The Ramsey Show - App - Saving for College (Hour 3)

Episode Date: September 29, 2022

George Kamel & Kristina Ellis discuss: Saving for college, Gaining financial independence, Paying off a home when you know you're moving, How to use an extra $100k, Adjusting tax withholdings, Pausing the baby steps to buy a car. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the pods moving at Storch Studios, this is The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm George Campbell, joined by Christina Ellis this hour. This is your show, America, so call us up, 888-825-5225. That's 888-825-5225. Reminder for those of you that enjoy the show, if you've ever found it helpful, we need you to do us a favor and go subscribe and follow wherever you're listening.

Leave us a five-star review. Share it with a friend. We want to help and impact more people like you, and that makes a huge difference. We can't do this without you. We appreciate that. Anne kicks us off this hour in Green Bay, Wisconsin. Anne, welcome to the show. Hi. Thanks for having me on. Sure. How can we help? Well, me and my husband are on, we have four, five, and six, and I'm struggling with, we're struggling with trying to find focus for steps five and six. Right now we're paying an extra 500 a month on our house, which will get us done with the mortgage in about five years. But we haven't checked the kids college off yet. Like we're doing a little bit and now I'm trying to do the math and figure

out how we can do it and still make progress on our house because it feels so good to have an end in sight for the house and the kids are seven and two and that just seems so far away. But it just feels overwhelming to save that much money for them to have college paid for. So I'm just looking for tips and advice on how to do that. Yeah, that's a great question. And balancing four, five, six can feel difficult because you're not sure how much to put towards one thing. It's a little bit squishy. There's no parameters of you have to put this amount, like we say with investing. And that's because every situation is different. And so in your case, you do have a lot of time, but that means it's a great time to invest for them

because that money has so much time to grow and compound. Right. So I think the balance is working with a smart investor pro and doing the math and going, all right, juniors too in 16 years, probably going off to college. So how can we make sure we have a big pile of money in 16 years? That may look like $2,000 a year for the next 16 years and let that compound to close to six figures.

Well, and just getting started in general, I think is going to be good, even if it's $25 a month for each kid. That's literally what we're doing. Our two-year-old is getting $25 a month and our seven-year-old is like $100 a month. And now I'm just trying to figure out, yeah, what more to do? How do we get to that? Like, I'm just trying to get like $100,000 in there by the time they're both 18. And is it bad to, like, for the two-year-old, it takes like $200 a month to get pretty darn close to that. And then our seven-year-old, is it bad to just do lump? We should be able to get

some lump sums with my summer gig. I don't know. I guess is it better to do monthly or lump sums? Think about this, Ann. Let's say it takes six years instead of five because we're investing a little more for the kids. Well, six years from now, the kids are going to be eight and 13 and you have no payments in the world. And so you have all of your income at your disposal to then save up and be able to help cash flow college. And so the fact you're even struggling with this tells me you're in a good spot. What's that? Okay. Is that okay to keep paying off that?

Because I could take that $500, that extra month that we're paying on the house, and put that towards the kids' college, but it feels so good to do that extra money on the house. Yes, because there's an end in sight that's a lot closer with the house payment, and you free up a payment. Saving for college, you're never freeing up any payment like you are with debt. Right, right. Well, and I love that you want to help your kids with college, but it's also not an obligation. You know, that is a gift. And it's a wonderful thing to do. But it is still important

for you all to take care of your finances and be in a great spot when you hit retirement age. So I definitely think you can do both in this situation. I think you guys are in a great spot to be able to pay off the house. And even if there's a little bit left at, you know, where you don't quite have enough saved up for the kids college, I think you'll be able to cash flow quite a bit of it. But there's also scholarships. There's also picking an affordable school. There's a lot of different ways that they can still go debt free. But I think you're on the right track to accomplish both goals. What's your income household? 74,000.

Okay. And I imagine that income will go up over time. So that's only going to help the situation. But when I'm looking at the numbers, I go, okay, $500 a month at the house, that's $6,000 a year? Yeah. Extra? What if we could fully fund an ESA for both kids? That's $4,000 a year. So now we're talking we need to find $10,000 worth of margin every year in order to keep up with both of these goals.

Is that reasonable? Yeah, that's reasonable. And I think that will give you some peace and confidence that you're on the right track and you're not doing too much in one and not enough in the other. Just set a goal in each area, find that 10 grand in margin, and make sure you're hitting that. And if you can do extra on top of that, that's only going to help both. And if you want to put that on the house for now, that's great. And then we can be more aggressive once the house is paid off and really ramp up the college savings. Oh, okay. All right.

Well, that makes me feel a lot better. That's what we're here to do. Just make you feel a little bit better, Ann. Thank you so much for the call. You're doing so great. I just want to encourage you in that. You're in a great spot. Cameron joins us up next in D.C.

Cameron, welcome to the show. Hello. I'm glad to be here. Absolutely. What's your question? I just wanted to know what are some strategies that I can use to become more financially independent? Well, tell us a little bit more about your situation right now. Okay. So I recently graduated college with my master's in business administration, and I graduated in August of 2021. And I've worked from then up until now, and I've been able to save a good amount of money that I'm planning to use for a down payment for a condo or a townhouse in my area.

And I've just started a new job, and that's where I'm at right now. What's your income? It's $55,000 a year. Okay, and how much debt do you have? I'm fortunate that I was able to graduate with no debt. Good job. So no debt, and you have a pile of money. How much money do you have in the bank, liquid cash?

I have about $10,000. Okay, and that would be considered your emergency fund? Is that about three to six months of expenses? Yes. Well, I live at home with my mom now, so yes, I'd consider that. Well, let's call that $10,000 your emergency fund because we know you're not going to be living there in the next few years, potentially. Yep. So any money beyond that $10,000, now we can start to use to invest wisely to save up for that down payment.

And it sounds like your next goal is to get in a condo or house and buy some property. Yes. And if you're going to do that, the way to do it is to save up a big down payment and culture will tell you, hey, put as little down as possible and it'll be okay. The problem is it's really hard to be financially independent when you have a giant pile of debt hanging around your neck. Right. And you know what it's like to live debt free. You don't have payments, which means all of your income stays with you. So the more you can use that wisely to stock up a whole bunch of cash to get property, to then pay that property off, that is the path to financial independence.

And you've done such a good job so far. The fact that you got an MBA with zero debt, that's a great accomplishment. So I encourage you to keep that debt-free mindset going forward, because a lot of people get that great job and they're like, woohoo, let's buy a house. Let's buy too much. But keep that mindset. You're doing a great job. Yeah. Keep living with your parents for another year, stack up a whole bunch of cash, and maybe you'll have a down payment. And then I want you investing 15% of your income. And that's the key. Culture will tell you financial independence looks a lot different, but the baby steps is the best path to do it. So make sure you're following those steps. Don't waver. Don't fall for a TikTok real estate investing scheme.

Stay the course, my man. This is The Ramsey Show. have you ever wanted to hear the most popular calls from the ramsey show in one place do you love a good dave rant can you tell these questions are rhetorical well if you if you want to hear our current take on events, you want to hear the best debt-free screams that people love the most, the most hilarious calls, you got to go check out a new limited series we released called The Best of The Ramsey Show, where you get all of those things you want and more. And in true Ramsey fashion, we hit on the current real estate market, investing, the trends, how to take control of your life and money in these crazy times. So you can find all of those special episodes on our Ramsey Show YouTube channels or on Spotify. All you need to do is search for the best of the Ramsey Show.

You will not regret it. I love seeing the comments on these. Our team did a great job just compiling all of the best, the creme de la creme, if you will. Zach's in there. He's part of our YouTube team. He's thanking me because they love a good shout-out, and they deserve it. We do very little compared to those guys, salt-of-the-earth folks. Yeah. All right, let's get back to the phones. The number to call is 888-825-5225.

Chris is up next in Colorado Springs. Chris, welcome to the show. Thank you. Absolutely. What's going on? So I'm active duty military, and I move every like two to three years, and we just moved to Colorado Springs and purchased a home. It's our second home to every purchase.

We sold our other one. And I've been working. I've done most of the baby steps, not realizing it, so I started researching once I got out here. And I have no debt other than my mortgage. Would y'all recommend that I just try to pay that down as much as I can before I go to sell and move in, say, two and a half years? I am always a fan of paying down the mortgage because it's a forced savings plan. Do you guys have any other goals, any other financial expenses coming up

that you're worried about? No. Both our vehicles are newer. They're paid off. Nothing crazy or anything like that. We have two children, and like I said, we don't have any other debt other than the house. So I'm just trying to figure out what I should do next, and I have a 401K plus my military retirement. When I get to 20 years, I only have five more years and I can retire.

Wow. And so that would also be my income whenever I retire. How cool would it be to retire with no mortgage payment? And if you're moving, you can roll that equity into the next house with cash. So y'all would recommend that I pay down more on the house as much as possible every month until i get out of here because i looked into refinancing when i moved out of here i didn't have the money to put down or i had to scrape money together to put down because the house was so expensive and i had two va loans but now i have money from the previous house to

put into it but they won't the only thing i can do is refinance because it's a VA loan, but the interest rates are so high right now compared to what I got when I got the house. Yeah. What's left on the mortgage? About $414,000. Wow. $414,000. That's a big one.

What's the monthly payment on that? $2,663,000. And what's your take-home pay? I make $6, 448 a month and that's total household income yes my wife's a stay-at-home mother okay yeah i mean that's a big chunk your take-home pay just going to that mortgage yeah and that's your i actually contacted one of y'all's refinance people about it, and they looked into it, and they said, well, you can't do anything right now. Your only option is to refinance, but you have to wait, like you said, 100 or 210 days before I can do anything.

But the mortgage rate would be so much higher than what I already have. The refinancing is not the problem. The problem is you guys got too much house. Well, I mean, for what we needed for our family and stuff, The refinancing is not the problem. The problem is you guys got too much house. Well, I mean, for what we needed for our family and stuff. I'm big about my family being comfortable wherever I go because, you know, they have to follow me around for my career. And the problem is the housing market here in Colorado explains these things. How does this payment feel right now in your budget?

Do you all feel pretty strapped? I know you called asking about paying it off early, is insane. How does this payment feel right now in your budget? Do y'all feel pretty strapped? I know you called asking about paying it off early, but are you guys able to afford the $2,663 right now? Well, yeah. I mean, we can afford it because we have no other debt and stuff. And then on top of that, the military. So on top of my, like in my pay, I get $2,100 a month for house payments. Is that included in the $6,448 you mentioned? Yes, that is included, but it's tax-free. Okay.

Well, the problem I'm seeing is you have over 40% of your take-home pay going to this mortgage, and so you don't have a lot of margin to even pay it down early. Yeah. You're lucky to cover all the bills and put food on the table and cover insurance and all the other pieces for your family. So when do you plan on moving? Well, I got here about six months ago, so two and a half years I'll be up to orders again out of here.

Do you have any way to increase your household income? I'm looking into trying to go to an officer program. Okay. For my last few years, that'd be like a $300 pay bump if I get accepted into that. And do you think your wife would work outside the home at any point? Well, we looked into like what it would cost for child care and her working and stuff. And it's just, financially, it makes more sense for her to stay at home and take care of the kids and with my work schedule and everything. You said that you'll be out of active duty in about five years. What is your plan for your next stop? Are you going to buy another house, or what's kind of your vision for that?

Well, in two and a half years, I'll move again. I'm not sure where. And then in five years, I'll hit my 20-year mark, so I could retire. could retire depending on promotions if I get promoted I could stay in over 20 which is the goal is to keep going as long as possible to build up my retirement from the military because I'm in what they call the high three system so it's the last three years of my take-home pay they average that out I get 50 percent at 20 years and then it keeps going up in percentage every year after that. Okay. When you move to your next location, so you plan on buying a house then,

and then do you plan on staying in that location or possibly moving after that? It really depends on where they move me to because we've talked about moving back because we're originally from Tennessee, but we haven't lived there in over 15 years. So we don't know if we want to move back there or if we want to settle down wherever we get sent next. If they send me to California, I'm definitely not retiring there. I would just make sure, you know, as you're doing these moves and buying houses, just to look at all the fees associated with it, you know, especially the real estate fees. That's going to be a decent percentage in each transaction.

So, you know, total up what the closing costs are going to be, what the real estate fees are, and then divide it out and see, you know, what is that costing you if you are only going to be there for three years? Like, is that really going to be a benefit in the long run? And it may be worth renting those scenarios for a while. Well, the problem is the brokerage company I went through, they didn't really explain. They were like, oh, well, you'll just be able to, because our last home we had built and we made over $150,000 on it. So once I pay, like, scraped together the money for a down payment on this house, I replenished my, like, my savings account and everything. So what's this house worth?

This house is worth $520, I think, right now. So you put about $100 down on it, and the rest went to savings? Yeah. Once I got it, I sold the other house a couple months later because we had to eat that house for a couple months because the market cooled down. Well, right now you're going to have to maintain where you're at, and I would pay it down so that when you move into that next house,

the payment is very reasonable. I want you on a 15-year conventional mortgage where the payment's no more than a quarter of your take-home pay. That's what's going to give you the margin. And right now you're talking about you want your family to be comfortable, but the problem is it's hard to be comfortable when almost half your paycheck is going to the mortgage. Yeah, and that's where I'm at.

I wish I started listening to you guys sooner. My last duty station was training recruits, and I didn't exactly have time to focus on finances and stuff. Well, hey, thank you so much for your service, and thank you for your willingness to move around like that, to take your family and uproot them and move through all these different cities to serve our country. That means a lot. Thank you. And Christina, a lot of these areas where the military folks are based, the neighborhoods, and Dave's talked about this on air, because of how much people are going and coming, the house prices don't appreciate all that much. And so

it's not a great investment in those areas because there's always inventory and supply and demand is how the housing market works as we've seen the last few years. And so this can be a very dangerous scenario for folks that are not there for long periods of time. They take on too much house. They have very little equity. And so I just want Chris to have more equity, more margin in his life, and to be able to retire with dignity with no house payment instead of continually staying in the cycle. Absolutely. Well, he's in Colorado Springs. So hopefully when he sells this house, he get a nice real estate market for sure over there yeah but we're glad you found us we glad we're glad you're on board with us now and can use us moving forward thanks

for the call chris 888-825-5225 you call in we'll talk about your life and your money this is the ramsey show This is The Ramsey Show. I'm George Campbell, joined by Christina Ellis this hour. The number to call is 888-825-5225. On occasion, we get some really nice guests in our lobby that travel from all over the country, sometimes the world, just to come see us at the headquarters here. So I want to encourage you to do so. We've got free baked goods, free coffee.

People don't know this, but they were asking about my Ramsey Show mug. And I went like, hey, you got to visit us to get it. It's free, one per family, if you come see us. So that's a hot ticket item. But occasionally in the lobby, there's a question that we put on air. And so on the debt-free stage, we have David from Corpus Christi who has a question for us. How's it going, David? Hey, great. Thanks for having me. Thanks for your time. I appreciate it.

Absolutely. What's going on? Yeah, about a year ago, I moved from Florida and sold my house in Florida and we made out pretty well with the equity in the house. And then some complications with closing in Florida and then closing in our new house. We got delayed in Florida, had to take out a VA loan for the Texas house. So we weren't able to put in all the money that we had into the new house. So you didn't have the funds in time for closing. Exactly. Yeah. So now we have $100,000 sitting in our bank account. And some things we've done with it was we set up a 529 for our little girl, done IRA contributions for the year.

And now we're sitting at $100,000. We're on four, five, and six. And just looking to see what you guys have to offer. Well, let's say you did have those funds before closing. Would you have put them into the house? That was the plan. Yep. I would have done the 15 year, but unfortunately we went with the 30 year. That's all right. Well, we can still pay this thing off aggressively. And what's on the mortgage? What's left? We got about $350,000 left. Okay.

Would it feel good to knock it down to $250,000 tomorrow? See, that's a question because it wouldn't really lower our monthly payment. And we're kind of hurting a lot right now with inflation. But yeah, it would feel good eventually to- Is this outside of your emergency fund? Yes, sir. Okay. So you have a hundred grand of liquid cash that you can do what you want, but you're saying it feels safer to just have it sitting in the bank.

I don't want it sitting in the bank because it's not working for me. So I'm thinking maybe doing a brokerage account and trying to get a little bit more return because I have a 2.5% interest. And if I refinance now, then it's going to be close to five or whatever. What's the interest rate on your mortgage? It's two and a half. Okay. Well, I mean, you're in four, five, six, you're doing 15% to retirement. You've got the kids college underway. The next step is to pay down the house. And I know it doesn't lower your payment to put that a hundred grand, but it does cut it by a third. And so I would still do that if I were you. Okay.

I know it's hard mentally because on paper you're like, well, I can make this in the market. And why wouldn't I put in a brokerage account? Well, we're seeing what the market's doing. You put that a hundred grand in a brokerage account and in three months it could turn into 80. Yeah, exactly. And now you're going, oh my gosh. Versus the forced savings plan of the house. Because I don't know about you, I'm human, which means I'm fallible, which means that hundred grand can easily turn into, you know what? We kind of deserve that newer car, safer for the kids. Got to get the nice Honda Odyssey minivan. Let's get the 2020. And so it turns into a lot of other things. And so I love putting it into the house as a way

to force myself into debt freedom. Okay. What do you think, Christina? Well, and just keeping that vision of what it's going to feel like when you have a paid off house. Like I think right now it's like, oh man, I'm still going to make the same payment every month and that money is just not going to be liquid anymore. But it's like, how much quicker can you get to that spot where you have zero payments in the world? And how good will that feel? How secure will you feel, especially now with inflation and so much gloom and doom in the markets and in the news? But it's like, if you got a paid off house, you're just going to be sitting back chilling. And so keeping that vision in mind where it's not that immediate gratification of feeling like a lower payment, but it's that long-term

goal of, gosh, it's going to feel good. How old are you? 30. 30. That's awesome. So do you guys have a vision for when you want this house paid off? Well, kind of similar to the last caller, I'll only be here for another maybe two years. So probably won't pay this one off, but the goal is- But you're going to be on this earth a lot longer. Yeah, exactly.

Okay. But two years in the house, you're going to have that money to roll into the next one. And that's where that fourth savings plan comes into play because you roll into the next one today and you're like, well, we're still going to have a giant mortgage hanging over our heads for 15 or 30 years. And, you know, I grew up thinking you just have a mortgage until you retire and die. Like that's just part of it. It's the American dream. And we paid off our mortgage last December famously on that stage at 32. And my wife was 31. And let me tell you, there's nothing like it. And I meet very few people who pay off their house and regret it and go, you know what? I'd rather have that 250 in the bank making me feel

good. There's nothing like having no mortgage payment. So what is your mortgage payment today? It's about $2,300 a month. Yep. And so I just put that on paper and go, what is $2,300 a month every year? And what is that over 10 years? If I can invest that kind of money and how could we send our kids to college completely debt-free and not worry about it? How could we retire early at 45 or 50 if we don't have a mortgage payment for the next 20 years. And so I want you to maybe sit down with your wife on a dream date and start dreaming about it, pray about it, and go, what's our vision for the next 10 years? Not tomorrow, not what's going to happen next month with the economy and inflation. Think further out than that. Because this is going to be a blip on the radar of your entire life as you watch your little girl grow up. And I'd love

for her to grow up in a home that's paid for. That's a cool vision, man. That's the dream. Yeah. I love it. About five to 10 years, we'd like to have it paid off. Awesome. Well, and keep watching the debt-free screams because even sitting behind the desk and listening to them, man, it just puts fire in your belly when you see people who are doing it and they paid it off. Like you said, you had that feeling at 31, 32 of complete freedom moving forward. And it's like, just keep watching them feeling at 31 32 of complete freedom moving forward and it's like just keep watching them to keep that motivation and keep that vision and that why right in front of you i listen to you guys every day appreciate it man well thanks for visiting us thank you so

much for the question really really appreciate the time thank you thank you for your service it's awesome all right we're gonna move on to the phones uh where i can't see them unfortunately um kelly's there in Jackson, Mississippi. Kelly, how are you? I'm great. How are y'all? We're doing fantastic. How can we help today? Hey, thanks so much for taking my call. My question is, the overview is, should I change my income tax withholding to keep more in my paycheck so that nothing is taken out, and then just allow for that in a sinking fund in our budget item. And why would you do that?

Well, okay, so we will be debt-free by February. I'd like to accelerate that a little more. So we're on baby step two. I have the $1,000 emergency fund, and I'm trying to get as much into paying off that debt as possible. And then after that, I just think it'd be a good practice for me to keep that money as long as possible until you have to pay the check at the end of the year. Well, Kelly, I know you want to accelerate the debt, but what you're doing is you're creating the fastest path to owing the IRS a giant chunk of money. And that's a scary place to be, my friend, because you're robbing Peter to pay Paul.

You're not really helping your debt-free journey, because that $50 that you get back in your check is now 50 bucks you have to then go save in a savings account to have the money come tax time. You see what I'm saying? Right. Okay. Well, I mean, we would make room for it in just our monthly budget. Well, you know, the best laid plans of mice and men. It's one of those where you're like, yeah, no, no, we'll save for it later. We got that later. But then later never comes. And all of those where you're like, yeah, no, no, we'll save for it later. We got that later. But then later never comes. And all of a sudden you go to file your tax return. And I tell you this out of experience, Kelly, because I've been there where we're like,

we owe $6,000 to the IRS. And now it becomes an emergency when it didn't have to be. And now you're robbing your emergency fund if you even have it, or you're getting on a payment plan with the IRS, which is frightening. And so I want you to get to zero. I want you to not get a refund and not owe money. The closest you can get to zero, the better. I got you. Yeah, the IRS is not a forgiving debtor. That is not someone you want to.

You put at the top of the debt snowball anytime anyone has IRS debt. And I want bigger things for you than to be owing the IRS every year or some kind of scheme. There's no way around it. You got to pay the tax man. So I would adjust your withholdings to try to get to exactly zero. You can do the math. There's a tax withholding calculator on the IRS website where you can pop in all your numbers and it'll show you exactly how much you need to put away every month in taxes from your paycheck. So that's what I would do. I know you want to accelerate the debt-free journey, but the only way to do that is to create more income and to shave more expenses. That is the true path. And that comes down to doing a budget every single month.

Thanks so much for the call. This is The Ramsey Show. Thank you. Our scripture of the day, 1 Peter 3.8. Finally, all of you, be like-minded, be sympathetic, love one another. Be compassionate and humble. Maya Angelou said, my mission in life is not merely to survive, but to thrive and to do so with some passion, some compassion, some humor, and some style. Oh, love that. Love that from Maya. Good stuff. That's awesome. All right, to the phones we go. Javier joins us in Phoenix. Welcome to the show, my friend. How you doing? I'm good. Thank you for taking my call. Yeah, what's going on? So, I just had a question. So, me and my wife were pretty much on baby step two.

We saved $1,000 and we started snowballing our debt. But the question is, should I put that on hold and just try to focus on just losing more money? I had a drunk driver crash into my house about two weeks ago. Oh my goodness. Yeah. Told him my wife's vehicle. So instead of having the two vehicles, we're down to one. Luckily for her, she works from home, but we still have to get the kids to school and then back from while I'm at work. And no one was injured? No one was injured, thank God.

Yeah, there was no fire in the house, no water damage. It was just basically like, I guess you want to call it cosmetic. He came straight barreling through the front door pretty much. Oh, wow. That's scary. And that damaged your wife's vehicle? So it was a total loss of my wife's vehicle. And so what we got, I mean, it was nothing brand new. We had a 2012, uh, a Hyundai Tucson and with my fault because the

driver who crashed into us didn't have no insurance. So it was basically all on our insurance. Luckily we have full coverage. So, you know, we, we, we got it paid out, but I guess with the comps around town and because of the year and the mileage, they only gave us about seven grand after deductibles. So should I put on hold trying to rebuild our thousand dollar emergency fund and the snowball debt to try to make up the difference to get something close to that same year and model? How much is it to replace the car? You said they gave you seven thousand. How much would it be to get it year and model. How much is it to replace the car? You said they gave you $7,000. How much would it be to get it? They gave us $7,000.

But, I mean, just the size of the family, we're just trying to find something like a crossover because we have a sedan. We had a sedan, so we're trying to find a crossover, you know, like to just kind of sponge everything because more than likely, once they start construction on the home, we're going to have to leave.

And it's just basically depending on where we go, we might have to be taking the dogs back and forth to either my sister's or my father-in-law's house. So I need something big enough to get the dogs in there. Okay, how much money do you have in the bank right now, aside from the $7,000? Right now, apart from the $7,000, I probably got maybe like $500 in my little side account that I have for savings. And how much debt do y'all have? Well, we just have the house, and we have maybe one credit card that's probably like about $2,500.

Okay. So that would be the only thing in your debt snowball is that credit card? Yeah. And then we'd be moving on to... There's two credit cards, but that's like the total amount, and debt snowball is that credit card? Yeah. And then would you be moving on to... It's two credit cards, but that's like the total amount. And we're almost done with the smaller one. Okay. And then what's your income?

My income, I want to say I make about $40,000 a year. And then my wife is probably just under me. So she's probably like maybe $36,000, $38,000. So about $75,000 a year gross income for both of you? Yes. Okay. So how quickly can we save up another few grand and get a vehicle? I'm hoping within like a couple of months because I do have a part-time job,

but it's only one day a week. But, I mean, it is a full eight-hour shift that I'm getting on there. Okay. So on top of my Monday through Friday, and then she's just Monday through Friday. So if you've got $7,500 to your name, I'm going to put away $1,000 of that for the starter emergency fund, which leaves you $6,500, and that becomes the car fund, and we are going to get a car, like, next month. And if it's not the dream car, that's okay. We can always upgrade later and sell that one and upgrade to the bigger one.

Right now, we can't be super picky. Yeah. And you're going to be in that one and upgrade to the bigger one. Right now, we can't be super picky. Yeah. And you're going to be in a very different place six months from now. I need to explain to my wife. I need to try, and my wife doesn't get it. She's like, I, we need something. We're not getting anything older. We need the same year. And I'm just like, I just can't get through to her on that part. So I'm just like, mentally she's stuck on, she wants that exact car. And now that car is $10,000 instead of $7,000. Yes, exactly. Yeah.

So let's see. Can we save up $2,000 in the next month and just sell as much as we can, work as much as we can extra, shave our expenses as much as we can so that we can expedite this process, get that vehicle? Then we're going to focus on getting back to the debt, paying off the $2,500, cut up the cards. We're closing them. We're not going to use them anymore as an emergency fund. And then we're going to focus on getting a fully funded emergency fund in place so we never have to deal with this kind of stress again. Yes.

Yes. That's what exactly I need to do. But it's just weird because I feel like sometimes she doesn't see my point of view. And then I tell her, well, Dave Ramsey, she's like, oh, I don't want to hear about Dave Ramsey. Yeah, that's not going to get you where you want to go. Well, and I think it's important to just acknowledge that she's probably grieving this. This wasn't just like her car broke down. This was a big deal. Somebody came onto her property and wrecked and she lost a car that she liked. She was happy with that car. And so this is a lot to process for her.

So I think just giving her space and time to grieve a bit while also making the right financial decisions could be helpful. Just acknowledging just how big of an emotional thing that is to overcome. I think the numbers, I think what George said is great. You can find a big vehicle for $6,500. I mean, it's not going to be the most glamorous vehicle. It may be an 09 instead of the 2012. Okay.

Yeah, but it's both and. It's doing the right financial decisions, but also giving her space to grieve and acknowledge those emotions and kind of work through and process. Because having what y'all went through happen where it affected your house, it affected your car, that's a huge deal. Yeah. And we're going to gift you one year of Financial Peace University. I want you and your wife to sit down together, watch all nine lessons. I think that will get you on the same page and it will turn Dave's name from a cuss word into a happy name. Yeah.

That's what we want for you guys. So hang on the line. Austin will pick up. We'll gift you that Financial Peace University. Thanks for the call. Well, and it'll help you see the future too because right now it's like this moment is so heavy. But going through Financial Peace, you're going to be able to see the why of the $6,500 car right now.

Get a bigger picture. Yeah. That's good. All right. Ashton joins us up next in Springfield, Missouri. Ashton, welcome to the show. Hey, guys. I want to just say God bless you both.

It's an honor. Oh, thank you. What's going on? So long story short, I'll make this quick. I know I believe I'm one of the last callers. Me and my wife just had the privilege to pay off all our debt this past May, and God is so good, man. Way to go.

Awesome. She's a mini Christina, let's just say that. Ah, we love to hear it. Driven. She got her whole entire bachelor's paid for through a scholarship to where, I mean, God bless that. That's amazing. So cool. But I was the knucklehead and took out the student loan. So I was $36,000 roughly in debt.

Oh, me too. We paid it off in 17 months. That's so great. Hey, join the party, man. But it's gone now. Oh yeah, let me get to the question. I apologize. So, now that she's in grad school, she's going to

Doctor of Physical Therapy school, and she's also getting all of that paid for through a scholarship. Way to go. I know, it's incredible. She's part of a Native American tribe, and so there's a lot of opportunities out there for those that may not necessarily think they can. And so I just want to put that out there. Okay. We got about less than a minute. What's the question we can help

with today? Here we go. Sorry about that. So there's going to be clinical rotations on her last year of grad school. And so that's a lot of traveling for different locations within nine months. Should I start investing now? Should we pile up cash, um, for that storm or should we do a little both? How old are you? I don't have any housing right now. I'm 25. I just turned 25 and she's 23. Okay. I would say to pile up cash for the next year and see what life looks like. You guys have plenty of time to invest, and that'll give you guys some peace while she's in school and we're figuring out what the next steps look like.

Beyond that, yes, we can split the difference. We can start saving up a down payment. We can use that cash towards that. We can start investing and fully fund a Roth IRA if we're in a good spot with a down payment, depending on the home that you're looking at. And so I think you go about this with wisdom and we don't know what her income is going to be either, right?

Right, right. We are daily listeners, so we're all in. We've been all in. And so I figured you'd say that, so I just wanted to get a verification. We're not surprising around here, Christina. You pretty much know what we're going to say. I love it.

Y'all are rock stars. Way to go. That's awesome. I feel good about your future. She is incredible, guys. I married up for sure. That's the only way to do it, my man. We love to hear it.

Well, that puts this hour of the Ramsey Show in the books. My thanks to my co-host, Christina Ellis, all the folks in the booth, Austin, Ben, James, Zach, and Andrew. And you, America, we can't do this show without you. We appreciate you listening in. Until next time, spend wisely, save intentionally, and give generously. Do you love a good day, Brandt? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from the Ramsey Show on YouTube.

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