The Ramsey Show - App - The Baby Steps Break You out of the Paycheck-to-Paycheck Cycle

Episode Date: February 7, 2025

From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by my good friend, Dr Dr. John Deloney, and we're taking your calls at 888-825-5225. Call us up and we'll help you take the right next step for your life and your money. Hunter's going to kick us off in Calgary, Canada. What's going on, Hunter? How can we help?

Hey, so I believe in the Ramsey Method. Save a good amount of money. I want to buy a house. I have this girl. I want to marry her, but she doesn't believe in... She believes in credit cards, and I don't want credit cards because that's what you guys teach. How can I convince her? She thinks that you can't rent a place or you can't get a house, and I've tried to explain her otherwise. What do you guys think? How have tried to explain it um like role play it with me how have you tried to to teach your girlfriend or to talk to your girlfriend about the way she thinks about a problem is wrong well I just I don't know I try to go soft like you guys do um I don't know i um i i'm like well this served me well the ramsey method served me well

um i saved up over like 120 000 i'm only 22 years old um i think yeah i think there's just less risk but so you are making i don't want to over gender this okay you are doing it exactly the way i would have done it at 22, which is I would have sat down with a spreadsheet and said, look how old I am, look how much money I am. And by the way, can I just, George and I high-five you? You're doing incredibly well. Well done, man.

99% of Americans don't have as much money as you have in the checking account. That's because he's in Canada. Oh, Canada. There you go. On behalf of Americans, they don't have that much money either. So you're doing a great job there. But I think getting beneath that is the only way I've heard and or seen it be successful, which is I don't want – like you firsthand know the turmoil that's been going on in the Canadian government over the last few years, right?

The last few days. Of course, yeah. Yeah. To your girlfriend. Years, yeah. I'm nervous and scared about any entity, the government, a bank, a car dealership, anybody owning me and you. Okay, that's a good way to put it. This is about safety. This is about, I want to have a family with you and I want us to control our destiny. I don't want a bank to tell us that you can't stay home with the kids. I don't want a government to tell us that we have to leave our house. I want us to be completely free. And that's a different conversation than the ROI.

George and I get calls all over the world about, well, I've got a 2.7% mortgage, but a 5%. I don't care. I'm going to start with freedom. I don't want anyone to own my family. Yeah. And if she says, screw you, you know how good of a deal we can get on a suburban, then you all have a deeper relationship challenge, right? A huge one, yeah.

And Hunter, I cover in my book, Breaking Free from Broke, I went through every single thing I've ever heard about using credit cards, and I debunked it, not with just opinions, but with facts, with research, with my experience, with hundreds of others. And so I'm going to send you a copy of Breaking Free from Broke, and here's what I would do. Hey, as part of our future together, I want to make sure we're aligned with money, because I know that money fights and money problems are one of the leading causes of divorce, and I want this relationship to succeed. Would you be willing to read this book with me about personal finance or listen to the audio book? Would she say yes? I think so, yeah. Because then it's not you telling her, it's, hey, what do you think about

that chapter? That was interesting. Like how he was talking about how you can rent a car without a debit card and the steps you need to take to buy a house without a credit score. And then it starts a conversation instead of you telling her how it's going to be and i think that will help this go better and um thank you this is for you dude but it's also for everybody listening it's really important that um a future husband and wife a current you know like just a partnership right two people who are married their values are aligned but dude beliefs will change all over the place my wife and i believe different things right yeah that's why we read different books listen to podcasts like i want my beliefs to always be challenged and always be changing it gives us stuff to talk about when we go on dates, but our values are aligned.

And so maybe a fun exercise for y'all too is like going into marriage, by the way, they'll change over time, but going in, what do we value? And if you start with, as for me and my house, I'm really going to value being free. Nobody's going to tell me what I have to do. I'm going to be able to control my destiny. And I want me and my wife to have that, to share that. Who could, who can disagree with that? Right? No, it's true. It's a good way to put it.

And then she'll give you some values. And then from there you can get into the belief stuff. And belief is where the fun fights and the fun, no ways. And the fun, like, Oh, you changed my mind. That's the beauty of relationships that I love. George and I believe different things. He believes that there's a Sasquatch. I don't think there is, but he does, right?

Yeah. And so that's awesome, but both of us value hanging out as friends. And so that value is going to override any silly beliefs either one of us have, right? Okay, that's awesome. Values are different than beliefs, and so good for you. And tell me your age again and how much you have saved up. I'm 22, and I have over 120 000 saved up and i'm making over six figures and what do you do man do you like dispose of bodies what do you do

i'm a heavy duty mechanic close enough hold on you can't make that kind of money doing um heavy duty machinery stuff you can only make that kind of money if you're a physician. Is that true? No. You just got to work hard, put your time in. Do you go to college or trade school? Yeah, I went to trade school. How much was it? Maybe, I don't know, $8,000 total tuition. That's pretty sweet ROI. You paid cash for it? No debt? Yeah, cash. All cash. Oh my goodness. Hunter, you're making a whole bunch of listeners, like millions of people

very uncomfortable. I hope so. Because right now they're watching a lot of news thinking that everyone else is going to save their problems and then there's guys like you who it's like, 8,000 bucks, game on. Good for you, brother. I'm proud of you, dude. Thanks for the call. It's an honor that I got to talk to you today.

There's an angry parent listening who's like, I just sent my kid to four years of college. It's 200 grand for a sociology degree. Oh my gosh, what did we do? Hunter's making 100 grand. And there's also millions of fathers of 22-year-old daughters who are like, no, no, Hunter, before you marry her, here's my daughter's number, right? You mean you're going to be a person

of integrity and you're going to work real hard and you're committed to a household of freedom for the rest of your life amazing i like making a bet with this girlfriend going hey let me be wrong cut up the cards let's live our life and let me be wrong if we end up hitting a wall because of this issue okay that could be a fun so we're gonna put to put, I'm going to put $5,000 of my $125,000 in an account. If we ever go to get an apartment and we don't have a place to live because we don't have a credit score, that $5,000 is,

we're going to put it in the budget that month as spend-a-thon. Her spending money. That's right. That's a fun game to play. That could be. I love that.

Well, Hunter, hang on the line. I'm going to send you a copy of the book Breaking Free from Broke. And in there, specifically the credit cards chapter and the credit score chapter, those two will unlock a whole lot for you and your girlfriend about how to live outside of the system. Yeah. That's why I wrote it, John. I wanted people to buck the system entirely because they go, I hear this, well, George, you can't live life without, you're so out of touch that you think you need a credit score and a credit card to live your life. I'm like, you're out of touch thinking this is the only way to live.

You've been so brainwashed. Can everybody just recognize? It's not so much about living outside the system right now. The system as we know it is being taken apart brick by brick right in front of us. So you're going to be on a different train. I want to be on a train that I'm driving, not that I get thrown in the back of because there was no other options. Right.

That's right. John's going to be driving for you. It's going to be an autonomous vehicle, John. Will you actually be driving? I'm going to keep my old truck just for that reason. With a stick shift. This is The Ramsey Show. There's a time in your life and at the baby steps for renting, but you don't want

to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner you can rely on, Churchill Mortgage. Churchill is Ramsey-trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire.

So get started on the American dream of home ownership today at churchhillmortgage.com. That's churchhillmAccess.org. Equal Housing Lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Welcome back to The Ramsey Show. I'm George Campbell, joined by bestselling author Dr. John Bologna. Taking your calls at 888-825-5225. To Canada again we go.

To Toronto, Noah joins us there. What's going on, Noah? Hi, how are you guys? Doing well. How can we help? So I'm 21 years old. I know pretty much next to nothing about finance. And right now, currently, I'm sharing the vehicle with my mother.

And over the next couple years, I'd like to stock away some cash in buying my own car. And the car I want to buy will be worth a resale value of roughly $15,000 by the time I want to buy it. My parents suggest that I take out a loan on this car instead of paying up front with cash, which, I mean, I've been listening to the show for a little bit, but even just on my basic instinct doesn't really seem totally right. I mean, if I have the cash and if it doesn't swap my net worth, then I don't see why I shouldn't just pay up front for it.

And basically their argument to why I should do this is they claim that the interest that I'd be paying on the car loan would be less than the interest that I would gain through some sort of stock market portfolio with the rest of the cash. Got it. So they're saying, hey, you could leverage that money in the stock market instead of sinking it into a car. Yeah. And I'm wondering... George is the finance guy. George knows way more about numbers than money than I do. My first response to that is, maybe, right? So maybe,

like just number for number. So if you get a car at 7%, maybe you can put it in the market and get 8%. So maybe. But that evaluation doesn't take into consideration that the value of that car goes down every day. And so it doesn't factor depreciation. So you're paying money back on something that's worth less and less every single day. Do you get what I'm saying? So you're trading one thing for another, but if you don't factor in the depreciation cost of that used car, then you're not taking in the entire financial picture.

Right. And there are no guarantees in the stock market. And I don't know what they're invested in and what's going on in Canada, but I'll tell you here in the US, we don't know what the future holds. And there's a guaranteed return when you pay cash for that car instead of going, all right, I spent 15 grand and in the end I paid 20 with interest and now the car's only worth 10 by the time I pay it off. That's the reality of the math of how cars work. And therefore, cars are one of the dumbest things to go into debt for because they're continually going down in value while you pay interest on it. And the market return may be lower. So I think a couple years ago, I'm trying to remember off the top of my head, but I think my whole thing went down 17%.

Last year, it was up 24% or something like that. That's cool if I'm looking at a 50-year play, right? Or if I've got this stuff in the market for 30 years. If I'm holding a four-year car note, that's horrifying because the one consistent that never changes is that car payment is due every month. No matter what. You get what I'm saying? So it sounds to me, tell me if I'm wrong, your parents just want to stop sharing a car with you.

I mean, it's kind of just, the car was actually my idea, like, let's say, for my own car. It's just the car we're sharing, or at least the one I'm sharing with my mother, is quite old. And, you know, by the time I'd be getting this other car, that car will probably be about 20 or so years old. Why did she pay off her car? Did they pay cash for theirs? I actually don't know. Might be something to ask them. If it's such a good idea, why aren't they doing it? They should be taking out as many car loans as they can get

and putting it into the stock market. Beating the market. Right. I know that the car that my father bought when I was very young, I know he took out a loan on that one, but the most recent one he bought, he paid fully cash for. What a dumb idea that was. He could have been leveraging that in the stock market, Noah.

Do you see where I'm going with this? It's okay to be misaligned with your parents. This is why I'm confused. Don't be confused. Here's this. Your mom and dad have whatever algorithm they've worked out. They think it's the best, and they're probably trying to love you in the best way they know how. It's all good. They're not's all good they're not bad people they're not bad people the reality

is um the best thing i can tell you is at my house in george camel's house in dave's house in our in jade's like we write a check for cars almost always unless you're dave almost always uh used cars and it gives you if it gives you any solace, I still disagree with my father to this day anytime we talk about money. So this is just a thing of life you're going to have to get used to. Me and my father do not talk about money anymore. We just laugh it off and go, thanks, dad. I'm good. I'm good. But the truth is, Noah, you can do this on your own, and you're a grown man who probably will soon move out and have his own life, right? Of course.

And they don't pay your bills. And so they're not going to get a vote in your financial choices. And so you got to do what is in your gut is the best thing for your financial future. And you know too much to go into debt at this point. And so the next goal is how do I save up really quickly to get a car I can afford in cash? How long will that take? Okay. It's going that take? Okay. It's going to take you about two years, you said?

Oh, you were actually asking? Yeah. Yeah, it'll take about two years, yeah. Are you living at home? Yeah, I am. What do you make a year? I could say per year. I'm not totally sure.

I mean, I'm about to uh hired for a landscaping company that pays about 22 per hour which is roughly uh i guess 5200 per month before taxes and pension deductions and all that so you could have a car in five months yeah i don't like this two-year plan where you're saving up you know five six $500, $600 a month. You should be able to save up, you know, a grand a month and knock this thing out within a year. No, absolutely. I guess, I mean, yeah, you're absolutely right. I guess I'm just not too much of a rush to get a whole separate vehicle,

you know what I mean? I guess. Well, the longer you're tethered to mom's vehicle, the longer this is going to get played out where you're just intertwined with family finances. I'd love to see you out on your own, and that's going to give you a sense of independence, maturity. And I've just seen it too often where growth is stunted when you stay at home for too long when you don't need to. You're right. Even if you get three roommates, you grow up fast when you're living with three dudes.

All right. You start to learn some things, and it prepares you for marriage. And it boosts your immune system, too, because a house full of guys is disgusting. Absolutely. Just kind of as a general rule. I'll tell you, my mom was just in town, Noah. I revert to a child, right? She's like, no, I'll get the dishes.

I'll fold the laundry. There's just a piece of you that turns into a child when mommy and daddy are there. And so I think it's going to really help you financially, spiritually, emotionally, mentally to move on and do your own thing sooner rather than later. I agree. But good gut instincts, brother. You're on your way. I love it. It's awesome. That's big. So, John, this comes up a lot. There's a rub between there's a thing this other person believes and they're projecting it onto me. And I love this person. I respect this person person and it's easy to say well just have a boundaries conversation and tell them to kick rocks and pound sand but the reality is these are your parents these are your loved right can i tell you what i think so what's happening our culture has told us if you have a disagreement

with someone you have to hate them. If somebody believes strongly about debt and you believe strongly about borrowing money, then inherently we have to hate each other. If you vote differently, if you want to go to this church and I want to go to this church, we have to hate each other. And it's so nonsense. I know he's from Toronto. The whole American exchange, the whole idea of the United States is you believe this, I believe this, and we're going to figure out a way that we can both live together and move forward. So, man, people like your parents, most of the time there are evil actors out there and there's morons out there. Most of the time a mom and her dad sits down and gives their kid what they think is the next best right step for them, period. So you don't have to hate them and you don't have to do everything that they say all the time, especially when you're a grownup. Now, if you're 22 and you still live in mommy's house and you're borrowing mommy's car, then

you're going to do what mommy says. And if mommy says be home at 1030 at night, because I'm uncomfortable with what's going on out on these streets because I watch tons of news, then you have a choice. Be home at 1030 or move out, right? But that's the world we're in. So, golly, dude, if you can make peace with people who just have different thoughts than you and then go do what's the next right move, especially, I love what he said, my guts are telling me this is the wrong thing. Follow your guts, man. It's just the wrong move. Apparently multiple, this is plural guts. I thought you had one, but I love it. John has multiple.

That's the kind of man he is. Yeah. He's got guts. And hashtag biology and science. Hashtag microbiome. We'll look into that later. Hey, more of your calls coming up. 888-825-5225.

This is The Ramsey Show. What does the future hold for business? Ask nine experts and you'll get ten different answers. Economic growth or a recession. Business taxes will go up or down. AI will help us work or it will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future-proofed themselves

with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite, and you should too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. With one unified business management suite, there's only one source of truth for the visibility and control you need to make quick decisions. NetSuite's real-time insights and forecasting help you see into the future with actionable data.

And when you're closing the books in days, not weeks, you can spend less time looking backward and more time focusing on what's next. And speaking of what's next, download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey. It's free at netsuite.com slash Ramsey. Welcome back to the Ramsey Show. I'm George Camel here with Dr. John Deloney. One of the best things to do for your finances is to have a really good tax pro in your corner that you can trust. They'll help advise you on the best moves to make for your situation or for your small business, especially if you've had some big life changes in the past year. So do what John and I do. Go to ramseysolutions.com slash taxpro to find CPAs and enrolled agents in your area

that have been vetted by the Ramsey team. Take the stress out of it. All right, Tyler is up next down the road here in Nashville, Tennessee. What's going on, Tyler? Hey, how's it going? Good, how are you? I'm doing all right. But starting off, so I'm a 22-year-old in Nashville currently.

I'm originally from Indiana. I am living paycheck to paycheck as of right now, but I have every now and then I get like a little bit spare some money to put aside, and I'm trying to start my own two businesses. So my main question is, should I put that money aside and put it towards the businesses or should I invest it in something else to get me and my old lady a house? Considering I have no credit card debt, I have no debt to my name, I have always paid cash for everything, I'm just trying to figure out what I should do. Well, you started off the call by saying you're

paycheck to paycheck. So it doesn't sound like you're coming from a place of strength, ready to start a business or buy a house. So we've got to look at what's going on underneath here that's causing you to have no margin at the end of the month. Okay. So what is your take-home pay every month? Roughly about $1,200, I'd say, at the job that I'm at currently. My old job I made more, but I'm going back to that job at the end of this year.

I'm going back to Indiana to go to that job. Okay. What will you be making then? Roughly, I mean, I made 1,200 a week, so I'll be making roughly $5,000 a month at that job. So why did your income get cut? You were making four times what you were. So the job that I took down here, it's actually the same job. It's a traffic flagging position. get cut. You were making four times what you were. So the job that I took down here, it's actually the same job. It's a traffic flagging position. I just, I'm not making years, not much money and it's not union based. So it's not a,

it's not like a laboring job, I guess. Yeah. But are you working full time and making 300 bucks a week? Roughly. Yeah. I mean, I'm not making much and I don't know why. Well, is it an hourly job, or is there a salary? It's hourly. Okay, so what are you making per hour? Roughly $1,850. Okay, something's not tracking here, because that's closer to a $40,000 salary, so you should be taking home closer to $2,500 a month instead of $1,200. Yeah, exactly. That's what I'm saying.

Have you looked at your checks? See what's going on? I'm actually in the current—I'm in the current of doing that,200. Yeah, exactly. That's what I'm saying. Have you looked at your checks? See what's going on? I'm actually in the current, I'm in the current of doing that right now. Okay. I'm in talks with my company. Right now is not the time to start businesses or buy a house. You're in a season of life where things are changing pretty rapidly. And so I would be looking for stability and starting a business, there's very little stability and there's a lot of startup costs. There's a lot of risk in that. Right now, do you have any savings? Currently, no, I do not because I had to use it to pay for bills whenever they came around because I ran into an issue. Okay. So your A1 is to get some savings. You said you have no debt to your name whatsoever. Yeah. No, I mean, I'm paying on a trailer, but it's not under credit. I have

no credit at all. I don't have a credit line. I've always paid for cash. So you owe on this trailer. How much do you owe and to who? Roughly $1,600 to a trailer dealership. Okay. I already made it. I think it was like a $200 down payment. My first payment comes out next month. So if there's a payment involved, it's debt. Okay. Regardless of lines of credit or whatever. So we need to make sure the definitions are clear here because that's now your A1. With every future paycheck beyond your basic bills, necessities, you got to throw money at that thing, get it knocked out within a month or two. Okay. Then beyond that, let's get a fully funded emergency fund, three to six months of expenses. For you, that might mean 10 grand right now.

And that's going to take getting your income up because this should not take a year or two to get 10 grand saved up. Do you agree? Yeah, I got you. Then beyond that, we can talk about investing for the future and retirement accounts, saving up for a house, starting a business. That's when you would do that once you have a financial foundation of no debt and a fully funded emergency fund. Okay. So you've got your work cut out for you. I love the dream of getting these businesses started up and investing for the future, but we got to, we got to pay for the past before we can build for the future and get some foundation under us. Because here's what happens. You try to start these businesses, one emergency happens,

you're looking to a line of credit to save the day. And that's going to rob you from your future. So I appreciate the call, man. We're rooting for you, and best of luck getting that income up and with the move. A lot going on. Alan is up next in Orlando. What's going on, Alan? How can we help? Hi, thanks for taking my call.

Sure. How can John and I help? So I'm age 31 and currently married, no kids yet, but that's coming up around the corner, maybe a year out. I'm currently on baby step four. I've been saving for retirement and had a luck of fortune or strike of fortune in the past year. I've been investing in a brokerage account for 401k, and that's a grown actually to just shy of a million dollars in the span of a year. Whoa. Really, really lucky.

What are you invested in? COVID recovery and some technology growth. And I was very fortunate there. So how much did you put into these single stocks? Two years ago, it was about 50 or 60K. So you turned 50K into a million dollars? Just about. In a year? It was about 50 or 60K. So you turned 50K into a million dollars? Just about. In a year?

It was two years. Wow. You and Nancy Pelosi are really great at stock trades, man. Good for you. You have a friend who had coffee. He's like, I'm thinking of starting this company called OpenAI. You got 50 grand. So congratulations, dude.

That's awesome. So what's your question today so being on baby step four and having this locked in a 401k account i'm trying to understand how can i use this to looking forward ahead so baby step five and six it is still you know it's in a 401k account i understand mathematically it makes sense to keep it in there, but psychologically using that net worth towards some freedom. I'm curious on your thoughts there, what makes sense, when it makes sense to tap that resource. Well, if you feel like that 401k, it's super volatile right now

if you are invested in single stocks versus mutual funds. So is it in single stocks? It was, and I've diversified that out to kind of lock in. Okay, so you rebalanced and you got out of single stocks and into some bigger funds. Correct. Okay, so I would not touch this money because I don't like paying the government anything more than I have to pay,

and if you pull money out before that 59.5 threshold, you are in a world of hurt. You're going to be paying probably upwards of 35%, 40% for the pleasure of using that money. So, Alan, I want to ask George a question on your behalf. So, if Alan had called the day before he sold those single stocks and spread it out, would you have told him, sell the single stocks and hold some money back just to get in a brokerage account for buying a house and whatnot? Well, he did this all within his 401k in a retirement account. If he had done it in a

brokerage account, that would be a totally different story if it was in a non-retirement account. So the fact that it's locked up now, that means it's going to have those massive tax penalties attached to it. Exactly. Okay. So for the future, Alan, I mean, I would still invest 15% of whatever your household income is into retirement accounts. And do you have it? You said you have a house? I do have a house. Okay. What's left on the mortgage?

About $230,000. Okay. And what is your household income? I've got to say about $230,000 as well. Amazing. Okay. So, Alan, I'm going to ask another question to George on your behalf. So, basically, he scratched a lottery ticket and won.

And he took all that money and dropped it in a 401k. He has a million dollars in retirement. It's going to double every seven years-ish. Would it be okay for him to pause retirement for a year and a half and pay off his house? You could at this rate. Because you're so far ahead. Yeah, I mean, at this point,

that 401k is going to grow without you if you never put a dime in. I would still add to it. But to John's point, if you were like, hey, I want to just knock this thing out. I want freedom faster. It sounds like you're wanting to potentially retire early or do some kind of encore career at an earlier age. Is that right? Absolutely. Yep. Okay. So at that point, if you've got 15% invested of your amazing income, that would be, let me crunch the numbers here, 34 grand a year, which is enough to max out a 401k and an IRA, right? So anything beyond that, I would just start dumping in a brokerage account and paying the house off with, and that'll set you up to probably have the freedom you desire by the time you're 40 with this level of income. How old are you again, Alan? 31. Yeah. So here's the, as the guy on the back end of my forties,

here's what I'm hearing. By 33, you can have a paid for house, more than a million dollars in retirement and a brand new spouse. That's a huge win. You're way ahead of the game, my brother. Congratulations. Way to go. You and Nancy Pelosi, man, they're doing something, John. I don't know how. Maybe Alan's been following her stock next year.

I did not have that year. We need to be in Congress or Alan. That's the only options to build wealth fast. This is The Ramsey Show. You know, one of the first things I discovered working in the financial world is how absolutely devastating it is when the breadwinner of a family dies, and there's too little life insurance or none at all. Grieving families are suddenly left behind scrambling to pay bills and trying to make ends meet. I also discovered that there are a lot of rip-offs in the life insurance world, like that whole life crap posing as an investment opportunity.

What you need is level-term life insurance, usually 10 to 12 times your income, which is the smartest, most affordable way to protect your family. The key is finding an independent broker who represents a ton of companies and works for you, not for the insurance company. This is exactly what my friend Jeff Zander and his team at Zander Insurance are all about. They shop the term life companies to find you the best options, and they've been around for over 95 years. So you know they'll be there when you need them. Zander is the real deal,

and that's why they've handled all my personal insurance for over 25 years. I trust them, and you can too. Visit zander.com for instant online quotes or for a more personal touch. Give them a call at 800-356-4282. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. Open phones at 888-825-5225. From time to time, we love to hear from real-life Baby Steps millionaires to see how did they do it, can it still be done in America today,

and we found just the folks. And that is Jefferson and Rachel in Twin Cities Minnesota how are you guys hi how are you we're doing great thanks for uh sharing your story with us of course is Rachel on the line too she's not okay we just had our second son so she's taking care of the baby right now. Congrats. That's amazing. Thank you. Okay. Figures, Jefferson. She's taking care of the baby, and you're talking on the phone with your friends. Must be nice. Figures. Figures. She is listening, so yes. I'm playing. Okay. Tell us y'all's net worth. $1,020,000. Awesome. So just right over that mark. Just hit the threshold. That's incredible. Okay, what is that made up of?

Yeah, so it's about $400,000 of real estate. We actually just paid off our house in October of last year. So we just paid that off. Way to go. Yeah, and thank you. Yeah, and then we have about $500,000 in just investments, like different types of retirement funds, and then about $100,000 split into other assets, like $50,000 in cash for emergency funds, and then cars and other things like that as well. Incredible.

How old are you two? We're 33. Both of us are 33. Oh my goodness. You guys are too young to be this wealthy. That's incredible. What's your household income? Thank you.

So last year was one of our best years. We just made $330,000. Whoa. And what was your worst year? It was right out of college, about a little less than $80,000. Incredible. What do you do for a living? Yeah, I'm a sales rep for a software company, and my wife is a stay-at-home mom, but she also has her master's degree in marriage and family therapy. Oh, John's going to love that one. She's a real counselor. That's awesome.

Okay. Did you get a college degree, four-year? I did. Yep. What was it in? Mine was in business finance. Okay. Do you remember your GPA? Yeah. Mine was about 3.3. Okay. And your wife? She's got her master's and she's got a 4.0 in her master's.

I had a feeling. 3.4. I was like, I bet hers is going to be sky high. Very smart. Okay. She's a smart one. I love it. So you're 33 years old. When did you really begin to focus on this stuff? Did you catch it? Were you a financial peace babies or was this, you know, when you were out of college, you found out about the Ramsey way? Yeah. So, um, it's, it's funny. We, you know, it's always been a focus of mine, but, uh, we weren't really super intentional about it, uh, until about two years ago when our first son was born and my wife stopped working and, um, things got really tight. We had a car payment, we had the house and all these different things.

And my wife and I, we found Ramsey while we were going through church and we got really intentional. We combined everything, we paid off our car quickly. We, and then we got really diligently focused on paying off the house and we paid off about 270,000 in two years. Whoa. Just really focused on intensity of making sure that we got that house payment done. So if we want to have more kids and my wife wants to stay at home, we've got that flexibility to do so. You were solving for freedom, as John Delaney would say. Okay. So what was your mortgage interest rate?

It was about 3.5%. Wait a minute. You can't pay that off, Jefferson. That's against the law or something. Yeah. We've heard it all. We've heard it from a lot of coworkers, friends saying, you're crazy for doing that. But the peace that we have, now that we have our second son here and we don't have to worry about things, we can just choose to do whatever we want to do with our money and choose to do whatever we want to do with our life. It brings a lot of peace to us. Wow. So even though you'll never have a three and a half percent interest rate again on that mortgage, you're going to be stuck with a zero percent rate with no payment for the rest of your

life. You blew it. You blew it. And when you you know thirty thousand dollars a year in interest income you're not going to be able to deduct twelve thousand dollars off of your taxes so man do your friends talk to you like that like do you have people in your life who think you're crazy for doing all this and following the ramsey plan absolutely absolutely we do what do you tell them but we also well we just tell them the piece that we have about having a paid-for house, being able to make decisions about what we want our life to look like in the future just brings us so much joy. And that it's not about the money, of course, but it's not about the interest rate. It's not about that tax deduction. It's about the peace that comes with our house and the ability to make the decisions that we want to make for our family.

Beautifully said. And you've been doing this for a while as far, you know, you've been investing for a long time. Just to have half a million in retirement accounts at 33 is really impressive. So you guys were doing a bunch of things at once, it sounds like. You had some debt, you were trying to invest, you were trying to save, you got the house. You weren't aggressive about paying it off. But you started on the Ramsey way with some focused intensity. And you went, man, what could we do if we just really focused and hunkered down for two years? Couldn't have said it better myself. Okay.

I'm just making sure I'm hearing that right. I love it. Did you inherit any of this money? We got a small gift from my parents to help pay for the down payment of the house. It was like $20,000, $30,000, but that's it. Okay. So mathematically, that didn't cause you to become a millionaire, but it did help you get a foot in the door in the housing market,

and I'm sure this house is appreciated in value. Yes. What did you buy it for? We bought it in 2019. $325,000. And it's worth over $400,000? $420,000. Yeah.

Way to go. And now what's next? you're 33 you've got your whole life ahead of you you're in baby step 7 what does the future hold? you know the world's kind of

our oyster I mean we've got a second kid so right now we're focusing on sleeping is the biggest thing but other than that what a luxury

we want to maybe get another get another house one day but we'll pay for cash for that and just continue to grow our wealth and save for our kids and save for our future. And we're excited for the future. Now that we're not paying for our past decisions, we get to focus on the future now. All right, Jefferson. I kind of smiled. George smiled.

George has a baby in his house. But I want to double click on that. Beneath the smile, there's some real seriousness to what you just said. Without a doubt, the number one conversation I have with couples who have a toddler in the house is downstream effects of one or both of the parents not being able to sleep. And this idea that you allall get to create this, whatever you want your world to look like because you don't owe anybody anything.

That's so profound. And the ripple effects through your kids, through that toddler who's not going to have a mom who's super anxious all the time, not going to have a dad whose head's 500 different directions. It can be present in his own house. That is ultimate change your family tree kind of stuff, man. Like congratulations on that.

That's really, that sounds fun. Like we're focusing on sleep, but dude, that's also a huge deal. That's amazing. Yeah. Yeah. We're, we're this, uh, our second kid is a lot different than our first kid, just because we do have a paid for house and, and things are much more peaceful here. So we're loving it.

Well, my second kid was a human hurricane compared to my first kid, so ha-ha to you guys. I love it. Can I ask what you guys drive? Give us the year-making model. Yep. I drive a 2017 Ford F-150, bought that used, and my wife drives a 2017 Honda Accord, and we might be getting her a 2020 little SUV here soon, but both used cars. Amazing. So if you guys wanted to know, listening out there, what do actual millionaires drive? It looks a lot like an eight-year-old reasonable car. I mean, and that's what we saw in the millionaire study, Jefferson, is most millionaires are driving a Honda, Toyota,

a Ford, and they bought it used. It's four years old, 41,000 miles on average. And so you guys are right there. And at a very young age, most people don't reach millionaire status until 49 is what we found. So you guys, it tells me you're way ahead of the pack. You're going to build generational wealth, and I can't wait to see what you guys do with it. We appreciate it. We appreciate the Randy Show. We listen all the time.

We love you guys, so we appreciate it. You're an inspiration. Tell your wife we love her, we're thinking of her, and congratulations. Yeah, get off the phone and go talk to your friends and go help your wife. Go help your wife. John, here's what I want. I want a sleep study comparing those who have debt and those who are debt-free. Yes, and I want that.

Can we do that? Yes, absolutely. Can you commission this? You have power. I have no power, but any researcher out there, grad student who wants to do that study, I promise you I'll make you famous. I'll put it on this show. Results either way, up or down. I'll call it out.

You can reach out to us, and I'll put you and the study on air. All right, let's go researchers. I can almost guarantee you that we know how this will end. My hypothesis would be if you don't owe anybody any money, you sleep pretty good. You're doing better. Your brain chemistry, synapses are firing up there in a good way. Yes. We like to see.

Hey, this has been The Ramsey Show. Thanks for joining us. From The Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel,

joined by Dr. John Deloney, and we're taking your calls at 888-825-5225. John is going to kick us off this hour in San Diego, California. What's going on, John? Hello. Hey. Hi, how you doing?

We're doing great. How can we help? Hi. So my name is John. My girlfriend moved from Atlanta to San Diego, moved in with me, and she has about $472,000 in debt from med school. And she's wondering if there's going to be a proposal soon. Well, before she moved, I had told her that I was a bit concerned with the debt and that we had to figure that out before things moved forward.

And, yeah, long story short, she's moved over and we've been living together for about six months. And she. So she wants you to propose. She's like, hey, when are you going to pop the question? And you're like, hey, when are you going to get rid of the half a million dollars in loans that you got? Hold on. But even before that, she was like, hey, I want to move in. And you're like, I've got some reservations about you owing half a million dollars.

And then you just made it sound like she just showed up at your house. No, we were dating or we've been dating for about two years now, long distance, because she was going to school, finishing up school. So as she was getting ready to finish, she was like, okay, so I'm getting ready to finish. And, you know, like, what's going on? So I told her, you know, like, I mean, I don't mind you moving over, but I know where this is going gonna go once you move over here and I would rather have a concrete plan that's at all so that probably would have been a better conversation before you were sitting on her couch that's in your living room but here you are so what are you gonna do well that's what I'm trying

to get help with well she already moved in so like what are you gonna do you gonna kick her out i'm not gonna kick her out but um you know like just having uh uh a question getting asked like every i don't, once a month or every three weeks. What's her urgency for you to propose? Well, most of her friends are married, you know, like getting along with their lives, and she's just wanted to know what... Well, now you're playing house, so she's like,

hey, can we make this a home? I feel like, you know, we've already committed hey can we make this a home i feel like you know we've already committed to each other in this way why aren't you proposing so i i'm trying to see from her perspective and i also know in this show i've never told someone not to get married to someone because of their debt load now i would tell them to pause if we're not aligned in how we're going to deal with the debt so is that the part that worries you? Has she said, eh, I'm not worried about it. Pay it off when I can. What's her plan? Yeah. The, the, what worries me is, okay, she, she's a physician and, um, she got a job, a consultant job where she only works four days a week and she works out of the four days a week she works like four hours a day

or five hours a day okay so can we cut to it dude like um you feel over water because you don't respect the woman that you thought you were going to marry she's not who you thought she was gonna be i just feel concerned that she isn't um he's taking it as serious as it is okay so get beneath that she's not who you thought she was and you made a huge step by inviting her to move across the country into your home and on a day-to-day basis living this thing out you realize she's not who i thought she was when it comes to work ethic when it comes to this work when it comes to work ethic especially yes but also what does that mean that means that she doesn't have a full picture of this the state of emergency that she's in because she owes a half a million dollars?

And she just wants to get married and just pretend like, oh, we'll be fine. You won't be fine. You owe a half a million dollars in a non-dischargeable loan, right? She keeps telling me that, you know, she knows all the people,

all the physicians that have just as much debt and they're able to live their lives. I know, but as a guy who sat with physicians who are on the brink of losing everything, and if you look at the suicide rates and you look at the mental health challenges, I don't give a crap. That's like going to a cancer ward and being like, yeah, but look, everyone else is sick. I still don't want to have cancer.

I don't want to be sick. And so it doesn't matter. That's a weird way to anesthetize the pain of reality which is she owes a half a million dollars but she's not on the phone we can't help her i can help you and i think you have to be honest about um i don't know that i respect this woman anymore and i'm not going to judge you right wrong or indifferent you get to respect who you want to respect but that plays into can I love this person? What happens when we have a kid

and she just decides fill in the blank? Everyone else does X, Y, and Z for a kid. What happens when it comes to the kid's car? We can't afford this car. Everyone else has given their kid a BMW, right? That might be the rest of your life. And I think you're wise to listen to your innate alarm systems.

Like, whoa, something's not whole here. But what's not fair for her is you're wise to listen to your innate alarm systems that like whoa something's not whole here but what's not fair for her is you're not being honest with her you're trying to be annoyed that she keeps hitting you up to get married get married get married and you're not sitting down saying i don't know if i can marry you because we're so far from being aligned on on things like integrity character respect that the my fear of owing other people money, et cetera. Do you get what I'm saying? Yeah, well, I've brought it up to her, and she keeps telling me that she's working on it,

and she's, you know, like, possibly looking to get a different job, and... What does she make now? About the same, like $150. And what do you make? About $150. And do you have any debt? I do not. Do you own your place or do you rent? I rent. Okay. So as part of this, that you worked so hard to avoid debt, to create this life for yourself, to build this work ethic, and now you're tethered to someone who doesn't align in that way?

Yes. Have you said, I don't want to have a household where other people decide what we do every day? I want to be free? I've told her that I don't feel comfortable with the debt. Okay. And she has said, I don't care what you think. When are you going to marry me? Well, not verbally, but she keeps on telling me that, you know,

like there are other physicians in her field that owe just as much or even more. She's going to spend her whole life comparing hers to others. That is a red flag in and of itself that I think you need to address with her. Everything so far has been, well, her friends are all getting married and her physician friends all have debt. And she's not even a physician, so that doesn't even hold. But here's the thing, either, good man, either make the choice in your mind, I'm not going to leave her, we're going to get married, and the two of us making $300,000 a year are going to spend the next 24 to 36 months paying off this debt like crazy. Or we're going to have a harder conversation about values and we may have to part ways because our values are so deeply unaligned. But what you're doing right now is you're playing ping pong in your own mind and you're making

yourself bananas and you are worth having a peaceful life. So have the hard, real, honest conversation underneath it all. Talk about values and then you have to have your or what statement. What are you going to do if she says, I'm not doing that? That's your call, brother. This show is sponsored by BetterHelp. All right, so I was born and raised in Texas, and I love the myth of the lone cowboy. You know, the guy who doesn't need anyone or anything. It's a fun story, and it's a lie. In our self-obsessed society, we're obsessed about our own diets,

our own workout routines, our own jobs, our own social media feeds, everything. It's easy to forget that no one can do life alone. And I don't care if you're an introvert, an extrovert, or whatever you want to call yourself, we all have to have a community and a support system to do life with. It's time to shift the focus from doing it all by ourselves to knowing that we can only be well and whole when we ask for help. Therapy can be a great source of help and support for any area of your life. And if you're thinking about starting therapy, try BetterHelp.

BetterHelp is 100% online therapy so it can fit with your schedule. To get started, just fill out a short online survey to get matched with a licensed therapist. And if it's not the right fit, you can switch therapists at any time for no extra cost. This month, start to build your support system with BetterHelp.

Visit betterhelp.com slash Ramsey Radio to get 10% off your first month. That's BetterHelp, H-E-L-P dot com slash Ramsey Radio. Welcome back to The Ramsey Show. I'm George Camel here with Dr. John Deloney. Hey, you do not want to miss our two-night virtual event, Investing Essentials, hosted by Dave Ramsey and yours truly. Investing can be overwhelming and confusing, and it's not something that you can understand or learn in a 60-second social media post as you're scrolling. So at this virtual event, we're going to walk you through how to maximize your retirement plans, how to pick mutual funds, how to get the most out

of your money, invest with confidence. Plus, it's the only place to get Dave's personal playbook on real estate investing, explaining how Dave made hundreds of millions in property investments. And this is not just a flex on Dave's part showing you, here's how much money I have. This is him breaking down the formulas he uses to make sure that he's getting the best returns on the properties, how he's sourcing his deals, and we're answering all of your questions at the same time. So if you want to get clarity on how to invest with confidence, how to start building wealth, join us for Investing Essentials March 4th and 5th. It's virtual. You can join from home. Tickets start at $1.99. Get yours today at ramsaysolutions.com slash events, or click the link in the show notes if you're tuning in on

podcast or YouTube. Let's get to the phones. Alec is in West Palm Beach. What's up, Alec? Hey there. How you doing? Good. How are you? Good. I'm doing good. Me and my wife are here. We're just calling because we have, we're only, my wife's 23, I'm 24. We moved down to just, we're just north of West Palm Beach. We moved here six months ago, and we're currently renting. I rent about $2,500 a month for just a standard, you know, three bed, two bath. We have a two-and-a-half-year-old daughter.

And what our question is, is, you know, we really want to buy a house, and the housing market's so crazy down here in Florida, you know, so it's hard to afford a house, just even a basic house like what we have right now on my income. Because I'm just a carpenter. I make about, you know, $40,000 to $60,000 a year, depending on how it goes. And, you know, I'm basically, and my wife's a stay-at-home mom, but right now she's going to school. So then she can, in about nine months, she'll be working too. But basically, it's like, I'm just basically just getting by, you know, making ends meet, paying the bills, and then, you know, just whatever we have left over is what we have, and a few hundred bucks, you know, at the but on the other side of things, my wife, she got, she, she was in a pretty

serious, um, court, uh, trial thing for about eight years and she finally won it. And she got, she got about a half a million dollars from it. Wow. And we have it invested. We have it invested right now with the financial advisor because we didn't want to squander it. You know, it's a good steward. We want to be good stewards of our money that the lord blessed us with and uh just trying to do things the right way you know and but right now we found a house that's fifty thousand

dollars under the under any comp it's a three it's a three two fifteen hundred square feet you know a nice nice beautiful curb appeal and you know it needs a little bit of updating on the inside it was a one owner house and the people passed away you know grandma and grandpa type of thing and um how much does it cost me and my wife are looking what'd you say what's the cost it's 314 okay so you have the money in cash from this court settlement yeah and we have we have 516 right now in the account. We have 80,000 liquid, and we can pull out the 315 by the time closing ends. We have the house under contract right now.

However, I keep hearing from my dad. My dad keeps telling us to pay cash for the house, like pay cash cash pay it off don't take out a loan but then like our financial advisor who's doing the investing for us and a few other people are like well why don't you just take out a loan and you don't got of course so do you know why because your financial advisor debt gets a pay cut if you cash out of that portfolio do you understand why they would be a little more likely and biased to get you to want to keep that money invested? Not saying they're a bad

person. That's just the reality of what's going on here. I'll go one step further. You need to get a new financial advisor because that's an advisor that's not looking out for you because I can't think of a better thing I would want for my son or my mom and my dad. And so both sides

of my question, then a paid for house that nobody can take from them. Yeah, we're going to be the first ones in our family since our grandparents have a home that we own. And that makes me want to hug your dad. The only reason why they own it is because they paid the 30 years

of mortgage and they just lived through it. That's the only reason why they own their house. I want to hug your father because he gave you the right advice son don't ever owe anybody money i've he's probably spent his whole life having to make payments on stuff and he sees an opportunity for his son to be free and i'm not i'm not even playing dude my smart investor pro when i was had money in a high yield savings account i had money in a with himyield savings account. I had money with him. And he said, hey, take this and go pay off your house because I have a financial advisor who is invested in me doing what's best for me and my family,

not for making himself rich. I'd get a new guy. I'd go to Ramsey Solutions, Smart Investor Pro, go check that out and get with somebody else, man, because this guy's looking out for him, number one, you, number two. Yeah, because, well, he's saying, like, oh, you know, he's like, oh, you'll make about, you know, 15% to 20% on your $500,000. But we're looking at it. First of all, what's he investing in?

Cocaine? What's he making 20%? Any advisor saying you're going to get 15% to 20% in this account is lying to your face. No good advice. Every advisor would be like, Hey, here's been the historical return. We don't know what the future holds. Not you're going to make 20% if you just leave it.

That gives me hemorrhoids on your behalf, Alec. Pull it out. Pull it out. All right. Thanks. Yeah. I'm looking at it.

Like go buy your house. Yeah. That's what we want to do. And I'm glad you guys are all about it, too, because we're looking at it like if we pay cash for the house with all our total bills at the end of the day, if we pay cash, you know, insurance, we're not going to have to get insurance because we don't have a loan.

I know, but you live in Florida. You should get insurance. You need insurance. That's a non-negotiable. Put that in the budget, dude. Can I do some math for you, though? That's about $1,000 a month. And then the loan would be $2,000 a month. And then we're just looking at it just keeps adding on if you take out any kind of loan, right? But if we don't take

out a loan, our bills would be about $800 a month. Yes know? Yes, and then you can start putting money into retirement savings. You can be insanely generous to that exhausted waitress that's bringing y'all dinner when y'all went late that one night. It changes how you do everything. Exactly. That's how we're looking at it. I'm glad you guys are saying that. Yes. Because I was just, you know, you try to you try to play, pray and, you know, try

to get as much information from God as you can, but sometimes you just got to kind of make the leap. And I think, I think this is our golden opportunity because we're still going to have about 200,000 left over. And if we put $5,000 into the property, it's done. We don't need to, like, it's just little things like, you know, take the carpet out, paint the walls. Oh yeah. Easy. So let me give you some solace here that you're doing the right thing. You are very young. You said you're 23 and 24. Yeah. You'll still have 200,000 invested. Let's say you just took half of what you're paying in rent, 1250 a month, right? And you put that in an investment account now that you're completely debt-free with tons of margin, right? Yeah. From 23 to 63, if you just did that,

you would likely have $18 million in that one account. If you never add it, just $12.50 a month, even if you get a raise, just keep doing $12.50, $18 million from 23 to 63, and that's a 10% return on average. So I just want to give you some solace. That's great. You have plenty of time to build wealth.

You're not 68 going, should I rob my entire nest egg to pay cash for a home so this situation gives me a lot of peace that you are now freeing up your income for the rest of your life and you're not desperate for that next job you can do the work you love and you don't need to go make six figures you can be a and when you said here's what bothered me alex you said i'm, I'm just a carpenter, just a lowly car. Like I need to knock the Eeyore spirit out of you. Jesus was one of those too, dude. You're in good company.

Thanks guys. You do good work. You know, I try to do is try to follow his footsteps as best as I can and help people out and stuff. And, you know, it's just, it's just tough living in Florida, man. Prices are so high. And we're like, we're looking at it in Florida, man. Prices are so high. And we're like, we're looking at it like, why am I paying? Why am I working?

You can like move one day to wherever you want. Yeah. And by the way, yeah, you don't have to live there either. It's been fun. Y'all are young and it's been cool living by the beach. And now maybe you move, take that $500,000 and get yourself a four bedroom, three bath house that you don't have to move from when you start having kids. And it's going to cost you 300 grand in another state somewhere. But y'all can do whatever you want to because you don't have a house payment. Go build a table for your new house, man. You've earned it. And get a new financial advisor. Ramsey Solutions SmartVestor Pros. Go check them out. Welcome back to The Ramsey Show. Open phones at 888-825-5225. The Ramsey Show question of the day is brought to you by YRefi.

YRefi refinances defaulted private student loans, which are different than federal student loans. YRefi refinances your defaulted private student loan and builds a custom loan based on your ability to pay. So kick your private student loan debt out of your life by going to yrefy.com slash Ramsey. That's the letter Y-R-E-F-Y.com slash Ramsey. May not be available in all states. All right. Today's question comes from Travis in Utah. Travis writes, I'm about to purchase a new home and have well over 50% saved for my down payment. Should I use all of it for the down payment or keep a portion out to add to my retirement investing?

I can afford to put less down and still make the monthly payments. Oy, oy, oy. Well, the answer is easy. I'll tell you what I would do and what I did, which is put as much down as possible. And we put down, John, I believe for our first townhome when my wife and I were married, we put down 45%, so close to what he's doing. No regrets. What ended up happening was we paid off the mortgage way sooner within a few years because we had a smaller mortgage with a much lower payment, which means we had margin to throw at the principal. So by doing that, we ended up freeing up our mortgage payment way sooner,

and we had the ability to invest that payment at a very young age. So I would encourage Travis to do the same and not see it as one thing or another. Should I put this in the equity of the home or in the stock market? I see this as a hedge going, hey, if I can get rid of this mortgage faster, it's going to allow me to invest more for the long term. And the only question I would have for Travis is a huge temptation I had, especially getting going. And that is, I look at all of the money I have saved, including my emergency fund, including anything in a high yield savings account that might be for college, it's not in a 529, and money for a house. And so it's so easy to look at a $300,000 house.

And between all those accounts, I have 150 grand saved. I'm going to put all that in there. So my only hesitation would be, this is 50% saved for down payment above. You still keep your emergency fund. You still got cash there. You still go ahead and cash, put cash aside for how much it's going to cost to move.

Cause you're going to hire movers to come over and help you do all that kind of stuff. Save a little money to get your electricity turned on, because some people want a month's advance. All those things add up. Furniture. Furniture, whatever those things are. Closing costs. And then put everything else on there, right? Yeah. And so go ahead and go into that with your eyes wide open. Yeah. Home ownership is more expensive than you think. And so having a lower payment, all that does is give you more margin to cover it without breaking a sweat.

You just kind of yawn and move on instead of, oh, my gosh, we were already at the limit with this mortgage payment. Now we have to replace the HVAC. You don't need that in your life. There's no need to. You have the money. You've done so well. And my guess is he's young enough that he's going to have plenty of time to build wealth, have compound growth on his side and invest that 15%. And then once the house is paid off, invest even more,

20, 30, 40, 50% of your income if you want. So great question though. I would put down as much as possible. As Dave says, the best plan is the 100% down plan, but he knows that will get him lambasted in today's culture. People are going, Dave, you know how much a house is in today's... Yes, he does. He does. He's just saying it's the best plan is to avoid debt. But if you're going to do it, 15-year fixed rate mortgage, make sure that payment's no more than a quarter of your take-home pay. All right. CJ's up next in New Orleans. What's going on, CJ? Hey, guys. Thanks for having me. So I'm just wondering, what can I do to break the cycle of getting out of debt and into debt?

As someone who's kind of young but has a pretty high income and kind of comes in waves and cycles, I can't get out of the habit. How much do you make? So last year I came out pretty taxed, about $255. Wow. How old are you? 29. Goodness, that is mind. Wow. How old are you? 29. Goodness, that is mind-blowing. What do you do? I'm a commercial wholesale insurance broker. And you're really good at it, apparently.

I'm pretty decent, yeah. How much debt do you have? So I have about $330,000 in a home, $46,000 in a car, and $35,000 in student loans, and $6,000 in credit. And what? What was the last one? So $6,000 in cards, like credit cards. Oh, in credit card debt. Okay, cool. So tell me how a guy making $255,000 is still looking to lenders when he has the bank of CJ available. Like what caused you to turn to debt?

Because you have the income. I mean, you're making, what, $15,000, $16,000 a month take-home pay? Well, my base, well, last year my base was only about $90,000, and then the bulk of that was biannual. Commission? Bonuses that I got, yeah. Okay. So what do you do with those when they come in? This year.

Part of it, I usually step back about 50% of my expenses coming for, like, bills and everything for the next six months. I put that aside so that half of my actual paycheck is going towards bills. And then the other half is coming from what I set aside. And then the other part of my paycheck, I kind of just spend it. So what would you say if you were going to list the top three things this money is disappearing into, what would you list them as? Food and going out.

So you're living life as a 29-year-old, going out to eat all the time. Is there outside pressure from friends, or is it just, nah, I want to get takeout again, another Uber Eats, who cares? Yeah, let's do it. All of the above, especially Uber Eats. Okay. And you've been doing all of this on a credit card? Not all of it. It kind of just jumped.

If I have to have the cash, I'll use the cash. But if I'm in a crunch, I'm like, well, the card's right here. So can I tell you what I did that really helped me? I cut up the cards and I closed the accounts and I froze my credit. Right. And if you do those, here's what's going to happen. You're going to stop borrowing money. It will freeze you.

You're not going to be able to open up new lines of credit. And so right now we have to stop the bleeding. That's step number one. You asked me how to get out of the cycle. You've got to just stop the behavior that's getting you into the cycle and keeping you there. Because the truth is you've got less than $100,000 in consumer debt. You make $255,000.

I'm guessing you have some money in savings. A little. How much? Since we're at the end of the six-month period of me having bills and everything split, maybe closer to like $5,000 or $6,000. $5,000 or $6,000? Yes. Okay.

So once you have a $1,000 starter emergency fund, I would use the rest of the savings and knock out these credit cards and call it done and close the accounts. Sayonara. That leaves you with a car loan and a student loan. If you want to keep the car, your income can support it because is this your only vehicle, only thing with wheels and motors? That's right. Okay. It's a nice truck. You make amazing money, so I'm not going to tell you you have to sell it, but if you're really going, hey, I want to burn the ships and restart, you could sell that thing if it's just too much car for you. But that, I mean, you're going to get out of this thing if you just go,

I'm going to get on a budget. I'm bringing in 15 grand on average. When I get these big bonuses that come in, I'm going to throw all of it at the debt. What if you just told yourself this, I'm not going to even see this money. It goes to the account and it goes to the lender. Could you do that? Maybe. Maybe is what gets us in debt again. Absolutely, you need that level of fire. Let me ask you this.

Why did you call, CJ? There's something in your guts. Why did you call? The stress of it. That's it. You know, because every six months, you know, right before I get a windfall of a bonus,

I'm, you know, I get closer to that, to February. It's like, oh, wow, I'm scratching by.

Let's wait until the end of February to get that. All right, can I, this is a personal question. This is a personal question. Did you grow up with money?

No. When you say no, do you mean, was money a big struggle for you? Yeah, it was a single wide trailer in the middle of nowhere. So let me, this is this, I didn't grow up in a single wide. We grew up in a small house in a suburb in North Houston, right? So I did not have that level, but I just remember money was so tight. It was such an anxious thing all the time. And the story that I told myself was when I make a certain dollar amount, everything will be okay, including how I feel about myself. And what you're finding

is the Uber Eats, the not budgeting, you don't want, you make a ton of money and you don't want the quote unquote hassle of having to think through it all. And I get that sentiment. That's the story you've been telling yourself your whole life. And what I want to tell you is, bro, I want you to have peace and I want you to have freedom. That's what we're solving for here. Not another Uber Eats night. Hang on the line. We're going to send you Financial Peace University and every dollar premium to get you going. You make way too much money to be this stressed, and we're going to set you free if you'll just follow through. Thank you so much for the call. Welcome back to The Ramsey Show. I'm George Camel, joined by Dr. John Deloney. Hey, are you staying

on track with the baby steps? Well, we made a way for you to find out. You can take a quick quiz to check your progress and receive a personalized plan just for you. Simply head to the show notes on this episode, click on the link titled, Are You On Track With Baby Steps? and complete the quiz. Timothy is up next in Oklahoma City. What's going on, Timothy? How are you all? Doing well. How can we help today? So me and my wife have been married for a year now. We're on baby step two. We're tackling her student loans. And then about three years ago, I bought a house from my aunt and uncle, and they were in some tax problems. They couldn't sign the house over to me oh no

I know but so we've got two years left until they can sign the house over to me deed it over to me and I will right now currently I still owe them 60,000 and I'm just curious if if I should sock that money away after I'm done paying uh student loans off and then just keep it in a bank. And then that way, two years from now, I can just, you know, deal's done. I don't have to take a mortgage out. Or should I go into investing after we pay off student loans? Oh, boy. I'm still stuck on the fact that you didn't buy a house.

You thought you bought a house. What was the legal process for you to buy a house. You thought you bought a house. What was the legal process for you to buy a house that couldn't even go into your name? Well, it wasn't on my... It's a handshake agreement? Yeah, pretty much. Oh, my goodness. Is there anything in writing? Yeah, we did write something out that we all signed.

This whole thing just worries me. I mean, what if they don't get out of this mess and you've been paying on a property that you have no claim to? So the way I justify it to myself is- Can I just say right now, hold on, before you even speak. Really low rent. Good for you. High five to you for saying it like that. The story I'm telling myself is this. So at least we're operating in reality. Good on you. Okay. So what were you saying? So just know that there might be a scenario where you go, hey'll at least we're operating in reality good on you okay so what were you saying so just know that there might be a scenario where you go hey at least we had cheap rent while we stayed here but it's not and that's what i'll have to tell myself it's something bad

all right if hey your your your glasses are not rose colored so fair enough so in two years you make the last payment and you own this thing outright no so in two years so they had to go to court with the IRS. The IRS said, fine, we're going to forgive everything. You cannot make any extra money for five years. So three years, and this was three years ago. So they had this house. I said, okay, well, I need a house. We came, we agreed on a price and I gave them some money down, and then I paid them a monthly payment. And at that five-year mark, the agreement is either I'll take out a mortgage to finish paying what I owe, or I'll have the money, or whatever it takes, and then they can deed it over to me.

I thought they couldn't get extra money. Isn't this down payment and you paying them rent considered extra money? Breaking the law. Cash money. Oh, under the table. Sure. Oh, that makes it better. George. Okay. Hey hey it's just a national radio show what do i know okay so what is your question timothy uh if uh if i should sock what i owe them away into a savings account so when the day comes that they can beat the house to me i could just pay them off, or should I be investing and then take out a mortgage?

Wait, so you're talking about not paying them anymore? No, I would still make the monthly payment, but just put extra away every month. But how much do you have left on the student loans? When are you guys going to be completely debt-free? About seven months. And then how much longer to get a fully funded emergency fund? That would take about another three to four months. Okay, so let's call it a year.

One year from now, you guys are completely debt-free with an emergency fund. That puts us in baby step four when we can begin investing. I would begin investing 15% while making rent. Any money beyond that, you can sock away to try to lower the loan that you'll have when you do take this house over. Okay. But I would just take a small loan out. You guys are going to knock it out quick. And so I'm not concerned about that, but I wouldn't hang on to the student loans and pile up money to make this transaction happen. Okay. I could have all of the money in about 25 months. That includes student loans and the house all in 25 months.

So you're saying you could get out of debt, get the emergency fund, and save up the $60,000 by the time this transaction's ready? I think so, yeah. We save about $5,000. Well, we pay about $5,000 a month now towards student loans. Okay. Well, once you free up the payment, that'll help even more. So I like this plan. I would have a goal to go, hey, by the time they're ready to make this deal happen, we have the money to buy it from them. Are you buying it at a deal or is this market value based on all the rent you paid? So we agreed at 105. I had a realtor out a few months ago and they put it at 248. Is what it's actually worth. And the money you put in with the rent down payment plus the 60 will be 105? Yes, sir two things here i have to say this i think you

may be complicit in tax fraud so i have to just say don't do that but you're doing it anyway i just feel compelled to tell you like if this whole ship goes down or the government finds out they've been making side money on on this deal um and they take house, you're going to be in a mess. Or if they know... Anyway, so that's number one. Number two, I hear a secondary question. Should you just let them continue to be your bank after this? God, no.

The second they can take... The second you can, I would take out a mortgage and end the business relationship with my aunt and uncle. Okay. And then deal with a bank because it's already so sketched. Right.

Again, I don't want to talk bad about people who aren't in the room, right? But you've got a couple who was so bad off, they had to enter into agreement with – they're so bad with their finances that they had to enter into agreement with they're so bad with their finances and that they had to enter into an agreement with the u.s government and the government said you can't make any extra money and then they're doing something shady under the table with their nephew and letting go of their house for less than half of market value the the the best predictor of future behavior is past behavior and so i've got a couple here who's not good with money who kind of does things under the table if they don't sit down the month before you clear this and say hey the house is worth 240 now we're going to up the cost of this thing i would be stunned now i have no problem being wrong but my goodness man you are dancing with the devil and um i would

want to end that as soon as possible let them go back to being aunt and uncle as soon as humanly possible. That's, yeah. The whole situation gives me the heebie-jeebies. All right. Let's see if we can help Sarah out real quick. Sarah, get right to the question. We're up against the clock. Yeah.

So thank you for taking my call. I have been an FPU coach for the last few years, and my sister opened up to me about her financial struggles. Last year, I've been helping her work through the baby steps. She's paid about 10k off now and has 50 still to go. But today, she was served with papers being sued by one of the banks for not paying off her balance. So I assume nothing really has changed. We're still going to have to negotiate with them, settle eventually, but wanted to get y'all's advice before I pass it along to her. So was she behind on payments for a significant amount of time?

What happened? Yeah, so by the time she came to me, she had already stopped paying her minimum payments, so we assumed that one was going to go to collections. And we figured we would settle with the collections company. And then that's where she, you know, we didn't have at the time the wiggle room in her budget to pay the minimum payment that they wanted her to. So now that's where they're coming to her and requesting that full sum again. How much is it? About $22,000. What kind of debt? Credit card.

All credit cards. Okay. And is this all one credit card with one lender? The $22,000 is one credit card, one lender. She does have a debt consolidation loan, and then she has two other credit cards. And is she able to stay current on all of her other debts? Is the only one in collections? She has three that have gone to collections, including that one, the credit card. Okay. I would put these collections at the top of the list to deal with. I honestly doubt they're going to negotiate with you since they're such fresh debts. They may not take pennies on the dollar for this.

You can help her by just being a support for her, but she's going to have to fight this thing and fight the behavior that got her into this mess. Yeah. So if you can avoid going through court and try to find some kind of settlement agreement, a payment plan, whatever it may be, I would go that route to avoid this escalating. But there's nothing much else you can do if they already have a judgment against her. Right. Does she need to lawyer up at this point, or can she settle that herself? My guess is they're sending a threatening letter, basically. If it's the first one she's got, unless she's been served papers, they're just sending a threat letter. Yeah, I don't know that it's worth hiring a lawyer to deal with this because she owes the money. And if they have proof of that,

she's going to owe the money. There's not really a way around this to where she's going to get out scot-free. She's got the cash. She can settle it. But short of that, then it's begging for a payment plan. Stack up as much cash as she can and see if they'll take it. This is The Ramsey Show. Live from the Ramsey Network, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by the host of The Dr. John Deloney Show, Dr. John Deloney. Open phones at 888-825-5225. Give us a call, and we'll help you take the right next step for your life and your money. Elena is up first

in Tampa, Florida. What's going on, Elena? Yes, hi. Thank you so much for taking my call. How are you doing? Doing well. So I am 48 years old. I have an eight-year-old son and an eight-year-old mom who I take care of. I'm on baby step two right now, and I still have some debt to pay off. My question is, I have, other than emergency fund, I have nothing in savings. Is it any chance for me to save money for retirement, or is it too late for me to start? And also, other question is, the college fund. Do I open a college fund for my son? Are they worth it? And at what point do I do that? Yes, and yes, and yes. And there is hope for you, Elena. There's no federal law that says, once you hit 48, there's no turning back no point in saving

a dime so here's the good news you still have you know 15 or 20 years of a working career right I hope so you can make a lot of progress in 15 or 20 years and so I want to tell you and I'll crunch the numbers to prove it to you this is not just fluff but I want to just give you some hope at the top that you can do this and there's a method to the madness you're out of debt or you said you still have some debt but you have have emergency savings? Yes. Okay. How much do you have in savings? I have about $3,000 in savings right now. Okay. And what's left on your debt? Well, I have just under $5,000 in credit cards and I have just a little over $18,000 in credit cards, and I have just a little over $18,000 home equity loan and mortgage, of course.

Okay. And what'd you use the home equity line of credit for? It's not a line of credit. It's actually a straight loan. Okay. Well, I had to do some repairs on the house, so I had to take that up. So you've got $22,000 left. How long do you think it'll take you on your current trajectory? Well, as it stands right now, I am paying about $800 towards my credit cards, which I actually, I am where they are no interest right now. So I broke down the balances to where by the time the interest starts being charged,

I'll hopefully pay them off by then. And I pay about $300 towards the home equity loan. Okay, so are we talking two years for you to be completely debt-free? Oh God, I hope so. Okay, what is your income? I make $60,000 a year. Okay, so let me just play this out as if you're going to be debt-free in less than two years. So by your 50th birthday, Elaine is completely debt-free. Are you

with me? Yes. And you're going to have an emergency fund a few months after that. Hopefully. Okay. So we're going to play this out. And what you're going to do at that point, once you have no debt and a fully funded emergency fund, you're going to invest 15% of that $60,000 income. And what you're going to do at that point, once you have no debt and a fully funded emergency fund, you're going to invest 15% of that 60,000 income. And I hope and pray that it goes up in the next two years. Thank you. Okay. So let's call it $9,000 a year. That's about $750 a month. Okay. And you have nothing saved for retirement right now? Nothing. Zero? Zero. Okay. Now, let me tell you, you might not have the lavish retirement that you always dreamed of.

And I like how my friend, Dr. John Deloney says, you might have to grieve the picture of retirement you had in your mind and create a new one. But if we just crunch the numbers here from 50 to 67, if you put 750 away every month, you would have about $400,000 in that one account. Okay. Now, that's not, again, would have about $400,000 in that one account. Okay. Now, again, it's not lavish, but it's something. You're not going to go hungry. And so I would aim to get your income up.

And on top of that, we might have to talk to your son as he grows up and say, hey, listen, mom's working real hard to prepare for retirement. She doesn't want to have to move in with you to take care of her because she didn't prepare. And you're living this out right now, right? And so what if you said, we're going to make a plan for you to go to school debt-free, you're going to work, you're going to get scholarships, and if I can save anything to help, I will. But I don't want you to feel the burden that you have to pay for college, especially at

the expense of your own retirement. There's a reason that baby step four happens before step five when you save for college. You've got to put your own mask on first. Okay. And so going back to what George said earlier, is all of this doable? Yes. Is there a way to do all of this hard stuff without some hard conversations? No. How old is your son? Well, my son is only eight. Oh, eight. Oh, I thought you said 18. Good gravy, Elena. You are, as Brene Brown says, dress rehearsing tragedy. You're already thinking all these worst case scenarios into the future.

And you can be debt free by the time your kid's 10. Well, yes, hopefully. Stop saying hopefully. Haven't you ever seen Star Wars? There is no try. Just do it. Why do you keep saying hopefully? I't you ever seen Star Wars? There is no try. Just do it. Why do you keep saying hopefully? I'm working towards that, but you know how it is.

I mean, he's eight, so there are sports coming in that I have to pay for. No, no, no, no, no, no. You're going to have to do a hard thing that most American parents refuse to do, and that is to look at their kids and say, I'm not going to mortgage both of our futures over this temporary rock and roll. I'm not going to mortgage our futures at the altar of travel sports. Your kid can play YMCA ball,

have the time of his life, do great, avoid ACL injuries at the age of nine, and then have fun, which is the point of nine-year-old sports. And he can get one sport. That's all he does. He does taekwondo right now.

That's all he does. Awesome. He really likes it. Fantastic. That's it. And so when baseball comes and soccer comes and everybody else is playing all these things and they're buying $90 shoes or $190 shoes for each season, we're not doing that because here's the deal you can't do that and I do think it's important um eight is probably a wee bit on the young side um to go into super like firm detail right but man

if you sat him down at the beginning of every month and just walk through here's what the the light bill is and here's the electric and here's the uh water bill and here's our rent payment and here's our food he begins to get a bigger picture so when you sit down sit him down at 13 and 14 and say you're a freshman in high school here's what college is going to look like and maybe it's the florida promise maybe by then you'll be making too much money to have an sai of zero so you'll have to do something else but like you're going to be really honest with him about what college will look like. And every parent wants to send their kid to Stanford, and most of us don't. And that's okay.

Do you know what I'm saying? I mean, education is important. I understand that. But yeah, it doesn't have to be hard. It is, but my mom's in her 70s, and she's traveled all over planet Earth as a PhD professor, and her first two years were at a local community college. Mm-hmm, exactly.

You can do anything you want to from a local community college. Mm-hmm. And by the way, if you want them to get rich, maybe consider trade school. There we go. And you know what he can do? This eight-year-old, do this in my neighborhood, John.

The mom posts on Facebook and says, hey, Junior's picking up dog poop in backyards and moving trash cans in and out on trash day if you're out of town. And they're picking up leaves. And they make a little side hustle money that can pay for some of these things. And so teaching money comes from work. George has a new book coming out advocating child labor. So you can get a plan. But him participating in some of this stuff is important

too. And by the way, just in case you're concerned, him growing up watching you love and care for your mom, which is a whole other phone call. I know that's really hard and difficult and challenging. That's going to be a gift down the road. So kudos to you. That's a hard, hard life that you signed up for. And it's cool that you're doing that. Hang on the line, Elena. I'm going to send you a copy of my book, Breaking Free from Broke. It's going to include three months of every dollar premium to help you get the motivation to say, I will be debt-free in two years. Not I hope. You're not going to need help where you're going. You've got this. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Camel here with Dr. John Deloney.

888-825-5225 is the number to call if you want to join the conversation. Kevin is in Milwaukee up next. What's going on, Kevin? Hey, how are you guys doing today? We're doing great. Having a good time. How can we help? You know, right now, it's fun to, thank you guys for taking my call, but,

um, I'm struggling a little bit with my self-worth. Um, I am the sole provider for our household. My wife and I, we have three beautiful children. Um, and I can honestly say the last couple of years have just been tough. Um, I can give you a little background on our debt situation and our goals, but I just, I'm trying to figure out if I'm just spinning tires or I'm still heading in the right direction or if I need to make some major changes. Yeah. Let it go, man. Um, what's been going on? Um, so our, our current debt situation, um, we pulled ourselves out of quite a bit of debt. We're down to our last, um, 24,000 on a vehicle and it's our, it's our family vehicle that we use. Um, my wife stays home with our children

and she does stuff on the side. So, um, right now she brings in about 1500 a month and then I bring in about, um, $80,000 a year. Um, but I just feel like we're getting buried left and right. We're trying to make the best choices, and I'm just not sure if I'm doing enough. How are you getting buried, man? Honestly, I don't know. I feel like we're doing a detailed budget well. It's just this and that that comes through. I'm not prepared for what's life throwing at you.

And I had some health issues come up in the last month or two that just kind of added on to all that. So I've been really struggling to try to figure out how I'm going to handle this medical debt that's going to be incoming and then the medication that I'll need to start taking as well. So that was the question I was going to get to underneath all of this. How old are your daughters? I have one daughter. She's going to be two, and I have two sons. I have my one is four, and he's going to be five this year,

and I have an 18-month-old. 18-month-old. Are you tired? Yes, I am. Well, what's that? What's the health issue, man? Uh, you know, I have a Crohn's disease. Um, I went in and for like a routine checkup and when they, they wanted to do an endoscopy as well. And they actually, at one point, they thought it was, I have a really large ulcer in my stomach, and supposedly it's really bad. But regardless, the medication they want to put me on is,

from what I'm hearing, is like $30,000 a shot. I'm still waiting on insurance and stuff to get that all figured out. I've had Crohn's disease for like a decade, but I just went in and they said it's progressed really badly. It's pretty tough. and stuff they get that all figured out i've had crohn's disease for like a decade but uh i just went in and they they said it's progressed really badly and it's not good um i guess what i'll tell you is it sounds to me like money's a thing and um it's a weird thing when you grow up thinking eighty thousand dollars000 is basically a million bucks, and then the world changes underneath you, and eggs are so expensive, and air conditioning is so expensive, and shoes are so expensive. And just being alive anymore, suddenly $80,000, you feel like a failure, right?

Exactly. But there's something deeper than that. I want you to hear me say this. I don't know anybody who's got three kids, ages five and younger, who is not walking around in some sort of, what have I done? Who am I? Where am I going? Fog. And you throw on top of that a chronic, brutally painful illness

that you just found out that you've been trying to manage and you found out it's worse. Yeah. And then I don't know anybody whose marriage is just super great with four kids under five. Right. And so you have all these different complexities here and it's easy because for a guy like you,

who's a good man to look in the mirror and say, it's probably all me. Yeah. I'm struggling big time with that. I mean, I just want to make sure our kids get to experience things in life and that they're taken care of. And I, I grew up, uh, just, you know, money was a struggle for the most part. Yeah. So, so can I just, can I just stop you right there?

Yeah. Like you're not a burden on your family, dude. And your kids won the lottery when they got you as their dad. Do you treat their mother with respect? Do you love your wife? Of course. Awesome. Does she love you, even though you can be annoying sometimes? Yeah, yeah, she does.

Okay. That's gift number one to those kids. What do you do for a living, man? I am a territory manager for a steel company. Okay. Is your job safe for a while? Yes. Okay. No, job is safe. The company I work for is great. Awesome.

They've been really flexible with appointments and all that stuff. Like I said, it's just hard. You know, when I was a kid, I felt like if I, if I could make $60,000, I felt like I was going to just be. Yeah. You'd be rolling. That's right. Okay. But do you also remember being a kid? Where'd you grow up? I grew up in Wisconsin here. Okay. Perfect. Do you remember those winters when you're outside and you forgot your coat and you feel like it's going to be this cold forever? Yeah. That's you right now. And you are in a season of grinding it out because you've done the math at 3 a.m. when you can't sleep and you're spinning out.

Your wife, if she was to go get a full-time job, you't afford the child care because that's five million dollars a month for everybody and so y'all are just stuck in this moment but i'm telling you with a guy of your hard-working ability a guy that cares so much about his family a guy that loves his wife and is taking care of his daughters the springtime is going to come and it's just a matter of grinding it out it just is really cold outside right now it's just a season yeah you get what i'm saying and the thing i don't want you to do is something you can't undo yeah don't say the thing do the thing text the person the woman back at work like don't don't do the things right now that you're gonna have to pay for later when the springtime comes just keep

grinding it out because i normally george and i would tell you to go get another job or to like work a little extra time but you also have a an illness that is that feeds on stress yeah and i i am doing real estate part-time and i think one thing i've learned this year is real estate's not a part-time gig no it's a full-time this year is real estate's not a part-time gig no it's a full-time gig it's been right now you're probably not selling any houses because it's bananas yeah and guess what if you stop doing it you're not a failure no because you're gonna say to yourself well just one more thing kevin can't do gosh this guy can't and i i feel it on you man i just think you're doing the most right now. And so I think giving yourself grace is the best thing you can do for yourself and your family. And you're doing the budget and

you know exactly how long it's going to take to get out of debt at this point, right? How many more months? Yeah. You know, I want the vehicle paid off in the next six to 12 months. Perfect. Cool. So that's one season. We've just put a timeline on it, six to 12 months. Perfect. Cool. So that's one season. We've just put a timeline on it, six to 12 months. We're going to know the future of this health diagnosis and what the ongoing costs are in the next few months. There's another known. So I think right now there's just a lot of unknowns and things in the air. And I got an 18-month-old at home, and I just have one, and it's too much.

And so I can't imagine, Kevin, with two more on top of that toddling around. And so just know that it won't always be this hard. You're going to be out of debt soon. You're going to have you up, okay? Here's what I want you to do. I'm going to send you Building a Non-Anxious Life, just my book as a gift, okay? I want you to read it and begin to map it out and how that would overlay on your life, okay? Thank you. The second thing I'm going to do is I'm going to hook you up with three months for free from my friends over at BetterHelp. Licensed therapists that you don't have to tell anybody that you're going to see a therapist, and they'll see you within the next 48 hours or so. And I'll hook you up for three months for free. You can do it from your computer. You can do it from your phone. You can do it in the privacy of your own home if you need to. On your lunch break. You can do it in your car out in the parking lot if you

need to. But it'll give you a licensed counselor. You can talk through some of this stuff. Living with chronic pain, especially with Crohn's, I wouldn't wish that on my worst nightmare. And can I tell you, listen to me carefully, you're not a burden on your family. They're lucky that they got you. And it's cold winter right now. Spring is coming. I promise. I promise. Hang in there, brother. Thanks for the call, my man. We'll be right back. Thank you. Welcome back to The Ramsey Show.

I'm George Campbell here with Dr. John Bologna. If you've been listening to this show, you know the best way to make the most of your money is creating and sticking to a monthly budget. It's a two-part plan. Every dollar makes it simple to plan spending, track expenses, and save for what matters most to you all in an easy-to-use app. It'll help you keep a pulse on your spending and make progress instead of just wondering where all of your hard-earned money went. So go download EveryDollar for free in the App Store or Google Play or click the link in the description if you're on YouTube or podcast. Lee is up next in

Louisville, Kentucky. What's going on, Lee? Well, good afternoon, John. George, how are you folks today? We're good, brother. What's up? Well, I'm creeping up on 73 years old as I take a look at my time horizon. I'm not sure I can get out of sight, but I really don't have a lot saved. I still work full-time um and i have about oh about 12 500 in a roth and in my 401k work i've got about four thousand dollars um don't have any debts other than my house and uh by um emergency funds at ten thousand a of months, I could pump that to $15,000 if I needed to. But where it comes down, since where I am at this point in life,

we both take Social Security, my wife and I both. And so over and above my salary, we get right at $50,000 a year between us and Social Security. So because of that, obviously, I pay taxes. We pay taxes on it. So after holding out Part B and holding out 10% taxes out of our Social Security, we get around $3,750 a month clear. And I'm trying to figure out at my point in time, uh,

you know, where am I, you know, where am I better to go with this money? It's basically free every month. And, uh, you know,

do I invest part, you know, 73, it's a kind of a tough, that's tough, you know, place to go. It's not,

who knows how much time or should I put most of the money on trying to, you know, 73, it's kind of a tough place to go. It's not who knows how much time, or should I put most of the money on trying to pay off my house? What's left on the mortgage? That's kind of where I am. There's $178,000 left. And what's the house worth? Between $4,500 and $4,500. Okay.

What do you make in your day job? Between $55,000 and $60,000 a year. Okay. What do you make in your day job? Between 55 and 60 a year. Okay. So you guys are making about 100,000, which includes social security right now? That's correct. Okay. And are you in good health? Could you continue working for a few more years? Well, yeah, actually I am. If you probably saw me, you may disagree with it. George is the picture of health when you see him. Oh, I see him on TV. I know what you mean. Yeah, there's a lot of digital editing going on.

Just trust me. Trust me. He looks nothing like this person. Good makeup department, I guess. A lot of makeup. Tons of makeup. Caked on there. Okay. I am actually in very good health, at least at the moment.

And, you know, the job I've been doing, I've been with my company over 30 years. And there's no pension or anything? No, no, just the 401K. But you haven't really contributed to that, it sounds like, in those 30 years. Well, you know, full disclosure, I have over the years. 401k but you haven't really contributed to that it sounds like in those 30 years well well you know full disclosure i have over the years but you know um i've had to rate it a couple of times for a couple of weeks you robbed the old nest egg that'll do it yes yep okay well let's let's work through a plan that'll get you guys a decent retirement here. What are your monthly expenses?

Just a little bit over $3,000, about $3,200 a month. Okay. So I'm just imagining, let's say as a worst case scenario, you could survive off of Social Security for the time being. Yeah. So if you had to quit today and just live off Social Security, you'd still have a few hundred bucks left over. Yep. And that includes the mortgage. That's making the mortgage payment and everything.

Correct. Okay. Here's what I'm thinking. Worse comes to worse, you could always downgrade, downsize, and house and try to pay cash for something to alleviate that mortgage payment if you needed to. You're not there. I don't think you're going to get there. I think you're fine to stay put where you are. Right.

But I would love a plan where you go, hey, we're going to live off of the Social Security and put all of my income toward investing or toward the house mortgage to get that knocked out in the next few years. Yeah. Okay. I got you. My dad's 75. If he sat down and asked me the same question, the first thing in my head would be to tell him, get a house that nobody can take away from you. That is, I'd have to reasonably agree with that for certain.

But I'll also say, because of raiding your nest egg over the years, it may be that, George, what he just said, I need you to take that into consideration. It may be that your nest egg is actually that $400,000 house you're sitting in. Well, that was my opinion as I sit down to think about all this, to be honest with you. That was my retirement probably is the house. Well, yeah. And it may be that you have a $200,000, you'll get to a $200,000 condo there in Louisville, and then you'll invest the rest of this money and that'll get you kind of jumpstart. That becomes eating money that's right what's your principle and interest every month aside from taxes and insurance what's just a principle and interest on this oh gee um let's see it's uh it's a 2.625 percent uh i think it's about 900 and and some are screwy taxes and as well with homeowners insurance keeps jacking up and down.

But I think it's about $900. Okay. I'm just wondering how much money you would free up if you did, in fact, pay off the mortgage that would give you a spare $1,000 every month. Oh, yeah. And so that's some breathing room right there. So I like the idea of attacking the mortgage, but I also think while you're working full-time, let's take advantage of all these catch-up contributions you can do in that 401k and stack money in there. Yeah, I changed it last week.

I increased my contribution at work to 15%. Good. And we both have a Roth that, you know, as I say, I have about $12,000 in mine. There's about $50 in hers that we could, you know, put $8,000 each, you know, into as well, I guess. Yeah, with the catch-up contribution. I think that would be a wise move. And anything beyond that, I would be throwing at the mortgage. And I might have a goal for myself. As long as I'm able and willing, I'm going to keep working and get this mortgage paid off. And the day I pay off that mortgage, I'm done. And that might be four years of hustling. Right, right. Yeah. So I guess, which is, I mean, one of the scenarios I'm running through my mind here, or I was running through my mind.

Speak directly on the phone, Lee. We're losing you there. Okay. I'm sorry. That was one of the scenarios. So out of this, what I call extra money I have of Social Security, make it $8,000 each in our Roths out of that as the months go forward and whatever's left, just put on the house. Exactly. Yeah. And you can just stick with 15% of your household income. So let's say it's that $100,000, that's $15,000. That'll basically cover both of those Roth IRAs.

And then any money outside of that, just start attacking the principal in that mortgage with extra payments every single month consistently. And once you get down to under the $100,000 mark, you're going to start to see some light at the end of the tunnel. And my hope for you is that you might be 76 and you'll have a paid-for house and you'll have $4,000 coming in and you'll have $1,500 in bills to pay, and that'll still give you a decent retirement. But you're going to have keep your lifestyle in check you know we're not going on vacations every two months and upgrading cars like it's i want to make it clear this is not going to be a luxurious retirement but you're going to have some dignity you're not going to be struggling darn the bad luck and again if i was talking to my dad i would say i want you to you to, you got a $470,000 house and $170,000 left on the mortgage.

I want you to strongly consider finding a nice $200,000 condo in that area. And again, I don't know, Louisville, everyone in Louisville may be going, there's no such thing. I don't know. I don't know. Don't be mean. But if you could take that $100,000 and put that in retirement savings with the catch-up contributions, you could set yourself up and kind of be off to the races a little bit. Yeah. If you can get that growing for you with compound growth in the market and you have some good years and some down years, overall, that'll still help your money grow for you so that you don't run out in retirement.

Let's say you live another 20, 25 years, God willing, I want to make sure that you guys can eat and eat good. And you're going to be driving that same truck in 20 years. So just get that out of your head. Make sure you take care of it. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell here with Dr. John Deloney. Our scripture of the day, 1 Corinthians 15, 58. Therefore, my dear brothers and sisters, stand firm. Let nothing move you. Always give yourselves fully to the work of the Lord

because you know that your labor in the Lord is not in vain. Joe Girard said, the elevator to success is out of order. You'll have to use the stairs one step at a time. Ooh. Dang. Joe. Dang. Where's the elevator repair people at a time. Ooh. Dang. Joe. Dang. Where's the elevator repair people at?

You know what I'm saying? Show up. They're all working on the AI stuff, I think. I'm just not going. I'm not going where I need to go at that point. I'll stay on the first floor. I'm fine. Not me.

One step at a time. Not John. All right, let's go out to Jared in Columbus, Ohio up next. What's going on, Jared? Hey, guys. How you doing? Doing great. How can we help? Yeah, big fan of the show, so thanks for having me on.

I was hoping you could settle a debate for me regarding Roth versus traditional 401k contributions. That's my kind of debate. Put me in the ring. So my wife and I, we've always contributed on a Roth basis with the understanding that, you know, we're going to use after tax dollars and, um, you know, the money that we invest is going to grow over time. And then, you know, in 30, 35, 40 years, when we retire, we can, you know, make withdrawals on that account, um, without paying tax. Um, so that's the approach we've taken. And, uh, a friend, I was talking with a friend, and he's someone I respect very much. And he was saying, well, no, you should contribute on a

traditional basis because when you're in retirement and ready to make those distributions, you're going to be in a lower tax bracket. So I was hoping just to get your guys' expert opinion on if there's any merit to that or what you guys think. Sure. It's a hot debate in the nerd community, and the truth is if we're having this debate, I'm happy. It means we're all investing. And number two, does your friend have like a time machine? Does he know what the tax brackets are going to be 30 years from now? No, no, he certainly does not.

Okay, that's question number one. So there's my first point is that we don't know. We've been in historically low tax rates, and we don't know what's going to happen in the future. Tax hikes could eat into those withdrawals on the traditional side, but with a Roth, you're kind of locking in today's rates, and you never have to worry about taxes again. And I don't have to think about how much can I pull out in retirement without triggering. I just go, hey, if we want to take out 250 grand in retirement every year because we have 10 million in there, great. Let's do it and not worry about what the taxes are going to be.

So that's point number one. Point number two is required minimum distributions. You've heard about these? Yes. So on the traditional accounts, you are forced to take these required minimum distributions starting at age 73. On the Roth accounts, now with the new Secure 2.0 Act ruling, there's going to be no RMDs on the Roth plans, which means no one's forcing you to take out money, and that RMD could push you in a higher tax bracket on the traditional side. Tracking there? Yeah, it makes sense. Okay. And then on the other side, there are some estate planning benefits to putting that money in a Roth, mainly that you're going to pass this money onto your heirs tax-free versus a traditional account. My daughter inherits that. She's got to pay taxes on that. And she's probably mad at me, you know, while I'm in heaven looking down, I gave you a million dollars and you're complaining about taxes, you know. So there's that piece too.

And then there's also the flexibility in retirement. It's not going to, you know, you're not paying any more. You're not going to get taxed on social security benefits when you use this Roth money. And so I just like the idea of knowing the knowns of, I know what the tax bracket is now. I know it's tax free. If there's $5 million in that account, I can withdraw $5 million without paying Uncle Sam ever again. And so it's a fun discussion. And if all things are equal, it wouldn't matter, right? Paying the taxes now would be the same as the money in the Roth versus traditional, but we just don't know what the future holds. And for that reason, I'm a fan of the tax-free growth. And I think you're sort of doing a better job at your forced savings plan when you put the money on the Roth side because it is after tax.

Yeah, it makes complete sense. Your friend probably thinks I'm an idiot and I can't change their mind, but that's just one man's take. John, are you a Roth fan? I like it in concept. Yeah. Okay. I'm much rather... I was hoping you could settle the

debate. I mean, I'd much rather have pain now so that I don't hoping you could settle the debate. I mean, I'd much rather have pain now so that I don't have any pain in the future. I'm with you. I don't like to be in the future predicting business just because who knows, dude. Yeah. Right, who knows.

Are you in baby step four? Yeah, we just have our mortgage that we're working on our mortgage right now. Awesome. Other than that, no doubt. And how young are you guys? 34. 34. And you've already been investing. How much do you have in your nest eggs?

So the 401K is between my wife and I, probably around 400. Amazing. You guys are crushing it. Dude, I didn't even know what a Roth was until I was 40. Yeah, you're ahead of the curve. You're so far ahead of the game, man. And what's your household income? About 270 combined gross. See, these are the types of people who are nerding out on Roth versus traditional conversation. Take your wife on a date, man. Call it. You're good. So you guys, guys if you're investing 15 that's over 40 grand right yes so i'm going to call that uh 3333 bucks a month you're 34 let's say we go to 62 10 on average you're going to have 12.5 million tax-free money if it's all roth

are you stunned yes so that's the thing i'm like you and your friend you can crunch the numbers all day if two young people are arguing about this i'm i'm so happy about it so you could also like work on climate change or like yeah i find hobbies cancer or something only i should be having these debates with my friends not cool people like jared exactly yeah well thanks for the call jared appreciate it great conversation happy to nerd out on a friday that's what i'm here for let's go out to tyler and jasper indiana up next what's happening tyler hey hey guys how's it going what's up thanks for taking my call um i've got a couple things uh ge yes, your middle name is on the web.

Oh, no. This is from a previous conversation, John. Ken was trying to guess my middle name, and I said I'll never tell. It's Peter or something, isn't it? Well, now it's on the web. Tell you that much, John. What is it, Tyler? What is it?

So I've got – I just started recently listening to you guys. Hold on. What's George's middle name? Oh, well, it doesn't start with a P. Oh, well, I just made that up, so I'm just guessing. All right, get to your question. Sorry. Follow you once.

Welcome to our cult. So what's up? Yeah. So I just recently started listening, and I just got my wife, my wife my fiance we're going to be getting married soon um i just got her on the gazelle intense part um i've kind of been like that forever i paid off my cars and my motorcycle but awesome i've got a the only debt that I have in my name is the mortgage on my house. And I've got a mortgage with her as well. And that's the current place we're living in. And the other mortgage I'm renting that place out.

So my question is, is it stupid to have two mortgages like that, even though the renters are paying the mortgage, and I'm not getting any extra really fluff money, maybe a hundred bucks, if that. So you're basically breaking even on the rental? On the rental, yeah, basically. If you're breaking even, you're losing money, because maintenance and repairs, tenant vacancy, there's a lot of other pieces of this. Is it stupid? No, we've seen a lot stupider things. You're going to be okay. Would I sell it to leapfrog our other

financial goals that we now have as a newfound couple? Probably. What could you sell it for? I bought it for $99,500, and I don't know how accurate Zillow is, but it shows on there $150,000 to $155,000. Okay. So you'd make a little bit of money off it. What's left on your current mortgage? On that one, on the rental? On the one that you guys are living in. Probably about $200,000. Okay. And what's your household income? I bring in roughly $70 to $75, and she brings in roughly $80.

Okay. And do you guys have any more consumer debt left? I personally don't. The only debt that I have is that. Okay. She has a car payment that she plans on paying off today. Good. Well, you know, in the next week or so. Yeah. Let her pay off that debt. She has another car payment. She got two cars? Which, yeah, I told her to sell the Jeep, which we're working on doing that.

Okay. Yeah. I'd sell one of those. Get rid of the car payment. Once you guys are married, let's combine finances, combine our goals. That might mean we stack up an emergency fund, invest, and we just pay off the rental and then pay off our primary mortgage. Or it might mean we just sell it and be done with it because it's not worth the hassle. That's one man's take. This has been The Ramsey Show. Thank you to Dr. John Deloney, all the folks in the booth, and you, America.