The Ramsey Show - App - To Change Your Results You Have To Change Your Behavior

Episode Date: December 12, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work they love, and create amazing relationships. I'm here, Jade Warshaw, with my co-host today, Rachel Cruz, best-selling author, number one, baby. All the time. Sometimes, Jade. Sometimes. Listen, take those props.

Well, we're going to be taking your calls about life and money, and it's the holiday season, so I'd love to hear calls about people deciding what they're going to do for the holidays with their money. That's always fun. All right, Rachel, you ready to get into it? Yeah, let's jump in. All right, let's do it. We got Sam from Green Bay. What's going on, Sam? Hi, thank you for taking my call. Hey, what's up? How can we help? So my sister and I, we tend to have this debate every Christmas. And so she's using Ramsey as her stance. And I just I wanted to see if this truly is a Ramsey principle.

So my sister and I go in on Christmas gifts often. And in my mind, if I'm going in on a gift with my sister, that's two people. We split it 50-50. Okay. But when she's saying that it's from her, her husband, and me, in my mind, 50-50 doesn't fully, why? Because there's three people now. You think it should be thirds? I think it should be at least recognized that it's not 50-50. So thirds would make sense. But can I tell you how she frames it? Yes. Does she blame us?

Yes, she does. And I am not sure. She says, well, according to Dave Ramsey, we are one household with one joint finance situation. So we count as one share. And I'm a single person. So to me, that's just rude. Well, here's the thing. Okay. It is definitely getting in the lines of like legalistic. I think, uh, she's right. If you're married, we think of you as one, like one income, one band, one sound, like that whole thing. But I also see your point of view, which is like, Hey, let's say we all make $50,000 a year. That's a hundred thousand dollars from her household and only 50,000 a year. That's $100,000 from her household and only $50,000 from mine, right? Is that what I'm understanding? So tell me what you

want out of this. Do you want her to just recognize, hey, thanks for going halfsies on me. I understand that it's two against one here. Is it just you want her to validate that or do you really want her to pony up more cash? Good that is a solid question I think I would like okay if it's for my parents and then you know that's more my sister and I I would be happy with a 60 40 split just for recognition 60 40 okay but otherwise if it's depending on what who it's for, I think thirds is appropriate. OK, can I can I throw on a sidebar here? This is just where Jade's brain is going. All right.

I think I might. This is this may not be good. OK, so if I'm in your let's I'm going to be the in-law. OK, so I'm your sister's husband in my house. If my husband was like, Hey, me and my sisters are going in on a gift for my mom. I would, I it's like, I'm part of it, but I'm not really part of it. Cause it's like, they're, they're the main family. They've decided what it is. I'm kind of just on the side being like, okay, cool. That's fine. I don't even really know what's happening.

So it does feel weird going thirds. It does feel weird going thirds. Now, I don't know the dynamic of your family if it's like, no, like he calls my mom, mom, and we're all together. Like, I do think that plays a part. What do you think, Rachel? Yeah, I mean, I think there's a level of courtesy, right?

That I'm like, okay, if it was like, you know, Winston and I going in, and if one of my siblings was single, a dual income, I mean, I think there's like a reality of like, oh, yeah, we probably make more from a dual income. Yes, yes. Single. So just as a nod of like, oh, yeah, but I would do it more, Sam, over dollar amounts specifically, like, hey, I have $100 to chip in for mom and dad's gift. that's what i have i love that let's build a gift around that or i'll just get my own right um and just do your own thing i really like that i think we did it backwards where we had the gift that's right that's right and did

the split so that does make sense to me yep yep yeah listen i want to validate all day the fact that you're feeling like man i feel like I'm chipping in more. But I like Rachel's idea of just saying, here's my set budget. This is what I can spend. And if that doesn't work, maybe we choose something else or I just do my own thing. Yes? Yes, I think so, because I don't know if we're ever going to see each other's perspective fully. So I do think that's probably the best case scenario. Yeah. And I do think, Sam, I would challenge a little bit on the end for you that what we find on the show so often is that money problems are usually not money problems. There's probably deep, you know, level of maybe kind of

hurt and loneliness. And I don't know what it is for you, but something there like I'm I'm flying solo here. Someone like throw me a rope at least like like at least acknowledge this idea right and you do kind of feel pushed to the back burner and then money's put into the play in the relationship and then it just feels weird because there's dollar amounts but i don't know it gets so sticky it shouldn't and it doesn't feel like it could it kind of feels like a oh not a big problem but i think it's a bigger problem to you because of other deeper issues i think so too and that issues i wouldn't say i would say just emotions feelings yeah yeah because the truth is most of the time a dual household is going to have more money yeah and that's a real part of it and i i stand by if it's one of those families where it's like you know everybody's so

tight and the in-law played just as much of a part, then I could see a little bit more while she was like, well, can you guys contribute more? Because it's from both of you. But like in my household, I'd be like, what are you getting them? Okay. Yeah. One unit. Yes, exactly. Yeah. One unit going in. Totally. But we've had some like discussion over this and I know we're going to talk more about it tomorrow, but just the idea of setting boundaries around Christmas in general, because the expectations are high. And a lot of times it's not even that you've intentionally done it to yourself.

It's just Christmas happens every year. And if the past three years you got someone a gift and then this year you don't, it's easy for somebody to think, well, what's wrong? Did something happen? I have to explain myself. It's hard.

It's kind of hard to backpedal, but I think. Tradition kind of sets precedent almost. Yeah. Yes. We changed it up. So the Ramsey side, we usually each individually like get mom and dad a gift,

right? So like I'll get, you know, from Winston and I'm like mom and dad a gift and same with the siblings. And then us adults, kids will draw a name. Yes. And this year we got, we threw mom and dad in the pot. So they're one of the adults.

So yeah, so like if you didn't pick mom or dad, you're not buying them a gift. And I'll be honest, it's kind of nice. It's tough? No, it's kind of nice to limit the amount of gifts you have to buy. I mean, obviously,

if there's something that's so great and you like wanted to get it right, we're not like hard and fast on it. But it is kind of nice. Like, you know what? All the adults were playing equally this year and like we're all in.

But then that means in turn, they're not, they used to buy us gifts. Now they don't have to. Now they don't have to. So now I'm like, dadgummit, I'm like an actual adult now.

Hey, welcome to the club. Winston's mom, Winston's parents still buy us gifts. They do. Yeah. So we'll get some from them. But I say,

welcome to the club. We're adult. I do. Yeah. So we'll get some from them. But I say welcome to the club. We're adults. I know. Yeah. My family, my sister actually introduced that to us. It's probably almost been seven years or so. And I love it. It's an adult.

Like my parents were included in the mix. Yeah. And I'll be honest. A lot of times I do cheat. And even if I don't get my parents, I'll still get them some. I just. Yes. I can't.

But I'm also not in debt anymore so like let's throw that out there yeah it's like yeah it's the whole argument on being thoughtful around giving gifts considering your debt considering your financial state has nothing to do with whether or not we want you to be generous or not that's right but it's understanding in what ways can you be generous because the truth is you to be generous or not. That's right. But it's understanding in what ways can you be generous? Because the truth is you can be generous and you can be giving and grateful and thankful in a lot of ways that don't require money and don't require you overspending and making a bad situation worse. Amen.

You know what I'm saying? Oh, yeah. Tis the season to be jolly and smart with your money. This is The Ramsey Show. Hey, you guys. I'm not a fan of the big banks, and you probably already know which ones I mean. But I do like credit unions because they're nonprofit organizations that focus on their members. And I'm proud to endorse Fairwinds Credit Union because they share the Ramsey mission of helping people get out of debt and live generously.

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they created just for Ramsey fans to help you take control of your finances. That's Fairwinds, F-A-I-R-W-I-N-D-S dot org slash Ramsey. All right, you're listening to The Ramsey Show. If you want to give us a call, it's a live show, so you can do that. The number is 888-825-5225. We'll get you on the line. Again, I'm Jade Warshaw. Next to me is Rachel Cruz.

We're the ones that will be taking your calls this hour. So let's go straight to the phone lines where we've got Samantha in Phoenix, Arizona. What's going on, Samantha? Hi, thank you guys for taking my call. You bet. I am new to the Baby Step, and I was technically on Baby Steps too, but I left an abusive relationship, and I'm going through a custody battle right now,

so I've incurred additional debt for attorney fees. Okay. So I'm trying to figure out my next steps going forward. Should I pause making additional payments towards my debt and just work on saving money for additional attorney fees that might come up. Yeah, I would. This is definitely a storm. Yeah, for sure.

I would categorize this as a storm. And we do say that when you're in baby step two, especially, there's a couple of things that would cause you to kind of pause and that would be a baby on the way or some sort of storm or major emergency that is causing you to kind of have to just hold tight for a minute. Yeah, that becomes more of a priority at that point than paying off debt, right? We're all about paying off debt, but your child is a priority there, right? If there's a health issue that you have to pause to make sure that you can get yourself in a healthy place, that is, you know, yeah, pregnancy, like anything that is, takes precedent, right? Which is usually a relational situation or a health situation. We for sure say pause and get that in order. I'm so sorry, Samantha.

I'm always so impressed with women like you that choose to step out of a situation like that, because that cycle can be so hard to break out of. How long has this been going on just from the custody standpoint, fighting it with lawyers? So going on two years, the first part was when he tried to fight the restraining order. So that was the first time I took on attorney fees. And then now he was in jail for a bit for violating the restraining order, but now he's out, and now he's trying to come for full custody. Oh, my gosh.

How many kids do you have? Luckily, I only have one. Okay. Me and my daughter, but it's still a lot. How is your, like, financial situation? How is your home situation? So I currently rent, and I am safe. Luckily I'm with family and I make about $52,000 a year. But my debt went from, I got it down to $12,000 and now it's back up at $20,000.

And what are you, is that just the outstanding, is that just the $20,000 is the attorney fees? No. So about $10,000 of it was attorney fees. $6,000 was about credit card. Three about student loans. And then about $2,000 left on my car loan. Okay. Do you have any savings right now that you're pulling from or are you just pretty much occurring

the debt as the attorney fees come up so i was able to pull from like 401k um to kind of help with this because it was so i wasn't expecting it you know i thought after the restraining order was standing that that was going to be it um so i wasn't expecting this. So I was able to get a little bit of help through that. But of course, I want to pay all of this back as quickly as possible. But my biggest fear is I don't know what's going to happen three to six months from now to the next year as well. Right.

Okay, so are you still in the middle of this then? I am, yeah. Okay. And has your lawyer given you any timeframe by any chance? Like, do you know, I mean, you're saying three to six months, you know, like, does he have any conclusion of like when this will end? No, no, because we're still waiting on mediation. And then more than likely that nothing's going to happen in there because my ex, of course, he's not going to agree to anything. Does your ex have a lot of money? Is that why he's trying to, is he trying to drain you out on this?

Yeah, they think so. Because yes, he comes from money. So he knows that I would do anything to protect our daughter. So he knows that I'm willing to, you know, figure out ways to get the money because he knows I'm not going to represent myself. I'm not in a position to do that, you know, emotionally. Is there anybody around you that has the ability to help with this that wants to? Because the truth is, this is costing you money and it's costing you money that you don't have and i do believe like i'm i believe that the custody

is going to end up with you because from what you're telling me there's clearly track record that this is an abusive person especially the fact that he's ended in jail for trying to violate this. So I have a feeling that this will end with you. But how long can you go down this track? Do you see what I'm saying? Yeah. Yeah. So Samantha, so I yeah, if I were you, if I was in your position right now, I would stay current on everything. I would not get behind. So I would be paying your minimum payments on everything. And then on the side,

finding that margin month to month to be able to put some money aside. So as these fees come up, you do have an account that you're gonna be able to pull from. And then I would also start to evaluate as much as you can the consistency of how often the bills are coming, how often you guys are using the lawyer, if there is mediation and all of it. Because I think a goal would be, small goals,

would say, okay, there's some money set aside for attorney fees. And the truth is, I may have to go into debt for that. But if I can at least maybe knock out that $2,000 car loan in the midst of this, right? Because it's not something that's going to be solved. It sounds like even maybe even the next 12 months. So I don't want you sitting idle financially during that time. But I do want you to put some cushion between you and life. So putting some money away, kind of for an emergency fund that you can pull some of that for attorney's fees as they come up. But then also giving yourself a goal financially to start making some progress. Because honestly, too, Samantha, I think making progress in this area of your life, it actually might give you that boost of confidence. And there's something proactive

that you're doing in your life that actually can start the wheels engaging in a positive way through the circumstance. Absolutely. I mean, there's only $2,000 left on the car. What's the payment on that? What will you get back in your pocket monthly when you pay that off? So I pay about $296 a month for the car. Good. So another $300, that's great. To Rachel's point, that's even more money that you'll be able to set aside um so yeah like no disguising the fact that this is tough and you know you've got your work cut out for you in a lot of ways but i think just being really intentional still sticking to still creating a plan and sticking to that plan whatever you decide that plan is is going to be really paramount uh for you walking through this. That's so, so, so, so tough. I know. I'm so sorry, Samantha. Tough to walk through. All right. Do you want to try to take

another call right quick? Let's try it. Caleb in Norfolk, Virginia. What's going on, Caleb? Hey, thank you for taking my call. Merry Christmas. Merry Christmas. How can we help? So my question is regarding life insurance. I'm currently in the military, but I'm getting out in about three months. I have life insurance through the military. It's called service members group life insurance. I pay about $31 a month for a $500,000 policy. My question is whenever I get out, I have the option for a limited time really to roll that over into what's called Veterans Group Life Insurance, which is about $35 a month. And that will, you know, increase about every five years. I'm 26 now. I have no debt, but really I'm just unsure

because I don't have a wife or children yet. I don't really have anybody relying on my wage but me. So I'm just kind of looking for some guidance here. Yeah, I mean, Kev, I don't think you really have to re-up this or roll it over. I mean, I wouldn't. The reason really you have life insurance is if someone is dependent upon your income. So that would be a spouse or children. And as a single person, I mean, I would have some money, you know, set aside that if something were to happen to you, like covers funeral costs and that kind of thing. But I don't

think you need a life insurance policy for that. So I probably would just end up canceling it once you get out. I agree. I agree with that statement. And if you don't have to pay it now, I wouldn't pay it now. Forget the rollover. I would get out of it now if I could, because you really don't need it. All right. That does it for that. Yeah. I think people forget all the time, Rachel, that there's a purpose to life insurance. It's not necessarily to make you rich or all of these other things. It's for anybody who's dependent on your income. If something happens to you, how do they make life work? That's what it's there for. Children, spouses.

And term life is so inexpensive. It sounds like some of those rates. It's just not expensive at all. And so, yeah, if someone's dependent on your income, make sure you get life insurance. You can go to Zanderinsurance.com and check it out there because that's a great place to get your term life. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have, George. Sketchy and never trust them. And that's why we recommend Delete.me. They help with that. Yeah, they do. Delete.me actually goes in and removes your information

from data broker websites, and it is an incredible service that everyone needs. And there's a lot of shady companies out there that solely exist to sell your personal data to bad guys. And that means your info, like your email address, your home address, your kids' names, your name, everything is just out there for scammers and spammers to find. That's right. And then once they remove your information, then they're going to send you a detailed report telling you where they found your information, when they removed it, how many hours they've

saved you. I mean, it is incredible. So detailed and it's beautiful. I love these reports. So far, get this, they've reviewed 27,000 listings on my behalf, removed me from 240 data broker sites, and saved me 77 hours of time. It's incredible. Absolutely amazing. And Winston and I now get fewer texts, weird emails, spam calls, all of it. I love it. So you got to be sure to check them out. Ramsey fans get 20% off their annual plans. Just go to joindeleteeme.com slash Ramsey. That comes out to less than nine bucks a month. Super affordable. It's amazing. So again, that's joindeleteeme.com slash Ramsey. Make sure to check it out, you guys. You're listening to The Ramsey Show. Hey, check it out, you guys.

You're listening to The Ramsey Show. Hey, thanks for hanging out with us. We're so happy that you listened to the show and you've made it part of the parts of your day that matter. I'm Jade Warshaw. Next to me is Rachel Cruz. And I don't know if you realize this, but Christmas is almost here. It was it happened so fast. I don't even know what happened. Always every year flies by. And if you're anything like me, you feel like you're running out of time to get gifts for everyone on your list. That is me. Whether you're shopping for yourself or looking for the perfect gift to help someone get their money in order, now's the time to shop and get 30% off of our best-selling products, which is a major deal. You can get books like The Total Money Makeover. It's the

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Yes, I know. Great, great gift. I have two in my purse right now to give for gifts. Love that. People have been asking for them. Love it. All right. Let's see what Al is talking about.

He's in Atlanta, Georgia. What's going on, Al? Hey, how you guys doing? Thank you for taking my call. We're good. So me and my wife were kind of looking for a plan and we're kind of going back and forth on whether we should sell our house or not. Okay. Um, tell me more. Um, so the house payment is like 240, 240 K. Uh. She has a credit card balance of $232 and a car payment with 18K.

Okay. And then the debt I have is I have a car loan, which is 8K. And then credit cards, about 20K in credit card debt. Okay. And just to clarify, her credit cards, it's only $232, or that's the monthly payment? It's only $232. Okay.

And then just to clarify the mortgage, the entire mortgage is $240,000. That's what you owe? Yes, ma'am. And what's the monthly payment? $2,000, but with utilities, it comes out to about $2,500. Okay. And what's you guys' take-home pay? We make about $70,000 a year. $70,000? And when you take your checks home what is it every month uh like i would say like roughly like 2,000 2,500 a month okay what is that a piece or what's missing here wait per paycheck maybe like that happened yeah okay per paycheck so you get paid twice a month is that what you're saying yes ma'am okayam. Okay. So 5,000 a month. Okay. So now that we have this picture. Sorry, real quick. That's combined your income and hers because you split up your debt. Is that both of your incomes coming in? Yes. Combined. Combined. I make about 2K a month and she makes

about 2K a month. Got it. Okay. So 4,000 a month. What do you guys do? We work at this little small warehouse, just operating a machine. Okay. And you both work at the same place. So both of you are about $35,000 a year. Correct. Got it. Okay. So there are some glaringly obvious things going on here. The big one is your incomes are both on the low side. And because of that, this mortgage is half of your income every month. And so just to put that in perspective a little bit here, we'd say that we don't really want your mortgage payment to be any more than 25 percent. Sometimes it's a little bit more than that. And people can make it work at 28 or even up to 30 if they know that they have this track of their income going up. But in this

case, that being half, there's no real place for you to go. You're extremely house poor, and I know that you feel it. And so to your point, that might be the idea is to sell this house. But I want to know, is there a way that you see your income going up do you guys have plans tell me more about that uh yes we uh picking up overtime we also have a side business where we detail cars uh and we plan on ubering and stuff like that okay how much are you guys making on on all of that extra? Oh, it varies. So it varies. Okay, couple hundred, a thousand? Yeah, I would say a couple hundred. Okay, okay. So what it sounds like just from and I'm not saying this to throw shade, it's just the fact. Based on the way you're answering these questions,

it doesn't sound like you're using a budget. Because one thing I know is when there's no budget, you're searching for the numbers, right? Right. Okay, so that's the first step here. Whenever we talk about the baby steps or the plan for your money, the very first thing is that foundational piece of the budget. You've got to have that.

And all that is, Al, is you saying, okay, here's our income and you and your wife sit down together and do this. Here's our income and we're going to list everything that we could possibly spend money on for the month. And that's the things that are necessities like rent and utilities and groceries. And that's also the other things that you're spending money on, whether it be, I don't know, maybe your wife gets her nails done or something like that, right? you're listing it all out and then you're seeing what's left and so in your case there's probably none left and you're probably in the red which is why the credit card debt's there as well yeah um is the 18 000 was that a car you said her car yeah that's how much she has a welcome card. Okay, how much, have you guys, Kelly Blue Book did it all?

No, we haven't. Okay. Because, yeah, I mean, all of this is a little bit disarray. I mean, you guys have dabbled into every part from a debt standpoint. And I want to give you a really clear path and plan in this call with you in the next few minutes, because I think it feels maybe a little jumbled. It is. So here's what I would do out if I were to wake up in your shoes tomorrow. This is always a fun game. It is. And much easier said out on the side of the desk because I'm talking to you than implementing it, because this is going to be really hard. Like and here's the truth. If you want something different with your money, something has to change and you guys need

to make a complete 180 and do things completely differently than how you've been doing it. I would put the house up for sale because I think this eating half your income is not going to work long-term and it's going to continue to leave you guys in the red. I would Kelly Blue Book her car

and I would get it sold ASAP, private sale. I wouldn't take it to a dealership, private sale. Even if you're underwater a few thousand, then take out a loan for the difference and get a three $4,000 car in the meantime and let that be the car. And then I would start working and I'd pay off this $232 like this month. I would you know, I would work to pay that off. Yeah. And then you guys would have the 8k left in credit card debt, I think is what or no your car 8 000 in your car and the 20 000 and if your car is nicer al give her your car and you drive the three thousand dollar car i love that and so and then those are your only two debt left really is your car and the

20k in credit card debt and again this is going to take you know i've just laid out two to three years of you guys really buckling down and saying, we're going to work tons of overtime. We're going to get this cleaned up. But Al, you guys could be in a completely different situation, but you have to make completely different choices than what you guys have been making. And Jade mentioned the budget, and the budget's going to be a great thing because it's going to keep you accountable, and you're actually going to see,

holy crap, here's what we've spent going out to eat. Holy crap, this is what This is costing And this and this And you actually start Eliminating some of this stuff Find extra margin To throw out this debt And you really could start Making some headway

So if you'll stay on the line Kelly's going to pick up And we're going to give you guys Every dollar premium Which is our budgeting app And I want you and your wife To sit down together tonight And you guys start

Filling this out together And then we're going to throw in Financial Peace University, which is our course and the Total Money Makeover book and the audio book. Yeah, we'll get you guys some stuff to really start seeing, hey, here is a step-by-step plan that we have to start taking in order to breathe. Yes. And go to ramseysolutions.com slash realestate to find an agent to sell that house. You know, one of the first things I discovered working in the financial world is how absolutely devastating it is when the breadwinner of a family dies and there's too little life insurance or none at all. Grieving families are suddenly left behind scrambling to pay bills

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be there when you need them zander is the real deal and that's why they've handled all my personal insurance for over 25 years i trust them and you can too visit zander.com for instant online quotes or for a more personal touch give them a call at 800-356-4282. You're listening to The Ramsey Show. We help people with your life, your money, your relationships. If that's you, you want to get in on the action, you can call us up. It's a live show. The number is 888-825-5225, and we'll get you on the line. Today's Ramsey show question of the day is sponsored by why refi when you're trapped in a maze of defaulted private student loan debt it's hard to find your way out but why refi can offer you a lifeline with custom refinancing

based on your ability to pay and a lump sum payoff option that you could qualify for after 24 months. So go to YRefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Remember, it may not be available in all states. Today's question comes from Lauren in New Mexico. I currently own three rental properties and have 30-year mortgages on two of them. You say to have 15-year mortgages because you pay it off faster. If I am putting my profits from my rental toward my principal on a 30-year mortgage

and can pay it off in 15 years, is there a need to switch it to a 15-year mortgage? What's the reasoning behind the 15-year mortgage? I make more profits with a lower monthly payment, which puts more money towards the principal. Well, Lauren, for starters, we would say not to even have rental property if you're not able to pay cash for it. So technically speaking, I mean, if you could pay it off quickly, I would probably just sell one and throw some of the equity at the other and make that a goal to sell it but having yeah three rentals that have mortgages on them yeah not not the not the best idea not really the Ramsey way to do it but for your primary home we do say a 15 even though people you know this is one of those that I feel like is is a slippery slope because

you know a lot of people still do the 30 and whatever it is. Yeah, of course. But the thing to remember is that your intentions don't always line up with reality. So if you have the intention of paying a 30 like a 15, you know, stuff happens. And you're like, oh yeah,

well, we won't pay extra this month. We'll make sure to catch up next month. And then something else happens and you end up usually not paying. It's truly like a 30. You don't. Now, when you're paying off your house in the baby steps, we do find that people are paying their houses off in like 9 to 11 years.

That's right. Which is amazing. So I think that 15-year fixed rate mortgage that we talk about, it just locks you in to a plan to get you out of debt faster with the guarantee that you will get it paid off in 15 years. It makes you accountable. And let's call a spade a spade. The truth is, if you go with a 30-year, you're not paying as much, so you get more house. And I think truthfully, when people want that, they want more house and not when you're locked into 15, though,

it's like, OK, maybe suddenly I can't afford what I thought I could get. Yes. So look at the root of it. Yeah. And that's the thing. That's what's so always interesting with houses is that you're going to qualify for a lot more house and what they will give you than what you necessarily need or even what's good for you financially. So we always talk about having at least 5% to put down for a down payment your payment being no more than 25 percent of your

take-home pay on a 15-year fixed rate which i always say we understand that is a very conservative formula uh when it comes to to the housing situation but just like our last caller you guys like you see people like get into housing situations and it and it takes half their income or maybe one spouse chooses to stay home but you can't because you've built your life around having a dual income. And it just starts to limit your choices. The deeper you go into debt, the longer you're in debt. It just limits your life choices on what you can and can't do because it's telling you basically what to do. So that's it, Lauren. All right. That's really good advice. Let's talk to Greg. He's in Biloxi, Mississippi. What's going on, Greg?

Hey, Jade and Rachel. It's so good to be talking to you all and fangirling a little bit right now. Glad you're here. So I have been listening for a little over a year, but the month before I started listening, I co-signed on a truck for my now for my now ex-fiance oh greg i'm sorry yeah rough situation um so we had agreed uh once things ended that uh hey you know we can keep the loan as it is for a year because we needed to wait for the

maturity date. Okay. And so it's coming up on that. And just in talking to her on occasion, she most likely is not in a position to refinance it on her own. And she has said that her parents or anyone else won't help her. Good for them. Yeah. Yeah. Just from my perspective, I'm not quite sure how I can get myself out of this. Have you tried persuading her to sell it and start over fresh on her own? I have. She is not completely opposed to the idea, but I don't think I can really rely on her actually following that through. Can I ask a question? And I promise it does kind of relate to this. Who broke up with who? No, you're good. I ended things with her. Okay.

Which makes it a little stickier. It makes it stickier because this is a tie to you. This is a way for you to still be in her life. Are you getting pulled over, Greg? No, there's an alarm going off somewhere. I was like, oh no, are you driving and getting pulled over? But my point is, this is a tie to you. And if things were different, I'd say you could make the argument of, like, hey, you broke things off, and I want a clean break, and I need to, you know, be free from this.

Like, you could make that argument. But in this case, it does make it a little tough. How much is the loan for? There's about $27 left on it. Okay. Man, how much is it loan for uh there's about 27 left on it okay man how much is it worth do you know uh i actually did look up the kelly blue book a couple weeks ago and it said that private party sale was uh tops like 23 oh gosh and it's upside down Yeah. This, I think this is only going to get worse. So I would really encourage her to sell it. And I'd be strong on that. I'd say, listen, there's a reason that you can't, I mean, the math is like the logical reason is there's a reason you can't refinance this. And

the reason is the bank has looked at your financial situation and said, it's not stable. You cannot afford this on your own, which means they expect you to default, which means I'm here for when you default. That's what that means. And I don't know what, the hard part is, I don't know if your relationship is there for you to even talk to her like that anymore,

but that's the truth of the matter. I know, because I mean, if you can't, you can't make her do anything. And so you really are kind of at the mercy of her. I'm like, you can't go in and you know you know take your name off the loan in secret right i mean like yeah so it is so yeah you're in it yeah you're in a tough position greg and it's kind of one of those um i'm sorry that you're gonna have to be one of the sad examples that we'll probably use this week to say when

someone calls i should come you know my girlfriend wants me to co-sign. We're going to say, talk to Greg in Biloxi. Greg would tell you don't do this because this is what happens. My family agrees. My family agrees that this is the dumbest decision I've made in my life. Oh, man. I mean, unless you can just convince her because you're a great salesman. But coming from an ex-fianceiance she's probably not going to want to listen to her to your advice i mean you broke her heart sorry greg and now you're you're i mean

yeah there's nothing you can do so i think it's one of those stupid texts um you know and i'm praying she doesn't default me too and she just pays this and and gets out of it but you but that she has been very consistent on the payment okay what is the payment uh oh gosh it's almost seven oh gosh i mean listen the most practical thing you can do to be ready for this storm is if she defaults is if she defaults and to be ready if you kind of have some money packed away on the side because if she doesn't pay it it reflects on you and when it's time, it reflects on you. And when it's time for you to buy a house or when it's time for you to do some of the things that you want to do, if you still have a credit score laying around, which you will because of this, it will make it

bad. And as we've talked about on the show, having a bad credit score is very difficult. We talk about having a zero credit score, which is wonderful, but this will keep you from having that even if you pay off all of your other debts. So if I were in your shoes, which this is the game we like to play, I would be, which by the way, we don't know much about your financial situation. Do you have debt? The truck technically and then I have about $22,000 in student loans I'm working on. I've already gotten rid of the credit card debt. Well, I'd go gung-ho on your debt. I'd work the baby steps on that. And then when I was through,

I would be mindful of keeping some money stacked up. Yeah, for your emergency fund, knowing this is something you may have to dip into. And I would tell her too, Greg, you don't want to emotionally be attached anymore, right? And this keeps you guys somewhat together in a weird state for the future. So I'm sorry.

Well, I hate that that's happening to you. All right. That does it for this hour of the show. Stick around. We'll be right back with you before you know it. From the Ramsey Network app, it's The Ramsey Show. We're here to take calls about your life, your money, and your relationships. I'm Jay Borshaw. Next to me is number one bestselling author, Rachel Cruz. She's my good buddy, too. I like hosting with her. But we're going to be the ones taking your calls this hour.

If you want to get involved, you can do that. The number is 888-825-5225. We'll get you into the mix. Merry Christmas, everybody. Let's go to Kate. She's in Charlotte, North Carolina. I'm sorry. Let's go to Morgan. She's in Charlotte, North Carolina. I'm sorry.

Let's go to Morgan. She's in Philadelphia, Pennsylvania. What's going on, Morgan? Hello. How are you? I'm good. How are you? Better than I deserve.

All right. So the dog. That's all right. Okay. Can we help? So my husband's employer hasn't been paying him. It affects about 15 to 20 managers. These are all salary people. They're saying it's a problem with their payroll vendor, and so I'm not sure how that all works.

So, just a handful of employees at his location are not being paid. He hasn't received a paycheck since September. Oh, my gosh. Holy smokes. We are coming up on six paychecks that we haven't received, totaling almost $20,000. We have gone through now our emergency fund, and I'm at a crisis point. Yeah. What are they telling you guys? Because a payroll issue, if it's not cleared up in 14 days or something, I mean, this is more than that. Do you feel like they're lying to you? I don't. I do. I don't feel like they're lying. I think. Oh, are you there? Our whole call system just lost. Looks like we lost the board. That's okay. We'll keep rolling on this because Rachel, let's figure out what we would do if we were in this

situation because I know she just gave us a very brief overview. But you know, and I know that these are systems you can call in just like anybody else. You can switch to another system. You can do it manually. You can have the accountant issue the checks. There's so many ways to make this right. And so for me, just with that brief overview, I do smell a rat. I feel like something might be going on. And the fact that she said, I feel like she said early on that it was only management positions, which makes me think that might be higher paid folks. Yeah, and it's not happening.

Yes, totally. Well, and my thing is too, you know, there's a period of understanding, okay, yeah, there's some grace and all this, but also people's livelihoods are dependent. And the fact that people have stayed for almost three months and not getting paid. Yes.

It's pretty wild to me. I mean, it is. I mean, there's a point that you're like, you owe me this money. And I have to feed my family. I'm like, what are people expected to do? Oh, 100%. And so, yeah, I mean,

I'm not going to keep working for free. I wouldn't keep working for free. And I'd love to hear Ken Coleman's take on this, because if they truly felt like it was some sort of an oversight or some sort of a true mistake that they were truly having issues fixing, which, again, I can't see where that would really be the case. You could say something like, listen, I've enjoyed my time here. I've been dedicated working here but i'd like to be paid and until you can pay me i have to go elsewhere it's like it doesn't have to be like that's it i quit you know sure no no you don't say mean about it but there is a reality that we haven't been again this is three months you guys like we're not talking about six paychecks

yeah i mean this isn't one month right and they're trying to work out whatever they are if you haven't gotten it worked out at this point then there's there's other issues happening i think i think that yeah you it shows me that you just don't have the money yeah because you would find a workaround if this company really cared about its people within three months you can find a way to put money in their bank account that's what i'm saying issue a paper check yeah and just sign it yes like yeah yeah yeah yeah so if i i. So if I mean, honestly, I'm I'm I mean, maybe through December, but first of the year, I'm looking for a new position. One hundred percent. You know, I read a stat the other day that said I believe it was forty nine point one percent. So let's go ahead and say 50 percent of Americans that if they lost just one paycheck, not for the month, but just just that one because most of us are paid bi-weekly yes

one paycheck they would be in total financial distress like they would not be able to meet their obligations and that's to say that they probably don't have an emergency fund sure and in this case thank goodness that they had the emergency fund yes absolutely that was coming out of an emergency that they couldn't control in a sense. Right. So that's what makes it an emergency. It's unexpected and it's urgent. You have to have money to put food on the table. But then also there is a point, you know, more than that, I would say that you guys are going to start to be at fault

personally and individually if you stay in a situation like this. I agree. So you can you can point fingers and, you know, talk about how terrible this is. But you guys also stayed in the situation for three months. So it would never be me, Rachel. No, I mean, seriously, I'm like, I yeah. And again, if we get her back online, we can ask her some more questions about just the history of it and everything.

But I know, I mean, yeah, it's just not either they're lying to you, either they don't have the money or they're just completely inadequate in the sense that they don't even know how to pay their people yeah and if that's the case you may not even be wanting to in the first place that's true fix this in six in three months i agree it smells fishy like if i smell fish i'm looking for i'm looking for it so i agree but this just puts into perspective and i know that this is not um the typical emergency This is not the typical hardship that we hear on this show. Right. But it does put in perspective why it's so important to manage your money well.

Right. We talk all the time about these baby steps so that whatever happens in life, you have peace in the situation, at least initially, because I'm sure when that first paycheck didn't come through, they were like, holy smokes, like rent was due or, you know, a car pay, whatever it was. But when you don't have debt, suddenly it's like, okay, my life is a lot more simplified. Yeah. And so if something were to happen where you lose a paycheck, someone gets laid off, I don't know, somebody gets injured and they're not able to work. Suddenly life becomes more simple. You've got this emergency fund to fall back on

and you can kind of get, you can fly above that storm, so to speak, and just kind of ride it out without it becoming this, I don't know, complete catastrophe in your life. Yes, yep. Okay, there's a great question from TikTok. We don't take many TikTok questions.

We don't. But I think we should start. All right, I love this. From CJ. Go ahead. Yeah, and he asks, how can you focus on one debt at a time when the payments are all due

around the same time i love that yeah so cj yeah when you're paying off your debt it's not necessarily about you know when the bill is actually due for the minimum payment it's about focusing on the smallest debt to get more of it paid off than the minimum payment right so you will have a schedule of when your debts have to be paid throughout the month. So they may be spread out, or in this case, they're all around the same time. So you may be paying all of it on the 15th, and it's your car loan, it's your credit card,

all of it together on the 15th. But what you're really focusing on, we say focus on one debt at a time, is you're gonna focus on that smallest debt. That's right. Find margin in your budget by taking an extra job, cutting expenses, selling stuff, doing what you have to do to throw that extra money at that smallest debt. So the focus is not one debt at a time, meaning you're paying the minimum

payments one debt at a time. You're staying current on everything, but you're focused on that smallest debt first. That's right. That's a really good way to put it because I know I made the mistake of kind of what he's saying. When Sam and I were paying off debt, I mentioned this earlier, but Sam and I paid off $460,000. And so the debt snowball that we talk about is really important. And therefore, the longest I remember thinking, oh, I don't have to make minimum payments because I was so eager to put extra money on the smallest debt. But when you don't do that, things get behind and 1-800-PAY-ME starts calling you. And before you know it, it's a worse mess because you're trying to do the right thing

with the wrong method. Yes, that's a great way of putting it. And so it's so important to do the baby steps and do the debt snowball the correct way, listing them smallest to largest, making minimum payments on everything, but putting any and all extra money on the smallest debt. Yes. That's how this works. So good.

And guys, and we and Jade and I both are on all the socials. So check us out on TikTok and Instagram and Facebook because I'm getting more people saying I follow you on TikTok. I'm like, wow, Dave hates the TikTok. But here we are. There's a time in your life and the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus rent means instability in your budget because it always goes up, never down. So when you're ready to buy,

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Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. You're listening to The Ramsey Show. Thanks for hanging out with us. I'm Jade Warshaw. Next to me is Rachel Cruz. We are your hosts for the day, taking your calls. And we want to remind you that the best way

to make the most of your money is by creating and sticking to a monthly budget. That is the foundation. And EveryDollar makes it so simple to plan your spending, track your expenses, and save for what matters most to you. You can do it all in an easy to use app that fits into your busy lifestyle and in your pocket because it's on your phone. You can keep a pulse on your spending and make progress on your money goals with EveryDollar So if you haven't already, download Every Dollar for Free in the App Store or Google Play, or you could click the link in the description if you're listening on YouTube or podcast. All right, let's go to the phone lines. We've got Katie. She's in Charlotte, North Carolina.

What's going on, Katie? Hi, thanks for having me on the show. You bet. How can we help? So me and my husband are coming out of credit card debt due to our business. We closed our business last year, and we were living off our credit card last year, and we just got it paid off. Wow, congratulations. Thank you. It's a big step in.

It is. The baby step part. Yeah, I'm obsessed with the Ramsey show now, and I'm trying to revamp our budget and our finances. So we just combined our bank accounts again, and I'm trying to figure out a budget of not falling into the paycheck to paycheck and falling into credit card debt again and try to figure out what to spend on cash what to put towards a credit card minimally we have child care now for both our girls, we plan on using cash and debit. And I just am trying to figure out a budget. Okay.

Have you downloaded every dollar yet? I have, and I loaded all of our expenses, and I'm still trying to navigate it. Be more specific. Is it that you have a lot of money left over and you're not sure what to do with it, or are you in the red? Tell us more more so i'm in the green right now i'm putting every all of our expenses in and our budget and our income and the issue is with my husband's income it fluctuates. It's not a set salary every week. Okay. So that's just an irregular income. A lot of folks are on an irregular income. I am. People that work on commission, that sort of thing. And so the way to do that, you're still putting everything in your every dollar budget, but as you're spending the money, you're doing it by

priority. And so if you don't have the premium version, I would really recommend that for you because you can plan your paychecks. It's a feature. It's over on the left-hand side. I think it looks like a little bullseye. But anyway, you can do the paycheck planning. And basically what you're doing with that is you're planning when you get to spend your money. So you've already gone through and said, I'm going to spend $600 on groceries. I'm going to spend X amount on rent. You've already done that. But now with paycheck planning, you're going to say, but when do I spend it? Because I have to know because if he gets paid at irregular times and if he gets paid irregular months, you want to know that the money is there. And so for you, paycheck planning is going to be a really big feature for you because at the end of the day, for anybody, even if you're not on

every dollar yet, if you're just doing your budget, four walls first, and then all the other priorities after that. So for you, it's going to be rent first. You need to have your transportation, your utilities, and your food. And then for you, daycare is probably going to be number five on that list. And then as the month goes on, you pay things based on priority and so that's kind of just a crash course yeah and what i would put then katie and his income because with every dollar there's multiple lines of like different incomes that come in so for his i would just i always shoot for lower because i'm on commission too so i usually shoot lower than what i think and plan all that out and then if he gets paid the third week and there's

more in that paycheck, then I would plug that into every dollar. I mean, I change our stuff. Like when I get paid on the 15th, I go in and change the income to exactly what I'm getting paid. So I know, and I would go in and do that. And so if there's more than you were expecting, then you're going to get more in the green at the top, more dollars there. But then the goal there is to say, okay, there's some extra money. So now I know that I'm going to be able to spend $200 more. And where am I going to put that? Well, I'm going to go down and up maybe the clothing category.

I mean, I don't know. You could pick, right? Okay, I'm going to up that $200. But you kind of plan as you go. And that is the other thing, Katie About the budget to and for everyone listening That it is you know It is a moving target in A sense that you get to change it Throughout the month and we change ours

I'd say pretty consistently i mean like We look and say okay yeah we're like Eating you know like this month for instance We're eating out more than we did last month So i ended up lowering our grocery Budget a little bit because we have so much going on At night uh we have more babysitters that we're doing this month. So I upped that category and lowered others.

So, yeah, you can go through throughout the month and change it. And you guys may be doing that more as you know what he's getting paid per month. But what Jade was saying is so right is make sure that the top priority is getting paid regardless of what he's making, that you guys can make sure that you're paying, you for those especially those four walls food shelter utilities and transportation and i love what you said rachel about shooting low and really basic basing your budget on the lowest possible amount because then when it's higher it feels like better yes it's great it's like you got a little raise there so i like you did have like a big high month we call them the peaks and valleys you can keep some money in, you know, you could

do this in your emergency fund, you could do this in your checking account, but keep some buffer on those really high months. Because if it is a low month, you can kind of pull that money forward and say, okay, we're going to use this to make up the gap because it's a lower month. So it does take some finagling, but it's possible. And it'll take about 90 days, Katie, to get it working. So keep at it. And by February, March, you'll really, really be in the groove of it. Love it. That's a great call. A lot of people have that question.

All right, let's go to Michelle. She's in Honolulu, Hawaii. Ooh, I wish I was where you are right now. What's going on, Michelle? Hi, thanks for taking my call. My question is, what is the best type of account to manage our 8-year-old son's savings if he wants to use the funds to buy a car when he turns 16? He earns commissions and divides his money into save, give, and spend categories.

But we have his save funds specifically set aside for this school. Oh, that's great. Good for him. I mean, you could do a high-yield savings. I mean, you know, under your account. Do you guys have a high-yield savings. I mean, you know, under your account, do you guys have a high-yield savings for you, Michelle, just you and your husband? Yes, we do. But his is specifically in just a regular savings of a 0.02% APY. Yep. Yeah. So I mean, we use Ally Bank for our high-yield yield savings So we have two

Funds like when I open up our profile You know so we have one that's just like Strictly our emergency fund we don't touch And then another that we have just for savings So if we do vacation or something We're able to pull out of that and we fund that Usually once a month too So I would just add

Another line item for him and call it his And just put the money in but But I wouldn't do anything. I wouldn't do like an investment or anything long term, but a great high yield savings. I think it would be perfect for him. I think so, too. And I know there are products out there that are designed for like teaching kids. Like there's some banks. I have not used them, but I know they're out there. So if you looked deeper into it, if you wanted something that he could see or that had like a fun app or something with it, I know they're out there. So if you looked deeper into it, if you wanted something that he could see or that had like a fun app or something with it, I know they're out there. Yes, for sure. Yep. Very good question. Thanks for the call. Hopefully that helped you out.

Do you do, is that what you do? Like if you're kids, like it's the holiday season and I know already we've gotten some money coming for the kids. What do you do? Do you put it in a separate account? Do you just keep it in a cash envelope? What do you do? Jess, we're talking about this. We need to do i'll be honest jade we're not we're not very disciplined with the kids when that stuff happens because i would say for the most part they don't get money they're getting toys and we started once i just started talking about it especially with our nine-year-old amelia there's a point that like she wants books i think the toy phase is actually kind of starting to fade out really okay and then you just end up with all this crap anyways of stuff so i'm like i don't want to like not do christmas for

them until the grandparents money but there is a point with birthdays and all that that she's getting to the age that i think we could start asking and say hey i think she'd rather have money and maybe she'd take half of that and she can spend some of that but then we need to start formally saving because our savings has still been a little bit hodgepodge with the kids with their money. It's kind of like oh yeah they just kind of save it up and then we'll go to Target and they'll buy something. But she I don't know

with our nine year old I'm starting to think okay she's getting to the age that we could start upping the ante and actually doing things a little bit more formal. What about you guys? Quick hot take Rachel. How do you feel when for Christmas people say just donate to their 529? No, don't do that. Do you like it?

I hate it. I hate it. George Camel would probably love it. Sorry, George. Sorry, George. Get a toy for Christmas. It's Christmas. This is The Ramsey Show.

You're listening to The Ramsey show on the Ramsey network we're happy to be with you I'm Jade Warshott next to me is Rachel Cruz we are taking your calls about your life your money and truly your relationships because we know Rachel that money touches every single area of our lives honestly whether we want it to or want to believe that it does or not it truly does and so if you have a question call in we will do our best to get you on the board but I will say Rachel one of the things I found when helping people with their money and me helping me with my money is there's a lot of jargon out there there's a lot of lingo there's a lot of vocabulary that sometimes we feel I don't know just a little silly or maybe even embarrassed to admit that we don't know what it is. Totally. You know? Yes. There's parts of money, you guys, that are so, it can feel intimidating and overwhelming. And like you said, it's like

this whole other world of terms and language and all of that. And you hear it, but you're like, okay, do I fully understand and grasp it? That's right. You can feel like it's for smart people only, but that's not the case. You can understand it too. And so I've noticed that if I want to ask a question and I don't want people to know that it's from me, I'll say that I'm asking for a friend, right? And so I love this segment here, asking for a friend, Jade, what are tax withholdings and how do I adjust them, right? So tax withholding, you probably have noticed on your check that withholdings come out, including federal tax withholding, which is basically when your employer takes out an amount of money out of each paycheck and they're sending it to the government for you. They're prepaying your taxes, basically. And that number

is set on what you tell them they can take out. OK, so the amount that they're taking out depends on what you earn and it depends on what you put on your W-4, okay? So after filing, depending on what you put on your W-4, they're either going to give you a refund, they're either going to have you break even and you owe nothing, or in some cases you end up owing money, okay? But the goal here is we want you to break even because that means you've done it right. And if you are getting a big tax refund every year, just remember that that means you're withholding too much and we want you to have that money back in your pocket. All right. So how does tax withholding work? Like we said, if you work, you got to pay the withholding tax, right, Rachel?

Yes, that's right. And in certain states, you might even have to pay a separate income tax as well. But when you start a new job, you fill out that W-4 form. Or maybe if you get married, you fill out a new W-4 form. And on that, that's where you tell your employer, here's how much tax I want you to take out. So that's how that works. So if you're sitting here today and you go, well, Rachel, I got a tax refund last year and it was, I don't know, $1,200. What would you tell that person? Yes. Then I would go on a gesture withholdings what 200 a month yeah so that you know okay yeah you you had 200 more that was being taken out of your paycheck and sitting in washington that needed to

be that they needed to be so then they're refunding you that so instead of that all happening put 200 dollars back in your paycheck and you can use that to help pay off debt and save up an emergency fund and all of it love that and i mean the is, we don't want to lend the government money. Yes. Well, in a tax refund, it is it's a sneaky way to feel like you got free money too. Because this check comes right in 1200 bucks or whatever. And you're like, well, that's nice. Thank you. No, no, no, you should have been having that all year. It's like it's this weird emotional whiplash that it is your money. So go and change it. But if you need to figure out even how much to withhold, you can even look at last year's taxes. That's right. And say, okay, here's how much I paid in

taxes divided by 12. But that's a, that's a pretty simple way. Yep. You could do a mock tax return and a lot of online tax softwares allow you to do this. But as we talked about earlier, Jade, you're like, it's a pain in the butt. It's a pain in the butt. I don't like, I mean, there's a reason we get help, right? So I don't want to do it myself. But yeah, just understand that if things aren't looking the way you want every year when you get your tax refund, or maybe you're breaking even if you are really good. But if you're not, you have the ability to change that. You can change that W-4 form. You know, you can fill out a revised one and you can download them from the IRS website. Or listen, I would just probably head over to my HR department and say, hey, I've been

noticing this. Help me out. Right. That's how that works. Yes. All right. If you have any questions, contact a Ramsey trusted tax pro. You could do that at ramseysolutions.com slash taxes.

And I'll say this too real quick, Jade. For those of you paying off debt, there's like three big buckets that you can instantly get some cash back in your paycheck to get this debt snowball going faster. This is one of them, adjusting your withholdings if you're getting a big tax return.

One is pausing retirement. So if you're funding retirement and trying to get out of debt, pause that for a season. That'll be money back in your paycheck. And then also shopping insurances. Those are like three big buckets to find money that you need quickly in your paycheck that can make some really big uh big changes for you so um so this yeah the whole withholding thing is very

real especially if you're getting a big tax refund make sure to check that absolutely all right rachel good stuff let's go to the phone lines we've've got Mark. He's in Albany, New York. You were just there. What's up, Mark? Thank you for taking my call. I have a, hopefully you can help me take a friendly debate between my wife and I and give us some clarity. I'll give you some background. I love these. So we are Ramsey disciples for many, many years, my wife and I. So we have paid off. We're both 50 years old. We've paid off our home. We pay cash for cars. We don't owe anybody any debt.

Wow, great job. We hope to retire. You know, if we retire at 60, the projection is my 401k will be about $1.6 million. And she's on a pension system, so her income will be about $150,000. So our retirement is looking really good and we've set ourselves up for success. We've got a couple of kids. The college really should be taken care of. But here is my question. We've been talking about this. Real quick, real quick, real quick, real quick. Can I just tell you, that is so good. Like you guys nailed it. Thank you. I mean, I listened to can I just tell you, that is so good. Like, you guys nailed it.

Thank you. I mean, I listen to that. I'm like, that's amazing. Thank you. So that's the good part. And there's another good part, but we needed some guidance from you. So we've been debating this at the dinner table for months, and I finally said, I'm just going to call those people that I listen to all the time on the radio. So about six months ago, uh, my uncle who is very close to us passed away and left us, uh, about $1.3 million. The discussion we're having is how do we handle that? Me, I'll give

you the two sides. Me, I say, uh, Hey, we've done great with our mutual funds. My 401k is great. I know who I work with. We can take that money, put it in there, and it'll double in seven years. Or, you know, do that. But then my wife on the other side of it grew up, you know, very poor, and she's much more conservative than I am. And she's like, listen, that's not, I don't want to do that. I'm okay with 50% being invested in mutual funds, but then, you know, maybe we do some bonds and maybe we do a money market account. So basically what I'm telling you is this is how we're currently living. What is your opinion on what we should do with the money that was left to us?

I mean, if you guys are, let me say it like this, if you're dead set on investing the money in some form or fashion, like you said, whether it's just normal mutual funds, whether you did bond funds, I would work with a smart investor pro to decide the best way to invest that as you get older and what makes the most sense. But since you called us, like for me, I'm looking at this money, I'm going, you guys have done so well. This is really gravy on what you guys have already accomplished. And it's a lot of gravy, but it's nice. And I'm looking at this.

I'm like, OK, I can give, save or spend. Right. Those are the three things you can do with money. And I would enact that here. I would give some of it. I would save some of it and I would spend it. And that what percentage of that is up to you. But I think this is a great opportunity to enjoy some of this money as well. Okay. All right. Yeah. And I don't know,

Mark, I mean, you guys have set yourself up for peace, which is always what we're shooting for, right? When we talk about financial peace to, to have some peace in your life. And you're not going to go, I mean, you really can't make a wrong decision here. Let's just be honest, right? I mean, like you guys are going to be fine however you do it. So you're looking at the most efficient routes of like, hey, let's put this money and invest this.

It'll double in seven years. We're going to make more. Like, why would we not? And she doesn't have peace about that. She's like, I don't feel good about that. So there would be a part of me that I think if I were in your shoes I would probably just invest it I'm probably more on your side mark just from a I don't feel like it's risky I think you guys will be totally fine but again

we're fighting for peace here and because this isn't a black and white issue because this isn't something that's going to put you into turmoil or like, you know, you can't mess this up. No. So part of me would say yield to your wife some just to create peace in the household. And if she wants to invest 50% and then you guys take 50% and put it in a high yield savings and say, okay, we'll just maybe live off of the 5% we're getting off that. Like, you know, and see it and it be liquid, then that's okay too. So I don't want to play like the,

oh, everyone wins game here. But no one's really wrong. Yeah. I would be on your side, Mark, if I personally, but also again, fighting for peace in the household is so key. And if that gives her a little bit more peace, I don't know. I think you'd be fine if you did that. I agree. Thanks for the call. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative

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So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. This is The Ramsey Show. Hey, it's the most wonderful time of the year. And one of the ways to stay on track with your money is to listen to shows like this that'll help you stay motivated.

And the Ramsey Network app is the only place you can go to get full episodes of The Ramsey Show. So download it for free using the link in the show notes or by searching Ramsey Network app in the app store. It's really, really a great tool. You can even search specific topics. So if you know, like, I wanna know more about real estate or I wanna know more about the debt snowball, or I want to know more about

paying off a car and buying a car in cash, you can search those topics and show clips will pop up for you. Or if you just want to watch the show in real time, you can do that. If you're on the radio, just know that after this hour, the only place that you're going to be able to listen to the third hour is on that Ramsey Network app. Okay. All right, Rachel, let's go to the phone lines. We got Adam in Wichita, Kansas. What's up, Adam? Hey, ladies, how are you doing today? We're doing good. That's good. So I had a question about saving for kids college. We adopted three kids a couple years back and due to the nature of where they were adopted from, they get full university coverage. They have a full ride to any state institution that they want to go to.

Oh, wow. Yes, and we think that's awesome. So we've told them that they're required to go even though they don't want to go to school now. My question is, my wife and I are basically on baby step zero. We're starting to save for our emergency fund. At what point do we worry about saving for college, knowing they have a full ride? Because it doesn't do room and board. It does books and tuition.

Oh, it does not do room and board. Is that what you said? Correct. Okay. Yeah, I would. How old are the kids? 13, 12, and board. Is that what you said? Correct. Okay. Yeah. I would, uh, how old are the kids? Uh, 13, 12 and 10. Okay, great. And how much debt do you guys have? Uh, counting student loans102,000.

Okay. Rough. Okay. So you guys getting out of debt, are you thinking what, two and a half years, three years? I'm thinking, well, I'm a teacher, so I'm applying to start working after school because we just took a big look at our debt and said, okay, that can't work. Yeah. So I'm thinking about two years. Okay, that's great.

Two and a half, two years to get everything Down as close as we can that's perfect And that's average you're right on par yeah and so The oldest at that point will be 15 And then you guys will save up your Emergency funds which may take in or No another year or so So that'll be about 16 so then Then you'll you'll have about two years

Then at that point to Help save for room and board. So I would wait until then. I would first prioritize the emergency funds, paying off debt, and then the fully funded emergency funds, and then look at room and board. And that's, I mean, Adam, but what an incredible thing, because while that still would be some money to save, even if you guys only had half of that, you know, that's right. You know, then that 18 year old

at the time could get a part-time job right to fill in the gaps for what they needed or live somewhere else so um i would definitely not worry and i would give you that same plan even if their college was not paid for and it would be just a totally different discussion on what they could choose and how they are going to have to go because it would look so different so um what a gift that yeah you guys will have it. I mean, they'll have their college paid for. That's huge. I love that.

Oh, what an amazing opportunity. And, you know, we say all the time, it's not, you know, Baby Step 5 is the baby step where you are putting aside for kids college, whether that's trade school or state university, right? But it's not required that you pay the whole amount, right? That's right. The only thing that's really required is that you're having that open conversation and you're letting your kids know the expectation so that you can prepare properly so that there's no debt

involved. Yeah. And two, Adam, I mean, I would, you know, maybe not at 13 right now, but as they start getting older and, you know, once you start entering high school, college, depending on where you are, you know, people start talking about it. And so pull some numbers and you know once You start entering high school college Depending on where you are you know people start talking about It yeah and so pull some numbers You know when it gets to that point to say Okay here because it's going to differ between College and you know different universities

Throughout Kansas is where you guys are So I would pull different numbers from Four different you know schools in the in the area To say okay this is how much room And board is here here and here and here Realistically we probably will be able to cover these three schools. This one's probably out of our league unless you get a part-time job, right? You start actually having these conversations and looking at actual numbers with them as well.

Very, very, very good. Okay, let's go take another call. We've got Matt. He's in Fort Myers, Florida. What's going on, Matt? Hey, how are you guys doing? Thanks for taking my call. You bet.

Yeah. Hey, uh, so there's a lot of backstory, but to get to cut to the chase, um, we took out a personal loan, uh, to fix up a house that was damaged from hurricane Ian that came through. Um, and, uh, we didn't have, we own the house and property outright. Uh, so we didn't have any mortgage on it. Now, we thought that Hurricane Ian would be a once-in-a-sort-of-lifetime storm, and we would never get any flooding again. And, you know, as the Lord would have it, Hurricane Helene came, and then Hurricane Milton came. And those flooded our home as well. And so my question is, the personal loan that we took, the payment for that is very affordable for us. But I could go pay it off. And normally, I would just go pay it off right now. But at this point, I'm wondering and considering just buying a new home altogether that's not anywhere in a flood zone, you know,

and whatever else. And I'm thinking that I should, wondering, should I just take, I don't want to cut into that down payment on a new house if that's the route we want to go. So you're saying you would sell this house, take that money, pay off the debt and buy a new house? Yeah, there's some extenuating factors. We're not going to sell the house and property because it's kind of a family piece and it has to stay in the family for... But if you get hit again with the storm, how does that solve the problem? Because if you're hit again with the storm how does that solve the problem because if you're hit again with the storm you still have to shell out the money to to cover the damage of based on what you're saying no no so the house that we're in currently i don't i still have to pay the money i still have to pay the loan anyway right um so but it's very affordable. But I'm worried about putting more money into the house

to fix it up even further. But don't you have to fix it up for someone to live there eventually? You're not going to have a house vacant. No, not necessarily. We may. We may. If the storm pattern continues, I mean, we've flooded, just to give you some context, we've flooded three times in a row.

I think we get it. I believe you. The point is, let's say another storm comes next October or next September, right? continues i mean we've flooded just to give you some context i think we get it but the point the point is let's say another storm comes next october or next september right you don't live in the house anymore it's been sitting vacant and it has water damage you're saying you would just leave it to rot not to rot i mean but we would we would i wouldn't invest more money. I'm debating whether I want to invest more money into a home that is continually flooding. Why are you? Yeah. What's the family dynamic?

Why can't you just sell it? Because my in-laws have essentially given the inheritance to their daughter, part of their inheritance to their daughter. Right, up front. Which is the house. Which is the house and property so that we can live there. So why don't you sell it and you take the equity of it, and that's her inheritance. This is her gift, right? Because part of the agreement to the early gifting was that we wouldn't sell it why

why do they care and since they're alive can't you go to them and say hey thank you for the gift is there a way we can rework this because where this house is it's costing us a lot of money it's it's not feeling like a blessing it's feeling like a burden they're still here with you so can you have that conversation that's a conversation that would would you know could be had um but hasn't been had yet okay um so i would do that matt so this is where the entanglement of parents and gifts and early inheritances and all of it this is where it starts to play because what happens matt is you guys as a family unit can't make a decision without her parents involved and so like that's that. And so that string needs to be cut.

They either need to give you the house as the early inheritance, and you guys then as a family, as adults, get to decide what you do with that, or we're not playing the game anymore. Yeah, I think maybe there's some confusion. Whether we still have a loan on, you're saying give it to us entirely and put it so that we can sell it if we want. Whatever you decide between you and your parents, the point is you've got to get to the point to where if you would like to walk away from this property, you can.

You shouldn't have to be clung to it because of something they said. Right now it's costing you too much money. You and your wife have decided we don't want to be clung to it because of something they said right now it's costing you too much money you and your wife have decided we don't want to live there anymore and so they need to let you out of it and if you want to sell it and keep the proceeds so be it but or if they say no we're taking the property back and we're going to keep it then so be it but either way you guys need to have final say and control over your life and your money. From the Ramsey Network app, you're listening to The Ramsey Show.

We're happy to be here with you. I'm Jade Warshott. Next to me is my good buddy, Rachel Cruz. For the next hour, we're going to be taking calls about your life and your money. And though you're watching in the Ramsey Network app, it is still a free show,

a live show and a free show. So if you want to call in, you can. The number is 888-825-5225. We'll still get you in where you fit in. All right, let's go straight to the phone lines to get started. We've got Ariel in Manchester, New Hampshire. What's going on, Ariel? Hi, guys. I feel like I'm at a Taylor Swift concert right now, honestly. You guys are like, my Taylor Swift. Is Rachel Taylor? Stop that. Stop. Don't put us up with T-Swift.

I'll take it, though. Basically, I'm in recovery. Good for you. It's been a rough journey. Um, I never like was raised to know anything about money, um, anything about budgeting, anything about doing anything like for the future basically. And, um, I'm just trying to look for like some type of motivation here. Like I listen to you guys every single day and I'm like trying so hard to just

do the next right thing and like try to be like basically break generational purses here. Like, cause it's just constant in my life and it, I feel like I just can't break it. And I'm like trying so hard. I like work at a, I I'm assistant manager at a gym and I make 30,000 a year and I feel like I'm just like not getting anywhere and it's it's just looking hard yeah for sure well let me say this Ariel we've been doing this show for a long time and we talk to people in all different types of backgrounds and life situations. And I'm not kidding when I say people that have made major life turnarounds and recovery,

leaving abusive relationships, like people that have made massive changes in their lives, we see tend to succeed really well when it comes to their money, because it's already in you. Like the idea of change and doing something really hard and uncomfortable is like that foundation has been laid in a much bigger way than even just money. I mean, honestly, people that make steps like you've made and created a new path forward for yourself is absolutely remarkable.

And we really do. We find people like you, that you may not feel like it because you may not feel like you're winning from like the tactical money side, which we'll talk through that and help you. But that ability to be so proactive and to make changes in something that's really difficult

has already been proven with you. So I'm excited. I'm so thankful that you called because yeah, I think you can do great. And so I think that the income is a big piece and I think it can feel defeating if you don't feel like that you're in an income track or a career track where you see a lot of growth. And so that's kind of what you're feeling right now. Right. Yeah, I mean, so pretty much. I mean, I hadn't been able to keep it like I was not able to hold a job forever and then um I got the job that I have now and I started like as an

overnight crew member and then like I just like I don't know what happened but just one day I just like started loving working there and like working really hard and so then I like got promoted to shift lead and then assistant manager so like I'm on the roll to get a gym, like a management position, like full management. And what would that pay? What's the bump? Almost double. Oh, great. Ariel, that's great.

Well, that is a great track. That's not defeating. That's very encouraging. You see a pretty like a pretty realistic path there. What's the timeline? Do you realistically, if you had to guess, what would be the timeline for something like that? So it, I mean, I went from shift lead to assistant manager in like two months. It's really, so the gym I work for is a huge, huge corporation. So they're

opening new ones all over the place. So it's basically just either my manager now, either she leaves and then I would, you know, go into her position or a new gym opens and then they would. That's great. Amazing. Yeah. So the timeline is kind of up in the air a little bit. Okay, well, that's a really encouraging piece, that there's a very realistic path for you forward to make some more income doing this, which I love. What's your financial state? What do you have in savings? What do you have in debt? Oh, gosh. I honestly have nothing in savings right now.

Okay, that's okay. With Christmas and everything. But my debt, I have my car, which is 20, I think I owe $23,000 left on it. And then, which I've been listening to you guys, and I'm like, oh, I feel like I'm thinking about selling it. Yes, yep. Because it's like a big payment. What's it worth?

Like $500. Oh, I haven't Kelly Blue Booked it yet, because I've been going back and forth about it. That's your homework when you get off the call, is to find out what it's worth. And honestly, making even if you're upside down i would do it yeah the 23 000 car versus a 30 000 salary mathematically is not great not good at all so yeah yes i would i would yep sell that car uh what else what other debt do you have um so i have a few things um in collections and I've been, so I think altogether it's $27,000 I have. Altogether, including the car?

Yeah. Okay, so $4,000 in collections. Is that credit cards? Nope. There's like a Comcast. There is a student loan. It's, I think, a private one. Okay. Which is $1,200. I think that one's $1,200.

Okay. Perfect. Cool. So the stuff in collections... The stuff in collections, see if you can settle it for, you know, pennies on the dollar, dimes on the dollar. And what you'll have to do is kind of save up a lump sum so you can offer it to them. Make sure you get it in writing. also sorry jade to contact why refi because they actually help with

defaulted private student loans to get you on a different payment process boom they're one of our sponsors on the ramsey show actually so you would be like a perfect candidate for them so so it's why refi.com slash ramsey or i would i would look on that site and contact them for the student loan portion of it and see if they can help you get on a good payment plan. That's great. That's great. Yeah. And then, yeah, once you get those collections out of the way, because I tackle that first. But with the car, to Rachel's point, it's so expensive. And if you have to take the hit being upside down, I would do that because let's say you're three or four thousand dollars upside down. You have to take a loan from the bank. That's fine. I'd rather you pay off $4,000 and $23,000, right? And then whatever extra that you can pull out to get something in cash, and I'm talking something really cheap, like $5,000 will get you. And it's not for the long haul. It's just

temporary so you can get your feet back under you. But again, that's a $9,000 loan versus a $23,000 loan. I mean, that's hours saved working and paying off debt right there. That one decision will save you so much time and money. And then after that, consider yourself on track. At that point, you're like, I'm driving in the right direction. I've gotten rid of all this baggage and I can just go forward increasing my income and using my income to do wise things from this point forward. Are you single, Ariel?

No, yes and no, no, but we've been together for nine years. We're together. We're not legally married, but we changed my last name. We kind of, you know, did a little. Thanks for saying that. We want to get married. Okay, that's great. Well, I was, okay. Yeah, that's great.

That's great. Well, I think that first step, the very first thing, you know, as you're working through December and into January is getting a $1,000 emergency fund and then start tackling the debt like we talked about. But if you hold on the line, Kelly will pick up and we're going to give you every dollar premium, our budgeting app, because that's going to help you month to month with your expenses and to know where to have margin. And we'll throw in Financial Peace University as well. So make sure to check those out. But we're so proud of you, Arielle. We're so glad that you called.

You're listening to The Ramsey Show. Thanks for hanging out with us. I'm Jade Warshaw. Next to me is my bud, Rachel Cruz. We're taking your calls all hour long on your life, your relationships, your career, your money. Money touches all of it. So if that's you, give us a call. 888-825-5225. If you don't

know, well, you guys know because you're watching on the Ramsey Network app. So thanks for being here. But you have the opportunity to submit questions to us through the app, which is really, really cool. And so today's Ramsey Network app question is from Spencer. Rachel, he says, I'm 25 years old and engaged to get married next fall. My parents gifted me with a mutual fund worth about $20,000 about five years ago. My fiance and I have one car loan in both of our names that has $15,000 left. We plan to pay that off within the next year before buying a house. We have cash flowed the wedding so far and we are wanting to save for a down payment. Should we cash out the mutual funds to pay off the car or keep that for part of the down payment?

That's a good question. That is a good question. Pay it off, Spencer. Cash it out and pay it off. Yeah, if it's non-retirement, we say to liquidate everything. Like if you have stuff in high-yield savings accounts or bonds or mutual funds and non-retirement, you cash out. You'll pay capital gains, but you will not pay the retirement fee.

The hit, you know, if you pull money out of your 401k or Roth IRA, you're going to pay an extra fee before 59 and a half. So we don't want you to do that. But everything else, yeah, the quickest way to get out and not have that payment month to month and pay it off will allow you then to save up a down payment faster. Yeah. Very good question. Love that. All right. Yeah. So if you ever want to submit a question, you can do so in the app. That'll be fun. All right. Let's go to Joseph. He's in Portland, Oregon. What's going on, Joseph? How can we help today? Hi there. I am just, first first of all want to say thank you for

taking the call I appreciate it you guys do awesome work you bet I thank Kelly for that she's our call screener perfect um so I'm in an interesting situation I am 23 years old I am currently living at home I found myself into a construction management job, which I absolutely love. And they gave me a truck and a gas card and great benefits and a cell phone with a cell phone plan. Wow, great. All is looking good. But I am currently $9,500 in credit card debt. It used to be a lot more,

but we are paying it down 2K each month. And so that is coming along well. Who is we? Sorry, Joseph, you said we are paying debt. We as in me. Oh, okay. Okay, good. I was just curious.

Is that the only debt, the $9,500? Yep. Okay. Good for you. I'm just curious. I'm not trying to take you to task, but where did come from I'm like you're living at home you got a job I know yeah it was when I was unemployed for a little bit while a little bit ago and I like to snowboard so I see say less okay so you bought the snowboard okay Okay. So you've got this great construction job. What are you earning now? And what's your big question?

$50,000. And my big question is, I still got to take my little brother to school. I live at home. I have home responsibilities. It's time for me to move out here soon. I'm 23. Agree. When should I do that? How should I do that? How do I go about that? Because I'm looking at probably April or May before I'm debt free. I have about $1,800 in savings. Oh, okay. What's my best approach? Do I rent? Do I just stay home longer and deal with it and save up for a house? What does that look like? Yeah, I would definitely recommend you renting.

I think getting out of your parents' home, I think, is a great first step. I would not rush in to buy anything or wait to save up to buy. I would go ahead and just make that step to move out. Because what happens to Joseph, and you're probably feeling it now, it's like, okay, you have a real adult job you know you're making a real adult income and you're starting to feel this like itch of like okay I can like do this on my own and there's something about stepping out completely on your own even though quote-unquote you won't be saving that money because you'll be paying rent in the long term like those dividends of you just growing up

is like it is worth it it is worth going out on your own and so um you could make it you know a goal i mean there's no rush in it and so you know you know you could say yeah you're on a pretty strict plan and it sounds like pretty diligent and to give your parents the heads up because obviously you're helping with your brother but to say hey mom and dad you know by april of next year probably may one i'm out like i like giving them you know that heads up i think is great and i would start looking and pricing out some apartments um but yeah i would i would make it a goal to to pay off this debt and then and then i would move out and i'm saying that because you're going to pay off this

debt in a short amount of time people out there that have you know fifty thousand dollars of debt or whatever it may be you may want to move out sooner just to get out on your own too. I don't know. But, but since it's like right there, that finish line. I mean, the timeline that Rachel said for you giving your parents and that you created, that's, that's for you too. And that's for anybody if you're living at home, the thing with living at home is it's got to have a clear start and end

date. Otherwise it can perpetuateuate and the goalpost keeps moving. Well, after I get out of debt. Well, after I save a down payment. Well, after I, right? Because it is cheaper to live at home. So I am 100% with you, Rachel. I would do this, you know, I think May and April is fine. But at the same time, I don't think the $9,500 stops you if you wanted to go sooner from doing that. So good question. I mean, just be ready. I would say in the meantime,

you're going to have to be ready for rent, right? So you're going to need to save up first and last month's rent. You're going to be able to save up whatever it's going to take for you to move and get your little, I don't know, U-Haul truck to pack up your room. Maybe it's just the kind that you hitch to the back of a car, right? So there are going to be some small expenses that go into that. You're going to need to get some basic furniture in there, possibly. I don't know what you have. But those things I want to just make sure you plan for, save up, budget for, pay for in cash. What's the expectation for you at home, Joseph?

I'm just curious. I know you said helping take your brother to school. But is your parents, like, what will that conversation be like? It'll be great. I have an older brother. He's just moving out now as well, and they'll understand that's just fine, but there is a certain level of being at home and contributing and helping out that I think definitely, because I also work remote, I work from home. And so I'm a little bit flexible and I feel like that a little bit gets taken advantage of. Yeah, sure. Totally. Yeah. So that is something that is definitely, I think, not helping me to

move forward and succeed. And it does hinder my progress with work to an extent. Okay. Yeah. This is going to be better for you overall. The parents aren't stopping you. And I'll reiterate, Jade said earlier, but it is true. If you wanted to go sooner, Joseph, you could. This isn't stopping you. But I know for some people, they like to have a money goal in mind. And since it's a short timeframe for a big money goal, like being debt-free, that's where a lot of people would lean. But if you're feeling the itch to get out earlier, you, by all means. And you did mention the idea of, should you rent or should you buy? Like Rachel and I definitely think that you should rent, but now also is the time to start thinking about what it would take

to buy, right? Because you don't want to rent forever. So if I were you, I would already start looking at ramseysolutions.com slash real estate just so you can get an idea. What would that look like for me? What do I need to have in place? What do I need to have saved? And that's a good place to start because the truth is that's a journey and you're really just taking the first step in that journey. So that's really good for you. Rachel, this is I feel like the the young adult living at home and I say adult because I think like after you've graduated from college, this is where this plays in.

Like the young adult living at home, it can be kind of controversial at times. And we tend to push people out of that situation. And it does have a stigma on it. And I do feel like it has a shelf life on it. Right. It's like maybe, you know, yeah, I get it. You're saving money. You want to pay off your student loans.

But there does like come a point where it's like,'re saving money you want to pay off your student loans um but there does like come a point where it's like all right you you gotta go yeah there's a tipping point and I think again over time it does more harm to you when you just you know have this level of like you're just being taken care of on the small things in life it's really not fully stepping out and being completely independent and like and there's something about that that you're like oh I'm in charge of all of this like it just grows you up I mean it just does and so um and I understand housing it's expensive it's it's a tough it is tough it is so tough out there yeah but having a if you are at home a clear move out date and that that could be because of a money goal that that could be because of a time frame, but something where it ends because that's going to be better for you in the long run.

That's true. I agree wholeheartedly. It could also affect your relationships. You know, if you're out here trying to date, trying to see people. That's right. Listen, I watch Married at First Sight and it is causing problems. Anyway, this is The Ramsey Show. You're listening to the Ramsey Show. You guys call in all the time with your questions about when it's time to buy a house, how to sell a house. Should I be buying? Should I be renting? What goes into saving for a house? All your real estate questions and more can be answered at our ramseysolutions.com slash realestatehub. It's really, really great. So there's a lot that goes into home buying. There's a lot that goes into selling your house. And I get it. You can feel

overwhelmed and you shouldn't have to tackle that process alone. So the Ramsey Real Estate Homebase is there to help you. It's a place with all the tools and resources that you need to get prepared to buy or sell your home with confidence. You'll find calculators, start to finish guides, how-to articles, a podcast, a book, and even a video course. So we've checked all of the boxes for you. There's no excuse. It's all packed with actionable steps to help you navigate

through the buying and selling process. So if you're taking the next step towards your home buying goals, you navigate through the buying and selling process. So if you're taking the next step towards your home buying goals, you can do so with peace of mind. You can do that by going to ramseysolutions.com slash real estate, or you could click the link in the description if you're listening on YouTube or podcast. And that's so true. The first time Sam and I bought a house, you just don't know what you don't know, Rachel, and you don't need help. It's a huge, I mean, it's a big process. And there's so many fees and things that you have to think through that you're like, oh my gosh, I didn't realize I owed this and this and this at closing.

I mean, there's just, yeah, it's a lot. And your first time selling a house, it's your biggest asset. Like you don't want to go it alone. So this is such a great resource for you. Okay, let's take a call from the phone lines. We've got Leanne in Biloxi, Mississippi. Is this the second call from Biloxi? What's going on, Leanne in Biloxi, Mississippi. Is this the second call from Biloxi? What's going on, Leanne?

Hey, Jay, thank you for taking my call. We've really worked really hard. We use the EveryDollar app, and I've been doing that for about a year or two. And we have paid off our house, kind of did it backwards, paid off our house. And, well, that took a while as well but um i was just had no guidance but we paid off the house we paid off most of the cars we have we have three credit union loans um for just a car and my son's car and we're down to about $5,000 on it. And so you would think we'd be debt-free. However, I have $32,000 in credit card debt.

Okay, what's going on, Leland? I was just confused. Didn't know any better. I was not smart. Didn't know what I was doing. It added up quick. Paid the minimum. It's my nemesis. And I really just want to get rid of that credit card so we had our emergency fund and actually this past week we had our water pump go out

and we had in our for our house for in our well and we had to spend eighteen hundred dollars on that so i just yesterday cleaned out my emergency fund so i just don't know what next step to take i think what i've been doing is throwing money at my credit cards and i've been paying the minimum plus the interest which is outrageous in itself and so i feel like I'm not getting anywhere and I don't see any progress. And then this happened. So I just don't know what to save for next. I had someone tell me you need to start paying just the minimum and then save up because you need your emergency fund, which I had as of yesterday.

And so then they wanted me to save up. They suggested that I save up you know a month so let us give you let us tell you our plan of action and it's a proven plan we know that it works um not just for me because I did it and it worked for me but truly millions of people have done this and it's worked for them and I I know that it will work for you too okay so Leanne the first thing that you need is $1,000 saved. We call that baby step one. There's seven baby steps and that's the very first one. So you get $1,000 saved and that's just your buffer between you and life, right? You can have

a flat tire. You've got the money there. You don't have to rely on your credit cards. That's the gist of it. And it will cause you to be creative and think creatively if other emergencies arise. Okay. So that's the first thing. And then after that, we are going to tackle this debt, but we're going to do it using the debt snowball. So with the debt snowball, what you do is you list each individual debt. So each individual personal loan, each individual credit card, you list it from smallest balance to largest balance. Okay. So if the smallest one is two hundred dollars you put that one and first and then the the highest ones go up like that okay and you make minimum payments on everything right so satisfy the minimum payment then whatever extra money you can scrounge up

from your budget whatever extra money you can scrounge up by working extra by selling other selling things off you throw it at the smallest debt to knock it out quickly so what would your smallest debt be well we've got my credit union yeah my credit union which the interest is not very high on those doesn't matter what's the balance on it together there's three different loans together it's about five thousand dollars but what's the smallest loan of the three twelve hundred twelve hundred so that's the that would be the first after you pay all your minimum payments that would be the first one you focus on so with your income which will let's get that information what is your income well we bring home around ninety thousand dollars

okay great this is a good year for us it wasn't like that last year year. Okay, great. So with no house payment, there's no problem. There should be no reason that you don't knock that out this month, right? Unless there's something I'm missing. Well, except, yeah. Yeah, the unexpected debt that came up with the water, the well. Leanne, yeah, with the credit card, can I ask, the $32,000, how many credit cards is that? There's three major credit cards, Visa and Discover and discover okay what are the balances on those uh they're pretty

high there's uh eight on six on one eight on another and eight on close to nine on another okay okay so yep so you're going to take you're going to put those in that debt snowball too so that 1200 um loan from the from the credit union, probably the other two credit union loans, list those out. And then you're going to tackle the credit cards and cut them up, Leanne. Like get rid of them now. They're your nemesis. You said that at the beginning of the call. Just get rid of it. Get rid of it. Because what that's going to force you to do, when you draw a line in the sand that black and white, like I literally don't have debt to use anymore and if

the hot water heater breaks what the crap are we gonna do we gotta figure it out right I mean it forces you to make other decisions instead of just relying on the credit card which is what it's been it's been the catch-all for you and it's caused you to be in this position so to completely avoid it which sounds extreme you like literally cut them up, get rid of them. And the next part of this is, I have a feeling you're not on a budget. And if you're not, that's fine. You said you didn't know what you were doing. But now we're letting you know, you got to have a budget. And before you get off the call today, we'll make sure that you have every dollar, which is our budgeting app. It's easy to use. But the thing here is,

I think when you do a budget, you're going to realize all the odds and ends of where your money's been going because truthfully if you're bringing in $7,500 a month because you said it was 90,000 take home if you're bringing that in and you don't have a mortgage payment I don't think you have daycare payments which are people's biggest line items you have a lot of money at your disposal well I use I use the EveryDollar app. It's just not connected to my bank account like I wish it was. That's that premium, which I haven't done yet. And you can afford to have it. I think for you, you need that accountability. Yeah. And what I've been doing is for the last year, I've been using it and I've been throwing my extra money into my credit cards.

So that's me paying the interest plus the minimum payment so i've actually paid those down i know that sounds horrible i mean i think i think you have made some progress but we're telling you a way that you're going to make a lot more progress a lot faster so more tangible by doing the smallest versus trying to do pay off you know five of these at a time when you're spreading your money out you're not getting the traction lean so i do think when there is focus and we call it focus intensity, right? It's like this, like, okay, we're just attacking. We're going to pay minimum payments.

You know, don't worry about everything else. Just minimum payments. Just stay current. And you get rid of this $1,200 credit union loan, you're going to feel like, oh, well, geez, now we only have five debts left. That's amazing. And you go to the next one.

It's that same feeling because so much of this, Leanne, is psychological, right? We've learned so much about money, that personal finance. It is so much about behavior. It is so much about feeling like you're getting progress and you're winning. That's what keeps you in the game. You've been just running, running, running, running, making some progress here and there, but you're not feeling it. So that motivation is so big when it comes to winning with money. You have to see progress. And by doing it this way, Leanne, you're going to

get progress. I mean, I really do believe you are not, you feel overwhelmed, but it's not going to be that overwhelming. When you start this, you're going to feel like you have way more traction than you even realize. Yeah. We're going to set you up with every dollar. We're also going to give you the total money makeover because I want you to understand this process. I feel like you've heard a lot of advice, a lot of conflicting advice, and I feel like even that's overwhelming your mind. I want you to decide on one plan and I want it to be the baby steps. So we'll give you total money makeover. We'll even give you Financial Peace University to watch with your husband because you guys need to work on this together. This is The Ramsey Show. You're listening to The Ramsey Show. Thanks for hanging out with us. I'm Jade

Warshaw. Next to me is Rachel Cruz, taking your calls, chopping it up with you. Our scripture and quote of the day, Psalm 128 too, you will eat the fruit of your labor. Blessings and prosperity will be yours. Serena Williams said this, don't let anyone work harder than you do. I know that's right, Serena. If something doesn't get done, it's not gonna be because of me. That's what I'm saying.

You know? Getting it done. Getting it done. All right, let's go to Scott. He's in Dallas, Texas. What's up, Scott? Hey, how's it going, guys? Doing good.

How can we help? All right. My wife and I are looking at trying to get rid of some of our debt. And we have $150,491.52 to the T in debt. Wow. Okay. Does that include a house or is that just consumer? That is a negative, ma'am.

It's mostly auto loans. We have two cars right now. How much are they? Our car is $50,745.86. All right. Okay. How much is yours? My car is $22,534.90.

All right. Well, you know, my next question is what's your income? Our income together combined is $95,000 a year. Okay. Well, yeah, there's a problem. There's your problem. Yes, ma'am. Can you tell me, and I know there's more debt and I'll get to that in a minute, but I really want to hit these cars. The $50,000 car, what is it worth if you were to sell it

private sale? Probably like, do it. Yeah, about probably be $35 thousand dollars approximately oh okay so pretty underwater and same thing with the twenty two thousand one do you have a estimate on the twenty two thousand dollar one um we i can actually it's worth thirty thousand okay so that's good all right scott can i just ask you guys make $95 a year You bought a $50,000 car What were y'all thinking? I'm just curious Like was it just

We like it Not just that So we have Three children Plus my wife and I and one on the way So we needed a family car And the family car we got at the time was experiencing major technical engine issues.

And the roof actually was falling apart on it. So we ended up just trading it in and carrying over the debt on the new car, which is why this car costs so much. Oh, carry over. Okay, that makes more sense well yes okay yes ma'am i gotcha i gotcha okay i just needed to get i just had to get in your head for a second scott and then well so it'll be four kids my wife and i and we needed third

row seating so we bought a new car uh got it so you've got you've got the reliable so that's why it's so underwater is it's extra debt from a previous car too. So you rolled over that and so you've got, but now you have the reliable vehicle, but now you've got your car, which has $7,000 of equity in it, which is nice. If you sold it, you can pocket 7,000 and you could buy something in cash. So you could clear some debt in that way and add back your, add that money back into your monthly budget. So I would definitely do that. And then it's all about the debt snowball. So after these cars,

what's the other debt? All right. Let me pull my spreadsheet up here again real quick. So So we have $3,300 in credit card debt. We have $7,600 personal loan to pay for expenses that we have, such as hospital visits and car repairs on my car. Okay. And then we have our student loan, which is $22,378. Okay. And then I made some unnecessary purchases, which I'm trying to pay off currently. I bought a gun not too long ago for $2,250 which I've since then sold and we're

currently still paying down what we could on that and then uh I bought a computer uh that I was going to use for school for $2,581.90 okay um So what I'm hearing here is you guys have just been going buck wild. It's like, if I see it, I think I need it. I buy it. Because you also mentioned another $33,000 of credit lines, and we don't know what that was spent on. So I think what happened here was maybe we're making $95,000. That's more than we've made in a long time, permission to wild out. And that's what it feels like. And you're going to have to pull it way, way, way, way, way, way back.

And I'm just telling you right now, that's not going to be easy, but you really can do it. I would do that deal with your car, and I'd clear that out, buy a car in cash. You've got that money back. And then at this point, you're listing them smallest to largest, right? Don't think of the, is the 33 in credit card debt, is that one card or is it multiple cards? It's going to be one card. It's just one card. Okay. And then the student loans, are you actively paying anything on those or are they on some sort of a plan where you're paying like a dollar a month? So they have a forbearance on that. And they've been in forbearance for a little bit. And we've had that until January of this year.

Okay. And then what does it go to? Then we pay $200 a month on that. Okay. Yeah. So, I mean, this is classic baby steps. This is classic debt snowball. And the truth is, for you, I think this is really going to be good because you're going to feel the weight of every time you swiped those cards, every time you took out those loans,

you're going to go, oh my gosh, this costs me way more than I realized in the moment. Cause you're going to have to start sacrificing. And with four kids, Rachel, you know, you feel that. Yeah. and I would go through your house right now, Scott, and I would just, I would sell everything. Like, you need a big jump start, because there's a lot of these $2,000, $2,000, $3,000. Like, if there's stuff that you're like, I'm going to work extra, like, I would make it a goal to try to pay off, like, $2,500 this month. What does that mean? That means we're going to probably sell two TVs. We're going to have to do this. We're going to have to sell some purses. We're going to go on Poshmark.

We're going to take an extra job. I mean, like, like it has to kind of be this like radical shakeup, Scott, because the people that actually win and do this and really change their lives, they make a complete 180. Like it is their life looks completely different than what it did. Because if you keep it right. The definition of insanity, you keep doing what you've been doing. You're gonna keep getting what you've been getting and expecting a different,

or keep doing what you're doing, expecting a different result. So like it has to be, it has to be so radical. And you and your wife, she has a baby on the way. Is that what you're saying? Yes,

ma'am. Okay. How pregnant is she? She is 20 weeks along currently. Okay, so technically on this debt snowball, we say when you're pregnant to pause the debt snowball. Do you guys have savings? We have, so we do not have savings at the current moment.

Oh, okay. We've currently made a spreadsheet of our debts, smallest to biggest, and I've currently made a spreadsheet of our debts smallest to biggest and um but i've currently picked up word uh but if you don't have savings i would i would do a pause on the baby steps to stack up money for this baby coming because you might be on the line for the deductible you know obviously we hope everything goes well but there is a risk of cost that can be incurred there and so for that reason as much as I hate to say it, because I don't want you to lose momentum, I want you at the very least to have your deductible stacked up before you push play on this. Yes, ma'am. Yeah, because babies do what,

April? Yes, ma'am. April 19th. Okay. So what I would do is make it a goal to say, okay, within four months, we want to have, you you know i'm just making up a number um eight thousand dollars saved two thousand extra every single month um maybe even a little bit more if you can squeeze it out of the margin of the budget and you're working extra um but eight thousand dollars is our goal uh we may have to pay someone deductible but our goal was after baby comes and mom comes home we can pay off that day yeah two of the debts right in full and just like they're knocked out right so like the motivation i still want to be there as if you're paying off the debt scott because i want this call to be the jump start for

you right so we want you to get off and like just start making some making some decisions uh but be but be stashing that away again because you guys are expecting a baby. But then the goal is the moment the baby comes, everything is praying, everything's good and mom is healthy and everything is to say, okay, we're going to get to knock out two of these debts and half of the third or whatever it is. Ooh, that'd feel good too.

So make that, yep. I love that. Bottom line is if you want something different, you have to do something different. And that's what Scott from Dallas, Texas is going to do. That does it for this hour of The Ramsey Show. We'll catch you next time.