash and you know what I'm waiting for? I'm waiting for there to be another dip in the market and I'm going to come buy your house for $500,000 because y'all are going to have to get out of it at some point. You can't keep robbing Peter to pay Paul. And there's going to be a whole bunch of real estate across this country in the exact situation you and your partner are in where you had a million dollar dream that turned into a half a million dollar nightmare. All you're

doing is paying interest in this machine is just growing and growing. It's getting heavier and heavier. And so I'm just going to wait until I can pay for something with cash. And so what we're telling you is not something that we just made up for fun. This is how we live our personal lives. And I'm going to buy real estate at a discounted price with cash. That's going to be mine and nobody can ever take it from me. And I won't care what the interest rates are. I don't care any about that crap. And me and my wife are going to sleep so well. I'm going to be able to help somebody in my community, maybe even with a little bit of a compressed rent because I can, right? Because I own it. It's mine. And so here's what we're trying to paint you. A picture of a non-anxious life,

man. A life where you can breathe and you can go hang out in Austin, which is one of the greatest cities in America. And you can go have fun and you and your girlfriend can go just go out and you are not unable to breathe because every time you look up and you're about to put your debit card down for dinner, you think I got to spend $2,000 just to get the interest covered on this thing. I hope homeboy pays his half because he may not because he's been screwing around with whatever. You never know, man. And so we're painting a picture that's slow and boring and that will make you a multi, multimillionaire over the long haul. Yep.

Low risk. Low risk. The long game. Wise. Play the long game, bro. And autonomy. Owning your life, Nick. Not distributing it out to all these other people.

So thanks for calling. This is The Ramsey Show. Welcome back to The Ramsey Show. So, John, there was an article in Forbes that I saw, and it was talking about before paying off all your debt, consider the downsides. Dun, dun, dun. Dun, dun, dun. The downsides of paying all of your debt off so

before we even read this i have to say so in in my nerd world whenever there's a study cited like a scientific study the authors have to put their conflicts of interest down there whose funds their lab who where they receive money from. Yeah. Just in case they're writing a research paper on how good sugar is for you. And they're sponsored by like- Sugar America.

Like the gummy bears of America, right? And so they have to disclose that. Anytime I see something like this, I always have to wonder like, whose author is behind this? Uhhuh right because it's just just on its merits it's silly but go ahead totally no that's a great point that's a good point okay so uh the article goes on that the author is saying that they paid off uh three hundred thousand dollars of debt in their 30s, which they were doing the FIRE movement. So the whole retire early kind of movement. So they basically lived on nothing and put all their money to pay

off debt and to retire. So here are some of the downsides, John. And some of these, honestly, I'm like, yeah, some of these make sense. You may have hiccups traveling internationally. So she gave up credit cards several years ago. And she said, I saw a lot of difference in my spending habits. I became a lot more intentional and spent significantly less money overall by getting rid of the cards and using a debit card. And she said, but some of the hotels required a credit card for incidentals, and we had to negotiate using our debit card. One particular car rental business in Italy required cards to have credit limits that would cover up to the

insurance limit and our debit card did not do that. Okay, but I want to stop here. This whole paragraph is all positive if you ask me. There's some inconvenience, but it's not a downside. It's not a downside, that's right. So I gave up using credit cards and I started being more intentional and spending less. Ta-da! That's what we tell people all the time. Totally. I stopped taking cash out. Right?

I mean, it's like we started tracking cash. Ta-da! To stick to our budget. Ta-da! A few hotels, a few, we had to have an extra conversation. Okay. Right? You and I travel a lot. We both have to do that yes i'm traveling internationally in a few weeks um i had to my the person who's putting

together the travel for me i had my debit card they had to split the purchase twice because there was a limit on that debit card and we contacted the bank but he had to run it twice and split it it was a pain in the butt and but it was it was an extra phone call for two yeah that's it and the rental car yep one particular rental car company wouldn't rent and and i run into that traveling so you find the rental car companies that will and we have two of those once and i use we kind of switch off yep and i literally use those i looked at one in the dallas airport and i said please help me give you my money. And they were like, well, it's 24 hours.

I said, no, listen, I'm trying to give you my money. They didn't want my business. That's great. And I literally went to the next counter and I said, will you help me? And they're like, oh my gosh, they need a car in four minutes. And I was on with the day. That's right. That's right.

Okay. The next one is your credit score may have disappeared even with an extensive credit history. So in 2015, millions of American consumers representing about 11% of all adults were credit invisible, meaning they didn't have a credit score. So she goes through talking about that. Yeah, if you don't have a credit score,

you can run into some issues, just like taking out a mortgage, which is her next point. This is kind of like saying, I don't want to get married because I used to date a lot and I was really good at dating and I don't want to lose my reputation as a great dater. Right. It's like when you get married, you're like, that's not your identity anymore. And so when you're married to credit scores as the metric for whether I'm financially successful or not. And the one that

blew my mind, I say this all the time on the show, if I called the author of this article and just gave her a million dollars in cash, it would not change her credit score because it has nothing to do with your wealth. With how much money you have. Nothing. It has to do with how much you can borrow based on how much you've borrowed in the past and how good you were paying it back. It has nothing to do with your financial situation. That's right. And the credit score will go down, you guys. If you get out of debt, just like she experienced, your credit score, I think it's on average 12 to 18 months. It basically just goes down, down, down, down, down and disappears. So if you're going to get a mortgage, which we'll talk about that next, because that's her next point, then yeah, if you pull your credit score for any reason, it's not going to be great as you're getting out of debt,

but eventually it will become undetermined, meaning that you just, they can't determine a credit score because you don't have credit history. And here's what it says. For a while, I just lived without a credit score, paying for everything in cash and not having any issues because my house was paid off and I wasn't intending to move. Ta-da! That's the thing. And then look, and then COVID came and I needed to makeending to move. Ta-da! That's the thing. And then look, and then COVID came and I needed to make some drastic changes. Awesome. Happened to millions and millions of people and I needed to get a new home and sell the one I paid

off. And that leads us to the next point. So her next point of that a downside of paying off all your debt is that it's harder to take out a loan, particularly a mortgage. So we talk about this a lot on the show. We don't want you to have any debt so you shouldn't be applying for any kind of loan. Not a personal loan, not out a loan, particularly a mortgage. So we talk about this a lot on the show. We don't want you to have any debt. So you shouldn't be applying for any kind of loan, not a personal

loan, not a car loan, no loan. So there's no reason to pull the credit score for a loan. Now, a mortgage is the one type of debts we always say we won't yell at you for, but you can still get a mortgage through manual underwriting. Okay, so this is where instead of pulling a credit score and deciding dependent upon the score, can you get the loan or not? They actually look at you, the person, and you have to be current on a job for two years and current on all of your bills. I like to say for at least two years. So keep a record of your cell phone payments, cable, internet, electricity, like any type of bills that you have monthly. Keep track of those. If you know in the future, hey, we're not going to have a credit score and we're going to want to buy a home, they're going to need this for a meal and drink. Which all of those are kept

with your online profile of those individual things, right? They keep all those. We still get paper. Well, that's because you'll hate the environment. It's fine. It's fine. Why do we still do? We do. We still get paper. We make our own butter. So there we go. It's 2023. It's 2023. It's online. So you can go back and look at all your history online. But yeah, getting a mortgage. Yes.

Again, inconvenient. And we will admit to that all day long. I think George said it was an extra piece of paper. Like it was an extra sheet he had to fill out. For him. Yeah, I think so. Yeah, yeah, yeah. And here's, again, I always want to look at these titles and then read the actual article. And this is scientific articles. This is headlines.

Because before paying off all your debt, consider the downsides. Ultimately, this section, the hardest thing, right, is about getting a loan for a mortgage. That's fair. It was really frustrating to explain my situation. That is not a downside, America. That is simply a momentary inconvenience and kind of a pain in the butt. When all these TV ads have you able to get a mortgage on your cell phone, you actually had to tell the banker, I need to do manual underwriting because I'm a millionaire. I just don't owe anybody any money. I'd like to make a purchase. And they'll all go, okay. Like send your cell phone bill, right? I mean, if the maximum downside in your life is that you're really frustrated explaining your situation,

you're doing all right. You're doing good. You're doing great. That's a good downside. Good job, America. All right, and the last one, this is my favorite one. Oh, geez. You may feel guilt spending money, even when you can afford it. So

what a downside of being debt-free, not paying interest, not owing anyone anything, having the freedom to make your own decisions. But man, I feel guilty every now and then about spending money. So I'm not laughing at the guilt. I feel this. I came from a home that was highly money insecure. It was tough. I still, to this day, have to exhale. I walked around Guitar Center the other night,

budget in hand, like ready to rock and roll, and I couldn't do it. I couldn't do it. I couldn't do it until finally I did it, right? It was tough. That guilt is real. That is not a downside to paying off my debt. That is a built-in trauma response that I have

that me and a counselor need to work out. I don't need to counsel people and tell them, hey, don't get peace in your life because you're going to feel weird about it. I need to go deal with my personal feelings. And so if this is you, if you've paid off everything and you realize it didn't solve all your childhood wounds it won't yep you got to go do that work such a good point and a lot of people feel this you guys like that is something we run into so

if you're on baby steps for and beyond like force yourself to spend and enjoy build that muscle back practice there you go and practice it so that's John, thanks for a great hour. Thanks to all the guys in the booth. And Emily, shout out to my girl. And thank you, America's Rachel Cruz. 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 ramsesolutions.com today to sign up for our newsletter. Again, that's ramsesolutions.com to sign up for our weekly newsletter.