The Ramsey Show - App - The Rent Problem Is Real but Debt Is Not the Solution (Hour 1)

Episode Date: May 10, 2024

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality George Campbell, joined by Jade Warshaw this hour. The number to call is 888-825-5225. You call in, we'll talk about your life and your money. And if I feel spirited today, it's because I am, Jade, because we have an electric crowd that's here for our Total Money Makeover weekend. What feels like hundreds of people out in the lobby right now.

I think it is hundreds. Preparing for a wonderful weekend, growing, learning about money, getting motivated, and getting fired up. It's good to be with people. That's right. I know that's right. It's about to be a pep rally up here. Well, let's kick it off with Joe in Newark, New Jersey. Joe, welcome to The Ramsey Show.

Hi, George. How's your aid? I graduated high school in 1994. I went to a Christian high school, a private high school. And while going there, they introduced us to FPU and we went through some of those courses and things like that. And I put that into my life and I did pretty well for myself. I'm now, um, 48, my wife's 49 and we have a family business now and we have a hot, very high net worth. Uh, we have no debt, multiple properties, and we don't really work. We're financially independent. We're comfortable. My question is our son, we only have one child, he is 14 and he is in ninth grade. We are considering pulling him out of school and letting him get his GED to fast track him into our family business and kind of bringing him in more into what's going on so that he can be more

involved in preserving our, let's say, let's call it generational wealth. Not like he'll have any say, we have a trust and all that stuff. for but for now it just seems like we're not getting a the most like I don't know what at what point should he keep going to school like what's the point we're not we're not seeing it but if we're being kind of like out of touch by thinking that we're just wondering some perspective that's maybe faith-based on what we're asking. Well, the biggest thing I hear is it kind of, and I'm not trying to overstep, but in many ways, it kind of sounds like you're predetermining his path in life. You're saying, hey, it's not worth it for you to get your education, son, because you are going to run the family

business. And there's a very good chance that, well, number one, it's putting the pressure and stress on him now at ninth grade to kind of say, like, this is this is my future, whether I like it or not. And listen, you might be seeing him say, hey, I do want to do this or I'm interested in that. But at ninth grade, he really doesn't know. So the reasoning that I would say not to do this and for at the very least, let this guy finish out and graduate high school is because, you know, you don't know what he's going to want to do this and for at the very least let this guy finish out and graduate high school is because you know you don't know what he's going to want to do you know in the future you don't know that this is the career path he wants he might get into it and be like i don't like this and you don't want him to turn up turn around and have any kind of resentment or you know contention

because of the way that you guys um pulled him out of school early and kind of stunted that that ability for him to really explore and see what he wants to do. Sure. Okay. My overall thinking is this man's not even done with puberty. Do we really need to be throwing him into this, you know, family business at this stage? He's probably just, you know, the guy wants to get his first girlfriend at this point. And so I feel like we should let him be a teenager, let him be a kid. Let him grow a mustache.

Let him grow a mustache, let him experience a teenager let him be a kid let him grow a mustache let him grow a mustache let him experience okay you know high school and guess what the family business is still going to be there three years from now when he's graduating and then he can make a choice hey do you want to go to college do you want to take over the business and let him explore most 24 year olds don't know what they want to do with their life let alone a 14 year old so true so i don't want to fast track that to jade's point and then he's resentful at 30 going, I didn't even get a choice, man. This was like, it was like golden handcuffs to take over this business. So, and like Dave has said with family business, you want them to feel called to it. And Daniel, his son went through high school, went to college, graduated. And then when he felt called, he showed up and it was on his it was over on his volition

versus dad saying hey kid i'm gonna pull you out of school you're gonna be a part of the ramsay organization and take over but now that it's his choice it's a very different mentality and uh work ethic versus getting dragged into it and there's probably a way that you could if you wanted to give him some exposure to what it is that you guys do all day, to what the values of the company are, there's probably ways that you could build that in. Like Rachel says, more is caught than taught. So if you're talking about it at home, every once in a while, he's showing up with you on a Saturday, or you're talking about the things that you're working on, you're talking about the things that you do, what the business does. I think that he is going to understand that, okay, this is what my family does. This is how we work. This is what we business does. I think that he is going to understand that, okay, this is what my family

does. This is how we work. This is what we're about. And I don't think that at any point that requires pulling him out of high school. Okay, that's great. Thank you very much. Definitely a lot to consider. I see the value in what you're saying. Listen, I'm going to flat out tell you, don't do it. I mean, I hope you don't do it. I'm 50-50 on it. It's like when he has a day at school and one of the teachers is kind of in the weeds and being silly about things. In my heart, in my mind, I'm like, kind of past that I don't we don't really need to deal with that that doesn't apply to us but that's kind of like the snotty side and I don't like I

don't want him playing that card you know what I mean like I don't have to be like there's some truth to that but at the same time like you have to be a good person overall. And sometimes you do have to go through, you have to be exposed to different challenges to make you a complete person. Right. Sure. So if you're too sheltered, you know, you'll be a spoiled brat.

So it's, you don't want that either for your child or children. Like if you're talking about what's going on, like the educational situation where he goes to school, if you don't like that, like that's a completely separate issue. If you're talking about what's going on like the educational situation where he goes to school if you don't like that like that's a completely separate issue if you're saying hey maybe this is not the right environment for him to have high school then yeah there's options there whether it's home school or online school or a different school or private school like there's a lot of options there but i i don't want to confuse the two topics i definitely sure you know so that's

a different that's a different thing but what does he think about this joe when you ask him about it he he he's very opinionated so he likes and he he knows uh kind of the what we do and the velocity of what we do it and things like that and he thinks to himself why am i here why am i going to school this is dumb if i'm just gonna you know inherit the keys to the kingdom like he doesn't say it like that but he kind of has like a a spoiled brat attitude towards it so like well that's one reason to put pause on this whole thing correct correct i want to put him in military school and say i'll see you in four years you know what i mean so it's like it's but then sometimes he's really pleasant he's

like you know i get it i'm doing my best and it's like it's i feel like there's two issues we're talking about here i feel like the first thing you called in was you know we need somebody to pick up the family business now's the time for him to get the training now but i feel like now we've shifted into he doesn't want to be at school but i think he should be somewhere because he's kind of starting to show these spoiled tendencies i think there's two separate issues that need to be worked on one is he's in ninth grade figure out what the best you know school option is for him and what the best discipline is for him and then as for the business who's going to take on and carry that business on? That's a completely different conversation.

And I can tell you, it's not your ninth grader. And you got to remind him, listen, if you're going to be a part of this, you've got to work twice as hard as everyone else. It's got your last name attached to it. That's how Dave sees this. And if he's got that entitlement, he's not going to be part of the business until he's emotionally ready. And we're talking about a 14 year old.

He shouldn't be emotionally ready. Let him grow. Let him make the choice later on. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. You jump in, we'll talk about your life and your money. Well, it's graduation season, and the grad in your life has now spent more than 4,300 hours in class. And the sad part is, I'm guessing nobody taught them how to handle money. That's unfortunate. So before you stick a crisp $100 bill inside that graduation card, why not give them the tools you wish someone had given you? And we've got you covered in the Ramsey store. We get gifts for teaching a grad about money. Of course, the Total Money Makeover, Dave's bestselling book. It's helped more than 10 million people get out of debt and

build wealth. And yours truly, my book, Breaking Free from Broke, a number one bestseller, exposes all the money myths and traps that those grads are about to experience. It'll help them avoid that and build wealth in spite of all of it. And if they're looking to help on their job search, Ken Coleman's got a brand new book called Find the Work You're Wired to Do, which includes his Get Clear Career Assessment. It's going to show them what they're good at, enjoy, and help narrow down the job search. So get the perfect grad gifts right now. RamseySolutions.com slash store is your one-stop shop. Andrew's up next in Toledo, Ohio. Andrew, welcome to the show.

Thank you very much for taking my call. So I'm going through a major life change, going through a separation. And once everything is said and done, I'm only going to have a car payment. And once the proceeds of everything are separated, I'm going to have a significant amount of money. It's not, you know, like millions, but upwards of $80,000. And I'm just curious how I can best set myself up for the future. Wow. How recent was this? Within the last two months. Wow.

Is it finalized or is it still processing? It is processing. The paperwork has been signed just waiting to go in front of the judge. Okay. So you'll get 80K out of this, but you'll have the car and the car payment. What's going to be your living situation? So I'm going to be moving in with my father temporarily. Okay.

And then until you find, until you kind of get your footing and find where you want to live? Yeah, I'm just not trying to make any rash decisions and, you know, like rush out and buy a house or go and get an apartment to rent. I don't want to rent anything because that's like throwing your money away. Well, we can talk about that.

How old are you? Jinx Yomeko. 36. 36, okay. Well, you're restarting your new life, new chapter. It's a clean slate, and part of that clean slate means we're going to become debt-free and stay debt-free for the rest of our life. So that's the good news.

What's left on the car? My intention was, so I had to refinance it out of her name so that she could get pre-approved for a house. And I think it's under $12,000. Okay. And what's your income? So my income last year was about $46,000 before deductions. My income is inconsistent. I'm a real estate agent. Got it. Okay. Well, you're going to be able to easily pay off that car loan as soon as you

get the 80K cleared, and it's still going to leave you with 68. Yeah. So that's going to become your fully funded emergency fund, which right now you don't have a lot of expenses, but you soon will as you step out and begin to rent. And so I would put away six months of expenses and then the rest becomes maybe your new home down payment fund. Okay. And begin stacking money on top of that. You can store it in a high yield savings account. It'll grow at about four or five plus percent right now. And just diligently put money away. You've got very little living expenses living with your dad, and so I would take advantage of this season as sort of a temporary launch pad for you, but I would not have it become a hammock where you get too comfortable and you're like, well, it's nice not having bills.

I want you to get back out there because you need to get your mojo back after getting knocked out like this. Are there children? Yes, there are two children. Okay. What's the custody situation? So it'll be shared. Okay.

And is there child support, alimony? Well, no, there's none of that, as long as everything is approved by the judge. Okay. So does that mean that you and her have just decided that you're both kicking in,. So does that mean that you and her have just decided that you're both kicking in or what does that mean? Well, I'm sorry. What do you mean by that? Like, have you guys decided your own method for splitting the cost that it's going to take to raise these kids or what does that mean specifically? Yes. So we've gone the route

of disillusion rather than divorce. It's just not as common for people to know what a disillusion is. Basically, we've decided, we've come to our own terms on everything and it just has to be approved by the judge. Got it. Got it. Got it. Okay. Yeah. You know, for me, I think with the kids, I don't know their ages. I'd probably, I like your idea of kind of getting somewhere and getting your bearings but i'd be i'd definitely be looking towards figuring out a place that's yours that the kids can get used to and kind of creating some normalcy in this situation some stability some stability um um sooner than later i would say

okay are the kids gonna stay with you half the time? Yeah, yes. So it'll be a 50-50 week on week off. And right now it'd be staying at grandpa's? Yes, when they're with me, yes. My father does have a very decent size home. So the kids will have their own space. I mean, we're all going to have our own rooms. Okay, that's good. That's good. Yeah, so it's, I mean, it's temporary. My daughter is a little bit older. She is probably primarily going to stay with her mother because of where she intends to go to school. She's doing college classes. So she's kind of just going to come and go as she pleases. We've already had that conversation. It'll mostly just be my son.

Okay. Well, the other piece to think about here is how can we increase your income in order to be able to afford rent with multiple bedrooms and all of that? And so that would be my next step as a real estate agent go, what do I need to do to get some more clients even in this market? Do I need a side hustle right now to supplement until things pick back up? So that'd be my next step as you knock out the debt and begin to save up for the down payment. And begin having those conversations about how you guys are planning to help out with college as those things come on the forefront. Don't let any assumptions happen. We know what happens there.

JC's up next in New York City. What's going on, JC? Hey, James and George. Thank you for taking my call. Sure. How can we help? Sure. My wife and I actually yesterday finished Baby Step 2. 13 months, we paid off over $144,000. Way to go. Amazing. I just raised the roof on your behalf. You're just fully raised now. Thank you very much. I couldn't reach the roof, but I would have if I could have. Yeah. She brought a book home 13 and a half months ago. I picked it up, read it, and I said, we're doing this.

Let's go. Proud of you guys. Yeah. Thank you. My question is this. We'll have a fully funded emergency fund by October 1st. We want to do six months. At that point, we understand it's 15% of baby step four of our total combined household income.

Where I have a little bit of confusion is, should I be factoring, because I also do like an HSA and stuff, should that be part of the 15% or should that be separate? I wouldn't start with the HSA. I would, with the 15%, first of all, I do it off your gross numbers and I would start with whatever employee-based plan you have. So whether it's a 401k or a 403b, if you have a match there, I would start with the match. And if you don't have a match, then I would just start with you opening up a Roth IRA, you and your wife. And I would fill those first. I think you can do, is it 7,000, 7,500? 7,000 this year. This year. And I would start with that. If there's still money to go, then you could go back to the 401k or 403b or whatever it is that you have. What do you have? Well, we have both. Well, she has a 401k that's sitting dormant right now from an old employer.

So now she has a new employer. She'll be eligible for a 403b. And I have a 401k through my employer. I just don't think that we'll be eligible for the Roth. So I guess that would be my next question. You can do a backdoor Roth if you're a high income earner, which sounds like you are. Do you have a Roth 401k option and a Roth 403b option? The 401k, I can say yes for sure. I'm not sure about her 403b. Well, I'd start with the Roth 401k option and you're probably going to be able to do up to the max 23,000. I'd start there. And then if she has a Roth option, I'd go there. And then like George said,

if there's still money to be had since you're on the backdoor status, then you can move over to that backdoor Roth IRA and make sure that she's doing a direct transfer rollover for that old 401k. Yeah. Don't let it sit there. We want her to have full control and the Roth IRA will give her a lot of options or a traditional IRA depending on what those funds are sitting in. You don't want to do it. Fantastic.

You don't want to transfer it to a Roth account if it's not because you'll have a tax burden there and you only do that once you're in baby step seven, which I believe you guys are on the track to be there real soon. Yeah.

You're doing a great, great job. Get in touch with a smart investor pro, ramsaysolutions.com. They can help handle all the logistics of this process and get you squared away and get you confident about the future. This is The Ramsey Show. This is The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. Jade, you sent us this article that

it piqued my interest, and I think the listeners can learn something from it. So would you regale us the tale? Yeah, it all started, I did a media deal on that show on Fox, The Bottom Line. Yeah. And so it kind of came as a result of this. It's this Wall Street Journal, I believe, saying Gen Z sinks deeper in debt. And it's all about how Gen Z is facing kind of this debt to income ratio, rent to income ratio. And, you know, we hear the frustrations that people are facing all the time with what they're earning versus what their lifestyle needs. You know what I mean? The needs of their lifestyle. And so I thought this was interesting. It says the median annual wage for recent college grads was $60,000 in 2023. And at the same time, rent, which typically takes up less than one third of the average worker's monthly paycheck,

has actually soared. And so they give the numbers here. They say the median rent in the U.S. was about $1,987 as of January, which is a 22% increase over the past four years. And so as a result, Gen Z is saying, listen, our wages aren't keeping up with what the rent is, and it's becoming too great of a percentage of our take-home pay. And so as a result, we're seeing people, as always, George, whenever there's that strain, people go to credit cards and they go to debt to fill the gap. And so I thought it was interesting as I was reading it. Sometimes you read numbers and they just kind of float around in your head. And I was like, let me just run these numbers out a little bit and let me see what this actually looks like. Because the fact is,

even if you're not a recent grad, even if you're not a Gen Z, but if you're out there, you're making around 60K and you're renting, this kind of does apply to you because you're feeling that strain and you're feeling that stress on your budget. So let's see how these numbers shake out. So if you are making $60,000 a year, the median rent is $1,928. That person, that rent is far, it far exceeds that range that we're looking for. Usually your rent would be about a third of your take-home pay, which is a little on the steep side. That's why people want to own houses. We recommend a quarter of your take-home pay.

Yeah, especially if you're going to own a house. And so if you want to at least get to where it's a third, that person would need to take home around $5,961 per month. So about six grand a month. That's right. To 72 grand a year. Meaning they would need to take home about 84 to 85 000 a year so that's a 25 000 increase in order to get this rent where it

needs to be in their budget and so when you look at that okay 25 000 it sounds like a lot but then you go okay that's about 2 000 a month right so my thought here is we're kind of the side hustle. This is like the side hustle generation until they get to the point where their core income gets higher. I mean, the point is you're going to have to side hustle. Like you can't supplement your lifestyle $2,000 a month, $500 a month, whatever it is on credit cards to make this happen. So what I want to say is the problem is real. Like no one's going to sit here and say, it's not a problem. You know, you're just, you're just not doing this or you're just not doing that. Like that's, that's, it's a moot

point at that point. Like this is a real problem. And it's frustrating when you get out of college, it's frustrating at any point when you're doing your job, you're going to work every single day and something as basic as your rent or where you live is taking up that big of a percentage of your take-home pay. And so I get it. There's a lot of frustration around that. But what I really want to say is we can't make the solution debt. The moment you make the solution debt, it takes it from being very inconvenient to just really crisis mode. And it takes it to robbing you of what your future can be. And so we've got to look at this and say, OK, how can we back this back out? And it really is with side hustles.

It's finding ways to supplement your income. Maybe it's you taking on a roommate for a period of time until you can get that income where it needs to be. But this is, you know, when you look at the numbers, George, I think sitting where we're sitting, it's important to be able to look at numbers and say, okay, this is what people are really facing. They're facing $2,000 deficits, $1,500 deficits, $700 deficits. But the good news is there's a lot of side hustles that can help make up that kind of cash. Yes.

And I know it's not fun. They're going, we shouldn't have to work three jobs to make a living. And I'm going, listen, when I was 22 and I was a college graduate, this was my life. You know, it was side hustles, getting out of debt. I had roommates up until I was married. And I think a lot of young people have a picture of what their life was going to be after college. Yes. And it was going to be, I want to live where I want to live, do whatever I want to do.

And they didn't realize what life would look like. And yes, inflation has exacerbated the problem here, but you might need to get some roommates. Absolutely. You can't get your own flat in the best part of town. And the median means middle. Middle, that's right. That means half of the rent in America is less than that. And half is more than that.

And so you don't have to go, well, my rent is, you know, here's an example. This girl is 26 in Salt Lake City. Her rent a little over a year ago for a one bedroom was $1,000. Since then, it's gone up. This girl is 26 in Salt Lake City. Her rent a little over a year ago for a one bedroom was a thousand. Since then it's gone up by $200 and that puts a dent. She makes $30,000 as a customer service rep. It's not rent that's the problem. Like we can find a way to make you 2,400 bucks, but getting your income up is really the key here. That's true. But I mean, for me, it's society's going to put an option out there as the solution. And we've really got to beware, because I think when you do find yourself in a situation financially, that's not, you know, what you want to your point, George, where it's rent

is high or there's inflation or their student loans, whatever that thing is, society is going to say, oh, we have the solution for you. And it's almost always some sort of debt product, right? It's the most marketed product in history. That's right. And so in 2021, credit card companies loosened the qualifications for who could get credit cards and more people opened new accounts. And so Gen Z members opened new credit card lines

at a faster rate than other generations during the pandemic. And so that's why I think the message that we're putting out here, George, is really, really important because we don't want to give you a Band-Aid. Like debt doesn't stop the bleeding. It's just an old Walmart brand band-aid that you put on for a moment, but it really doesn't heal you. It really doesn't stop the bleeding. It's just a quick fix, and we want you to have a fix. We don't want you to go into debt. We don't want

you to make the problem worse. We're saying, for a little while whether that's you know side hustling whether it's living in a cheaper part of town whether it's finding a different place altogether uh but definitely do not look to debt because that's just it's robbing you of your future because you're going to get into more payments and then buy now pay later becomes your solution quote unquote and the credit card companies are always marketing to you as hey we're going to give you financial freedom and breathing room. They're using the same language we do, but they're selling you a change. That's what they're really giving you. Yeah. Because, hey, here's some handcuffs that will temporarily make you feel a little bit better. And that's the thing. That's honestly, George, that's what you have to take away from this.

Any company that's really benefiting from your bondage, benefiting from you being in debt, benefiting from you taking on more of that, they're not going to help you find freedom. And we're interested in helping you guys find freedom. And we're telling you, it is not by signing up for a new credit card. It is not by taking out personal loans. It is by you doing the hard work

and doing some sacrifice on the front end. It's just, you can't get around it. I remember when my husband and I had roommates. We were married and we had roommates. I mean, because you needed the extra, the money. Yeah. The rent was, the rent was 1200 and let's see, we each paid 650 or something like that. And it saved us $650. It was temporary, but Hey, you do what you got to do. That's a side hustle in its own right. And, uh, I, that's why I wrote the book Breaking Free from Broke, was to help people understand all of these traps out there, show them a different way,

regardless of what's happening with inflation and the economy and who's going to be president in November. It was all so exhausting because none of it led to solutions or freedom. It just led to wallowing and pity parties and complaining on social media. You can't let a good reason become a bad excuse. And that's what we want to get to.

Listen, there are good reasons out there. Like the reason is inflation. The reason is rent prices. The reason is wages are not keeping up with inflation. Those are all very valid reasons. And I don't want to go on the record as saying they're not. But the moment you let it become a bad excuse for you to go into debt is when things go off the rails.

Amen. Well, we built a free tool to help people find a great side hustle for them. You can go to ramseysolutions.com slash side hustle. And this is a tool that I helped build that really helps people figure out how much time do I have? What's my target? What are my talents? What makes sense for me? Because everyone goes, yeah, do a side hustle, but what's the right one? What's the best one for my time? And so this tool has been helping people figure that out with a really quick free quiz. So RamseySolutions.com slash side hustle is the place to go. Tell them a little more about that.

Because when I saw this quiz for the first time, a lot of people think I don't have time for a side hustle. Or, you know, my skill set, I don't have the right skills for side hustles. But the way this does it is really great. It talks about your time. It talks about your skill set. And we have different kind of in the back end, there's quadrants. You have low skill, high time. Do you have high skill, low time? Do you have a mix of both? And what's fun is that most people said, no, I actually have some skills and I actually have some time. Love that. Listen, you got time. You're watching the show. You're scrolling social media. Don't tell me you

have time. Tell me you won't make the time. But it's worth it. And it might be for a season. This is not your life forever. Gen Z, millennials, Gen X, boom, whatever. It will get better. It will get better. Make it better.

But you've got to be a part of that. You have agency. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. If you're enjoying the show today or any other day for that matter, do us a quick favor and hit the subscribe button, hit the follow button, leave a comment, leave a review, share it with a friend.

All of that is the best marketing plan we have, and you guys are so good at it naturally, but it's helpful to remind you to do it because you may not have taken the time to actually hit those buttons and share it with a friend. And it could, who knows, it could affect someone else's life and help create a ripple effect from the show. So thank you for doing that. Andrew is up next in Portland, Maine. What's going on, Andrew?

Good afternoon. Thanks for having me. Sure. How can we help? So my wife and I have accrued some points from a credit card that we have. And really, I'm just curious on your opinion if we should use those for vacation, probably this fall, take our kids on vacation, as we're just working through getting through that debt at the same time. Oh, how much debt do you have?

So between on the credit cards, we have $64,000. And then you've got the two cars. That's about $44,000. And then the mortgage as well. What's your household income? $122,000 or $120,000. I'm sorry. Okay. That's a lot of, that's not really a vacation. I feel like it's hard to vacate when you have that kind of debt tied around your, your body, right? And you're going into debt in order to make it happen. We already have the points accrued. So we've got like $3,300 worth of gift cards. So it probably cost us $2,000 to $3,000. No, it cost you $64,000. You said you had $64,000 of credit card debt.

At 22% APR. Yeah. So the points are the problem. They're not the solution to anything. And so I would clear the debt, and after you become debt-free, you still got some points, use it to celebrate.

But you're going to do it with cash. And right now you guys are broke regardless of the points you're still going to have to come out out of pocket for something you're not going to be able to gift card your way to a totally paid for vacation and you're better spent using that vacation time to be doing side hustles to get the income up even more because you are about in debt as much as you make an income why are you guys spending so much on these cards and not paying it off? Because the truth is, George, plenty of people argue with us and say, oh, I use my credit cards for the points, but I pay it off every month. And you're a really great example of somebody who's not paying it off every month. So what's happening that you're

putting $64,000 worth of debt on a credit card? Yeah, that's a great question. So we relocated about five years ago, and before we moved, that was exactly what we did. But with that relocation, we started to just be foolish and lived outside of our means. And I wasn't making, or we weren't making the amount of money that we are now. I just took a new opportunity, and our income went up by 40,000 annually so um and along with that is kind of what has really got me bought in and my wife bought in we talked a couple weeks ago and she's really bought in with it but she's kind of hung up on this vacation because our kids are young and she wants to take advantage of that so that's kind of what I'm trying to navigate through um okay I get it I think in her's like, listen, we have this free money

sitting here. Why not use it? And then we can tackle these credit cards. I'm just worried that to George's point, how many is your new family? Family of four? Yes. Yeah. Family of four is it's going to cost more. And I don't think that the mentality is there. I think that if you continue to say, well, we're going to use these credit cards for this benefit, and she's still viewing it as some sort of a benefit in her mind, the mentality is not there to do what it takes to clear this debt. And that's where my red flag goes off. Right. So we've got $5,000 or so in savings, so more than just the emergency fund. And I could just put that obviously on the credit cards that kind of kept it there with us in the back of my mind okay um with knowing that she wants to do this how how bought in are you guys are you like are you ready to like sell

the cars level um i don't think we're quite there i drive a lot for my job so i'm not sure i'm ready to get uh a beater of any you know what that means if you drive a lot for your job so i'm not sure i'm ready to get a beater of any you know what that means if you drive a lot for your job it means your car is depreciating faster than the average person which means you are going to be upside down on this car if you're not already that's true hey one before we get too far into the cars you said you had the 3300 on gift cards is that what i heard you say yeah you can redeem it for gift cards they're already gift cards they're already redeemed what kind of gift cards are they they're for disney oh you redeemed them for disney gift cards well ain't that uh here's my thing i think we we hang we hang on

to the gift cards they're not going to lose value over time let's wait till we're debt free and then we'll do a disney celebration and these gift cards will help pay for it but not until we're completely debt-free so break down these cars you said 44,000 in cars what's yours and what's your wife's so I drive a Jeep Cherokee it's a 2021 Jeep Cherokee um and then my wife drives a 2019 Chrysler Pacifica and what's what's the debt on your 2021 uh 23 000 okay so it's about equally split um are these the credit cards are they split amongst a bunch of cards yes okay here's my rule here's my rule where it comes to these cars and i i don't think you're going to be able to do it so i think one of them is going to get sold if you can't pay it off in two years or less then it's out right and so you're making 122,000 I'm guessing your wife staying home with the kids well that's combined with her she works part-time

she brings in less than 10 okay um and is is that because she's staying home with kids right okay is there for child care right is there a way that she can make more part-time do you think i don't think so um she she takes up as much as she can for extra shifts but without having to add in child care we don't have any family nearby okay um they could pick the kids up from school so adding in the cost of child care i hear you we've really looked at that but it doesn't want to work if i were you if you're not yet upside down in one of these vehicles if i were you i might get rid of one of these vehicles and take four thousand of your saved money and put a little money with it and get you an eight thousand dollar car that she can drive the whatever whoever wants to drive it i don't really care

but i get i'd clear one of these out now. That's what I would do to knock this down, especially since you don't see your income going up anytime soon. And that clears out, you know, 20 some thousand dollars of this. And then I'm going to get busy on these credit cards. What's the smallest one? Uh, 9,000. Yeah. That's where we're starting. We're listing them in order from smallest to largest. We're paying minimum payments on everything. So you don't have debt collectors and whatnot. And then all the extra money, you got to put it at the smallest debt. And I know you said it doesn't, it's not possible, but I really want you guys to sit down and truly, truly get sober and somber about this and say, okay, what do we have to do? Is there truly no other time? Is there truly no other way that we

can be earning money? Because I think if you stretch, there's some money that can come in somewhere. But I can tell you this, it's not going to be comfortable. So the other aspect that I haven't shared yet, but I don't know really about it yet because I just started this new opportunity, but I'll bonus twice a year. Okay, good. It could be $18,000 twice a year. Great. That's excellent. So kind of in the back of my mind, I was thinking that I'll use that and pay off one of the cards as quick as possible or put it on the credit cards, one or the other. When you say could,

is this like a 80% thing, like a 90% thing or like a 20% chance? I will. That's where it's going to go. Okay. I just don't know which is the right one to do if I put it on the cards or if I pay off the cards you put it on the smallest balance and when it's knocked out you attack the next smallest balance while making minimums on the rest if I were you I wouldn't let those bonuses keep me from selling one of these vehicles I would still do that because I want you out of this debt as quickly as possible

you've got $108,000 in debt you make $120,000 and here's the deal the context for what Jade's saying is on average it takes people about 18 to 24 months to pay off the debt. So it's going to take massively longer than that. We need to make a deeper sacrifice, which may include selling the car. So for you, that's, we've got to put 55K a year onto the debt. That looks suspiciously like a little over 4,500 a month. And if you can't find 4,500 a month in your budget, we need to sell something. We need to increase income, cut the expenses in order to get rid of this debt in two years.

Yeah, our monthly expense is not factoring in anything extra like clothes for the kids. Just the base expenses is just over $6,000. Is this because of your mortgage? You must have a massive mortgage. Yeah, what's the mortgage payment? The mortgage is $2,100. Okay, and what's your take-home pay every month? So like I said, I just started this opportunity, so I've literally gotten half of a paycheck so far. What is it?

What will a full paycheck be? Full paycheck should be $4,200 bi-weekly. Ooh, lordy, lordy. Okay, that's twice a week, so twice a month. So it'll be about $8,000. Then you're okay. So pause all investing. If you're getting a refund every year, you need to change your withholdings. We need to find any money we can in the proverbial couch cushions to get out of debt fast. That's the only way out of this. Cut up the cards, never look back. That puts this hour of the Ramsey Show in the books. Thank you to Jade

Warshaw, all the folks in the booth, and you, America, will be back before you know it.