The Ramsey Show - App - What if My Loans Have 0% Interest? (Hour 3)

Episode Date: May 2, 2023

Rachel Cruze answers your questions and discusses: "Should we buy land before or after leaving the military?" Paying extra on the house vs. saving for a new house, from the blog: How to Pay Off Your Mortgage Early, Travel spending: what conveniences are worth it? from the blog: Travel Hacks That Will Save You Money, "How do I pay off credit cards I haven't paid on in years?" "Pay off small loans first even if they have 0% interest?" "Should we put our whole budget on autopay?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Enter The Ramsey Cash Giveaway for a chance at $3,000! https://bit.ly/TRSgvwy Shop our bestsellers during the $10 Sale! https://bit.ly/TRS10Sale Enter The Ramsey Cash Giveaway for a chance at $3,000! https://bit.ly/TRSgvwy Shop our bestsellers during the $10 Sale! https://bit.ly/TRS10Sale Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am Ramsey personality Rachel Cruz, hosting this hour I am Ramsey personality, Rachel Cruz, hosting this hour of The Ramsey Show and taking your calls from anywhere in the country. It's a free call at 888-825-5225. And starting us off this hour is Jacob in Tacoma, Washington.

Hey, Jacob, welcome to the show. Hi, Rachel, how's it going? Doing well. How can I help? My wife and I are both active duty in the military, and we're deciding whether we should buy land before we get out or after we get out. Okay. Well, thank you guys for your service. When is your date to be out? What are you guys thinking? My minimum year is 2027 before I can get out. Okay. And how about your wife? Hers is 2024. 2024. Okay. So she's before. And are you guys moving? Do you see yourself moving again in between now and 2027? Yes, definitely. Okay.

Do you guys know where you want to be planted long-term? Do you know where you'd want to buy land, or is there a piece of specific land you're looking at? Right now we're looking in the Casper, Wyoming area. Okay, and is there a piece of land that you want, or you guys know you just want to settle there in 2027? There's one piece of land that we found that we're interested in. It's about 40 acres.

Okay, but it's not like a sentimental piece of land that you've grown up with generationally. There's not like a specific one that you're like, oh gosh, we want to buy this for our family. It's more just the idea we want to buy before the market goes up or what's your kind of what's the motivation around it? Yeah, there's nothing sentimental or like a specific piece of land we absolutely have to have.

We just know that when we get out, we definitely want to just have our own piece of land and we just want to be able to stay there. So we're trying to just figure out when in case the market goes up or whether I stay in for 20 years or not. Yeah. And are you wanting a home on this lands? Is that what you're looking for? So that you can move into it when you guys are done. Okay. That's great. Are you guys, do you have any, do you have any debt? What's your, what's your savings, your savings like? We have no debt. We have a full three-month emergency fund, which I think is like at 18 right now.

That's great. And our savings is at like 11 right now. And then we have our investments and stuff, which I don't remember exactly what that sits at right now. Okay. Do you guys have any kids? Not yet. We are trying. Okay, good. Well, you know, if I were you, Jacob, I probably would just wait until you guys get out of the military and see where you're at. Because just a lot can change in four years.

And being locked into a piece of property that you're not even really going to use for four years, I don't think is a great investment of your money right now. I think I would rather have money just in the markets or just cash on hand as you guys make all these transitions and these moves between now and 20 and 2027. So, yeah, if I were to wake up in your shoes, Jacob, I would I would wait until after you guys are out and you know where you want to settle. Because the crazy thing is too, a lot changes in four years, whether that's kids and that's family, or even maybe you guys are stationed in another part of the country that you fall in love with. Then you're like, oh man, I wish we didn't have this land locked in and we have to go and sell it. And it ends up, instead of it being a long-term play, it ends up being

a short-term play. And I don't want you to make a bad financial move on that end considering where the market is. So if I were you guys, I would be renting. I would just save up a lot of cash. And then when you guys are out in 2027, look to buy something permanent with the cash that you have. Hopefully it's a good down down payment so thanks so much for the call jacob and thank you and your wife both uh for your service um military members are just uh we really are appreciative so thank you thank you for your service all right up next we have brooke in houston texas hey brooke welcome to the show hi rachel how are you? Doing well. Thanks for calling. How can we help? So my husband and I are kind of planning on moving homes in the next two to three years. And we're currently in baby steps four, five, and six. And we didn't know if we should continue baby step six of paying down our current mortgage

or should we kind of pause that and put any extra cash aside into a high-yield savings account. We might want to buy some land and build on, or we might want to just buy a house. Okay. How much do you guys have left on the house? We have $133,000. And how much do you guys make a year? About $105,000 take home. Okay. That's great. Well, well you know the way i kind of look at this brook always is when you are paying into the home and paying it down and you're having that equity that's that's guaranteed cash for the most part right i mean i don't think the market's gonna go i don't think it's gonna tank like you know there are some people that had a doomsday approach when it comes to real estate i just don't think that's gonna happen to happen. Things are slowing down. They're softening. We're seeing

that, but I don't think there's going to be a crash. So I do think what you will have in equity that you're putting in as you're paying off this home will continue to grow. And so what I kind of like still about the idea of just paying down the mortgage, even though you know you may move, is number one, you never know what life's going to happen and you may not. Who knows, right? You could get three years down the road and something were to happen with your family or circumstances change. You end up staying in that home, but you've been paying it down. And then the second thing is that that cash is kind of locked into the house. So when you guys sell it and you get the equity out, that has been saved versus putting money in a high yield savings account that can sometimes,

sometimes easily be spent on things like a summer vacation or something is happening. And you're like, oh my gosh, you know, we had this money. So we do stress in four, five and six to be intentional, not to be intense. So intensity is through that, you know, one through three steps. And so what I would say is still enjoy your life. I would still, you know, to the point that you guys are, that you're still enjoying your life, but putting some money away

by paying off that house early, continuing down that path, I think is the best bet because again, that money's locked into that home. And when you sell it, you'll have the equity versus when it's in a high yield savings account. Your idea is, yeah, we can use that for a down payment later on,

but sometimes life ends up happening and you end up spending it. Yes, that's a good point. That's kind of what I was thinking. I'm very Ramsey-esque in the way I think. No, it's great. Yeah, and I think it's a great question because a lot of people have that. And then even some people have asked, do I take some of this cash and start

redoing things in my home for resale value even? Do I, you know, do we change things and update our home to even get more when we sell in two to three years? And even those, I would be careful because there's some stuff that, you know, if you guys went down that road and for some people, certain things are an upgrade. And then to majority of people, when they're going to buy a home, it's not an upgrade at all. And you lose your money in that. So I would just continue to pay down the mortgage. And then when you guys decide to move, you'll have all that equity that can be moved to another home. But it's a great question, Brooke. Thanks for calling. This is The Ramsey Show. Hey, you guys.

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studio, it'd be fun for them to call in and say hi and talk for a little bit. So I have Jade Warshaw, our other Ramsey personality, on the line. Hey, Jade. What is up, Rachel Cruz? What's going on? How are you? How's California? Man, it's treating us good. It's a bright, sunny day, partly cloudy skies.

Feeling good. Just doing great. Well, I heard from Ken in an earlier segment that you guys are staying, like, right by Disneyland. Yeah, I think I see what is Disneyland across the street. I mean. Some Ferris wheels and whatnot. Yes, that's so fun. That's so fun.

Well, I know for so many people, travel and so many families, that this is the thing that we're about to enter upon, right? With summer here, summer break, so many families travel, maybe coming to Disneyland where you guys are. And there's just a lot of expense when it comes to travel. I know you and I have talked about this, being moms and having little ones. And there's the price to pay for convenience sometimes when you travel, but also sometimes it just costs you so much and it's not

worth it. So when you guys travel, what are the things that you're like, oh yeah, that's worth it and that's probably not? Oh man, you know, traveling is, I'm definitely starting to notice things that might be worth spending a little bit extra for for the convenience. Rachel, I think you know this, before I came to Ramsey Solutions, I traveled primarily for my work because we worked on cruise lines. So we were traveling all around the world. And honestly, back then, I would just do bare minimum.

You know, we were trying to pay off debt. So it was more just about let's just get there. And instead of spending a bunch of money on experiences and things like that, we just would walk around, we'd eat and just try to do things on the cheap. But now I'm realizing, you know, there's some things now that I have kids, it's worth paying for like a good piece of luggage. Can I just say, I don't want to be carrying like duffel bags and backpacks and things that are breaking my back. I want just one like good piece of luggage that's got the four wheels on it. It swivels, you know what I'm saying? And you can

get through the airport. I'm a suitcase pusher. I put all those up on four wheels and I push that thing next to me on this side instead of dragging it behind. That's the way I go about airports. So I'm with you. Yeah. I mean, the bag I have, I've literally had it for 10 years. It's a great bag. It wasn't super expensive, but it wasn't just something that I picked up at Walmart. It was a decent bag that I bought at Macy's. And honestly, on this trip, I'll be 100% transparent. I valeted my car.

Have you ever done that? You know what, Jade? This is one of the luxuries in life that I will pay for. Some people make fun of me because I know it's kind of expensive, but to just be in and out of your car right there at the airport door, it's worth it versus doing one-term parking for me. So that is a baby step seven thing that I am enjoying with the margin that we have. Are you, okay, how has it felt? Do you like it? Is it worth it? I mean, I had never done it before, and I was like, a girl can get used to this. Now, but here's the thing.

Balanced with Southwest tickets. It's not like, you know what I'm saying? You pick. It's like you pick the things that are important to you, whereas, you know, flying Southwest, it's not as expensive as some of these other lines. I would definitely categorize it in more of a bargain airline with maybe not as far as spirit, but you know, like Southwest, you can usually find a good deal. Yes, for sure. Like if you find a good deal on the tickets, then maybe you can find a way to splurge on things like, you know, parking at the airport or, you know, once you get on the trip, here's another one. I bring snacks from home on the airplane. I do not buy snacks in the airport.

Oh, we do the same. I'll buy the Uncrustable sandwiches. I'm like, sorry, guys, your lunch is right here in the backpack that we're going to take out and eat. I know we just, we did a trip in March with the kids. And it was the first time we took them into a, you know, the gift shop area. And I did let them buy one thing of candy because they were just so excited but that's the first time we've ever done that because I'm like and it is you get that you get up there and it's like 20 something bucks for three bags of candy and I was like this is this is silly

oh yeah it's unbelievable and then you feel you find yourself like having to say no a lot which is not fun you know I mean on a trip it's not fun to have to say no to yourself and to your kids but if you have all that stuff in your, if you brought all the snacks that you know you like, your kids enjoy, then you can just open up your bag and say, what do you guys want? And the answer can be yes, which I personally love. On my trip here, I always bring like cheese puffs. I always bring like some kind of trail mix. And then I'm depending on the fact that they're going to at least give me a bottle of water.

Now, if you're on spirit, they may not give you a bottle of water That's right They may charge you for that Yeah I think that's great Jade and I love Even just the picture of the budget Because when you have the amount of money you want to spend Within that you're like hey here's where I'm going to cut Here's where I'm going to splurge and it's all within

This dollar amount So that's so great Jade I hope you guys have A great event tonight It's so great. Jade, I hope you guys have a great event tonight. It's almost, what, over 2,000 people. We'll all be together in Anaheim tonight for the Building Wealth events. Are you excited? I'm so excited.

I was in here picking out my outfit, trying to get my wardrobe on lock, but the most important thing is tonight we're going to be in a room, like you said, 2,000 people, and it's going to be honest life change. I love getting to meet people, talk eye-to to eye with them, get to shake their hands, and really see the impact that this message is having on real people's lives. Yeah, it's so great.

Well, Jade, thank you so much for calling in. And I love hearing from you guys on the road. You all are very missed here in Nashville, but I know that message is going to be so powerful there in Southern California tonight. All right, we're going to go to the phones, and we have Julie in Kansas City up next. Hey, Julie, welcome to the show. Hey, thanks for having me and taking my information and taking on my problem today. Absolutely. How can I help?

Well, I have two credit cards from two different accounts they're not related they're not related accounts uh from a business i was uh running in 2018 i had three employees and i was using these credit cards for to buy supplies with and then i moved out of that state and the business was okay, but I thought I could do all that and then pay off the cards as the business was going on and then COVID hit. And then all of the sales that I was having, which I was doing really well, right up to COVID, because I did a lot of sales for the church. And so a lot of churches stopped, you know, having services, all that. And so then I moved to another state and that didn't work out. So then I moved to a third state and then I started having health problems. So that was five years ago. I think the last time the cards were active was 2018. I'd like to consolidate the cards, if possible, probably not, anyway, to one account.

And how much do you owe on each of the cards? Well, I would say a total of both of them, $7,000. It's not a lot, but it is a lot for me because I'm pretty limited in my income. I don't really have a lot of income. It's true. How much are you making a year, would you say? Well, I'm on disability. I'm legally blind and legally deaf. Oh, wow.

Yeah, I'm really in a hard spot. And I've been, just three weeks ago, had my fourth cornea transplant. And I only see out of I only had vision in one eye so I'm so sorry yeah I'm living on yeah it's it's really been a hard hard road and and I like I said I had man business for 23 years and I had designs and all these different nations so I'm not like someone who sits around all day. But anyway. And you haven't been paying on these two accounts, these two cards? I haven't. I just couldn't.

I had so much, like I was trying to describe, my life as a whirlwind. There was so much going on. And then I started having eye problems. Yeah. Okay. So, Julie, have you had creditors call you? Have they tried to contact you? No, because they don't know where I am.

Okay. Yeah, they just don't know how to get in touch with me. But I know how to get in touch with them. I know where they are. Okay. So, yeah, no, it's great. Well, what I would say, Julie, is I would contact them. I would make a plan to say, okay, here's what I can do.

And they may even settle with you since it's been five years. And if it's moved to a creditor, you know, and it's in collections, even usually they will settle with you. So if they do get that in writing and then have a plan to pay it off, because I want this off your report. I want this out of your life because it's still hanging out. And I, and I don't like that for you. So I know that you're working hard in your own business and you're incredible, absolutely incredible doing all of this. With you said being legally blind and deaf. So I would have a plan to negotiate that and pay it down. Well, it seems like there's an official day for everything now.

There's Barefoot Day, Bad Poetry Day, Dance Like a Chicken Day. Seriously, can't make this stuff up. There is one day I can get on board with, though. National Life Insurance Day. Yep. So it's a reminder that if you have anyone in your life that depends on your income, like little kids running around, then getting life insurance needs to be your top priority. If you've been listening to our show for a decade

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Again, that's ramsaysolutions.com slash term estimate. All right, up next, we have Rachel in Lancaster, Pennsylvania. Hey, Rachel, welcome to the show. Hey, Rachel, how you doing? Doing well. Love the name. Thanks for calling. Obviously.

Obviously. How can I help? Okay, so my husband and I have three loans right now, two of which are small totaling $8,000 that don't have any interest whatsoever for the life of the loan. And then the third one is about 45,000 at 5% interest. And I know the baby steps say to go for the small one first, but if there is no interest whatsoever, would it be more beneficial in the long run to go for the $45,000 with the interest first so that we don't have as much interest in the long run? Yeah, well, you know, mathematically, you're correct, right? If we were just doing math, then yeah, it would obviously

make sense to pay off the highest interest rate first but what we have found rachel with paying off debt it is so much more than a math issue there's so much around the person doing it the motivation that is caused when you pay off that smallest debt the wins that you get by paying off that smallest debt so i i would still tell you even if those two smallest debts, I mean, how much are they? Did you say each one, the two smallest? One is $1,900. The other one's $6,300. Okay. And how much do you guys make a year? Probably about $160. $160. Okay. So here's what I love about this, Rachel, about the debt snowballs. I'm like, okay, yeah, you guys make a great income. Take your budget for next month and just cut everything out of it. I love about this, Rachel, about the debt snowballs. I'm like, okay, yeah, you guys make a great income.

Take your budget for next month and just cut everything out of it. I mean, honestly, pause subscriptions, don't go out to eat, don't go shopping, do nothing. And you guys are gonna be able to knock out that 1,900 probably next month. You can be like, we're gonna just absolutely scorch earth our life, get that out of the way. And I'm telling you, there's something freeing

about even having a small debt paid off where it's gone. It's'm telling you, there's something freeing about even having a small debt paid off where it's gone. It's over. And you're like, oh, okay, we only have two more left. And then you do the same thing, that 6,300. You guys take a few months, knock that out. And then you can focus all of your time, all of your energy on the $45,000 loan. Because even though they don't have interest, you guys are going to pay it off so much faster that you're going to get to the higher interest rate loan of the $45,000 soon, right? It's not like you're going to be having that around forever

and never getting to it. So by paying off those smaller ones, you are going to get those wins. And you don't have to think about it. It's less brain calories, right? If things are paid off, those smaller little ankle, we call them ankle biting ones, right? They're just kind of swimming around there. Once they're done, it's like, oh, we're cleared and we are focused on one thing

and one thing only. Right. Okay. Yeah, that's really the mindset behind the debt snowball. But you're right. If we were doing math, that would be the debt avalanche where you pay off the highest interest rate first. But there is something to be said, again, where you take math out of the equation and you just say, let's start this habit of our life where we are going to take everything out of the budget that we can. We're going to take on extra jobs. We're going to squeeze as much money as we can month to month and pay off the smallest debt first. When you get those wins, it keeps you motivated. I'm telling you, there was a study done between people doing the debt avalanche

and the debt snowball, and those doing the debt snowball paid it off faster than those doing the debt avalanche. And again, it's paying off debt. So we want you to be debt-free. That's the end goal anyways. But it's still the most efficient way to do it because personal finance, it's 80% behavior. It's only 20% head knowledge. And so

what does not come into play for people when they're looking at money is they look strictly at the numbers and the math. They don't take into account the person on the other side doing the work. So you, Rachel, and your husband, you guys are it. Y'all are the secret sauce in all of this. And when you guys are motivated and you're excited about this, you're going to pay off that 45,000 even faster. So that's what I would recommend. But it's a it's a great question. All right, up next, we have Megan in Columbus, Ohio. Hey, Megan, welcome to the show. Hi, Rachel, thanks for talking with me. How's it going? Absolutely. Thanks for calling. How can I help? So first of all all I'm answering your plea on Instagram to call in while you're hosting this I know I did I put on stories I was like y'all I'm gonna be hosting

this show for three hours call in and talk to me and you did Megan you answered the call I so appreciate it I feel so loved absolutely absolutely um well my I have two questions my first question actually pertains to um your book recommendations which have been awesome um all the books you've recommended have been great i just finished the perfect marriage oh yes my husband called the end of that book after i read the first chapter like i don't know what that means but i will say that one yeah it was a little bit of a predictor of of maybe the end or your husband knows too much about murder mystery books so exactly so thank you for that um so my first question is what is your what's your next book

recommendation um and then question number two how did you convince win Winston to finally make his social media appearance and even be on the show with you? Because my husband is the same way. He hates social media. So I'm wondering what tricks you use to get your husband on social media. That's so funny. That's so funny. Okay, well, the book recommendations will go there first. Okay, if you're wanting, I just wrote some down um another mystery type book

the housemaid it's great it's really good it's a popular one right now if you're a book lover i feel like people see that uh if you want to i love war war ii that kind of genre of book so the nightingale is so great by ch Hanna. It's a great one. If you want a little love in your life this summer, It Ends With Us by Colleen Hoover is a great one. They're actually doing a movie, and Blake Lively is going to be the main actress in it. She's going to play the main character.

Oh, okay. So I just read both of those books by your recommendation, and I was really hoping they were doing a movie about it because I was obsessed with both of them they're so good yep so if all you ladies out there need a good summer read it ends with us and it starts with us it's a great series Colleen Hoover and then okay and then one book I read and I put it on Instagram because I all the ones all the books I read I put out there is the comfort crisis so we read this book as a Ramsey family over Christmas we were all on a trip and we like got passed around.

But it's a really great one. So it's a nonfiction. All the other ones we were talking about were fiction books. But it's just about why we don't, specifically in America, push ourselves physically, mentally, all of it to a point of pain to have sacrifice to get a result. Right. We want everything comfort like even we have you know it's 69 degrees everywhere you go you get in the car you can turn on the temperature you want there's no we we are not we are in a comfortable society physically and then that plays into it mentally and then you put technology on it all of it i it's it's a great

book it's kind of more of a of a guy book because he talks about this big hunt that he does in Alaska and all of that. But his points in it are so good because it pertains a lot to what we talk about here on The Ramsey Show with money. That in order to get out of debt, you have to sacrifice. You're going to be uncomfortable. And being uncomfortable usually gets you a great result. When you're just comfortable all the time, you're in the status quo. So there's that. And then Winston, I know, you know, he had a slight career change recently.

And he's just kind of embracing more of my social media in my life, which I'm so glad because he's so wise and he's so smart. And I love him. So the fact that he's getting on a little bit more and then did the show today earlier is just, I can't believe it. But I love it because I love you guys getting to know him. This is The Ramsey Show. Our scripture of the day comes from Psalm 139.14. I praise you for I am fearfully and wonderfully made. Wonderful are your works. My soul knows it

very well. When you don't dress like everybody else, you don't have to think like everybody else. Iris Apfel, who's a fashion icon and interior designer. When you don't dress like everyone else, you don't have to think like everyone else. Hey, I believe it. That's great. That's great. All right. I am Rachel Cruz taking your calls this hour. And up next, we have Jason in Boise, Idaho.

Hey, Jason. Welcome to the show. Hey, Rachel. How are you doing? Doing well. How can I help? Quick question. So my wife is getting ready to get a closing on one of her listings, and we're making good traction. We've been paying off debt like crazy feel like we're midnight paying bills, doing our budget faithfully.

So her and I were talking last night, how would you, or what would you do if, um, with one of the closings, if we took, um, a small portion of that money and stuck it in an account. So each month we're one month ahead. I mean, our, our new emergency funds still funded. We're not going to be taking that thousand or anything, but we're not going to be taking that $1,000 or anything, but we're just going to put everything in an account. You know, I set everything up, all of our utilities and everything, on auto pay through my debit card, not credit card, just so we're a month ahead. Yeah, why don't you just do that for your checking account?

Yeah, I just wanted your opinion. Because we'd be taking roughly about $3,800 out of this house closing. And instead of putting it towards debt this next month, we would be putting that in an account just so we're a month ahead. And we're not doing budget every single two weeks. We'd be doing budget once a month. Oh, I hear what you're saying. I hear what you're saying. Yes.

Yeah, I'm all for that. I think even getting to that point, because for a lot of people living paycheck to paycheck, they don't even have the margin. They have to, you know, they have to take the paycheck from the first to use it. And then once they get the 15th, they have to use that. Right. Versus if you have some buffer, exactly what you're talking about in your checking account, then you're able to go ahead and just pay everything at the same time and stay kind of ahead of it versus waiting on the other paycheck. So, no, I'm great with that. Yeah, I think that that's really smart. And if you can get to that point,

it's a nice point to get to, again, because you're not literally waiting on the other paycheck. And so, yeah, I think that'd be wise. And I don't even think you have to open up another, I mean, unless you guys want to, but you can even just do some of that auto-drafting, auto-pay out of your checking account, just knowing, yeah, that money's gonna come out of that with that 3 pay out of your checking account, just knowing, yeah, that money is going to come out of that with that $3,800 in your checking account.

Perfect. You answered my question. Yep. Awesome. Well, thanks for the call, Jason. Yeah, I think the only time we're cautious about auto anything is sometimes auto savings. If you just put it on auto savings, you know, it's fine, but we want you to be very intentional when it comes to your money.

And so even that with savings can kind of lose that point of hey I'm doing this really on purpose and I can change it month to month I can add more if I need to so sometimes the auto savings is one that we say hey just do it purposefully but when there's bills like utilities cable electricity like there's things that you know you're going to have to pay. If that's on auto-draft and it's just taken out, it actually helps you not lose track. It helps you not be late, all of that. So making sure you have that buffer though so you don't overdraft on your account

that you have the money for it is a great option. And we do that too where we can just because it's convenient. It's nice to just have it paid when you know you have to pay it. So I'm all for that, Jason. That's a great question. All right, up next, we have Michelle in Green Bay, Wisconsin. Hey, Michelle, welcome to the show. Hi, Rachel. Thanks so much for taking my call.

Absolutely. How can I help? So I have a question about saving and paying for a wedding. My fiance and I are both in baby step two. I'm wondering if we should pause baby step two and pile up some cash so we can paying for a wedding. My fiance and I are both in baby step two. I'm wondering if we should pause baby step two and pile up some cash so we can pay for a wedding and or honeymoon, or if we should just kind of keep going and try and do it on the side or what you'd recommend. Yeah, that's a great question. How much do each of you have left in debt? I have about $10,000. He has about $5,000. Okay. So you guys are close to the end of that.

How much do you make a year? I make $81,000 and he's $55,000. Okay. And when's the wedding? Well, we don't have a date set yet. We were kind of trying to figure out budget and how we were going to pay for it and let that help guide us. Okay. Okay.

I hear you. How long have y'all been engaged? Since July. So almost a year. Oh, yeah. yeah so you're ready i mean yeah you're ready to get married i get that um you know what i would do when it comes to this kind of thing uh doing both at the same time i think is it is ideal because you guys are going to want a wedding and a honeymoon but i think you have to be realistic to say okay our budgets for the wedding and honeymoon is not going to want a wedding and a honeymoon. But I think you have to be realistic to say, okay, our budget for the wedding and honeymoon is not going to be astronomical. It's not going to be huge

because we have other things in our life financially we're taking care of. So having a realistic expectation of the wedding and the honeymoon is really important. But I wouldn't want to lose momentum when it comes to paying off debt. But you have 10,000 left. So I'm like, Michelle, you could still do this. If you guys do a couple of side hustles and bring in some extra cash,

you could have this knocked out really quickly. Yeah, for sure. For sure. And we're on track for that. But we're both kind of just feeling like, man, it'd be really nice to just get married. We're anxious to get married. So part of me thought, well, maybe we could just pause and pile up some cash for the wedding. And we have a very small budget. We're probably going to only spend around $5,000. So I think we could get there quick. Yeah. Well, then I would save that up on the side and kind of have a goal to say, okay, you know, by fall or whatever the date is, right? Maybe it's July, whatever it is to say, yeah, we want to be married by then. We're going to save up some money on the side to pay for. And you may pay as you go because vendors are going to want, you know, maybe a deposit, things like

that. So keeping track of it. And I don't have to tell you because I know you said we have a small budget and all of that. And we're all for weddings and enjoying the celebration of marriage and life and all the things. But just being realistic. And you guys, I mean, because the reality is you could just go down to the courthouse and get a document and be married tomorrow, guys, I mean, because the reality is you could just go down to the courthouse and get a document and be married tomorrow, right? I mean, like you can go and get married if you wanted to. But I understand the celebration. But I just wouldn't put it off getting married to save up this crazy big budget for a wedding.

And this is more for people listening, not necessarily you, Michelle, because I know you have a small budget and you guys can hit that pretty quickly. But I think we get caught up a lot when it comes to weddings and honeymoons and expecting very big and extravagant things. And we put off putting a decision like marriage, a really important lifelong decision, off for an event, basically. So I want to make sure you guys, the priorities are kind of right in your mind. Yeah, for sure to make sure you guys, the priorities are kind of right in that, in your mind. Yeah, for sure. For sure. We both feel like we've been to many of the big overdone extravagant

things and we just want to keep it simple and, you know, and, and just celebrate, but yeah, yeah. We don't want to wait too, too long. No. And I think that's great. And I think, you know, the big, you know, celebratory ones that people spend a lot of money. That's great. I mean, I had a big wedding and, you know, we're not against that, but I think putting it in perspective and financially is really important. And then even for the honeymoon, Michelle, too, I would say like, yeah, maybe you just plan a three or four night getaway somewhere that's less expensive. And then at the one year mark of your anniversary that you guys are like, oh yeah, we're completely debt-free. We have all this money saved because we're combining our incomes and we are living this

debt-free life. And you guys go and take a great honeymoon. That could be an option too. Sure. I guess I have one more layer to the question. Our parents have gifted us some cash and they said we can use it for whatever we'd like. We had kind of decided we were going to save it for a potential down payment on the house. Okay. How much do you think it'd be better to 13 000 is the total oh nice and they've given that to you guys with no strings attached correct they say it's up to you you can do whatever you'd like you can use it for a wedding is this your parents or you can use it for a house your parents his parents yes both of them both of them together oh that's what yeah that's great okay gosh Michelle if I were you

I would take 5,000 of that and then I would yeah I would take 5,000 of that and pay have that for a wedding fund over there I would take the rest of that 8,000 put it at the 10,000 of yours or no I'm sorry I would knock out well I want y'all married first before you combine accounts right I don't want you guys paying on each other's debt so even if you split your parents money which sounds so tedious but I would kind of still run in those lanes but put some money towards your debt his debts depending on the amount of money each parent gave and yeah I would use that money now all that to say I would use it for the wedding and I would use it to pay off this debt because then you guys can use your

income to save up for a down payment later down the road but I would take it for the wedding and I would use it to pay off this debt because then you guys can use your income to save up for a down payment later down the road. But I would take care of the present problems, which is debt first and saving up for the wedding and having that budget. So that's a gift for sure, Michelle. I would use that today for the things that you guys have. That's a great question. Well, thank you guys so much for calling in. Thank you for listening, America.

Thank you to all the guys in the booth. Thank you, America, for listening. This is The Ramsey Show. Hey, it's Rachel Cruz. If you love the show and want a deeper dive on your money journey, we have a weekly newsletter that gives you trending and helpful articles and tips on following the Ramsey way. Just go to ramsesolutions.com today to sign up for our newsletter. Again, that's ramsesolutions.com to sign up for our weekly newsletter.