The Ramsey Show - App - The Answers To Your Money Problems Are Simple (Hour 2)

Episode Date: October 13, 2022

George Kamel & John Delony discuss: What to do when dealing with debt collectors, How to save your family after financially hitting rock bottom, Why you should never co-sign on a loan, Why you shouldn't skip over Baby Step 5 to pay off your house, Why you should never use your Roth as an emergency fund, How to prioritize your debts. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/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

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the pods moving and storage studios, this is The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Ramsey personality, George Campbell, joined this hour by my good friend, Dr. John Deloney, and we are taking your calls, America, about money, life, mental health, boundaries, relationships, paying off debt, whatever you want to talk about, we are here for you. The number is 888-825-5225. Sally is kicking us off in Manhattan. Sally, welcome to the Ramsey Show. How's it going? I'm not going great, George, but thanks for taking my call. I'm sorry to hear that. Yeah, I got to just put the honest deck of cards on the table. I just love you all, and I love Dave. And anyway, here are the facts. I'll

be like short and brief and just interrupt me. I'm going to be 58 in January. I've been paying a mortgage on a small one-bedroom since 2004. Right before the pandemic, which I won't even give my opinion about that episode in our lives, Chase Bank, to whom I was paying a mortgage every month since 2004 up until 2019, perfectly full full i'm very financially conservative i was raised by financially conservative people i never missed a payment on a credit card this kind of stuff my mom who was suffering from a terrible stage of dementia and was dying quickly basically i and i was in between jobs i am a professional who works on assignments,

long hours, two months at a time, then there's a rest, but then I'm assigned somewhere else. And between all of that going on, and my folks moved back to Texas, I started paying my monthly mortgage payments a little bit less than what I had been paying for years because I was scared and terrified and overwhelmed for the first time in my life. And I find out that Chase sold bundles of mortgages that were right under $100,000, which mine was at the time, to this debt collector by the name of Shell Point or New Res, New Res LLC doing business at Shell Point. Long story short, they're just kind of horrible

and everything that Mr. Ramsey has spoken about, collection agencies and debt collectors. Well, they issued a forbearance during COVID. I sent them a chunk of money, $10,000, because I was a little behind. And, you know, I'm very nervous about these matters. And I sent them money, and then they said, you can take advantage of a forbearance during all these COVID programs that the feds are issuing. So I took a little forbearance break to bury my mom and sell her childhood home and all that kind of stuff, go through her things alone and whatever. And, well, now this time is over and they've come at me aggressively.

And I got a letter from some cheesy law firm in Long Island. The paper looks like it's printed out on like 1985 printout. I don't even know if it's valid, but they said there's a data signed for a foreclosure. Now, a couple of weeks ago... Hold on, Sally. Let me hop in here. Let me hop in here, okay? I can hear the anger in your voice, okay? Oh, yeah. Here's the question we have to ask, okay? Sure. If you've listened to me at all, you know I'm as empathetic as they come, okay? I can't wrap my head around having to bury my mom and go through her things, okay? Right. Thankfully, I haven't been there yet.

Okay. She was young, too, by the way. Yeah, yeah. I mean, it's a lot. Here's the question sure did you get far enough behind on your mortgage that you're not that chase just did some crazy thing and what but at some point they sold your home to a to a bad debt collector because you weren't paying on it is that right or is that not no I was paying them every month up until, and the full amount up until 2019,

probably about six months into 2019 when I was in between jobs and my mom was dying and did die in 2019, by the way, right before Christmas. So there was a period of time you didn't pay the full amount and that amount went to collections. But I kept paying something every month.

Yeah, but it wasn't the agreed upon amount in your mortgage structure, right? Correct. Well, yeah, of course not. Okay. Okay. But I made these payments every month. Nobody's disputing that. Nobody's disputing that.

Not at all. Not at all. I'm not a liar. But if you told them, if in your mortgage, hey, I'm going to pay you $1,000 every month and then nobody's disputing that nobody's disputing that not at all but if you told them if you told them if in your mortgage hey i'm going to pay you a thousand bucks every month and you started paying them 500 every month that's that's basically around what happened okay i'm like let me just put something here yeah then they're gonna say hey you're not paying your mortgage and um in a perfect world you would hope somebody after 15 or 17 years of faithful would call you and say, hey, what's going on? This is out of the ordinary for you. And it's a big, giant bank that probably rolled you up in a computer program. They saw you as an account

number. You're just a number. You've missed your payment for three months and it just gets shipped off. There's no discussion when I'm talking about it. This is not a personal attack against Sally. This was just the robot saying, all right, send it to collections. I know. And, you know, I'm not – I am aware of the reality of this world and how corporations and banks, you know, who – I mean, does anyone have to say anything good about a bank? No, of course not.

I get it. But now I'm just in this place where I need your advice on what to do, who do I contact, do I file a complaint? Like, you know, I just sent them a $30,000 check. Okay. Does that square you up? Oh, that more than squares me up. But why am I getting this, you know, I just saw this letter from this cheesy law firm in Long Island. Well, we're going to contact the original creditor of the debt.

So we're going to contact Chase and say, what companies did you authorize to collect this debt? That will give us the right information. And we're going to go to whoever's coming at us. We say, I need this in writing. I need to know exactly how much I owe, what I owe, all the details of this before I even agree to talk about this any further. Okay. So get that all in writing. Never give them access

to your checking account. Never give them any personal information. I never will. Be proactive. You call them more than they call you. I want them to be annoyed. Yeah. You say, hey, just giving you an update. Here's where things stand. I saw that my $30,000 check cleared. Just want to make sure, will you send me something right now that shows it applied to the balance? Show me right now, right now, right now. And they may say,

sorry, your house is already in foreclosure. That ship sailed. We should have had $30,000 last month or the month before, the month before, the last year. And so it may be too late, but it's not worth, I want you to knock on their like George said knock on the door

every day every day every day where are we where are we where are we and finally they're going to they're going to take a computer inventory every time you call and there's going to be man this lady calls every day twice three times a day and hey yes the banks and yes corporate America not this is just a person

on the other end of the phone treat them with dignity and respect and kindness okay other end of the phone. Treat them with dignity and respect and kindness. Okay. And all of the, it's so easy. I'm the worst at this. My wife is often going, okay, cool, John. I'm glad the end of times, blah, blah. What can we do right now? What can we do right now? And Sally, you can look up the Fair Debt Collection Practices Act that protects you. And that tells them, hey, you can't call me after five o'clock. And you're going to keep track of every time you call, who you talk to, what time't call me after 5 o'clock. And you're going to keep track of every time you call, who you talk to, what time it was, every detail of that call, and you're going to stay on them,

and we're going to clean this mess up, and we're going to learn it, learn from our mistakes, call it a stupid text, and move on without anger because your life is worth more than just sitting there angry at a big bank for the rest of your life. So we're hoping the best for you. Hope you can get this thing cleaned up and move forward. Give us a call, 888-825-5225. This is The Ramsey Show. welcome back to the ramsey show i'm george camel host of the entree leadership podcast

the fine print and co-host of smart money happy hour join this hour by the host of the dr john deloney show you guessed it, America. It's Dr. John Deloney himself. But how funny would it be if it was a different host? If it was Dan. Hey, my name is Dan. I'm hosting the Dr. John Deloney Show. It's kind of like us, me and you hosting the Ramsey Show. That's true. At least Dave took his first name off of it to make it less awkward for all of us. It's great. Well, we are here for you, America, taking your calls about life, money, mental health, relationships, career. It all kind of blends into one blurry thing we call life, and we're here to help you take the next step and help you make a breakthrough in that.

So 888-825-5225 is the number to call. Renee joins us up next in Orlando, Florida. Renee, welcome to the show. Hi, thank you. So just a little bit of backstory. My husband and I were in our mid-30s, and we both work in frontline positions at one of the major theme parks in the area. And we also have a six-year-old son. And for the last three months, we've been living in a hotel because we could no longer afford our rent in our apartment.

And financially, we are just not in a place to buy a house. Um, we've been able to secure an apartment, but the real issue is, um, we ended up falling for, um, as you would say, George, the stupid tax of, um, getting into payday loans and installment loans. And now we're like $25,000 in debt and we make like $75,000 a year. But between the weekly payments on those loans and our regular bills, we're suffocating under our debt.

And we don't know how to get out of it. We were just turned on to your show, the Ramsey Solutions, maybe like a couple days ago from a coworker of mine. And we've found hope in it so far, but we've been hearing stuff on the show like baby steps and emergency funding.

We don't know what any of that stuff is and we just we don't know how to start we don't know where to go from here we don't have anything in savings we don't have anything for retirement we don't have anything for our kids um and we would like to have more children someday and set up a stable future and a stable home life for them eventually. So sorry to hear all about this. Gosh. Are you ready? Yes. Like when George starts talking here,

like you have to say you're ready. And what that means is you're ready to quit your jobs. If you have to, you're ready to move out of the area. If you have to, you're ready to change everything. Are you in? Yes, we're ready.

My husband and I, we've already started looking into schooling to get different jobs, you know, stay in the jobs that we have right now so that we can fund the schooling that we're going to because the company we're at, they will fund higher education for free. And my husband, he currently has a bachelor's in psychology and wants to go to school for a master's of social work to be a guidance counselor. And I'm looking into real estate school because I don't have any desire to go to college per se and throw money into a system where there's no guarantee of me getting a job in that field.

Okay. So you're ready. So George is going to walk you through it. So I love that you guys want to further your education and get out of this hole, but right now we're in survival mode. And so I'm not thinking about school. I'm thinking about how are we going to put food on the table and stop living in hotels and make sure our six-year-old is taken care of. And so A1 is to stop going into debt.

Are you guys done there, or are you still having to take out these payday loans to get by? No, we're done. We did take out some credit cards a couple months ago, but we have since stopped using them. Cut them up. Cut them up. Can you physically cut them up? Yes. Cut them up. And throw them. Can you physically cut them up? Yes. Cut them up.

And throw them away so you don't know the numbers anymore. Okay. And then we're going to pay those off completely and we're going to close all of those accounts. Okay. And we're not going to look at credit card companies and payday loans as a blessing

to get us through next week. They are snakes. Okay. They prey on people in your situation, okay, who are working their butts off to try to make it work and want the best for their little kid and just can't make the ends meet. They prey on you.

They give me and George, they give us free flights, and you pay for them, okay? They are not your friend. So once we're saying no to debt, let me ask the interest rate on these payday loans, because I think it's going to make us all throw up. Too much to want to say online. Is it in the hundreds? Probably.

I mean, we're spending $1,200 a month on these payday loans. A loan. What other debt do you have? We both have car payments, and I've looked into selling them off, and we are basically upside down on both of our cars because, again, it was a buy here, pay here kind of place, so astronomical interest rates. Okay.

You have two car loans. You've got the payday loans. you have the credit cards. What else? The credit cards were actually not in debt on. We make those payments. Zero balance. Okay. We just stopped using them. But we also have like medical bills and collections. I have maybe $1,200 in medical bills and collections, and my husband has $1,400 in collections. Okay. So what we're going to do is A1 is we're not going into more debt. That's baby step zero. We're going to stop the bleeding.

Your next step is to scrape together $1,000 as quickly as possible. That's going to go into a savings account. I know that sounds like, how are we going to do that? We have no margin. And this is where we go. Obviously, you guys aren't living lavishly. All of your money is going to debt. We haven't lived lavishly in a long time.

So right now, your expenses are your four walls, is what I'm guessing. Food, utilities, housing, transportation. Yeah, basically. And then anything my kid needs. Okay. Our, basically. And then anything my kid needs. Okay. Our kid needs. This might mean that we are working 60, 70-hour weeks and we're trading spots to take care of the six-year-old for a few weeks

just so we can get out from being underwater. Let's tell her what that means. Your husband gets off of work and he doesn't come home. Yeah, that's what we've been doing. My husband's been doing double shifts good six six or seven days a week because he can my my role at this theme park um they don't allow overtime okay but have you talked to your employer your leaders there and explain what's going on yeah okay and there's could they put you up in some of their housing on the property temporarily?

They don't have it. I mean, they have it for the college kids, but not for actual... Do you have somebody who could watch your kid for you? We will now because, like, our closest family is three hours away. But we recently acquired an apartment, thank God, in a complex that's an hour away from work. But we actually have friends that live in the complex that would be willing to watch our son from time to time. Well, it might be for 30 days you ask them,

tell them, hey, we're in a mess. And the moment you get off, you're going straight to drive Uber or deliver Uber Eats or deliver Instacart. And all we're trying to do is get a thousand dollars, get a thousand dollars. You are going to get a thousand dollars in your account and you're going to take a deep breath for the first time in a long time. Okay. And you're going to do whatever it takes. Even if it's, I'm staying with friends, I'm going to get plugged into a local church and do whatever you can to get there.

Baby step two is listing all the debts, smallest to largest, regardless of the interest rate and attacking it with a vengeance with all the margin you can muster up with all the income you can create with all the expenses you can shave down. And it might be hard at first, but when you knock out that first debt, you are going to be on cloud nine and you're going to feel like,

Oh my gosh, we can do this thing. And you're going to knock out the next debt and the next debt. And what does that do? It frees up the payments on those, now giving you a bigger snowball to keep rolling. And that's called the debt snowball method. Okay. And once you do that over the next, you know, it may, what's the total amount of debt you guys have? I would say between 25 and $30,000. You guys can do this. Easy. You make $75,000, you got $25,000 to pay off. We've heard much smaller incomes with much bigger numbers, and they were able to do it. So I want you, the key to all of this is just believing that you can do it. And we're going to help you and walk with you by giving you one year of Financial Peace University. Watch all nine lessons with your husband to get fired up, to give you knowledge,

to give you motivation. We're going to give you one year of every dollar premium to get on a written plan, a budget. Every single week, you're tracking every expense, making every dollar stretch as far as it can go. And I want you to call us back when you're debt-free and share your story because it's going to give so many other people out there hope who didn't think it was possible for them. Hang on the line. Jen is going to pick up. We are rooting for you. We are in your corner. Please call us back if we can help in any other way. This is The Ramsey Show. what's up america welcome back to the ramsey show i'm george campbell joined by dr john deloney this hour our question of the day comes from blinds.com find out for yourself

their 100 satisfaction guarantee it means even if you mismeasure or pick the wrong color, they will remake your blinds for free. You get free samples, free shipping. With the new promos they run every month, you'll save even more. Use the promo code RAMSEY to get the best deal. All right here. Today's question comes from Brenton in Georgia. Brenton writes, way. I thought going into debt was a normal part of life. I talked to my dad and stepmom about refinancing to get my name off the condo and they said no because the monthly payment and interest

on the loan is so low and they're renting out the condo to pay their mortgage on their house. If they refinance, they'll have to pay a few hundred more a month. So they're going to continue to bury their 29-year-old son, so they save a couple hundred bucks a month. What a great mom and dad. Wonderful. Way to go, dad and stepmom. My question is, that was John Commentary, by the way.

My question is, I realize now that co-signing on a mortgage wasn't a smart move. Ta-da! On my part, and I'm wondering how this will affect my ability to get my own mortgage going forward if they won't refinance. And if they won't refinance, what should my next step be? What a pickle we found ourselves in, Brenton. What a pickle. Well, I'm glad we've learned the lesson here.

And this is going to be a hard conversation with mom and dad saying, hey, my future is on the line here. And I regret this decision. And I want out. And this is part of the risk of co-signing because guess what? You could stop paying. And guess who that mortgage would fall on? Your parents. So you say we could do this the hard way or we could do this the easy way. The easy way is you allow me to refinance and you figure out how to cover a few hundred extra bucks a month on this small mortgage so that I can live my adult life because I am broke. I net 27 grand a year. I'm in student loan debt. I need to get out. And I hope that works. Right. I mean, there's, I don't know that you can force it. You can talk to, you know, Churchill Mortgage. They'll explain the deal when it comes to debt to income

ratio and the timelines and when you would be able to buy a house if this is still sitting on you. But I would do my best to get out of this. And I do, George, I don't know. Here's what I want you to check on, Brenton. I think if you called an attorney, you are basically dissolving a partnership here if you co-sign on a loan. And if you say, I want out of this partnership and my partner refuses to let me out, I think, I may be wrong because this may just be a business transaction, but I think you can take them to court and the judge will force a sale.

And they force a sale and then you split the proceeds and partridge in a pear tree. Because my guess is that this place also has equity into it that you've bought into over the last two years. And the house has probably gone way up. The condo has probably escalated in value significantly in Georgia. And so you've got money built into this thing. Even just walking away from it as a gift to your dad and stepmom who just love you so much that they want to keep you tied to this thing.

But you can force it. I think George brings up a good point. We can do this the hard way or the easy way. The easy way is I need y'all to sign this over. The hard way is I refuse to be held back on my life by a decision I made when I was 25 years old. I screwed up. I'm sorry. But I want to move on with this. And at the end of the day, here's what's going to be hard. Your parents may choose that couple hundred dollars a month over a relationship with their son. They might make that choice. And that says more about them than it does you. So if you have to say, okay, cool. I learned my lesson. I will never coast on anything ever, ever again. And by the way, I'm sorry that y'all

walked away from your son over a couple hundred bucks a month. Good grief. And by the way, Brenton, $27,000 a year at age 29. You're going to have to make some more money, man. You're going to have to make some more money. And that's not a judgment statement. That is me saying, I love you enough to that. I see your value in you that you don't see. And I want you to put yourself in a better financial position at 29 so that when you're ready to buy a house, you got the money to do so. Yeah, that's a good call.

And you don't have to lean on schemes and hey man, will you help me out to build a credit score, right? Yeah, the good news is you being a homeowner is not anytime in the near future with this level of debt and income. And so it's going to be a while anyways. Now you can still get the info. I would still do your homework, talk to an estate

attorney. You can talk to Churchill Mortgage and they can give you the rundown on what that looks like with debt to income ratio. But right now you wouldn't qualify for a mortgage as it stands. So I wish you the best in getting out of this situation, man. It's just one of the many reasons we tell you never to co-sign debt and never have a mortgage with someone you're not married to. It's just messy and it hurts relationships every time. All right. Thanks for the question. Yeah. Thanks, man. All right. Let's go to the phones. Mike joins us in NYC. Mike, welcome to the show. Hey guys, how are you? Thanks so much for having me. Well, about a year listener. Awesome. You guys have created a gazelle on steroids.

Wow. I cannot stop paying down debt. Dude, a gazelle New Yorker, man. That's somebody to be reckoned with. I'm scared of that. I have a question for you guys. All right. I recently came into some money through the sale of my mother's house.

Has anyone ever, and I do have three children, young children. Has anyone ever skipped five and six? Because I really want to land a knockout punch on my mortgage. I mean, it's the type of punch that when, like, Rocky hit Drago, he's cut. You got the momentum. I have the money now. He's not a machine. He's a man.

Yeah, I know what's up. So you're saying skip five and knock out six, which is pay off the house early. And then it'll bring my mortgage down to about seven years. So essentially I'm refinancing without refinancing. Get out of that and reallocate my mortgage payment. I'd like to pretend I have a mortgage payment, and that would fund my kid's education. So I have the money now. I'm eager to keep paying down debt,

and I can't be stopped. So what's left on the mortgage? Right now, at this point, $356,000. And how much money do you have? Around $250,000, but I know I have to save some for some taxes, my accountant said, because it was under a life estate. Yes. So I know I have to save some money. So let's say I want to throw $200 at my mortgage and get it down to $150. Well, don't refinance it at that point. No, he's saying that by putting $200, he's basically getting a refinance.

Got it. Basically, it cut me years out. Where are you at with the kids? You said they're young. How old are they? Nine, six, and four. Okay. And how much do you have saved for college right now? Nothing. We never got into a 529 plan because, like I said, we had to start the baby steps.

So over the last 25 months, we've got to step five now. Okay. So you've been investing 15%. I've no 529 plans or anything. You've got the fully funded emergency fund, and you're out of all consumer debt. Last thing is the mortgage. How much do you make? Household income is a little shy of $210,000. Okay.

Well, I think we split the difference here. I don't think it needs to be one or the other. Why don't we throw a bunch of money in a 529 plan or an ESA? Maybe you could fully fund an ESA for each kid. That's $2 two grand a kid, and we can put the rest onto the mortgage. So that's 194 on the mortgage? Oh, my mortgage now is 356. So even if I throw 100 at it, it'd be 256, but that would probably- Sure. John's saying if you had 200 and you put six of that in the ESAs, maybe you could even put a little in a 529.

The rest can go to the mortgage, and it's not one or the other. Then we're at least starting this process because that money is going to grow tax-free until they're at college age. And so when you start to do the math on that, there's a lot of opportunity cost in not starting to invest for college right now. And the only time I've seen this, if you think, okay, if we did this, I would have this mortgage paid off in a year, I'd have this mortgage paid off in 18 months, then I could be convinced. Does that make sense?

What I don't want it to have, I want it to become two years and then three years and then five years and then seven years and suddenly that nine-year-old is 17. Right, and I definitely factored in. So maybe we could, like you said, split the difference. But like I said, I can't stop paying debt. I love it. I got you, man.

It's a lot of fun, man. Only for a little while longer. That's right. I love it. That's right. Well, you can definitely do both, and if you knock that mortgage down to, let's say, close to $150,000, $160,000, making $210,000,

that thing's going to be gone in three, four years if you're still intense about it. Yeah, if you keep being a maniac about it. And then your kids are still young, and now you don't have a mortgage payment. Now we can really start shoveling money into college savings and watching that money grow. So either way, you're going to get there. I just don't want you to put it all in one and forget about the sweet kids. Forget about it. There we go. Thanks for the call, Mike. This is the Ramsey show. We know a lot of you are planning on moving soon, and I've got some great news for you.

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rental today. That's pods.com slash Ramsey. Open phones this hour at 888-825-5225. I'm George Camel hanging out with Dr. John Deloney today. Madeline joins us in Roanoke, Virginia. Madeline, how are you? I'm great. Thank you guys. Also, yeah, I want to thank you guys so much for what you do. I want to say the show is awesome and I also love reading the email blast. Those actually help a lot. Oh, that means the world. Our email marketers appreciate that. They work hard on those. Yeah, those are great. Yeah. So my question is, my husband and I are actually on baby step three, trying to build up our emergency fund, but we're also maxing out my Roth IRA at the same time. So I'm asking is, can we use the money we

haven't invested in my Roth, so there's money in my Roth that's not invested, as a second emergency fund so that we can keep building our emergency fund and our Roth at the same time, assuming we don't end up using our emergency savings from the Roth account, if you follow. And then also, or should we just take all the cash out of my Roth and put it in the bank with the main emergency fund and stop maxing out until we've completed baby step three? You took the words right out of my mouth. Why haven't you been doing that one the whole time?

I feel like there's a reason. Taking all the cash out of the... Following the baby steps as laid out, which means we're not investing until we have the fully funded emergency fund. You guys are doing three things at once. Yeah, no, we're not doing that. I guess just because when I was 17, my dad set me up with investing and I never stopped maxing out. So it's just not like, I didn't have debt at the time. So we cruised through some baby steps while we were maxing out. Got it. Well, we're here today. So let's walk you through what's next. So how far are you from

having a fully funded emergency fund? Probably like $5,000 away, a little more than that. Okay. And how much is in the cash portion of your Roth IRA? About $3,000. Oh, cash portion of the Roth IRA, that's $5,000. I'm sorry. Oh, so you have 3,000 invested and 5,000 is just sitting on the sidelines that you can move anywhere. Yeah. So what you just told me is you have a fully funded emergency fund. Way to go, Madeline. Congratulations. So just move the money over to your savings. Not exactly, but we're trying to get up to $14,000. We have $3,000 in the bank and we have $5,000 in the Roth. Okay. So that puts you at eight. You need to get to 14 at that point. Yeah, like 6,000 more. Okay. And so how long is it going to

take for us to get 6,000 more if we're pausing investing for now? It's going to go faster, isn't it? Yeah, it's going to go a lot faster. Yeah. And then I guess another part of that question is, should we be saving for retirement before we're done saving for our first house? Is that also part of the equation? So you're talking about 3B, which is saving for the down payment and baby step four. That one is a choose your own adventure, depending on your age and how quickly you want to get into a house and where you're at for retirement, some people choose to do up to the match and the rest is going to a down payment. Some people choose to pause investing for two years and stock up that down payment. Some people

choose to do 15% and it's going to be a longer journey to get to the down payment. And so it just depends on where you guys are at in life. Okay. That's great. Thank you, guys. Yeah, absolutely. Thanks for the call. Good question.

I mean, that was like beautiful mind-level math in the beginning there. And it just, when you simplify it, it changes things. If you were listening to this, George just said the word, simple. I was a guy that had a bank account for our emergency fund, a bank account for our bills, a bank account to get automatically withdrawn from just in case it gets overdrawn because they've got our number. I had another account that was like a secret storage. And you know what? I caused a huge mess, a giant mess, like an open field, open reel, open face fishing reel that I cast backwards. It's just a huge nest of mess.

And my wife was like, hey, there's this cool thing in our one bank. It's got multiple accounts you can open just in the same account. Can we just do that? And that way I don't want to set myself on fire every time I ask how much. Anyway, simple, simple, simple. That is the answer to most of our money problems. Simplify. Relationship problems.

Most of our problems. Simplify. Good word. All right. We're going to Charlotte, North Carolina up next. Chris joins us there. Chris, welcome to the show. Hey, how's it going today? Good. How are you? Doing pretty good. Can't complain. So I started watching the material about a week ago. I'm on baby step two. And as I'm looking at my budget and my bills, I realized that I had my phone bill and my insurance premiums. Should I include that into baby step two, or do I leave that off to the side and make monthly payments?

Well, what do you actually owe debt on? Because your insurance premiums aren't debt, correct? That's just a monthly, it's like a utility bill. Right. It's not necessarily debt, but it is something that I'm going to have to pay one way or another. So that's why I'm a little confused. Sure. If I'm going to have to pay it, maybe I should include it. So my other debt is two credit cards at $500, another credit card at $1,000, and a motorcycle and a car, but that's above. So I'm thinking maybe I should just kind of pay off my credit cards first, then do the phone and insurance, then pay off my motorcycle or-

Just pay them off smallest balance to largest balance and ignore the interest rate. Okay. And your insurance, let me explain how that would work. So you're doing a budget, hopefully. And in your budget, you're going to have a sinking fund and you can create that with every dollar. They have a special, you mark it as a sinking fund. And so what you would do is if your insurance bill is, let's say, $1,200 a year, that's $100 a month. So in your budget, you're going to have a line item for insurance at $100 a month. And that $100 is going to stay in your checking, your savings account.

So by the end of the year, after 12 months of that, you have $1,200 ready to pay that bill. So we're not going to put that in the debt snowball section. And then as far as your phone, your phone payments, you're saying you have payments on your phone because that's how they sell phones these days, because they want to keep us in debt? Yeah, it's in the contract and all that type of stuff. So if you stop paying that payment, what are they going to do? They're going to come after you, right? Right. So I would consider that debt and include that in your debt snowball to parse out the phone payment.

And if you can pay it off in full, find out the amount you owe on the phone. If it's $900, we're going to put that in the debt snowball and get that phone paid off in full. Okay. Well, it's not necessarily the phone. It's more the service for it. So I don't think I could pay off the service. No, the service is just like your monthly bill.

So it would be like your light bill. It's a water bill. Yeah, and so just put that in your monthly budget as a line item separately. And if you're using EveryDollar, which are you not using it right now? Are you using a separate method? I'm sorry, what was that? Are you using our EveryDollar budgeting tool or are you doing budgeting differently? No, I have EveryDollar allocated to something.

Okay, well we have an app called every dollar i'm going to gift that to you for one year the premium version to connect to your bank so you can drag the transactions in it makes it really easy to create those sinking funds i mentioned it makes it easy to track all of your debt in one place we have our own baby steps tracker where you can track your debt snowball to keep the momentum going so hang on the line and we're going to gift that to you for being one of our listeners and wanting to get on this plan. But it's that simple.

If it's debt, then it's going to go in the debt snowball. If it's not, it just becomes a line item in the budget. Hey, and man, one of the strangest looks I've received in my lifetime, and I've received a few,

is when I went to, I think it was AT&T or wherever, and I said, hey, I need a new phone. How much does it cost? And they're like, well, we'll just sign up on a plan and put it on. It's like, I think it was AT&T or wherever, and they said, hey, I need a new phone. How much does it cost? And they're like, well, we'll just sign up on a plan. And I was like, no, no, I just want to buy a phone. And he's like, hold on.

And then a manager comes over, and it's like, what do you want? And I was like, I just want to pay for this phone. Like, well, we'll just roll it into a plan. And I was like, I get that, but I just want to buy the phone. I don't like owing people money. This is before I worked here this was back in Texas and finally the salesman

they figured it all out and he came back and said no one has ever asked this question and I thought what? and he goes

no one's ever asked can I just buy this phone that's frightening and they had to come up with a special plan on how I could just walk out with my own phone gosh

by giving them money how can we figure this out where you can take my money that's how we've trained all of America today is, well, what's the monthly payment? Yes. Great, I can do that.

Yep. Absolutely. Oh, my goodness. What a time to be alive, John. Good hour. Thank you, sir. Thank you to all the folks in the booth. We've got Jenna, Will, Austin, Andrew

keeping the show afloat. And you, America, thank you so much for listening. Who else is back there? We've got Bobby back there. He's an Alabama fan. Yeah, we don't need to mention him. We'll be back with you before you know it, folks.

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