The Ramsey Show - App - The First Budget Is Both Invigorating and Infuriating (Hour 2)

Episode Date: December 27, 2018

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🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Jose starts off this hour in Louisville, Kentucky. Hey, Jose, how are you? Good, sir. How are you? Better than I deserve. What's up?

Well, first I have to say thanks for what you do for everyone and passing on your blessing of all your information. Well, thank you. What I have here is I have a question in regards to TSP. I'm a new listener, probably about three or four weeks, and I feel like I have ADD with all the information that I've received. Okay. I'll tell you.

The game will slow down. It'll be all right. Okay. Okay. Okay, my wife is a RN for the VA, and she has a TSP account. Right. And I feel like we've been doing everything correct. We are debt-free. Mm-hmm.

All we have is a house. Good. But what she has is 80-10-10, but what I heard on one of your shows before was that you should have 80 in the C, 10 in the S, and 10 in the I. Yes. Well, she has 10 in the C, 80 in the S, and 10 in the I. Yeah, I would switch that.

Okay. And the reason is the S is really, really volatile. It's the highest risk. It's the small company stock fund, and it's the highest risk. When times are going good, it's going to do really good. When times are going bad, it's going to do really bad. Okay. So it's going to live on the extremes, and I don't want 80% of you in the extremes.

Okay. So the money that's in the S, do we take it out and put it in the C? Yeah, you can just roll it. You can just move it to the C. Oh, okay. Great. When you look at your total balances and just recalculate, and that's called rebalancing your funds, and just say, okay, the total in there is X number of dollars times 0.8.

That's what I want in my C times 0.1 is what I want in the S, and 0.1 is what I want in the S and 0.1 is what I want in the I. Okay. And my next question is, we have our emergency fund and some. So right now our emergency fund is $30,000. But like I said, I haven't been doing everything right. We have an additional $34,000 on top of that emergency fund. Okay. Not sure what to do with that. It sounds like you've got your emergency fund and you're debt-free but the house, so that brings you to what we call baby step four.

Fifteen percent of your income should be going into retirement. Do you have children? Well, yes, we do. I'm newly married with her, so she has two kids that are still in school okay and all of mine are growing up okay so you're wanting maybe to take care of college uh yes okay might use some of that 34 000 that direction get the o10 if they if there's no college at all done right now you could throw 10 in each kid's name into a 529 and some good mutual funds. That would leave you another 14 left over. Baby steps four, five, and six we teach you to do at the same time.

Four is 15% of your income into retirement. Five is kids' college, something for that, however you want to do it. And six is any other money we get our hands on, we throw it at the house. So I'm probably going to throw about 10K each in each kid's name and that other 14 over on the house and let's start working on getting the house paid off now with any other monies that we come into or run into you guys have done a really good job jose you're in good shape you're just all you and i are doing is just fine tuning the plan to align it with what we call the baby steps and i think it'll cause you to speed up some hitting some of your financial goals

because you really have done a good job. You're not calling me up all screwed up and deeply in debt and everything else. So way to go. Well done. Liz is with us in Coeur d'Alene, Idaho. Hi, Liz. How are you? Hi, I'm good.

How are you? Better than I deserve. What's up? Okay, so I'm 59. I'm not married. I have no debt. I have a house that's worth about 230. I fully own it. And I have a little over 300,000 in a 401k. I have a couple of questions. Wondering when I could retire. I no longer have a 401k plan where I work that I can add anything into it. And also I want to know if maybe there's something else I should be doing with the money that's in my house. Should I be selling that, getting into something smaller, and then investing that into some property that might generate a little income for me?

Do you like your house? I love my house. Do what? I love my house. Okay. Then no, I wouldn't sell it. You got it paid for. You're in great shape.

What's your income? $35,000. Okay. Do you like your job? It's okay. Okay. All right. Good.

Well, here's the thing. You know, if you're ready to retire is can you live off of the income that you'll have coming in? And, I mean, you could take Social Security early at 62 and use that, and then the income that's created off of 300K. And if you say if that money's invested in good mutual funds and you start pulling off like eight percent if you can live off of eight percent or less of your income and it's invested making more than that then you could be okay uh that's less than you're making now though well i could live off of less than i'm making now Yeah, I mean, that'd be like living on about $25,000 a year.

Okay. That'd be about 8%, $24,000 a year, right? Okay, yeah. That'd be 8% of $300,000. If that's invested in good mutual funds, and of course you're going to pay taxes on that as it comes out. You've got to be able to pay the taxes on your property. You've got to be able to pay the insurance on your property, and you've got to be able to eat. It doesn't sound like there's a lot of room in this budget.

It sounds pretty tight to me. And you're only 59. I mean, I'm 57. I don't plan on quitting anytime soon. Maybe you find something to do that you like more and that you make more money even. And maybe you work a few more years and pile up some more in you know have a little

bit better nest egg it's not the end of the world you can do it but you know you're going to be doing nothing at 59 years old i think there's some other things that god's got on this planet for you to pull off yet so i'll just be thinking about what you know if i could do anything i wanted to do what would i do well you can do that whatever that is go be thinking about, you know, if I could do anything I wanted to do, what would I do? Well, you can do that. Whatever that is, go be one of those. You're still young. You've still got a lot of things you have to offer. And, you know, another decade of income thrown on top of this would quadruple this nest egg,

and you'd be in really, really good shape, like be approaching millionaire status then. But that's, you know, making a little more money, doing something you love. Maybe it's time to loosen up a little bit and say, gosh, if I could do anything because I can, because I don't have to have much money to live. But goodness, if you could just earn something, it would keep you from draining down and messing with that nest egg. You're right on the bubble. You could probably pull it off, but I'm just thinking there's an upside potential here that I don't know why we would avoid that.

So, good question. Thank you for joining us. This is the Dave Ramsey Show. Thank you. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month. You never pay data overage fees and we never turn off your data. No contracts, no hidden fees. And if you're thinking our low cost means less coverage, think again. Our voice and data service covers 99% of Americans and our 4G LTE network provides the fastest internet speeds like more expensive carriers. We operate on the largest GSM network in the U.S.

to ensure you receive reliable coverage virtually anytime, anywhere. Plus, you can keep your same phone and number and add multiple lines to save more. We're so confident you'll love Pure Talk USA that we invite you to try our service risk-free. Just visit puretalkusa.com, enter promo code SAVEDAVE, no spaces, and receive 50% off your first month. That's PureTalkUSA.com, promo code SAVEDAVE. Thanks for joining us, America. Jennifer is with us in Hartford, Connecticut. Hi, Jennifer. How are you? Hi, Dave. I'm well. How are you?

Better than I deserve. What's up? I have a question. I'll be done with Baby Step number three in May and moving on to baby step number four. My company has a 15% profit sharing with no contribution of my annual salary. Do I save an additional 15% of my bring home pay on top of the 15% that I'm getting from my company also? What is your vesting schedule on the portion that they're putting in for you? Six years. Okay.

And how long have you been with them? Six years from the time they put it in or from the time you've been employed? Time you've been employed. And I'll be here six years in January. Okay. That's good news. So you'll be 100% vested in everything they put into this point? Correct.

Okay. And how much is in there now? About $70,000. Cool cool and what's it invested in that i can't answer okay all right because they don't know we get it we get a yearly statement in january yeah and it's put into a pension is that correct yes but you're vested okay good okay the good news about being vested is when you leave, obviously, you could take that money, and you should, and you would roll it to an IRA in a direct transfer rollover. So in that sense, you've got control of it. The difference in a 401K and a pension plan like we're talking about is the 401K is an asset of yours.

You own it. You own this only to the extent you are vested. But if the company were to fail, this pension is an asset on their books. And, you know, the old, you know, you think about an old movie or something where the mine closed and grandpa that worked in the mine lost his pension. That's because the pension is owned by the company. And so to the extent the company is stable, you know, the pension is pension. That's because the pension is owned by the company. And so to the extent the company is stable, you know, the pension is stable. And or to the extent it's run properly. So bottom line is you don't have 100% control like you do in a 401k.

So for that reason, I don't give it 100% credit towards the 15%. I want something growing that you have complete control of other than that. Now, maybe while you're paying off the house and saving for kids' college, I want something growing that you have complete control of other than that. Now, maybe while you're paying off the house and saving for kids' college, if you've got kids and that kind of stuff, maybe you only do 10% because you have this wonderful benefit instead of 15%. Okay. Okay? But I want you to be doing something going forward

while you're getting your Baby Steps 4, 5, 6 working in your name. 7, 10. I still do the Roth. I'm sorry. in your name. I still do the Roth. Yeah, Roth. I still do that. I do that already. Okay. You've already got that going towards it.

And, you know, and if you put a little in a 401K or something, too, that gets you there. But it's not as, you know, slam your fist down on the table important because you have this wonderful side benefit, but the side benefit is not so wonderful that I want you to have nothing in your name. So, you know, kind of a middle ground is what I'm saying. I would be 8% to 10% of your income at Baby Step 4 going into something in your name. Roth IRAs, 401ks, those kinds of things. And then, of course, later on when you get your home paid off, you're going to max out that stuff anyway.

And that's the point. But it's a wonderful benefit you've got. And now that you've hit this vesting, it's an even better benefit because the only way you're going to lose this money is to die before you leave the company or the company to go broke. Those would be the only things that happen, and you would lose that in either case. So good question.

Very interesting situation. Thanks for calling in. Joe's with us in Joplin, Missouri. Hey, Joe, how are you? I'm doing okay, Dave. How are you doing? Better than I deserve, sir. How can I help?

All right. I'm pretty much a new listener. I haven't been listening very long, but I like what I'm hearing, and you got me motivated. I bought your book yesterday, the workbook, and it did be a very dollar app. And the problem is I'm $100 in the hole when I do all the budgeting, and that's not with saving or anything. And I don't know what to do. I don't know what to do. I don't know where to start. I've got three vehicle payments, which is dumb, but I'm just... Okay. How much do you owe on these cars each?

One of them, my wife's car, I owe $10,300. And the motor blue one, I bought it, and I have a different note on it for $4,500. My truck, I owe $9,000 on it and Harley-Davidson, I owe $11,500 on it. Okay. And what other debts have you got, not counting these car debts? I've got about $,000 medical bills. I've got a stupid title loan on a vehicle that's a cheap vehicle, I doubt that's paid for. I let my son drive sometimes.

Furniture. How much is the title loan? A thousand dollars. Okay. Furniture. How much is the title loan? $1,000. Okay. Furniture loan, bed loan. How much? Bed loan is $1,000. Furniture loan is $1,000, right around it.

Overriding about $4,000. And I can't hardly pay for my kids' lunch stuff anymore. I'm getting in a hole. I don't know whether to... Gotcha. Okay, so let's stop. What's your household income? Before taxes, I make 55. My wife's about 20, so about 75 before everything comes out. Okay. All right. All right, cool. Are you putting any money into retirement?

I'm putting 5% in, and I knock it down to 1% to give me a little more money. And how big was your tax return last year? $8,000. $8,000. Okay. Yeah. All right. Cool.

Okay. Fun. And how much do you owe on your home? I rent. Okay. Good. All right. So, and you're what, 45 years old?

38. 38? Okay. That's about the right zone of what I was going to guess. Good. I've got three kids at home still. Here's what you've been doing. You work your butt off, and you pay no attention to money, and it has been whipping your butt for 15 years.

I agree. And consequently, you get in a pinch, and you do something stupid. Then you get a pinch and you do something stupid then you get another pinch and do something else stupid and then the stupid piles up and you you just get you're just trying to make it hand to mouth it's thank god it's friday oh god it's monday exactly been there myself brother that's how i can tell yeah you're a good guy you're a hard working guy but you've not been paying attention to the money part and it's kicking your butt so we're going to turn that around today. All right?

Here's a couple things we're going to do immediately. Today, you stop all contributions to your retirement today, and you go in and you change your W-4 at your payroll withholding because you have way too much being withheld. When you get an eight thousand dollar refund what that really means is that uh somewhere around five somewhere around six hundred dollars a month too much is coming out of your check right okay and they take too much out and then they give it back to you in april s Claus does not live in Washington, D.C.

That money that you got back was your money that you gave them too much of. Do you follow me? Yes, sir. So change your withholding by $600 a month, more coming home. That's going to mean this year you'll still get a refund because you've already still done it for this year, but next year you hopefully won still get a refund because you've already still done it for this year. But next year you hopefully won't get a refund because all a refund is is a return of too much money paid in. It's a savings account with no interest, and you don't need a savings account with no interest right now.

You need money. Exactly. Okay. So $600 a month coming home more, plus we're going to not have the 401K coming home, and that money is going to go in. So that's all going to come home starting right now coming home and that money's going to go going in so that's all going to come home starting right now a hundred percent of it to stop everything if you've got any gimmick insurance like cancer insurance all the little stuff stop all of that the only thing you

need is just straight health insurance that's all you need at work straight health insurance and if there's a long-term disability you might look at that okay and then we're going to start looking at what we can sell like the harley maybe the kid car and we're going to live food first shelter second lights and water third car payments fourth and we're going to get on beans and rice around this place and get this budget balanced and pick up extra work and have a big garage sale and sell everything in sight and start turning this around but when you start paying attention to this and you get this budget balanced and you get on a mission to get rid of this debt, you can turn it. Hold on. I'm going to put you guys into Financial Peace University, our nine-week class.

I want you to turn this and call me back and tell me you did it. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. We'll be right back. It's not complicated, and Zander will be there as your guide every step of the way. Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected.

That's Zander.com or 800-356-4282. In the lobby of Ramsey Solutions, Richard and Ashley are with us. Hey, guys, how are you? Good. How are you? Welcome, welcome. Where do you guys live? We live in Connecticut.

Ah, good. Well, welcome to Nashville. Thank you. And all the way here to do your debt-free scream. Yes. That's right. Very fun. How much have you paid off?

$160,000, give or take. All right. How long did that take?000, give or take. All right. How long did that take? Three years and two months. All right. And your range of income during that time? $110,000 to $140,000 was the final. What do you guys do for a living?

I work at a private nonprofit behavioral health agency. I'm a police officer in a local town in Connecticut. Very cool. Good for you. So what kind of debt was the $160,000? Mostly my student loans. Mostly your student loans. What's your degree in? Well, it was in criminal justice. Okay. Is that where you all met then? Yes, we met in college, yes. Okay. Very cool. Very cool. So you got a criminal justice degree? I did.

Okay. And a lot of the 160, what other kind of debts? The typical debt, Dave. Car. We had a little credit card debt, but we had two cars. And student loans was the big one. Sally Mae. Gotcha.

Got to kick Sally Mae out. Yes. And in her case, she was large. Her and Wells Fargo. So what happened three years and two months ago? Did you all get married? We got married in August of 2013, but our journey really started a little after that. I was driving around at work one day, and I'm just listening to the radio, and I catch a part of your radio show,

and the next day I catch a little bit more, and by the end of the week, I had already ordered the book and was listening to the show every day. The problem was I didn't tell her what the situation was. So one day I came home and I said, hey, this is what we're going to do. All that money that we're making,

yeah, it's not going to go to the fun stuff anymore. It's just going to go towards our debt. But I didn't explain the why. No. So you were a curse word kind of in our house for a while. I bet. After that conversation, a lot of them, yeah. He just told me what we were doing.

He didn't explain why. And eventually he kept showing me this book. He's like, a lot of them, yeah. He just told me what we were doing. He didn't explain why. Yeah. And eventually, he kept showing me this book. He's like, this book is amazing. And he's like, just read it. And I kept saying no, no, and no. And finally, I was like, fine, give me this book. If I read one chapter of this book, will you shut up about this Dave Ramsey person?

And he goes, yes. And I said, okay. So I read the first chapter. And then once I read it, I discovered the why. And once I discovered the why, I was like, oh, well, this makes sense why we would do this. But it wasn't until I found what the why was and discovered, then that's when I got on board. And then immediately we started the plan. Then you could bonk him on the head with that book.

Yes. Yeah. Very good. Congratulations. Thank you. So then you tear into this yes three years and two months later 160,000 is gone yes what do you tell people the key to getting out of debt is when they say how'd you do that the budget the budget is a big thing and we know where our dollar is going now we used to go to the you know grocery store to Walmart, to these other places, and we would go in for $20 worth of stuff and come out with $120 worth of stuff, and we couldn't

figure out why, and couldn't figure out where our money was going. Yeah, the budget was a huge key. It was invigorating when we did our first budget, but it was also very infuriating for me, at least, because I didn't know how much we were bringing in. And then once I realized how much a month we were bringing in and then I was like, OK, where is it going? And then I finally realized where it was going. And I was like, this is ridiculous. But sacrificing was also a big thing. It's a wake up call. The first budget is cold water in the face, isn't it? It definitely was. It was like, how are we spending this much on this? This is ridiculous.

There's two of us. You feel like you got a we spending this much on this? This is ridiculous. There's two of us. You feel like you got a raise, but it also kind of shames you. Yes. Wow. Very cool. Very cool. Good for you. And, of course, you discovered, Ashley, why.

Yes. You know, the why. I'm not going to just quit spending money. I'm not going to just get out of debt. It's so that we can become wealthy. It's so that we can live a good life. So we live like no one else. So later we can live and give like no one else right absolutely yeah once i finally saw the why and then i saw the numbers and i was like oh my goodness this we get this

much a month but this much is going out towards debt imagine if we got rid of that like the plan says and then like my whole world was like i like, when we don't have any debt, that whole income that we're getting, that great income, imagine what we could do with that. And then we started saying, what does five years like? What does 10 years look like?

What does retirement look like? And it was just like, mind was blown. I was like, we have to start this right away. Love it, love it, love it. We have to start it right away. Well, well done, you guys. Very well done.

What was the hardest part of this for you guys? I think the hardest part of it for both of us was saying no. And your friends want to go out, and you say no, and then they ask you why not, and you tell them we're on this plan, and then they kind of roll their eyes because they think that debt is just something that is natural in life and we we talk about the program enough where sometimes you know it gets overwhelming to them but but saying no was the hardest part but now that we're at this step we're able to say yes and i think the first time we said yes to someone someone about going out or going to the movies or something, they like double took.

And they're like, what's going on? Why are you guys saying yes now? And I said, well, because we followed a plan. And that plan is leading us to say yes a lot more than saying no. Yeah. Now we don't have any payments. Yeah. How does it feel now that you did this?

Incredible. Like words can't describe it for me at least. I'm the same way. It's just unbelievable. We got to this step and we can keep going with the steps and build wealth and give and do everything that your plan and that everyone who has succeeded with this plan has been able to accomplish. Yeah.

And I know people our age, I see it everywhere. I hear it from my friends. I see it on social media. People our age with student loans and they have that mentality of, I'm never going to get out of this. I can't do anything.

And it's like, no, you can. We did it. Don't let student loans ruin your life. Really? For real. And now we can say we successfully did it, and you can too. And it's the most amazing feeling to not. So have any of your friends picked it up and decided they can do it?

Actually, yes. A couple of our friends have. They finally saw us, and they're like, oh, okay, what are you doing over there? So they have. Some of them have come around. Very good. Did you have any cheerleaders? I think they were somewhat cheerleaders.

They were kind of like, okay, you guys do your thing. Okay, we don't understand it. There's a lot of eye roll here you were talking about. Yeah, that's right. What did your parents think? My parents, they understood why we wanted to do it, and my grandparents understood why. They have a different mentality.

Always going to be in debt. That's right. Well, good for you guys. I mean, you blazed a trail here. Very powerful. Good for you. We've got a copy of Chris Hogan's book Retire Inspired for you. Thank you. That is the next chapter in your story

for you to be millionaires and outrageously generous as you go along, okay? Absolutely. Very cool. Richard and Ashley from Connecticut, $160,000 paid off in three years and two months, making $110,000 to $140,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free scream. Three, two, one. We're debt-free! Woo-hoo! Well done, you two. Very well done. That's how you do it right there. Absolutely fabulous. Fabulous. You know, most people, when they download every dollar, they have that reaction. They put in their income. They put in what's supposed to be going out, and they go, where has all this money been going?

Where's all this money been going? Where has all this money been going? And it's not like me shaming you it's like i'm looking in the mirror at myself going i feel stupid i mean you ever done that where you say i feel stupid and i found what have i been doing this is crazy i can fix this. And it's this simultaneous thing where hope kicks in. And you just go, yeah, I got this. I can do this. And you can't. This is the Dave Ramsey Show. We'll be right back. Thank you for joining us, America.

It's a free call at 888-825-5225. You jump in. We'll talk about your life, your money. Jeremiah is with us in Pensacola. Hi, Jeremiah. How are you? Hey, I'm doing all right, Dave. How are you? Better than I deserve.

What's up? I actually just have a question, kind of just looking for some advice. Me and my wife are soon to be expecting a child. Congratulations. Oh, thank you. I appreciate that. But we are also $55,000 in debt, and my wife and I have different ideas on how to take care of that. I agree with her that we need to get rid of, I have a brand new motorcycle. That was the dumbest thing I ever did,

but I need to get rid of that. We both agree on that, but she doesn't necessarily think we need to cut up the, uh, any of her credit cards, even because she thinks that we can pay them and we can, we haven't have enough money to do it, but it, but I don't know how to convince her otherwise. Well, the question is, what makes people wealthy? What money habits, what money processes causes people to win with money? And that's the question the two of you should ask each other, okay? And here's what the data tells us, that your number one wealth-building tool is your income, okay? And when you have your income due to not having any debt payments,

you have more ability to build wealth than the person standing next to you that has debt payments. No duh, right? I mean, if you had no payments, you could invest. Duh, right? Yes. Okay. And then you ask yourself, okay, what do rich people do? Well, rich people get rich by not having any payments, and the vast majority of them don't use credit cards.

Credit cards are, that's what the middle class does. But rich people go, I'm not going to fool around with these snakes, they bite. And so if you pay your credit card off every single month, you can use a debit card. Because it's the exact same thing then isn't it yes yes but if you're not going to pay it off every month now you're being a middle class person if you want to be middle class i'm not going to be mad at you i'll be your friend but this is a show about winning with money and so it which means build wealth and if you're going to build wealth you have to do what rich people do if you do rich people stuff you get to be rich people and so you know cut up your stupid credit cards get a debit

card if you're paying it off every month anyway it's the same thing because you're using the same money right yeah exactly then the debit card will do everything the credit card will do it has the exact same fraud protection the exact same fraud protection the exact same fraud protection and i you know my wife and i spent three weeks in europe this summer debit card did it just fine and so you know and i have many many many friends that are worth tens of millions of dollars and they walk around with debit cards in their pockets they don't carry credit cards and they don't think credit cards are an essential way to handle money or an essential way to build wealth.

And so, you know, you just got to look at it and start asking yourself, what are the methods, what are the processes? I mean, it's like saying, if you want to be skinny, eat and exercise like skinny people do. Right? Yeah, pretty much. If you want to be 500 pounds, then talk to that guy. He can tell you how to do that.

Yeah, and just lots of donuts, I guess, or whatever. You know what I mean? But you just got to, you know, you have to decide what behaviors, habits, character traits give me the results I want? And then what tools give me the results I want? And credit card is not the tool. Getting out of debt and staying out of debt does that. Now, with a baby on the way, I wouldn't pay a bunch of extra on the debt. I'd sell the motorcycle.

I'd cut up the credit cards and get me a debit card. I'd get on a budget. I'd pile up as much cash as I could pile up until baby comes. When baby comes and mama comes home from the hospital, and baby comes home from the hospital and everybody's safe and happy and healthy, then we'll use a bunch of that savings to start our debt snowball and start paying off our debts, listing them smallest to largest, paying minimum payments on everything but the little one.

Jeremiah, hold on. I'm going to send you a copy of the book, The Total Money Makeover. You and your wife read that because you have a baby on the way you need to change your family tree you need to do what it takes to change your family tree jay is with us in sioux falls south dakota hi jay how are you uh very good thank you good how can i help? Just trying to figure out the best way to get my wife intense with the budget and sticking to the budget. Okay. Well, the couple that just did their debt-free scream, she said that he came home and told her what to do instead of telling her why to do it,

and she thought my name was a cuss word. Is that what happened at your house? No, not really. You both looked at the why total money makeover you both looked at the why um we've looked at the why and it's not that she disagrees with it it's just that um she's not following through in what way in what way uh Not sticking to the budget, purchasing things outside of the budget. Okay, that's called lying. And that's the way you need to explain it to her. So next time you guys sit down to do a budget, the two of you go over it and initial the corner of it like it's a contract.

Okay. And look at her and say, I am making you a promise you are making me a promise that this is the what we're going to spend money on nothing else and if you spend money on something other than this or i spend money on something other than this that's me lying to you are you lying to me and you need to frame it up that way because she didn't take that budget contract seriously, and you did. Okay. Is that right? Yeah, and then as far as the budget goes, we use online budget software.

Would you recommend doing the cash envelope instead? I would recommend going and getting the EveryDollar app for your phone. It's free. It's online budget software that we have it's the best there is and then use the envelopes with it as a part of it the envelopes aren't instead of a budget the envelopes are part of doing a budget right we use the every dollar uh we just uh use it with our debit card and i think it's just a little bit easy for her to um make a quick purchase and that's fine so yeah take take your uh take your uh uh say your clothing budget and maybe your food budget

and put those in envelopes okay and then you're not allowed to buy anything out of the clothing envelope except clothing and you're not allowed to buy anything out of the clothing envelope except clothing. And you're not allowed to buy anything out of the food envelope except food. That's lying. That's breaking our deal. Now, if something happens in the middle of the month and, you know, you run out of money or something happening, then you can change the budget. But we both have to be in agreement for the budget to be changed before we change it. We don't come home and go, well, I well i just decided no that's not how it works this is us working together us agreeing on a plan and if we're going to deviate from that plan we have to have an emergency budget committee meeting

and change the budget okay before we can spend more on something. And sometimes that sounds like I'm standing at Costco and I call my wife and I go, hey, I'm about to go a little bit over the budget on this purchase and I'm going to pull it from this other category because I see this thing's on sale. Is that okay with you? And she says, yeah, that's okay. Well, we just had a budget committee meeting and we just adjusted our budget. You see, it doesn't have to be a big formal thing, right? Right.

But the difference in that is I didn't come home and go, Honey, you remember that promise I made you that we were going to do a budget, and then I went and did whatever the flip I wanted to do? Don't be mad at me. I lied to you. Which is how it feels to you when she does that. Yeah, it does. And she doesn't feel that.

She doesn't get that. So you've got to put it in those kinds of words. Because, honey, I know you're not a liar, but that's how it makes me feel when you break your word to me. Now, that also may mean she's not putting enough, fighting you enough. You may be too much of a tightwad on one of these categories. You may not be putting enough money in the food budget, so she's having to do other stuff, other gyrations. But if she's just impulsing the crap out of stuff over at Target, well, that's completely different.

And that's what we've got to rein in if you're going to win, brother. Hey, good luck with it. If I can help further, you call me back. This is the Dave Ramsey Show. This hour of the show is over, but feel free to check out our YouTube channel where we have over 2 million views each month of debt-free screens, millionaire hour clips, Dave rants,

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