The Ramsey Show - App - The Balance Between Paying Off Debt & Enjoying Life

Episode Date: April 22, 2022

Rachel Cruze discusses: How to save up for a house, What to do with a large inheritance, Why the debt snowball method works better than the avalanche method, How to talk to kids about money, Why credit cards aren't worth the points, Balancing gazelle intensity with enjoying life. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

🎵 Live from the headquarters of Ramsey Solutions, this is The Ramsey Show, where America hangs out to have a conversation about your life and your money. I am Rachel Cruz, Ramsey Personality, and I am hosting this hour of the show. And so I'm so excited to be here with you guys. And it's a free call anywhere in the country at 888-825-5225. So give us a call. And it's so fun because this show, we get to talk about your life. We get to talk about your money. We get to talk about your relationships, your career, anything and everything.

So give us a call or on social even you can ask some questions. So one of the exciting things happening right now at Ramsey Solutions is Dr. John Deloney has launched his new book, which is absolutely fantastic. And it's called Own Your Past, Change Your Future. So it's available now for anyone to read. And I'm telling you guys, it's so powerful. I finished it actually in two days. I got a copy of it because it launched this week, which was just so phenomenal. And this whole idea of saying,

hey, I'm going to take control of my entire life. And part of that is looking at your past. And in my book, Know Yourself, Know Your Money, I talk about knowing the money classrooms you grew up in. Understanding how you were raised with money affects so much of your life. And money is really communicated in two ways. It's communicated verbally, but it's also communicated emotionally. And so for some people growing up, you know that they were raised in a house where money was talked about, that it was normal and it was good and it was fine. Others, they never heard their parents talk about money. Like it was never a conversation to be had.

I feel like some of those parents kind of lump into you don't talk about politics. You don't talk about sex. You don't talk about money. Like, you know, those those are off limit topics. And then it's also communicated emotionally. You can feel if it's stressful, if you're in an environment that there's a lot of anxiety around money. But then also there's the level of just calm and controlled and having a plan. And so all of that shapes really how you view money today.

And people either mirror a lot of how they saw their parents act with money or they do the complete opposite. And so I find that as well. And so just kind of unpacking that past with your finances is so important. But even in his book, he does it about every subject in life to go through and look at your past and say, hey, what influences have now affected how I live my life today? And so it is a powerful book, you guys. Again, I would recommend getting it. You can buy it anywhere books are sold,

but it is so good to go back and say, hey, here is what shaped who I am today, and here are the decisions I now get to make going forward because, again, it affects every area of our lives. All right, we're going to go to the phones this hour, and Sarah from San Francisco is up first. Hey, we're going to go to the phones this hour. And Sarah from San Francisco is up first. Hey, Sarah, welcome to the show. Hi, Rachel. I'm a huge fan of yours. Oh, thank you. I'm so glad you called. I'm so glad you called. How can I help? I want to purchase a home in the future. And I want to know if you had any tips that could help me.

Yeah, absolutely. So where are you at today financially? What's your situation? Financially, I have a stable job. I'm able to save some money monthly to put aside, but I'm having a hard time managing that money that I put in my savings. I always tend to dip into the savings and it hasn't passed a certain level of money over time. And so, yeah, I've had a hard time with that. What's causing you to dip into it? Just emergencies, unplanned things, or is it more just like spontaneous things you just want? Spontaneous things that I just want. I see that money, I guess, and I say, oh, well, I want this, or I want that, and I'll just dip into the savings. So for you, it's a home. I mean, it's a, it's going to be, it's a goal for you, right? I mean, you are in San Francisco, which is like, I think,

the most expensive real estate in the country. So congratulations. Sorry about that. But for you, yeah, I mean, I think saving up for a home, owning real estate as part of your financial journey is very important. I really am a big believer of it. I love renting, especially if you are new to an area, if you're just starting out with a new season of life or something, renting is not bad. It is not wrong. And some people are like, oh, it's just throwing your money away. And it's not. I mean, it really is giving you a very stable foundation. But eventually getting to the point where you have home ownership and you own a home, I think really is important. So for you, Sarah, I would work on getting completely out of debt.

Do you have any debt right now? I still have student loans. Okay. Yes. And how much do you have in that? I have $10,000 in student loans. How much is in your savings account that you keep dipping in for fun stuff? I have around $8,000. Okay. Okay. So if I were you, Sarah, I really would, I would start working the baby steps, and I would say, okay, I'm going to take $7,000 of that, throw it at my student loan debt, get it down to $3,000. I would do anything and everything to get that $3,000 paid off, the rest of the $3,000, and then save up for that emergency fund. And that emergency fund is going to be just for emergencies, which I know, as you were talking,

it's difficult, right, because you're like, oh, the money is just sitting there. But putting it aside to know, okay, if something happens, I have this money. And then from there, saving up for a down payment on a home. And again, it has to be something that you have a why for. You have to be able to look and say, gosh, this is why I want to buy a home. This is the area I want to be in. And that does have to be a goal for you. But if you're in a situation that you don't necessarily need home ownership right now, or you think you may be changing cities or life stages soon, and you don't want to be tied down to a mortgage, you don't have to own a home right now. And again, San Francisco, it's kind of a tough, it's a tough spot there. But when it comes to our homes, you know, it's probably the largest financial purchase that we

make in our lifetime. I mean, it's huge. And making sure that our homes are not a curse, but they are a blessing. And so looking to see what kind of home can I afford. And that's a really, really important thing to look at because, yes, while home ownership is wonderful and great, you don't want it to eat into so much of your paycheck where it ends up being a curse. So being completely debt-free, having that emergency fund is going to set you up really well. All right, up next is Spencer from Chicago. Hey, Spencer, welcome to the show. Hey, Rachel, how are you? Doing well. How can I help? So I wanted to ask, my wife and I recently inherited about half a million dollars and we're

trying to figure out whether the first thing to do would be to pay off our mortgage with that or to invest it otherwise. Yeah. I'm sorry. Was it a family member that passed? Yes, it was. Yeah. Was that unexpected, or were you guys... Yep. Yeah, it was her father. Oh, I'm so sorry. How long ago was that? Last year in September. Okay, okay.

I'm so sorry, Spencer. That's difficult, especially when things like that are unexpected. Well, he left you guys a really generous gift to be able to use. I'm glad you called. And, you know, since it was in September, I still think that there's a element when people receive an inheritance from a family member that's passed. There's a level of grief that I really want you to walk through. And actually, Dr. John Saloni talks about this a lot, which is so important that you're not making financial decisions out of that. But going through that process of really grieving and then from there, yes, Spencer, if you guys have any debt, I would pay it off.

I would use some of that to get the emergency fund in place. I would go ahead and pay off the home. And then from there, you guys start investing 15% of your income into retirement and you can throw some of this at that retirement or just mutual funds as well, just for general investing. This is The Ramsey Show. Your home is one of the biggest financial assets you can have. That means when it's time to buy or sell, you've got to think differently about who you hire to help get the job done. Some normal real estate agents you find online or through a friend will have subpar experience at best, and they probably won't have your back either.

That's why I started the Endorsed Local Provider, or ELP, program over 20 years ago. Our ELP program makes it easy to connect with top Ramsey-trusted real estate agents in your area who think like you do about money. These guys have the heart of a teacher, and that means they actually care about your financial goals and understand your home's role in them. ELP agents are vetted by our team for integrity and we demand excellence every time. Find a trusted real estate agent near you by going to ramseysolutions.com

slash agent today. That's ramseysolutions.com slash agent. Welcome back to The Ramsey Show. I'm Ramsey Personale, Rachel Cruz, hosting this hour. And we're going to go to the phones. And Daniel in Dayton, Ohio, is up next. Hey, Daniel, welcome to the show. Thank you for having me on. How are you? Absolutely. I'm doing great. Thanks for calling. How can I help? So I've been working on Baby Step 2, working on my debt snowball. Awesome. I've already paid off a couple of my smaller balances. Nice. But my largest credit

card has a really high interest rate. And last month for the first time, the interest charge was higher than my minimum payment by a dollar. Oh, my gosh. Yeah. So I was wondering if it would be in my best interest to switch gears and pay at least some of that down just to get the interest under control or if I should just keep plowing through the snowball like normal. But it'll probably be about 16 months before I get to that balance if I do it that way. Okay, so what other debt do you have left? I have my car and I have another credit card

and then a couple thousand in student loans. Okay, and what are the balances on all those? What do you owe on your car? The car is about $10,000. Okay. The student loans are about $2,000, and the other credit card is about $4,000. Okay. And how much do you make a year?

$55,000. Okay, that's awesome. Okay, so obviously you're going to be paying off the student loan, the $2,000. Are you doing the debt snowball by paying off the smallest loan first, All of your debt? Yeah, I've paid off a couple small ones already and I'm working on going up to the next one. Yeah, but that one credit card is bothering you because of the interest rate and all of that. Yeah, you know Daniel, I'm still going to suggest just plowing through the debt snowball. I mean what you've been doing, you've been seeing the traction that you're getting and even though it's

frustrating mathematically of what's happening, the idea of still knocking out that student loan, getting that out of the way, because there's something too about not just gaining the momentum of paying the smallest one off first, but there's something even just checking it off the list where I'm like, you don't even have to think about it anymore. And getting, and thankfully, you know, your student loans, it's only $2,000, which is amazing for a lot of people. It's, you know, sometimes even six figures. So to start knocking those out, it's still going to give you that momentum. And so continue to pay that minimum payment.

But I would I would still I would still keep the debt snowball method going because it works. I mean, over time, even though I know mathematically it's frustrating with that one credit card, but over the scope of it, you're still going to be gaining that momentum. And once that student loan's paid off, obviously that minimum payment's freed up to keep rolling over. So that would be for sure my suggestion, but thanks for the call. And it's a good question because this whole idea of money,

you know, a lot of people think it's like the dollars and the cents and the math, where so much more of you guys, it's behavior. It is so much about that behavior change. And when you can start to feel anything emotionally with money on the positive end of like getting that traction, getting that stability, and just knowing things are getting knocked off,

it does something. It gives you more sleep at night. It gives you more peace. And so keep attacking it that way, Daniel. But great question. All right, next is Andrew from Minneapolis. Hey, Andrew, welcome to the show. Hi.

Hi, Andrew. You're from Rochester. I'm sorry. I messed up your city. Yeah, you're okay. I apologize. Welcome. How can I help?

So my current issue is I have about six months to a year before I'm kicked out. I'm currently living with my parents. I'm 25. I've got $10,000 in the bank, but I have $20,000 worth of debt. Okay. I'm trying to figure out if I should buy a home or go and rent somewhere. The lowest rent currently from me and my area, like the lowest end possible is about $1,200 a month. Okay. I would for sure rent, Andrew, because it's not just the rent that you're thinking about.

When you go and own a home, there's all the other expenses that come with it that you may not even be thinking about. And so that home ownership, it's so expensive and it takes a new level of responsibility. So you said, are your parents kicking you out? Did you guys have like a timeline in place or what happened there? Yeah, so it was, you know, because I'm almost, you know, 26, you know, being a single guy, it's not really attractive, you know, living at home with the folks all that much. Failure to launch is what I'm thinking about. You're a smart man, Andrew.

You're a smart man. Yes, exactly. So what do you do for work? So I work in a hospital with 3D printing. I make about $72,000 a year. That's great. Doing that. Very cool.

So, yeah, if I'm you, if I woke up in your shoes, you could keep going the six months of your parents, but I think you have the ability to go still out on your own. So go find an apartment. Because I think too, and you kind of alluded to this, so I know you're feeling it, but there's the sense of dignity of like, all right, I'm on my own. Like I'm paying my bills and I'm doing it. And so getting that for you, I think is really important. So even if you wanted to move to an apartment or renting a house or wherever you're going to go renting-wise earlier than six months, I think would be totally appropriate. You can do that. And then you have a great savings.

So I would take some of that and throw it at your debt. And I would go ahead and just bring your savings down to just $1,000 and start working on that debt. What's the $20,000 in debt again? What's the debt? It's on student loans. Student loans, you said, yeah. That's already a quarter down of what it was originally. Oh, that's awesome.

Congratulations. And that's your only debt you have? Yeah, that's the only debt I have. That's amazing. Yeah, so I would throw $9,000 at that and just kind of keep chipping away because a lot's going to be freed up for you for sure when you pay that off. So congratulations. Enjoy that rental house, Andrew. I think that's a great move. And then once you're debt-free and you have a fully-funded

emergency fund, you can save up for a down payment there for your home. All right. Up next is Jen from Des Moines. Hey, Jen, welcome to the show. Hey, thanks for having me. Absolutely. How can I help? So I'm a mom of two kids, two and three and a half year old, so they're little. And my husband and I are realizing more and more that we need to think about how we teach them about money. When your Know Yourself, Know Your Money book came out, I got it from the library and realized, like, I grew up in a kind of stressful household related to money. When your Know Yourself, Know Your Money book came out, I got it from the library and realized I grew up in a kind of stressful household related to money. And I know a lot

of families just don't talk about it, so the kids don't know about money when they grow up. So my question for you is, how do I talk about money with my kids so they grow up to have a secure relationship with money? Yeah, it's a great question. And I love that you're asking it because it is it's so important and how to do this wisely and, and do it well. So I would say one thing, Jen, is that more is caught than taught. So your kids are watching you and your example is huge. I mean, I think a lot of people think growing up as Dave Ramsey's kid that, you know, our household, we were like obsessed with money and all we did was talk about money. And we had like mutual fund birthday parties and like like everything was around money.

And that was not the case. Thank the Lord. It was not the case. Mom and dad. I mean, they they talked to us about it. Sure. And they taught us and we had some responsibility here and there. But it was nothing like extreme out of the ordinary. And so I would say as much

as you can make it as organic as possible in the ebb and flow of life. And so I feel like a lot of parents, you know, they have such good intention of teaching their kids about money, but it ends up being this unauthentic, unorganic, like sit down and we're going to explain all this to you like twice a year. And it just becomes this almost robotic feel, right? Where it's almost can lean like legalistic or something. And so I think with your kids, again, your example, you and your husband's example is going to be the biggest. They are watching you. And then number two, just talking to them, especially when they're small. And again, three and a half and two, like they're super small, but when they're

getting, you know, six, seven, years old and and starting to show them things and and talk about it i mean even small things like at the grocery store even my kids like this literally just happened this week at the store and it was like the honey nut cheerios it was like buy one get one free and i was like girls did you know you could buy for this store specifically i could buy this and get a free box or if i don't buy, if I don't get the second box, I get this box half off. You know, and I'm like sitting there and just teaching them. It's like these little things, these little tips and tricks throughout life that you're just bringing them in age appropriately.

And then the three or really the four lessons with teaching kids, again, age appropriately, but work, give, save and spend. And those are the three things you have to remember. And even as adults, that's really what you do with money is you work, give, save, and spend. And those are the three things you have to remember. And even as adults, that's really what you do with money is you work, you make your money, and you really can just give it, you can save it, invest it, and you can spend it. And so looking at all three of those buckets. But again, Jen, for you, I mean, I wouldn't start all that until they're probably five, six years old. But up until now, yeah, just letting them see, hey, money comes from work. Even something just that simple when they're young can go a really,

really long way. So great question. Thanks for the call. This is The Ramsey Show. We'll see you next time. We're live on the debt-free stage here at Ramsey Solutions in Nashville, Tennessee, is Dominic and Julie from Burlington, Wisconsin. Welcome, you guys. Hi there, Rachel. Hello. Well, I mean, Hi there, Rachel. Hello. Well, I mean, I guess there's one reason you're standing on that stage. Right?

Yes, congratulations. Thank you. Completely debt-free. Okay, so you guys are in Wisconsin and you made your way here to Nashville. So how much debt did you guys pay off? So it's really debt-free times two. Whoa, can't wait to hear.

$263,465.64. I love when people get down to the penny. So good. So really, we graduated college in 06. It took us four and a half years to pay off $78,000 roughly of student loan debt. Yeah. So we're completely debt free. Saved up our down payment.

And then in the last 10 years, paid that off. Oh my gosh. So this includes the mortgage. Yes. You're completely debt free. Correct. Amazing, you guys. Congratulations.

As we always say around here, I'm like, I'm looking at weird people. Yep. You don't have a mortgage. Correct. You don't have a guys. Congratulations. As we always say around here, I'm like, I'm looking at weird people. You don't have a mortgage. Correct. You don't have a mortgage. Okay. And so how long did it take you? About 15 years. 15 years to pay it all off.

Amazing. And through that time, three kids, about $100,000 cash flowed in, house repairs, new cars, all that kind of stuff. Oh, yeah. You're living life for the 15 years while you're doing this. And how much was your income during that time, which I know will be very different in that 15 years.

So starting out when we graduated, I was making $39,000 a year. And then last year, $163,000. Yeah. And then this year, probably close to $180,000.

Oh, my gosh. Amazing, you guys. Okay, so what do y'all do for a living? So I'm an accountant and she stays at home and manages the house. Yeah, that's wonderful.

You know, one of our top three careers that we found in our millionaire study. And to give you an insight, she went to school to be a teacher. Oh, there you go. You're the devil, the teacher accountant. Yes. That's amazing, you guys. Okay, so the type of debt, it was student loans, mortgage, anything else? Nope, that's it.

That was it. Okay, it was the of debt, it was student loans, mortgage, anything else? Nope, that's it. That was it. Okay, it was the house. So what happened? So in college, we went to school in Grand Rapids, Michigan. And so in 05, I started listening to the show. We got married in 04. Wow. Went to Dave's live event in Grand Rapids in 05.

Yeah. I may have been there. Yep. I was about to say. You might have been working though. High school Rachel may have been there, yep. And then we went in 07 yeah i may have been there yep i think you might have been working the high school rachel may have been there yep and then we worked then we went in 07 as well yeah and then when we graduated started paying off the debt led four fpu classes oh wow also led uh your generation change that you were a big part of yes so dang y'all are you a group yeah y'all been around

been around the ramsey block or two in a sense. Yeah. That's amazing, you guys. Absolutely amazing. So you guys just finally said, you know what? We're going to just knock out this mortgage. We're going to be done with it and be completely, completely debt free. So you started listening to the show in college, like you said, and then just kept getting involved. So as a coordinator, did that help the motivation continue on? Yeah, that's really really for the question the biggest

cheerleader it's it's the fpu class all the members that went through it that we taught and if you're going to teach you you have to do it yep and then um also all the doubters along the way were big cheerleaders as well yeah and they push you along they do did you have a lot of doubters do people think you're crazy for trying to pay off your mortgage? There were a few throughout the years, yeah. Yeah, for sure. Okay, so Julie, for you, going through this experience with your husband to pay off debt, you know, money, we say it all the time around here, but it's just true. It causes so much tension in couples.

So for you guys, how did you work as a couple to do this? Because I'm assuming, are y'all both spenders, both savers, vice versa? What's the... I'm the spender in the family. Yeah, I appreciate you. I feel like I grew up in a frugal household. And so that helped a lot when it came down to budgeting and sacrificing. So that definitely helped. There wasn't too many arguments. I mean, I felt like we were on the same page a lot of the time. Yeah. So yeah, we worked well together. The neat thing is we really grew up together. So we were dated in high school. Yeah. Married after our sophomore year of college. So we started with nothing together and built everything that we have. And did it. Yes. Amazing. Okay. So what did it feel

like when you made that last mortgage payment? We literally loaded the kids into the car, went to the bank, said, take the money out of the savings, pay it off, we're done. And we just went home and went out for ice cream. Called it a day. Isn't it funny? I feel like the consumer debt, like when that's paid off, it's like this crazy celebration, which we obviously celebrate all of it. But I've heard a few people recently, with the mortgage, it's like this you know crazy celebration which we obviously celebrate all of it but i've heard a few people recently with the mortgage it's like oh the thought of not having a mortgage payment is in a totally different sphere in my mind but the payoff is like

oh yeah well we just did it and we did it you know what i mean like that kind of thing so that's awesome that is awesome so what what would you tell someone who's listening and they're thinking y'all are crazy. I would rather just enjoy my life right now. It's not a big deal. I mean, it's your house. Everyone has a mortgage. What encouragement would you give them?

It's worth it on this end. Hard work. It breeds the next thing. So now it's what are we doing next? What's the next goal? And continue moving along that path. Absolutely. Do you guys have anything fun that you're going to be doing in the next 12 or so months?

Well, if we could travel a little more, that would be nice. But really, we're saving up to do more remodels on the house. Okay. Okay. Continue off the house. That's amazing. Well, you guys, I mean, it's huge. You completely changed your family tree. The legacy that is left of what your kids witnessed as you guys were doing this journey.

Yeah, you can't put a price on it. You can't. And for you guys that did the diligence of working the plan and paying it off, I mean, I'm so excited for you guys. So proud.

Absolutely incredible. All right, and you got your kids here, right? Yeah, so bring them up. Oh, so... Okay, what are their names and ages? Madeline, 13, Nicholas, 11, and Hattie is 8. Amazing, you guys. Absolutely incredible.

Well, you did what some would say is the impossible, and with the focus and intensity, you guys did it. So congratulations. We're going to give you a copy of Baby Steps Millionaires because that is the next part of your journey and Total Money Makeover to give away to someone to continue to help. But you guys have been helping people all along the way by being financial peace coordinators, which is just incredible. So I'm so excited to say to count it down. Again, Dominic and Julie paid off $236,000 that includes their mortgage over 15 years,

making $39,000 all the way up to almost $180,000. Count it down. Let's hear your debt-free scream. Three, two, one. We're debt-free! Oh, my gosh. Amazing. Absolutely amazing. I love that. And again, people are like, what?

That's not possible. That's not possible to pay off your mortgage. You're going to just keep on, you're going to just have it forever. But a lot of student loans completely paid off, which some people think that's impossible as well. And then knocking out the mortgage and not having a mortgage payment. I'm like, you can do anything. They can do anything. And you guys listening out there, you can do this. If you are freaked out and you're stuck and you're listening to everything going on out in the world and you feel like you can't control your life, you don't know what's going on.

You feel out of control. You're stuck in these debt payments and you think it has to be a part of your life. It doesn't. It doesn't. And Dominic and Julie, they are a picture of it because it's going to take everyone a different amount of time. Everyone's going to have a different level of income during it, a different amount of debt coming into these journeys. But we've heard it all, you guys. We've heard it all here on the Ramsey Show, every amount possible, even up to paying off a mortgage. Because you know what you can do when you have no payments? Anything you want, you get to go and you don't owe anyone anything. And the amount of freedom that comes with that, with just not the financial freedom, that it frees up your income, which is your largest wealth building tool, but it frees up your mind, frees up your spirit. It frees up your sleep at

night. I mean, it changes everything in your options and margin. All of those things are on your side versus living in that rat wheel of just payment after payment after payment and shaking it up. And we say it again, I said it to them, but it's weird. Like that's not normal. It's not normal to think I could really work hard and sacrifice and get out of debt. What's normal is to think,

well, this has to be my life. And it doesn't. You get to make a decision and that's the beautiful thing. You get to make a decision and they made decisions day in and day out for 15 years, you guys. But guess what?

They don't have any payments. So congratulations to them again. This is The Ramsey Show. Thank you. blinds.com 100 satisfaction guarantee means that if even if you mismeasure or pick the wrong color they will remake your blinds for free you You get free samples, free shipping, and with the new promo codes they run every month, you will save even more. So use promo code RAMSEY to get the best deal. And today's question comes from Chris in Maryland. I use credit cards for their rewards.

I look at getting them, wait, hold on. I look at it like getting revenge on the credit card companies for all the money that I paid them in interest so long before I started being responsible. They had no problem charging me 25% interest and late fees if I missed a payment. So now I get all the rewards and I can make up

for the money that they got out of me. If I had paid them $5,000 in interest over the years and collected more of that in rewards, I come out ahead. What do you think about this mindset? Chris, listen, they're winning in life. Like, like, do you see their buildings? Do you see the bank's buildings around? Like, you're not, you're not getting all like your $5,000. You think it's making a dent in the side of them. And it's just not. And so for me, let me just tell you. Study after study has been proven that you spend more when you spend with credit cards.

Okay. That's just a fact. It's 12 to 18% or more. According to Dun & Bradstreet, that was done just a few years ago, that study. So you're going to spend more with credit cards, even if you think I'm going to get them with the rewards. You're spending more, period. So you're getting the rewards for spending more money versus saying, hey, I'm just going

to pay for what I want with cash, with my debit card. And then whatever reward I was going to get from the credit card company, I'm probably going to say I'm going to have saved because I use my own money that amount or even more to make up my own rewards over here. So for me, I just know you end up spending more. I also know that your perspective when you use credit cards, even if you say you pay them off every month, which a new study came out that up to, they said almost 28% of Americans are the only ones that actually pay off their balance in full every month. So majority of people do not, they carry a balance. But that mindset of, well, if I paid off every month, but still, even if you

do, okay, even if you do pay yours off every month, there is still this idea that at the end of the month and you pay that bill, you are still paying for things that you have already experienced. That is food you've already eaten, movies you've already seen, vacations you've already taken. You are literally living your life in a rearview mirror versus if you said, I'm actually going to just, when I spend money, I'm going to spend my own money and it's coming out of my bank account in the moment and that's how I'm going to live. You end up living in the present and even in the future because when you budget, you're looking ahead to say, hey, what am I going to be doing there? And you're casting a vision.

You have a plan going forward versus continuing to look back. And that's what you do. I had a friend who was hardcore on this stuff for years and we went out to dinner with them a few months ago and he was like, Rachel, I got to confess. I got a Southwest credit card. I was like, I mean, like, I'm not going to yell at you. Like we can, we're still going to be friends and go to dinner and all of that. You know? Uh, he's like, I know, I know, but I just feel like I need to tell you. I was like, it's fine. You don't have to tell me.

Well, fast forward until, um, like two weeks after that we were talking, uh, we were him and his wife and us. And he said, he goes, I actually ended up cutting up that credit card. I told you I got. And I was like, Oh really? He's like, yeah, I had it for wife and us. And he said, he goes, I actually ended up cutting up that credit card I told you I got. And I was like, oh really? He's like, yeah, I had it for about three months. And he said, and I realized how much more I just spent subconsciously. Like we went to the athletic store

and my kids needed new jerseys for the team. And you know, this professional team that they were getting jerseys for. And he's like, and I found myself being like, oh, we'll get the nicer ones. Yeah,'s only like you know 20 bucks more it's not that big of a deal here go and he's like and I just ended up subconsciously just just spending a little bit more because the emotional tie of not spending my own money was so real and so true and when you know it's your money coming out of your account you just spend money differently

and then the last thing I'll say it's credit a credit card rant, man. And some people are like, oh, that doesn't bother me. But it does bother me. Because Chris, you're getting these rewards and all of this because of people who have mismanaged their money. People that are mismanaging their money, you're benefiting from their mismanagement for your own self. And to me, it's gross. It's a toxic environment. It's a toxic industry that I'm like, no, I want nothing to do with it. I'm good. Like I have a debit card. I've never had a credit card. I'm alive. I'm breathing air. And you can still survive today and just spend your own money and not even mess and play with the game. So to me,

I want nothing to do with them. So Chris, I don't like your mindset. What did you think about your mindset? I don't like it. I don't like it. There's my answer. All right, we're gonna go to the phones. And Lauren from Indianapolis is up next. Hey, Lauren, welcome to the show. Hi, Rachel. Hi. Absolutely. How can I help? I love I love your books. Oh, thank you. My husband and I have been listening to the show for two years now, and we've made a lot of huge changes. We've paid off about $55,000 on our mortgage.

Wow. Amazing. Just merged all of our bank accounts finally after being married for five years. Yeah. And I pretty much went cold turkey and stopped using my credit card last month, finally. Done it, Lauren. You've converted all the way. We've done a lot of stuff.

And so we have $131,000 left on our mortgage. Okay. And we're kind of facing this dilemma where we're looking at our income and like, I really want to be gazelle intense about it. I want to get it gone as soon as possible. But we also recognize we need to save for things for the future like a roof and siding and a future car. So I'm trying to wrap my head around approaching the mortgage payoff.

And we want to have a life too. I mean, we've been super frugal recently. So I'm just kind of trying to wrap my head around that because we want to be mortgage free as soon as possible. Yeah, for sure. But we also don't want to completely destroy our livelihood process. For sure. And how much do you guys make a year? We have a household income of $185,000. Okay. So here's what we say, Lauren, on Baby Steps 1, and no other debt, I'm assuming, right?

No, no other debt. Okay, so Baby Steps 1 through 3, which is your $1,000 emergency fund, getting completely debt-free, but your mortgage, and your fully-funded emergency fund, those are your gazelle intensity moments. Those are the steps that it's like you don't have any life, right? Kind of what you're saying. You're not going out to eat. You're

not going shopping, no vacation. You're doing nothing. You're literally focusing all of your energy, all of your effort, all of your money on those steps one at a time. And then once you get past baby step three, we say you can kind of take your foot off the gas pedal, right? You're going to be doing other things. You're gonna be funding retirement. You're going to be, uh, if you guys have kids, even looking into kids college and then again, throwing extra at the mortgage. So, so this includes having somewhat of a life too, Lauren, like you guys saving up for a vacation is totally appropriate. If you need to replace a car, yes, all of this is appropriate. So, so the way I look at it and what I would encourage you and your husband to do

is to look ahead and say, okay, what, what year or even down to the month do we want to be completely debt-free, like not have a mortgage, right? We just had a debt-free call just the segment before and they paid off their mortgage, which is amazing. Yeah. So just to say, okay, realistically, where can we like, you know, enjoy life? Because you've worked hard to enjoy life. You guys have made the sacrifices to get to this point. But we really, really, really want that house paid off. And just look ahead and find a date that feels right to you guys. That's not the 15 year, you know, mortgage date. I have a date. I have one picked out and stuff and like made a tracker and everything. Okay. So is that, how's that feeling? It feels good. Like I think it's doable. I mean, it's an extra $2,000 a month on our mortgage. We already refinanced. We refinanced from like a 30 to a 15 and then we had an opportunity to do

basically a free finance down to eight years. Oh, wow. Okay. Even if we just kept our, it was like $40 or something. Even if we just kept on our regular payment with the eight year mortgage that we refin kept our, or like $40 or something, even if we just kept on our regular payment with the eight-year mortgage that we refinanced to, we'd be paid off 2027. But if we doubled down, we'd be paid off by the end of 2024, which is what I'd really like to do. Okay. So I think that's great. And I think you and your husband sitting down and deciding, hey, this date feels right. It feels like we have enough breathing room to be able to do things that we want and that we know are going to be coming up, you know, like replacing a roof and all that that you explained. So it gives you a little bit of

that breathing room, but it also gives you enough aggression that you're like, yeah, we can get this, we can get this paid off. So it sounds like you guys are completely on the right track. And if you and your husband are agreed upon on that date, I would say keep going forward because you're never going to look back and be like, we sacrificed too much, right? Once you have paid off the mortgage, you're thinking, oh my gosh, for a short amount of time, we sacrificed our life. And now we have no payments and we can take that mortgage payment and do whatever we want with it. And it's an amazing thing. Amazing thing. So thanks for the call, Lauren. Thanks to everyone in the booth for helping me out this hour. This is The Ramsey Show. Hey, it's Rachel Cruz, co-host on The Ramsey Show. If you want to do your debt-free scream

live on the show, visit ramsaysolutions.com slash debt-free scream. We'd love for you to come to Nashville and tell Dave your story. That's ramsaysolutions.com slash debt-free scream.