The Ramsey Show - App - Own Your Decisions Instead of Pointing Fingers! (Hour 3)

Episode Date: February 29, 2024

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am your co-host today, Jade Warshaw joined by your other co-host who would be george camel uh we're talking about your life your money all hour long so give us a call the number is triple eight eight two five five two two five dr john deloney has mysteriously been replaced with george camel well we wanted a strong end to the show jay we need someone to really land the plane someone who could land the plane yeah that's who they call in i love it well i'm glad you're here it's fun to host together let's go to the phone lines. We've got Yvette in Los Angeles, California. What's going on, Yvette? Hi, thanks for taking my call.

No problem. So I'll start off with a question, give you some numbers and then some reasoning. Okay. So we have a mortgage on two homes. One is a primary residence in California and the other is an investment property in Arizona. Okay. So we're wondering if we should sell our primary home in California and rent here in order to pay off our California real estate debt, and then we would keep our Arizona home and pay that off, and we estimate to pay that off in five years. So the Arizona debt is $219,000 with an $1,800 mortgage. And our California real estate debt consists of our mortgage that's $389,000. That's the balance. Then we have a

HELOC of $95,000. We have a solar loan of $52,000, a pool loan of $58,000, and a personal loan of 16K. My goodness. Yeah, so we kind of feel like selling our California home would allow us to pay off all the California real estate debt. Can you tell me what the total of that all is so I don't have to add it up? The $389,000 plus all that? $610,000? Yeah. Okay, thanks. So selling that would allow us to pay all that off.

And then what we would do with the profits from the home is we would put $60,000 toward the Arizona principal, which would lower our mortgage. Okay. And then we'd be able to put away our six months of living expenses, which we currently don't have any of that. We have $1,000 of savings. That's it. So this would allow us to put away six months of living expenses. And then it'll also allow us to invest 15% of our income. And then the last bit of info is renting here in California would be about $2,800 a month.

Plus we'll still have the Arizona mortgage, which we anticipate to be around $1,200 once we make that $60K payment toward the principal. Oh, so you wouldn't move. Are you going to refinance the mortgage in Arizona or recast it? What was your plan there? Recast. Yeah, it would be a recast. I already spoke to the lender, and so she said that it would recast and probably come down quite a bit.

Why keep the Arizona rental? Why not just sell that? Why not sell the Arizona rental? Yeah, if you guys had the money sitting there, you're not going to go out in California and go buy a property in Arizona to rent out. Right. So why not just sell this and be done with it and use that profit to pay down the debt? Well, the profit on that Arizona house would only be about $5,000. We've only had it like 10 months. Okay. You've only had it 10 months. Yeah. And what would your home sell

for in California? We're hoping to get $750,000. Okay. But you owe $610,000, right? So you're saying the money you'd get out of that, that would get your emergency fund going, that clears all of your debt and it gets you a clean slate. Yeah. What's the cash flow on this Arizona property? Not much at all. I think we made like $3,000. I think you're about to lose money on this deal. If you're not making much with real estate investment, you're losing money because it takes one emergency for you to be underwater on this thing. And then you said the plan was for you to turn around and be renters in california yes we can't move to arizona right now so eventually we plan to move out of california when can you move in about 12

years oh 12 years what's keeping you our jobs okay um here's where i'm at with this. Um, you've only had the AZ, the Arizona property for eight months. Um, it's not cash flowing. It's not making you any money. If you were to sell it, you'd get, you'd maybe clear 5,000 bucks for it. And honestly, that might be what happens because you're losing money for on it. You're not there. You don't plan to move there. If you were telling me, Hey, we're going to sell this California situation. It's just debt. We're going to clear it. And then we're going to be able to move to Arizona. We'll pay off $60,000 on that mortgage. We'll have six months of emergency funds saved. And we're starting our new life in Arizona. That'd be a different conversation. But if the plan is not to move

there for 12 more years and to keep this property and you be renters in California, I don't like that plan, George. Yeah. Well, I'm thinking the money you would have put toward the Arizona mortgage, why don't you put that away in savings and use that as your future down payment? I don't want you guys renting for 10 years. I agree. So that's what I would do. I would sell both properties. Any money that's left over beyond your emergency fund becomes the new down payment fund. And we work to stock that up to buy a house the more peaceful way. That's my vote.

But the bigger question here, and I mean, this is the elephant in the room, $95,000, $52,000, $58,000, $16,000, and then we're going to buy a second property in another state. There's a pattern of behavior here that's just like atomic. How can you assure us that you're not going to go into debt again? Yeah. Because this feels like a great little shortcut to become debt-free, but it didn't actually change much of the behavior that got us here.

Yeah. Because you guys make great money. What's your household income? Take home is 162. Wow. And there's not much to show for it after all these debt payments leaving your bank right i kind of we're just you know we're just sick and tired of being sick and tired yeah and let's be honest 162 in los angeles it's not like you're scrooge mcduck like it's it's a decent income right um it is it's but it's not like outlandish it's not like if you made 162 living in kansas so i just think that there's,

help me understand what you were trying to accomplish by taking out all of this debt. Was it, because there's got to be a learning from this. Yeah. So originally what we had bought this house here, we wanted this to be like our forever home. And so we added the pool, you know, thinking about our grandkids and just the family gathering here. And the solar loan really helped our electricity bill, which was like $400 average. And so we're barely paying $200 a month fixed on that. Add up your debt payments and tell me this solar was such a great deal i mean that's i'm sorry people justify solar because of their savings but here you are rocking this solar debt

with interest on it that probably won't roi for a long time well it won't roi because she's and now you're selling the house and gonna rent for 12 years so So what George and I are getting at is we want to make sure that you can look at every single one of these decisions and go, oh, I see exactly why that was a bad move. I see exactly how that cost me, right? You built your dream forever home that you now have to sell. That's what's sad to me.

Yeah, it is a little sad. We're just the California, if we could move out of California, now we would. Come on, Yvette. Don't blame California politics for your money decisions. It's an easy scapegoat instead of looking in the mirror and going, we took the freaking HELOC out. We took the pool loan out.

No governor made you do that. No state made you do that. We just got to own the decision. And it's sad that you guys have to give up the dream home, but this house turned from a blessing into a burden real quick because of your money decision so this is a great way to clean it up but you got to change the behavior to go with it i'm selling both properties and let's start fresh and in many ways you have to look at it they got lucky that there's even some equity to to get out of this that they can't have it to get out of jail free

card oh take it while you can get it and change that behavior. This is The Ramsey Show. Hey, you guys are listening to The Ramsey Show. I'm Jade Warshaw. Next to me is George Camel. I almost said Dr. George Camel. You know what? It's not too late for an honorary degree. If anyone wants to give one to me. I bestow it upon you. you hey we're taking your calls all hour you can call us in uh the number is triple eight eight two five five two two five and we'll take your call uh george i am happy to yet again announce total money makeover weekend coming up i'm getting excited yeah i'm so are you planning your talk because we're coming up with all new content for this weekend event i am not only planning a talk ge, I have pitched a whole new stage design. Wow. Listen, I'm going in.

You got some pull around here. I'm trying. I'm trying. The point is, this event is going to be unlike any Ramsey event that you've been to. All new content. We're delivering, you know, we're playing the hits, but we're delivering them in a, it's like a remix, right? Oh, I like that.

I like that. We're delivering the hits in a completely new way. And by hits, I mean, we're delivering the hits in a completely new way and by hits i mean we're talking about the baby steps baby steps one through seven you know them you love them um and so the event is really cool because no matter where you are in the baby steps there's going to be content there for you so it's just a really fun event all the personalities are going to be there um there's going to be live q and a's all throughout the weekend so you can bring your questions you get that really cool access to what's going on.

And something different about our events, I don't know what events you're used to, but our events are actually fun. Like, they're bangers. We have a good time. Yeah, people have been to, like, a seminar. And I'm like, no, you need to come to a Ramsey event. It's a whole experience. We have a world-class live events team.

And it's a weekend experience. So Nashville is a great destination. Start putting in the budget for the travel the lodging the transportation and of course your tickets which are super low right now 99 99 dollars i keep telling me to charge more i'm like this is wild i feel like this should be like two three four hundred dollars but what do i know the point is early bird tickets start at 99 but to true, that's only for a limited time. So that price is going to go away at some point. So make sure you get your tickets now. And the first 500 tickets sold, you will get a copy of Total Money Makeover signed by Dave himself.

I might buy one just to get that signed copy. I know, right? He won't sign one for me. He won't do it. So don't wait. These will go fast. If you want to get your tickets, you can go to ramseysolutions.com slash events to get your tickets. Awesome. Let's go straight to the phone lines. We got Chris in Kansas City, Missouri. What's going on, Chris?

Hey there. Thanks for taking my call. I'm looking for some guidance. So I am making okay money right now. We're in baby step two. We still have some student loans, credit card and a car and then our house. And I'm starting to do some real estate part-time. And I'm trying to figure out what the number or what I should aim for so I can start doing that full-time. I'm not ready to quit my full-time job and I'm just trying to see what your guidance is. So you're trying to get out of the job, you're trying to move out of the job that you're doing and into real estate, but we need to understand like that point at which the connection, the eagle has landed, you can make that connection,

especially with getting out of debt, right? Yes. What do you make right now? About 64 take home. And is it just you or your wife is working also? No, she doesn't work. We have four little kids. Okay. So she's working in the house. So you've got 64,000. She does harder work than I do. I think this is a really great opportunity to replace exactly what you're making right now and beyond it. So that would kind of be my signal. Once you get to the point in real estate where you're closing enough deals to where you're meeting the same standard that your $64,000 was meeting on a monthly basis, that's a really great indication that it's time to move on. Have you sold any houses so far?

No, I'm still, I'm finishing school and, you know, in talks with the brokerage and getting things started. I'm just, I'm nervous about, you know, where the line is, you know, should I have, you know, six months of expenses in case the market dumps, you know, what do we do to... What's the urgency to jump into real estate? Could you work the plan, get out of debt, get the emergency fund in place, and then make the transition? Right now, I'm kind of just kind of stuck. Because right now, it's not like the gangbuster time to get into real estate. True that. I don't know if you've seen the real estate market, Chris.

Pros are having a hard time. And that's why I want to start doing it part-time to really see if it's going to pan out. I just don't make, you know, I don't have an upward slope right now. I'm just kind of stuck, and I don't really love what I do. So I'm just trying to... So why real estate? What made you go real estate's the thing? I love being able to work for people and help people and be that resource for them

and be able to affect my own income and do what I want to do for people. And right now, I work in IT. I don't really have any control over my future as far as... Sure, but what you're really looking for is a commission sales job. And there's a lot of those out there. It doesn't have to be real estate. It could be traditional sales. You could be a mortgage loan officer.

I mean, there's a lot of fields. So I'm just trying to dig to go, what is it about real estate that lights you up, if there's something specific about that? I think it's just, I mean, I've had the experience of like walking into a house and knowing that that's my house, right? Like I know this is where we're supposed to be. And I like working hard for people to do that and see that and, you know, help them get their goal. And so I don't, you know, yeah, you can go into car sales and those things. I just don't know if that's the, I don't, I don't love the idea of just commission. I want to have some purpose in what I do. Well, let me ask questions on the other side of this.

So we're talking about the work side of it. You want to have purpose in what you do. Everyone does. Like there's a big part of that. You mentioned earlier in the conversation that you had student loan debt, credit card debt, car debt, and mortgage debt. Can you tell me a little bit about that? Because that's also going to be a major player in this equation. Like George said, housing market, it's not like you're just raking in the dough becoming a real estate agent at this point. And right now you do have the luxury of a stable $64,000 income. I say stable with quotes around it because no job is stable, but you understand my point. And so looking at the debt that you have, I feel like

debt has the ability to cloud our mind and cloud our judgment, whether we realize it or not, because debt makes every paycheck feel like, oh, I'm just getting this paycheck and I'm having to put it over here. And it especially makes it feel like that if you are in a job that doesn't give you the juice. Right. And so I do think that looking at this debt and getting more numbers around that will also help us make a better decision. So how much student loan debt do you have? Kind of just walk through that line for me. So between my wife and I, we have 40K left on our student loans.

We have $10,000 on a credit card, $6,000 on a car, and then the rest is house. Okay, so $56,000 of debt making $64,000 a year. Okay, so already I'm looking at this and I'm going, there's not a whole lot of margin to pay this off super quickly. So I'm almost... Correct. We've been working for years. You know, we started with $ 80,000 in student loans. And so for that reason, starting a new job in sales, especially real estate,

it doesn't feel like the right move at this time. Just listening to you talk, it feels like at this time what the better move is, what can we do? What can we lock in on that's going to bring in extra income, a lot of extra income? What is it that my wife can do? She's at home with four kiddos, which I'm going to get their ages here in a minute. But what is it that you guys can do that can allow you to tackle this debt in two years or less? That's the equation that I want to solve for first. And then when you solve that conversation and that problem, it's going to open up your mind to really see and be able to focus on what you want to do with your career

long-term. That's my take on it. Yeah, no, that makes sense. I would probably try to increase my income in the field I'm in as I get this mess cleaned up. And then later on down the road, we can explore the part-time work when you have the margin. Because right now you can't even breathe. It's hard to think about a whole new career path and have the time to do that. I'd rather you flipping burgers for a guaranteed 10, 15 bucks an hour than hoping that you can make a sale in the next year. And the other thing to think about here is there's cost to just being an agent. I mean, you've got the classes, the testing, MLS fees, the NAR fees, continuing education. It's hard to be a successful

part-time real estate agent. There's a reason people go with the full-time pros. And so my dad did this as a hobby because he loved helping people and he still does it on the side as a real estate agent, but he was an engineer by trade. And so that's something that's great to pursue, but I wouldn't bank on it to be the breadwinner right now. You need six months with a regular income in real estate and a stay-at-home spouse, you better have that emergency fund locked and loaded. Oh, yeah.

I think the conversation you have with your wife tonight is what can we do to double our income? And how can we do that very quickly? And that's going to take both you and me making a lot of sacrifice with our time. This is The Ramsey Show. You are listening to The Ramsey Show. Hey are listening to The Ramsey Show. Hey, thanks for hanging out with us.

I'm Jade Warshaw. George Camel is to my right. We're going to take your calls for the rest of this hour. So if you have something that's just burning, it's sticking in your craw, and you got to ask that question. Or see a doctor, depending. Yeah, if it's really stuck in your craw, you might need to see a doctor. If that burning sensation lasts for more than an hour, don't call us. Not the burn, George. Hey, give us a call. The number is 888-825-5225, and we will try to

diagnose your issue only as it relates to your life and your money, though. I've been called Dr. George. That was a mistake. All right, let's go to the phone lines. We've got R in phoenix arizona hey rylan what's going on hey hey guys how are you doing good how can we help good good i have a question um i don't know if you've been keeping up today lately but uh cryptocurrency has been uh kind of jumping up oh yeah in the last month yeah yeah about Yeah. About time, man. Yeah, I've been holding it for a while and I've been waiting for this for a little bit. So it finally happened.

What do you have? What coin do you have and how much you got? I have Ethereum and it's gone up to, I think it's gone up to 20,000 now. Okay. All right. So what's your question? So you have 20,000 now. Okay. Alright. So what's your question? So you have $20,000

worth of Ethereum? Yeah, $20,000 worth of Ethereum. Because it's at $3,300. Yes, right. So I bought Ethereum a few like two years ago, I want to say. You have six Ethereum in case you're doing the math at home.

Oh, okay. Yeah. Right. So I lost my place. I apologize. It's all good. So you have 20 grand worth of crypto. Yes. I was going to ask, I bought a new car in 2021 and I put down 23, 24,000 on it and I still owe 17 now. So I'm at a point where I could pay it off completely and still have a few thousand left over. But my son and I are discussing moving into a house and growing our family and whatnot. We already have a two-year-old. I know we're just going to say to that we're not married yet, but we are going to get married. When?

Tomorrow? It's on me. It's on me. I'm so bad at planning. I can barely plan a vacation. The really cool thing about when you go to the courthouse is you don't even have to have that much of a plan. I'm picking on you a little bit, but please get married. Yeah, I know. You know what? I deserve that. yes i know i'm i'm good with the courthouse but she wants a wedding yes you should you definitely should have a party i'm not saying that you should not have a party but if it's just if you're talking about moving in and all this you've already got a kid man just get that certificate no one even has to know that you have the certificate like just get it for legal purposes you're protected. And then tell all your friends we're having a wedding when the time comes.

But to your point, to answer your question, yeah, man, I'm clearing out this crypto immediately. I'm paying off your smallest debt if it happens to be your car in this case. Yeah, more power to you. You'll have a paid for car. And I would not buy a house until you're married and until you have the money to afford the house, which would include not only paying off your debt, but saving up three to six months of expenses and having the property on payment.

Okay, thank you for that. What was making me nervous was that 17 grand kind of going away, you know. It makes me nervous that you bought a $40,000 car. How much do you make? Uh, well, I... Oh, Jay hung up in mid-sentence. Let me go back. We'll get you back. You're back. There you are. Sorry about that. What do you make? Sorry. I make 50. My fiance makes 40. Holy crap. You make 50 grand a year and you bought a $40,000 car?

I bought a $51,000 car. Oh, my gosh. Oh, my word. Rylan, you may not do a lot of planning, but you plan to be broke. Let me tell you guys. Let me tell you guys. It's a 2.49% HDR low. Oh, well, in that case, Rylan, you got me. We'll never be impressed by that, Rylan.

Did you get a free T-shirt to go along with it from the dealership after they screwed you? Well, it's a Tesla, so there's no dealership involved. Oh, no, not on a Tesla. Well, in that case. As a Tesla driver, I'm telling you, that was a terrible decision. Oh, man. Because I know how Teslas have gone down in value because Elon's like you know what cut the price down 10 grand I don't care

yikes I agree what is the car worth well right now I haven't checked but I'm gonna I want to keep it for the next 10 years you know what I mean no I don't know what you mean you've committed to this car more than your relationship dude

how so No, I don't know what you mean. You've committed to this car more than your relationship, dude. How so? You're more committed to this car than your hopefully soon-to-be spouse. Because if you were committed to her for the next 10 years, you'd put a freaking ring on it and go to the courthouse today. But you're willing to drive a depreciating asset while telling us that you have a great interest rate on it while buying a car that's worth more than your annual income. Do you have any other debt?

I used to have $6,000 in credit card, but I picked that off. Okay. Are the cards still around? Have you cut them up yet? Yeah, I practically cut them up. What does that mean? Come on, man. They're either cut up, never to be seen again, or they're sitting in your freezer in a block of ice.

Which one is it? They're in my wallet. I want to say collecting dust, but that's not exactly true. Rylan, you're making it so easy to fire shots right now. What's going to happen? Is your girlfriend, fiance, is she going to say, no, no, no, is she going to say, no, no, no, no, don't sell.

We need to buy a house. What are you doing? Don't pay off the car. Is that what's going to happen when you tell her? Well, I already did talk to her about it, and we've been discussing it, and it's, you know, we were thinking that maybe we'd use the money as emergency slash a couple grand for furnishings, and, you know, because the APR percentage on the car is so low.

You're talking about the wrong numbers. We're talking about... Oh, my gosh. Broke people... Let's just talk about this the way it is. Rylan, broke people talk about interest rates on their debt. They care more about the interest rate on their debt. They care more about the monthly payment on their debt. They care about what the debt is doing for their credit score.

That's how broke people talk. That's how poor people talk who don't think that they can- It's about payments and interest rates. Yeah. They don't think they can get ahead without borrowing money and without borrowing at whatever interest rate they talk about. What we're talking about over here on this show, and what we want to teach people is that life is more than that you can actually take your income it's your biggest wealth building tool and you can do amazing things with it you can actually pay for your life in real time and um that's what we want to get you to and i think right now you know i'm not gonna lie like shifting a mindset that takes some time i don't expect it to happen right here in a four minute call, but. I've got just the book for you before we leave, right? I will send to you in the mail.

It's called Breaking Free from Broke. And I wrote it for people like you to help them make this very difficult paradigm shift. Yeah. Because I used to think like you, Rylan. That's why I have a love for you. I want to change your mind so badly because I believe in you and your ability to build wealth. But it takes doing some different things. And one of those things is not buying a $51,000 Tesla when we don't even make $51,000. Yeah. Did we tell you the rule of thumb? Like going forward, one of the ways we want to shift your mindset is going forward. We don't want whatever you earn per year, your vehicles, the things going down in value should not equal more than half of that. That's kind of a rule of thumb. That's what's fair. We also say that if you're going to purchase a brand new vehicle, you should not do that until you have a net worth of $1 million or more,

because you're able to take the hit. You're able to basically take that money that you would depreciate within those first four to five, six years, and just put it in a pile and burn it. And you wouldn't even break a sweat, like your temperature, your heart rate wouldn't raise one bit. And so that's the way we teach that. And then at the end of the day, we want people to buy vehicles in cash because we know that the car payment is what separates the middle class from the wealthy class. We know that the car payment is what makes most Americans, most people in general broke because they're giving away such a high percentage of their biggest wealth building tool every single month in payments. It's like it goes like housing and mortgage, student loans, car payment. You can flip student loans and car

payment depending on who you are, but those are the top, those two debts, student loans and car payments are the things that keep people in debt and keep them from building wealth and so hopefully you got that from this conversation a lot going on here but ryan i'll tell you you know what beats a 2.49 percent apr the apr on my tesla which is zero and not because i got a zero percent financing deal it's because i bought a 10 year old tesla in cash not because it's flex, but because I don't care what other people think, and I know this is a toy going down in value. So hang on the line. I'm going to send you a copy of my book,

Breaking Free from Broke. Read it. Give me a one-page report, and I'll send you a gift in the mail. This is The Ramsey Show. You are listening to The Ramsey Show, calls about your life and your money. If you want us to take your call, you can call us at 888-825-5225, and we'll hook you up with our advice. Scripture and quote of the day, Romans 1.16 says,

For I am not ashamed of the gospel, because it is the power of God that brings salvation to everyone who believes. True that. All right. Alice Cooper said this, drinking beer is easy. Trashing your hotel room is easy. But being a Christian, that's a tough call. That's rebellion. Then call me America's bad boy. Come on. That's what's up. That's good. I love that. That's very interesting. That's some food for thought there. All right. Let's go to Kyle, who is in Lakehurst, New Jersey.

What's going on, Kyle? How can we help? Hey, how's it going? Good. How can we help? So I got a pretty controversial opinion on credit cards for you guys. Let's go. And just a little backstory. After listening to you guys, I realized I've been on baby step three ever since high school. Never going into debt, living below my means. After listening to you guys, I realized I've been on baby step three ever since high school,

never going into debt, living below my means. Now at the age of 26 and serving in the military, I've managed to accumulate a net worth of $140,000. Here's the thing, though. I know this goes against your guys' teaching, but I actually use my credit cards for all my expenses. However, I always pay the full statement balance every month never carry a balance it's always on auto pay okay i've never paid anything in interest or fees by doing this i take advantage of the signup bonuses

we cash back rewards without going out of my way to buy things I wasn't already planning on buying. So do you want us to change your mind? It's also giving me a huge boost. What's that? Are you telling us this because you want us to change your mind or because you, what? Well, I want to hear your guys' thoughts on it because it's also giving me a huge boost on my credit score. And I feel like I might be beating the system. I think you did it, bro.

Have you written a book about this yet? Start a podcast? Have you started, like, an online course? I mean, you've cracked the code, dude. I mean, if you're implying I should, then... I mean, the points guy did it, made a huge brand out of it, and now he gets paid by Capital One. I mean, here's the thing.

If your plan's working for you you keep going but usually people call this show because their plan is not working and you told me you've been on baby step three since high school you're like a toddler with stunted growth man what happened if your plan was working so well why are you not a net worth millionaire with a paid for house well i'm working on it i'm definitely trying but but you're telling me that your use of credit cards will accelerate that process right yes but i've heard a lot of you know bad opinions about it on on this show and i was wondering if you guys know something I don't,

or maybe... Here's the difference. We're not financial prodigies. We're fallible humans who realize that psychology plays a huge part in how we spend our money. Here's the difference. Number one, we probably disagree on philosophy around money, which is fine. But the difference is, if I go into a gym, and I talk to a trainer, where most people go to a gym and talk talk to a trainer when they need help and I walk in and go, look, dude, I'm swole. Look at me. I'm ripped. Like I can already bench press this much. I can already do. Then I'm looking at it. I'm going, great. Keep doing it. Like, keep doing your thing. Why are you talking to me? And so part of me is wondering, do you want help or do you want to just tell us how awesome your thing is? If you truly want us to change your mind, we can talk about that. But at the end of the day, our philosophies are totally different. You're living in a world where you're caring about your credit score. You love utilizing and leveraging debt. And you're a grown man. You can do that all day. But we live in a world where

we say exactly the opposite. And if you really do want to sit in kind of like tit for tatted and kind of say you think this here's what we think and kind of like uh play the fence on it like we can do that but i i don't think that's what you want i kind of and i don't unless that is what you i mean do you want to be swayed in the other direction or do you want to convince us why you're right let's do this i mean absolutely like i i'm completely open to constructive criticism okay um if there is an argument against it absolutely let's play it out with your own situation let's just play it out i truly want to help you as fun as it is to have a friendly debate yeah what do you make a year um i make i don't know how much it adds up to in a year, but I make, I bring home $5,300 a month.

That's your take-home pay after taxes? Yes. $5,300 a month. Okay, good. All right. And so you make, you bring home $63,000 a year. How much of that have you put away for investing in savings every year? My living expenses, including like, well, just anything I need, all the essentials, I only pay like $1,500 a month. Everything else just goes into

investments. What kind of investments? I put more than half of my paycheck into investments. So you're investing like 60% of your check into investments every month. So $3,800 goes to investments. What investment is that and what account? So I have ETFs. I'm like Charles Schwab. I also have like a 401k. Okay, good. I do the matching 5%, no more than that. Do you own a home? Yeah, the rest of it just goes into my ETFs. Okay, but you told us you don't have an emergency fund. Oh, yeah. Well, I do keep like an extra 10K in my savings account. Okay.

And that just sits there. I don't touch it. Do you own a home? I do not. That was going to be another question, but I didn't want to take up too much time. Do you have any debt? I do not. Well, it's not from the credit cards, but I don't carry a balance.

Okay. So here's the truth. The wealth that you've accumulated has nothing to do with credit cards, Kyle. It has everything to do with your ability to flex your savings muscle and put away 60% of your income and live on less than you make. Yeah. So you're much more aligned to us than you think. And I walk through, you're the character in the book, Breaking Free from

Broke that I wrote on the credit cards chapter. I walk through the eight character archetypes. You are what I consider the perfect spender. And you said the quote, I said the reason I pay off my card on time and in full every month. I never pay a dime in interest. I treat it just like a debit card. And here's the thing. Even if you pay it off perfectly, every study shows that you spend more when you use a credit card. So you're in the majority, you know, 48% of people statistically pay off their card every month. So you're in the 48%. But here's the deal. Researchers from MIT did a study in 2021. They used MRI technology and they looked at brain activity when people were swiping that card. And so this is what's wild. We've already proven that credit cards reduce the pain of payment,

but this study added another layer. Not only do credit cards release the brakes on spending, they also cause our brain to step on the gas, accelerating the spending. And so when it hurts less, it costs more. And I'm telling you, when you spend your own money, even though you tell me you treat it just like cash or a debit card,

I'm telling you it causes more pain than using someone else's money and paying it back later and so i think you'd be doing even better i think so too i think you're too i think you're giving too much credit to credit cards and i think you need to give yourself more credit that you're really in many ways you're really great at handling your money and like to george's point credit cards are really just holding you back you've proven that you have the restraint and you have the foresight to go you know I I could save 50 60 percent of my income like that's a muscle a lot of people in a discipline that a lot of people don't have and so I think that credit cards are really a dead weight in your plan

and when you look at the rewards I mean most of these are two percent cash back of course yeah and then you got the airline miles. But they add up. Sure, but it adds up. If you're making $60,000 take home, you might be getting $1,000 in rewards. Yeah. That doesn't add up to much when it comes to wealth building. I mainly, you know, I'll farm the sign-up bonuses.

So, like, if I plan on buying a computer, if it's, like, a purchase I'm already planning on making, I'll, like, find a credit card that will give me a sign-up bonus. You know, I'll utilize that, like, $1,000 it wants me to spend and earn $100 back. And you can play that game. And I'm telling you, you can do that, and you'll be successful at it, and you will be the rat in the maze for these credit card companies and i interviewed someone from capital one an ex manager

who said they run 10 000 experiments on consumers like you to get you to chase the cheese in the maze and think you won and they zoom out and you go oh my gosh i'm a rat in their maze playing their game and think about how many brain calories you've spent that's my thing george you are spending a lot of brain calories for a smart, successful man serving our country. Too much time and energy putting into maximizing rewards. Just to get a computer. You'd be better off starting a business, a side hustle, and putting your time and energy into that instead of helping Capital One sponsor the next Taylor Swift tour.

So I'm going to send you a copy of Breaking Free from Broke. Read the credit cards chapter, and I hope it helps you see our side of the picture. So hang on the line. Taylor will get you a copy of that in the mail. Thank you for your service, truly. It was fun sparring with you. That was fun. I just like, I value simplicity in life, George. I like being able to sleep easily at night. I love what you said about brain calories. I got one card in my wallet, Jade, and it's got money on it. It's amazing how that works. This is The ramsey show We'll see you next time.