The Ramsey Show - App - There’s a Glaring Problem in Your Budget (Hour 2)

Episode Date: April 21, 2023

George Kamel & Jade Warshaw answer your questions and discuss: "Should we get a prenup?" "I'm scared to have $1000 emergency fund", The bleak financial state of most Americans (and why there is hope), Paying off a townhome vs. saving for a new house, How kids should handle their money. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Pod's moving and storage studio, it's The Ramsey Show, where we help people build wealth, do work they love, and create amazing relationships. I'm Ramsey personality George Campbell, joined by the incredible Jade Warshaw this hour, and we are taking your calls at 888-825-5225. That's 888-825-5225.

Courtney kicks us off this hour in Chicago. Courtney, welcome to The Ramsey Show. How can we help? Thank you so much for taking my call. I really appreciate your guys' time. Absolutely. Yeah, thanks. Okay, so I have been divorced for about six years.

I'm 39, almost 40, and my boyfriend and I have been talking about getting married. What makes me nervous is I'm in a much better situation financially than he is, and I have a lot of questions on prenups. I have two kids. I own a business. I have a lot of assets and everything. I just, I'm really just like confused about what's the right thing to do and still protecting me and my kids. But you know, all that, all that jazz. Understandable. So tell us about your financial situation. What are your assets, your net worth, and your income?

Sure. Compared to this. Okay. Yeah, so I take home about $150,000 a year. I have no debt. I have two vehicles that I own. I have about $100,000 in my savings account, about $400,000 in various retirement accounts. I have two kids and then my boyfriend is also debt-free except for his mortgage, which

only has about $100,000 left on it. He makes about $60,000 a year as a restaurant manager, general manager. The only thing is he has zero retirement and he doesn't have any children. So retirement is really like my biggest hang up, I would say. So I don't really know how to navigate that. Can I ask you a question? Absolutely. Let's pretend that things go well in the marriage as we expect that they would. And you have this retirement nest egg set aside. Do you view that as something that you guys share together or do you view that as this is my retirement and he has his retirement? That's what I'm like really wrestling because in a perfect world, I would see it as something shared, but I just know how really hard I've like worked for it and like all

the sacrifices that I've made as like a single mom and just like really like smart choices that I've had to make to do it. It makes me really nervous. Okay. I could see how that would make you nervous, but I do think that there's, it's unfair, I think, to go into it, to a marriage where you're saying, I do, we're going to be one, but I worked really hard for what I have. And so I think that I should be able to have that over here I think if the tables were turned that might be a little bit off-putting for you I yeah I totally understand that I think what makes me nervous is he has something he's zero retirement he's only he kind

of I mean being in the restaurant industry he's never been at a place where they offer any kind of like investment like 401k or anything and he's he's 40 years old too so is he against contributing to a Roth IRA on his own when he he I keep I keep suggesting that and encouraging that but he just never seems to get there if that makes any sense um I even gave him my like financial planners information, and it just, I don't know. He always says Eric plays phone tag. I'm not sure, but he says he is. So there's some things you guys agree on about money.

Like you both agree debt is bad because neither of you have debt. Yes. But he's just. Yeah, we both own two cars straight out. He is very, he's very frugal with his money. He's not like an overspender. You know, that I do admire, and that's great. It's really the retirement thing that's really like a hang up for me.

What would be the long term plan? Let's say you guys get married 22 years from now. You guys decide to retire. What happens then? That's what I keep asking. And he just, I feel like his parents never taught him like anything with that, even though they're retired and his dad had worked for a union. So that's how he, you know, that was his retirement thing,

but they never really pushed him to like, think about that or to be in a career that, you know, he never had any skin in the game for like his college. They paid for all of this college, which he has nothing to do with the major that he's in. i feel like he he doesn't like think about that so my worry is less about this prenup and it's more that you guys aren't on the same page financially the prenup is just kind of a formality after we have the discussion and go hey there's all this wealth over here this is not a trust issue between the people it's we don't want to invite crazy into our life it's more about the people in your circles than it is about you two yeah and this

sounds like i don't want him mooching off of what i worked hard for later on if it doesn't work yeah that's the spirit of it you said some things off to the side that were kind of dare i say passive aggressive you're like he's not even in his degree field so I you have I'm just gonna say you've got a little beef here that you need to cook it up y'all need to cook it up together and eat it because if you get married without doing that it doesn't matter if you have a prenup it's always gonna bother you that there's these checklists in your brain that he's not checking the box now I do wonder if we were to give you Financial Peace University, would he go through that with you or would he say, no, I don't need that? No, I think he would.

Yeah, I think he's open. I think I think more or less he's just clueless. So he just it's just a lack of education. Yeah. Yeah. OK, well, here's the thing. If he's if it's a lack of education, but he's open to learning it and doing the things and he's like, hey, there's a class. Yes, I will go to the class with you, Courtney.

I think that's that's a green flag. But if the if the answer is no, I don't need that. You know, I never grew up and he's closed off to it. That's a giant red flag. And that's something that you need to consider. And a prenup in my mind is not the answer. It's digging deeper and asking more questions to find out if there's more red flags and if there's more red flags then you can kick him to the curb but um

do you have a paid for house courtney sorry what was that do you have a paid for house i actually run okay okay so he's coming to table with uh with home ownership with spices things up it does that's. That's a green flag. So here's my thing, Courtney. If you do, I don't think this is necessary in this scenario. It's not like you're coming to the table with $4 million and he's broke. No. He's doing fine. He's

doing great, but we need to get him on the investing side. He doesn't have that financial literacy background that you do. You've done so, so well, and I'm really proud of you. So if you do go forward with this prenup, you both talk about it. You say, hey, this is to protect the relationship. This is not a trust issue. This is to protect us from crazy down the line, but be open to revisions. Make it protective at first, but five years down the line, say, we're going to revise this and it's going to be all ours now. So it's not one thing set in stone

forever. And again, come to the conversation without it being a i don't trust you you're broke and if we're going to go through with this thing it's going to be my money but that is what it is though let's that is the spirit of it right now yeah and so that's what worries me i think we got to do some soul searching before we move forward with this relationship or with the prenup. Okay. Thank you so much. I appreciate it. You got it, Courtney. Wishing you the best. Congrats on all the success. More of your calls coming up. 888-825-5225. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't

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Are you with us, Zane? Hey, there you are. Yes, sir. How's it going? How can we help? Good. Yeah. Well, hey, so I was calling. My wife and I are wanting to, or we're thinking about doing the baby steps, getting out of debt and all this stuff. But the problem is I'm a real estate agent, and because of that, my income's not very consistent. And so the thousand dollar emergency fund seems kind of scary to us, I guess. There's some months where I just don't make any money. And in those months, my wife, her income would still leave us about three to $4,000 short of our monthly bills. And so we're trying to figure out what should we keep in our bank account while we're paying off debt so that we don't uh on the months that i don't make money that we don't go you know negative or have to go into debt you know

to try to not be late on our bills is there anything else that you can do aside from the real estate to kind of level out level the playing field a little bit there so that you're not, so that the pendulum is not swinging so far from one side to the other? Well, I mean, typically we just keep a large nest egg. We just keep 10 to $15,000 in savings because, you know, there's going to be, I mean, there's always two to three months out of the year where I just don't make money. And so that's what we've done in the past, and it's worked pretty well for us. That's true, but what I'm suggesting is that you eliminate the two to three months out of the year that you don't make money.

Yeah. I mean, I guess I could maybe pick up a second job. That's not really something we want to do, though. We've got little kids, and we're both already busy enough with our careers in church and different things like that. Well, there's a level of sacrifice that needs to be made for a season. We're not saying take on a side job forever. Nobody wants to. Nobody's like, man, I just got so much free time. It's, oh my gosh, we got to get our butts in gear. We're in debt. We've been in debt for years. What are we doing? And right now you guys

have been kind of comfortable. When you got 10 to 15 in the bank, you're like, well, we're not in a crazy rush to get rid of the debt. We're going to make it. So how much debt do you guys have? Oh, y'all are going to laugh at me. Probably a little over $100,000, probably closer to $110,000. I ain't laughing. I'm scared for you. What kind of debt is this? About, so $50,000 in student loans, another $50,000 in in car and then about five in credit cards and probably we just had a baby not too long ago so i think like 6 000 more in medical debt what's your household income oh so wife and i together probably close to 175175,000. Okay. Well, looking at the numbers, there's a

glaring thing that we could do today to clean up some of this debt. I see it. And you're not going to like it. Can you guess which one it is? I mean, probably the cars, I'd imagine. Ding, ding, ding. What kind of car is this? So mine, I have a Jeep Wrangler. We only owe about four or five on that. That's easy. The other one is an Expedition that we just got last year. What's that thing worth? Probably 50. And you owe, what, 45 on it?

Mm-hmm. Dang. That's the silver bullet right there. I'm jonesing to sell that thing. Yeah. Let us come take that off your hands, Zane. Do you see what George is getting at? Dude, you just cleared half your debt.

What's the payment on that expedition? That's $812 a month. If you had an extra $812 a month, would you be as nervous having $1,000 in an emergency fund? Well, it still would leave us about $2,200 short. Because you got payments out of your eyeballs. See, this is what I don't like. I'm just going to be honest with you.

You called with the issue. George just freed you up a good chunk of money, but that's an excuse. You put an excuse in there. he's solving your problem for you and you can't say yeah but you've got to go okay that gets me one step closer what's the next thing I got to do okay that gets me next step closer what's the that's the type of attitude we need here Zane to get this done you've got to be looking at this going all right great check what's check. What's next? Okay, good. I'll do that. I'll do whatever it takes to clear this debt.

That's where you've got to be right now. And I think George was right. Before, you guys were coasting, and you were just going along, and now you're going to have to really put the pedal to the metal, and you're going to feel this. There's no getting out of a $100K of debt without feeling it and without it hurting. You go down to a thousand bucks, you're like, I'll take four jobs tomorrow. Because you need that fire. The thousand dollars was never meant to be enough. It wasn't enough

back in 1992 when Dave came up with it. HVACs cost more than that even back then. The point of the thousand bucks was to get your butt in gear, cover the ankle biters, and put a fire under your butt so you go, oh my gosh, we're not okay. Because America thinks they're okay when they have $10,000 in the bank, but $100,000 in debt. Yeah. And I'm going, oh my gosh, I'm freaking out over the $100,000. Yeah. That nest egg that you have sitting there, I think you said you like to keep $15,000 or whatever, that's kind of lulled you to sleep on this. Is that what you have in savings right now, $15,000?

A little more, probably closer to 20 right now. Okay, so think about this, Zane, for one second. You would clear the medical debt, the credit card debt, and the Jeep just like that today, right? Now add up all those payments. What does that add up to? Five, 600 bucks that you were paying on those? Let's see. Yeah, yeah, just about. Now we sell the expedition.

Boom, we just cleared another eight hundred bucks. So now we're up to, what, thirteen hundred up from where we were. You get a side job making an extra seven hundred a month. Now we're two thousand up. Now all that's left is student loans. And we start crushing those, and that thing's gone, you're making $180,000 and you've got a $50,000 student loan, it's gone in, what, eight months probably with your income?

Yeah, that's probably doable. And then I'm up in my marketing game with referrals, with real estate. I'm going, I'm about to sell some houses. Do you see that, Zane? That's exciting. In a year's time your life is totally different now you're not the one who's asked to go to my wife until i sell the car but yeah oh yeah you're right you're right we don't have to be there for that you'll be

strong though because she's if you lay it out the way that we just showed you literally the way that george just said it you write these sit down with her tonight and say, hey, man, I've been thinking, don't say, hey, man, say, love of my life. I've been thinking about this. And write this out and lay out that plan and say, do you understand what we'd be able to accomplish? And really make sure that you're playing up, you guys' goals and your dreams for the future. This is an offer that few could refuse. Am I right, George? I mean, you lay out the vision, not just tomorrow, because tomorrow sucks. Tomorrow we get where we amputate the Tahoe, right? Amputate the expedition in this case. But think about what three years

from now. Three years from now, most people who don't follow this stuff are calling us back going, hey, we're further in the hole. We thought having 10,000 in the bank was going to save our butts and the interest and the payments and we're further in debt. Or three years from now, you have no debt in the world. You have a fully funded emergency fund. You're maxing out your retirement accounts and you drive cars that are paid for. That's a vision right there.

And then you go, hey, honey, if I don't make money that month, we're going to be okay. Yeah, that's the big reason. We don't make money that month, we're going to be okay. Yeah. No, that's the big reason. We don't owe people money. And that's the freedom. That's true freedom right there. Right now, which y'all are coasting on, that's the fake stuff.

That 15K that you're sitting on is fake. Let's make it real. Have you guys been through Financial Peace University, Zane? No. Our church just did it, but I was too smart to sign up. Oh, you're like, no, no, no. I figured out, well, hey, I'm going to give it to you for free so that you can start a class or join a class that's happening in your area or online,

and we're going to help you get your wife on board. Because sometimes, I know I'm not very good at convincing my wife of anything. But I'll tell you, Dave Ramsey, he's quite the convincer. And when you watch those videos, usually it takes a lesson or two, and all of a sudden you're like i get it yeah i get it let's do this and they get more amped up than the spouse absolutely and i mean here's the thing with them it's not even going to take that long it's just making a couple of key decisions locking it in and just kind of grit grit and bear it is it grin and bear it grin and bear it for a minute and and then you're through i'm seeing a theme in today's show, Jade.

People that are making $180,000 a year are broke. Because everyone goes, well, Jade, if I just made more money. Nope. You'd be the next Zane. Yep. You'd be the next Brad calling in going, I made great money. I just don't know where it's going. Man, paycheck to paycheck.

It's going to lenders, making them rich, helping them sponsor the next freaking stadium. Going to your taquito fix at 7-Eleven every day. Don't be a statistic. Delayed gratification, America. Look it up. Get used to it. It'll change your life. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George camel joined by jade warshaw this hour call us at 888-825-5225 if you want to talk money if you need a little hope you need a little encouragement confidence information to help you take the right next step with your money so jade these calls have reminded me of a great little financial quiz that you whipped up, I guess. Someone from our team. The powers that be, yes. And I thought it'd be fun to play with America listening in because everyone's wondering, how do I stack up? How am I doing financially compared to other people? Yeah. And so we're going to give you some questions. And if you answer yes to any of these, you might be at risk. You might need to make some changes. Absolutely. All right. So the first question is this, do you live paycheck to paycheck?

Now, most people know what that means. But for those of us that don't know, paycheck to paycheck is you're spending all that you get and you're barely making it to the next month before you get your next paycheck. And then it like oh finally i got you know and it's like there's no room to breathe there's no margin so paycheck to paycheck and hopefully the answer is no but unfortunately the stats say most of america is 62 percent are living paycheck to paycheck that's rough so hopefully you're not in that. Six out of 10 people. Six out of 10.

Living with that stress on their bodies every day. And I've actually seen, this stat is variable because I've seen some that have said up to 76% of Americans. Yeah, depending on what study. This one is from our latest Ramsey Solutions study that we did. Wow, yeah.

Fascinating. So hopefully you're not in that group. Here's the next question. Do you need to use a credit card to cover a $1,000 emergency? So if today, you know, the car broke down, you go to the shop and they're like, yeah, it's going to be $1,000. What do you do?

Do you have that money sitting in the bank ready to protect you? Or do you need to turn to American distress to help you out? Yikes. The majority do. The majority. Well, the stats say 57% of of u.s adults are currently unable to afford a thousand dollar emergency and i just know this stat 36 of americans have zero saved so forget it forget it 800 or a 700 they can't do anything they have zero

oh my goodness where do you fit in get in where you fit in all right this one george do you depend on a credit card to cover any regular monthly expenses? This one would shock me if the majority said yes, because hopefully you've got the income to at least cover regular monthly expenses. I don't know, George. I don't think people know what they're spending.

And I don't think most people understand like needs and wants kind of thing. So it's like, well, and this tells us 49 of americans depend on credit cards just to cover essential living expense like groceries that's crazy because 99 tell me that they just use credit cards for the rewards and they pay it off every month somebody's lying somebody's in here lying who's lying come at me bro i know who's lying and you know you know who i'm talking to right now okay who would be worried i know some folks listening right now would you be worried that you couldn't cover living expenses for one month if you lost your job wow so this

talking about having an emergency fund yeah you lose all income how long until you go i can't pay bills anymore well we know based on the other question most people don't even have a thousand dollars saved so you're not a real bleak quiz jade you couldn't have thrown some fun ones in there i want people to understand the state of their finances and this is really serious it says 68 again way more than the majority of people are worried that they would not be able to they're not look they're worried that they wouldn't be able to cover it we know they would not be able to cover it we're telling you the answer um just for one month they lost their job that's that's scary that's scary stuff all

right two more questions guys i don't want to like dig you into a dark hole all right are you unsure how much money you will need for retirement oh that's an interesting one do you have a number in mind have you done the math? I don't think people know, George. This one says most Americans have less than 50,000 saved for retirement. You don't need to have your cornbread done in the middle to go, I need more than that. So regardless of knowing the number, people aren't planning for it. No, they don't know the number. They're not planning for it. No, they don't know the number. They're not planning for it.

Wow. Okay. This is the final one. Do you think you need the right job and the right salary to become a millionaire these days? That's a fun one. I love that one. Because most people have the excuse.

Well, Jay, I'm just not, if I had a better job, if I made more money, then I could become a millionaire. I'm just going to tell y'all, I put this question on there because i wanted to debunk the peoples and here's the thing guys 33 percent of millionaires never ever made more than six figures in their entire working life it's it's top professions engineer accountant and teacher can you believe that so debunking that and wow if so let's let's grade everybody here george okay whoo one two three four five there's six questions on here okay so if you answered yes to any of the five questions or six questions you're at risk and financially vulnerable so just even to one question i'm guessing this quiz isn't the thing that let them

know that though. It was a reminder that they're not doing okay financially. Yeah. If you know you're not doing well, you're feeling it in your body, right? You're stressed. You got anxiety. You can't sleep at night. You're living paycheck to paycheck. You're getting in fights with your spouse. You know. So the question then becomes, what are you going to do about it? Clearly, a lot of these questions point to the problem of debt. That's one part of the equation. We got to get out of debt, take back control of our wealth building tool, our income. There's also another part, investing for the future.

Yes, so important. And at the end of the day, you guys hear us talk about Financial Peace University all the time. And I think a lot of people think, oh, it's just get out of debt. It's just get out of debt. No, if you take Financial Peace University, you're going to learn how to take care of everything that was on this quiz from the getting out of debt part to the budgeting part. So you're not paying living paycheck to paycheck to figuring out how to get

your savings right. So you've got savings for emergencies and savings for the long haul. Not to mention, we're going to make sure you're building wealth so that on down the line when you do retire, because you can't work forever, right? We're going to make sure that you're set up. You've got your retirement on lock. And hopefully one day you're a Baby Steps millionaire. That's the end goal. So you can live and give like no one else. It's not just, you know, robbing Peter to pay Paul and getting through each month and paying off. It's we're getting you somewhere. We're really trying to change your finances and change your family tree. Well, the biggest thing I realized when I went through Financial Peace University, it was like light bulb moment. When I stopped paying for the past, I can start building for the future. Say that again, George. When you stop

paying for the past, you can start building for the future. And too many of us live life in a rear view mirror. We got a crick in our neck because we're just looking back there going, oh, there's Sally Mae. There's the other lender. There's Discover. They're all coming. There's my buy now, pay later.

There's my Apple pay later. And instead, when you look through the windshield and go, oh my gosh, I don't have to worry about what happened last month, four months ago. I can be looking towards the future. What are my savings goals? How am I going to get there?

When do I want to retire? How long do I want to have to work for before I get to work? Those are different questions to ask yourself. And you can't do that until you get out of debt, have the margin to invest, to hit those savings goals, to pay cash. And it is so freeing. Love it. And Jade, if you want to get smarter with your money, along with all of America, we just had a baller smart conference here at our new Ramsey event center. And I got to talk with people outside and we did a fun YouTube channel segment asking about their dumbest money mistakes. And there was some

hilariously and sad money mistakes. But then I asked, where are you now? What's your biggest money? When? And they're going, oh, we're in baby step six. We're almost done paying off. We're baby steps millionaires. We got a paid for house. And these mistakes, they weren't like 20 years ago. Some of them were five years ago. So it's the turnaround. Seven years ago. Their turnaround was so encouraging to go, oh, I was done with money. I don't have to stay like that. So good. And so if you want to join us, we're doing Smart Conference weekend again in the Windy City, Chicago, Illinois, September 15th and 16th. For all you new folks out there, Smart Conference is our biggest event we do at Ramsey.

Whether you've been working the baby steps for 10 years or two weeks, this is the event for you. People tell us they leave feeling motivated. It's what they needed to get back on the plan or it's what finally got their spouse on board. And it's all of our personalities, not just money. We're going to have Dave Ramsey, Rachel Cruz, Dr. John Deloney, Ken Coleman, Jade Warshaw, and myself for two action-packed days. Join us for that. We also do a Smart Money Happy Hour live recording that is always a blast with my friend Rachel Cruz, and there's a lot of surprises. I can't tell you, but it involves Jade and her amazing singing voice. Maybe we'll bring that back out. Maybe. So join us September 15th, 16th in Chicago,

Illinois. This event will sell out. Make plans. People travel all over to be there. And tickets start at just 79 bucks for a two-day event. Wow. That's a killer deal. Go to ramsaysolutions.com slash events. You don't want to miss it because I saw Jade's talk and she brought the house down. And if she does anything remotely close to that, I got to work on mine for next year. You're too kind, George. I got some competition. You're too kind you're too kind she brought the fire i bring i don't know the the sparkling water you brought the atomic bomb george come on now i appreciate that more of the ramsey show coming up this is the ramsey show i'm georgeel, joined by Jade Warshaw this hour. We've got our question of the day here, sponsored by Neighborly, your hub for home services.

If you've got rental properties, Neighborly's local real property management offices can help you manage them and help optimize your ROI. That's return on investment and give you some peace of mind. You can go to neighborly.com to schedule a consultation with real property management pros near you. All right. Today's question of the day comes from Jim in Nevada. He says, I'm on baby step six right now, and we're planning to upgrade from a condo to a townhouse. I know what baby step six says, but I'm worried that the condo is not appreci not appreciating much would you recommend to invest our extra funds into an investment or savings instead of paying more on the mortgage

to cover more ground for our next purchase so for those of you listening baby step six that's the baby step where we're paying off the home mortgage and so it sounds like they would rather, or they're not sure, they're like, hey, the house is not appreciating very fast. We don't want to put extra payments on it. We'd rather invest it or save it to the side. I don't know about that. If it were me, I would work the baby steps and continue to put the money onto the house, the extra money. Because here's the thing, when you sell the house, you're going to get that money back in equity. It's literally, I like doing that for a couple of reasons. And you use this term, which I like.

It is a forced savings account. You're putting that money on the mortgage. And at that point, you're locked in. As opposed to if you said, okay, you know, instead of putting this extra payment on the house, we're going to put it just in a savings account. And before you know it, maybe you've stacked up a decent amount of money yeah and that's when i like to say you're opening yourself up to who i like to call uncle boo-boo which he's that he's that person he's that guy on your other shoulder that's always tapping you to do bad ideas right he's like oh you got 20,000 saved you know you have

been needing a new car lately right oh you got 25k you know I had this investment opportunity that's that's when it comes knocking and you're like man and now when it's time to move you're like man if only we had put that 25,000 or 15,000 or even 10,000 extra dollars on the house so if it's me and I'm pretty sure if it's George too, Jim, we're going to put that money, we're going to make the extra payments on your current mortgage. And when it's time to sell, that money is going to be right there waiting for you in equity. Yeah. I don't look at paying down the house as an investment because the house is going to appreciate. I look at it as my plan for long-term peace and my plan to keep me from doing stupid,

which the forced savings plan does. So here's the thing. There's also an assumption on Jim's part that if he invests this money, it's going to make way more than his home appreciation would have made. That's what he's saying. That's what the argument is. And I don't know if you've been actually Googling and looking at the stock market and the headlines.

The S&P 500 was down 18% last year. So if you put $10,000 in, you're down to $8,000 at the end of that year. And so we're also investing for short term, which is not a good plan. We always tell you invest long term, five year time horizon or longer is the way to go. And you said you're planning to upgrade soon from that condo to townhouse. So that's another reason I would not do that. And it's all going to roll into the next house. And I know we've run the numbers on that. The difference between keeping an investment for five years versus three or less, the chances of earning a return on that that's worth it is substantially less at three years versus five years. Like the percentage is

crazy. Dave told me about it one time. I said, that's cray cray. So, yes, Jim. Take it or leave it, but I hope you take it, my friend. All righty then. Should we get to the phones, Jade? I think it's time. Let's go. Amanda is on the line in Franklin, Tennessee, right here. Is she in this building now?

That would be cool. Okay. Welcome to the show, Amanda. Hi. Thanks so much for having me. I listen to you guys pretty much every morning when I'm getting ready. Oh, that means a lot. Thank you. How can we help?

I am a middle and high school teacher, like you said, here in Franklin, Tennessee, and I am teaching an entrepreneur class this semester. And the kids are doing fantastic, way better than I thought they were going to do. And they are about to have some cash in their hands. And I was just wondering for these, you know, ages 12 to 14 year olds, maybe some suggestions from you guys about like maybe pre-baby steps or what they should do with this cash. We are going to tie 10% to a nonprofit organization. So that's going to be done. But then the rest of it, I'm like boggling my mind of trying to figure out what I should do. And I just figured my smartest thing to do would just be call you guys and ask you what you would do. Well, first of all, it's Financial Literacy Month. And I got to say, shout out to you and all the amazing teachers out there changing the world. I mean, these kids, the impact you're having on them just from this class alone is immense.

So thank you for what you do. Yeah, thank you. It's an honor. Thanks. So how much cash are we talking per student? Yeah. So right now I did some pre-order sales to just the families here at the school, at the small Christian private school. And just the pre-sales alone, they've got almost $800.

So they're averaging about $55 per student right now that they'll have cash. And then they have next week will be two days of actual selling in real time to the students and the families. Wow, what are they selling? They're, they've all designed, made their own product or service. And so they have marketed it and,

um, we're just letting God take over. Wow. I had no idea. Yeah. I had no idea it was going to be this, this amount of money. And I'm a little floored at this point.

So let's say you think it'll be like a $100 profit per student. Is that fair to say? I'm thinking probably more anywhere between $100 to $200 per student. And it's their money, right? It's not like the school has to, like it doesn't have to stay within the school, right? Okay. No, it's all their cash. So you said 10% is already getting tithed. That's awesome. Giving right at the top.

Because I would kind of flow this into like a baby budget for them and have them write out and just have them. It'll be real simple. Put their income, so that's $100, then have giving, saving, spending. In giving, we have 10%. That leaves 90%. And then let's set a goal for saving. And by the way, in the real world, they'd be paying taxes on that.

So it'd be really funny to go, hey, 20% going to Uncle Sam, you can give it back to them. But that would be a fun, just take 20 bucks away from their 100, just to show them some pain. That's the teacher's tip. Then I think it'd be cool to say, hey, we're going to save 50% of this. How cool would that be to start for a savings goal we have down the line maybe it's a car a lot of them are going to be driving in the next few years how do we what if we could start a car fund and then the rest let's

have them enjoy it and spend some and do that wisely and go okay we have you know 40 bucks left 30 bucks left what is something that you really enjoy doing that would be a real treat? Maybe that's for some people going out to the movies and blowing that on one movie and some popcorn. Maybe someone's going to the mall and we're going to get a new shirt or a new pair of sneakers. And so I think having that balance helps early on because most people, if they get really good at the savings muscle early on, they have a hard time using the spending muscle. And if you have too much of a giving muscle, that's incredible. I haven't seen that often. Yeah, that's true. What do you think, Amanda? Would you say even with the savings, could I also, you know, maybe some of them want to reinvest this in maybe this business or maybe it's triggered

them that, oh, I could actually do another business over the summer while I'm not in school. So I didn't know sort of where a reinvestment of some of these funds. I love like that freed me up of, hey, spend some, have some fun money. But you've worked really hard on this. But how would you guys guide these students between saving and also reinvesting in themselves in a product or service or something along those lines? I love that idea. You know, I used to be a small business owner. So when you were talking about this profit, my brain

immediately went to reinvest. And so I think that's just another line item that you add on that baby budget that George said, maybe, you know, after the giving, because give off the top, and then maybe you're saying, hey, you've got 90% left. If it were me, I'd probably reinvest maybe half of it, and then break the what's remaining into the saving and the spending category. And that way, they're getting to do basically all the things that you would do with money other than pay taxes. Absolutely. I like that plan, Amanda. What do you think?

I think that's fantastic. Yes, I think that's great. These kids are crushing it. Debt-free entrepreneurs at 12 years old. What are you doing, America? These kids have a higher net worth than you. Let's get our butts in gear. Incredible.

I'm inspired by that. Me too. I love that. She's a great teacher. Very amazing. Hey, that puts this hour of the Ramsey Show in the books. My thanks to all the booth dudes keeping the show afloat, my co-host Jade Warshaw, and you, America. We love you. We'll be back with you real soon. Hey, what's up, guys? It's Jade. Look, if you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to ramsesolutions.com and click the get started button. We'll help you figure out the best next step for you based on your specific

situation. That's ramsesolutions.com and click get started.