The Ramsey Show - App - What To Do When You Owe More on Cars That You Make in a Year?

Episode Date: May 27, 2022

Ken Coleman & George Kamel discuss: How to grow a small business, The high-earning poor,  When it's time to leave a job, Paying off debt and getting your life on track, Having over $100k in car debt. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

🎵 Live from the headquarters of Ramsey Solutions, this is The Ramsey Show, where we talk about your life, your money, your work, and your relationships. I'm Ken Coleman, joined by George Campbell, as we take you through your questions this hour. The phone number is 888-825-5225. That's 888-825-5225. George, how are you feeling today?

I'm doing great, Ken. Welcome back from Orlando. Heard great things from Montre Leadership Summit. Fun time. Great, great group of people. It was a lot of fun, and the voice is a little weak. A little weak today. Well, you did a lot of speaking. Not only did you speak

at Summit, but you interviewed Jay Leno and Nick Saban. That's got to be some career highlights right there. It was very fun. Couldn't be two different personalities there, right? Like Jay's Mr. Joke, always joking around and Nick Saban smiles five times a year. I heard he smiled. It was a rare moment. Well, I actually have

a picture on this phone. I'll show you on the commercial break where he actually is smiling. Incredible. Unicorn moment. That's going to be framed in the Coleman household just because. It's such a rare occurrence. I love it. Yeah, it was big fun.

But we are here for you today, folks. So George and I are going to team up. I'll help you talk through work issues, which are related to your paycheck and income. And George is here to help you with your money issues as well. We always enjoy being together, so there's probably going to be some snark. Not from me, Ken. I'm on my best behavior today. Oh, really?

I don't know. Probably not. I don't think so. All right, let's get to Josh, who's up in Salt Lake City, Utah. Josh, how can we help? Hi there. And, you know, George, I'm perfectly happy to take whatever snark you've got for me. Perfect. I will deliver. Be careful what know, George, I'm perfectly happy to take whatever snark you've got for me. Perfect. I will deliver.

Be careful what you ask for, Josh. That tongue of his is a weapon. So we'll see how it goes. We'll see what can of worms I've opened. Yes. I'll be brief. In 2020, I was laid off from my job, but they forgot to replace me. So my client started calling me and said, we still need search engine optimization. Do you want to stay on? And so I said, yeah.

So I started my own search engine optimization company, and I've been having a blast. But it's not paying the bills. It's almost paying the bills. Okay, let's stop there for a second. Okay. What are you charging? Is it not anywhere near what the old company was charging, or are you charging the same? I am charging the same, but probably not enough, which is your question.

Well, no. So if you're charging what the old company did, so there's at least some type of market there, and those people were saying, hey, this is what we paid for it before, so we're going to keep paying that now, but it's not enough to cover all of your expenses. How much of a difference is it between your old paycheck and what you're paying yourself? Well, it's about the same, but with inflation, I'm just having a hard time paying the new bills. But the rent's gone up 30% this year. George, what do you say? Do you have debt?

Sorry, say again? Do you have any debt? No debt. Baby step three, but we're now making negative progress on baby step three. And you say we. Is this a spouse? Correct. Okay, and they're working outside the home?

Yep, she's working part-time, and I'm working full-time in this business. Is this a spouse? Correct. Okay. And they're working outside the home? Yep. She's working part-time, and I'm working full-time in this business. Okay. You have kids? Not yet, but we'd like to start. Okay. I'm wondering, can she go full-time, you live off her income as you get this business off the ground? Or the other option is you go work for someone doing some SEO while building this business up with a client list and contracts and you figure this thing out. Yes. I think it would be easier to grow the

company if instead I delivered pizzas in the evenings. Okay. Well, I mean, there's just so much remote work you can do with SEO and we've got lots of SEO folks here, and people, especially business owners, are willing to pay for help with this because it hurts their brain. So you're in a great spot to do that remotely. I think that's a better idea than pizza. Well, I think it's a better idea to focus on your business than to get a side hustle if you need the income. And my question is, have you cut everything that you can cut? This is a sole outcome of rent going up and groceries and gas? Is that what you're telling me? Yes.

I mean, yeah, there's a little bit more we could cut from the budget, but it's trimming around the edges. I do think it's not. How many clients do you have? I have 21 clients right now. And is it recurring revenue? Yep. Monthly retainer. Okay. And you're saying 21 clients with a monthly retainer isn't enough to pay the bills? Correct. That hurts my brain. What are you, you know what? How much are you charging each client? What's your retainer? Anywhere from the smaller packages

or anywhere from $300 a month up to, you know, I've got $2,000, $2,500 a month. What do you have to cover? What's your all-in budget you've got to cover every month? Well, I've got a little bit of overhead

in terms of software investments. That's fine. Okay, but $300 a month times 21 is $6,300 a month. Yeah, tell me what you're all in budget. That's $75,000 a year you should be making from this business with very little expenses. So top line right now is $9,000 a month, and of that I take home about $2,500 a month.

Where's the other money going? Software is a big expense. It's $6,500 a month? No, that's about $1,300 a month. Where's the rest of it going? Something's not adding up. Link building, content creation. Are you outsourcing this to other people and paying them?

Yep. Oh, you're in the wrong business. Right now, you can't do it this way. George, you can't do it. You're paying yourself 2 500 bucks you're making 30 grand a year from a business that's making 9 10 grand a month here's what i mean by you're in the wrong business and i should i should probably step back a little bit what i mean is is that the way you're doing this business is not going to be sustainable for you you are outsourcing most of the work.

That's not a sustainable model. There's no margin there for you. You're outsourcing most of the work. Of the 9,000 you're taking in, 6,500 of it's going to other people and other things. Yeah, what you're charging needs to cover those costs and still give you great income. And so if that means raising the retainers to 500 instead of 300, and that's your smallest package, and that allows you to have some margin, that's what I'd be doing. You don't think that 27% margins is good enough?

You're telling me you're broke, so it sounds like it's not enough. It might be good enough for somebody else, but not you right now. That's my point. You can't ask the question that way. It's not a function of, well, the margin. Margin, 27%, doesn't matter. You're broke. Well, but I guess the question is, does my margin percentage need to go up or do I just need more clients? I think both. I think you need to raise your prices, get more clients, and figure out how to outsource this without bleeding yourself dry. What I'm going to do is send you a copy of Dave's business playbook, Entree Leadership. That's going to help walk you through how to do this whole thing completely debt-free with cash,

how to lead the teams of the people that you're leading, how to grow this thing in a sustainable way. Because I want you to be a small business owner. We love small business. But right now, this is not fun for you, and I want it to be. Yeah, yeah, very interesting. And one option might be to go you know what i'm gonna pair this back a little bit keep it going on the side and figure out your formulas well he can go work for someone else and go work for somebody else that's what i'm saying

go do seo for somebody else and then slowly build the side hustle i like that so you can figure out your margin your ratios and all that because there's some some more work needs to be done here all right good stuff good question you'll get there thanks for the call this is the ramsey show when you've been working your tail off to win with money and build wealth you deserve an investing professional who cares about you and your money. That's why you need one of our SmartVestor Pros. For over 20 years, our SmartVestor program has been scouting financial advisors who know what we teach and are committed to super serving our listeners. Through the years, we've passed on some so-called pros that weren't worth your time

or your trust. So you can have peace of mind knowing when you sign up for a SmartVestor Pro. You'll get matched with an investment professional in your area who has a track record and shares your values. With pros in all 50 states, you get the opportunity to meet the SmartVestor pros in your area and choose for yourself who you want to work with. To find a SmartVestor pro today, go to RamseySolutions.com slash SmartVestor. That's Ramsey Show. I'm Ken Coleman, joined by my colleague George Campbell. We're here to answer your money questions, your work questions, your relationship questions.

It's life. And we're here to help you get the breakthrough that you need. It's one phone call away. It's a free call, by the way, 888-825-5225, 888-825-5225. George, one of the phenomenons that we've noticed in the news recently is the seemingly growing category of six-figure earners who are living paycheck to paycheck. Yeah. And I don't think that this is necessarily a new phenomenon, right?

However, it seems to be a growing phenomenon of, okay, I make really good money. I've gotten a raise maybe through the great resignation, them leveling up, and yet they're still living paycheck to paycheck. And what's interesting about it is when I see things reported on it or things on social media, it's as if it's a head scratcher. Right. How could this be? Oh, it must be.

Oh, it's inflation. Right. You got to have a villain. Everybody's excuse now is inflation. It's a great villain to have. But the truth is, if you have the mindset that inflation is the enemy and I can never win because of inflation. Right. You're always going to have a villain in your life.

So we found this video. You know what else becomes the villain, though, before we show this video? Is, well, my boss isn't paying me enough. I'm not getting those inflation-adjusted pay bumps. This is a common theme right now. And so to your point, you're always making somebody else the villain. And we've got a video. And I really can't

wait i saw it i can't wait for george for you to just break this down well i think our team just scours the internet looking for ways to rile us up these days yeah and they found a video on the internet so we'll show that video to you and we'll have some commentary so here it is it's a tiktok let's watch this so do you feel like no matter how much money you make you always seem to be living paycheck to paycheck well you might be part of what we call the high earning poor. This is a massive problem right now that affects millions and millions of people that make six figures, sometimes multiple six figures, and they don't understand why are they always living paycheck to paycheck? Well, here's the deal. If you have a job and you get a raise, your average annual raise is about 2.8%.

The odds are you're actually getting poorer year after year and doesn't feel like it because you're getting these raises, right? But understand this, inflation, modest inflation is three or 4%. This past year, it was 7%. And on top of that, your lifestyle tends to creep, what we call lifestyle creep, your lifestyle increases too, as you make more money. So you combine the fact that your lifestyle typically gets more expensive and inflation is eroding the buying power of the dollar faster than your raise. And you could be making a quarter million dollars a year and still feel poor. Well, this guy must be real fun at parties, Ken.

Yeah. I got to say. Yeah. I think he travels around with his own cue cards, too. Yes. So what do you make of this? Is it possible to be a high-earning poor person? I don't buy it.

Well, there's a lot of people who make six figures that are broke. Yes, I'll say that. But they're not poor. No. He was trying to do some wordplay there to really bribe us up. I've been to Haiti and seen the most impoverished situations that exist on the planet. And it irks me that people think they're poor. Poor isn't their problem. No. The problem is they are in debt, deeply in debt, have no budget, no financial principles

guiding this paycheck that's coming in every month. And so that is the true problem. He's trying to point at inflation and go, it's never going to be enough, guys. They're never going to give you enough raise. And the truth is, I looked into this guy. He's got an online course to teach you how to be successful and be your own boss kind of thing, which is fine. I'm not mad at him for that. But what he's trying to do is make everyone fearful that they'll never have enough, they'll never make enough to build wealth, to retire with dignity. And that is a hope stealer, if I've ever seen one. Yeah, and it's so you can't make enough of the man, so you got to do your own thing and he's the guy to help. Yeah. And I do think

that there's some emotional manipulation going on when we see posts like that, as if there's just, it's just mystical. Well, it feels good to wallow in the pain of it's all about inflation and I'll never get ahead. And part of the goal of our Building Wealth Live event that you've been a part of is to give people hope that they can build wealth in 2022. They can build wealth regardless of who's in office. And it's a simple concept, George. I'm not going to stay in the money lane very long, but can I hop over into the money lane? Please, come on over. I don't know if you saw this, but one of the grocery items that has been hit the hardest by inflation is bacon. Yes.

Now, I'm just going to tell you something, folks. I love bacon. My boys love bacon. I've got two teenage boys. You ought to see the amount of bacon we go through. One pack, George, is not enough for breakfast. This is Ron Swanson levels of bacon, Ken. This is a lot of bacon when you've got two teenage boys.

And so I'm going to tell you something. Guess what? We're not getting as much bacon. Please don't tell me you switched to turkey bacon. We've dialed back on the bacon. Oh, okay. You just dialed back. I'm making a simple point.

When cost of goods and services go up, you have to decide how much am I going to engage in those goods and services, and I've got to cut back. I don't just have to willingly walk into poverty because it's like, well, bacon's a lot more now, and I still, you know, you don't have to do that. Yes. So on the career side, Ken,

you're always encouraging people, hey, if you're upset about your current situation, go find a new job. Yeah. You can do that. You can go make more money in today's economy. And on the money side, the truth is if you really want to raise,

do a budget. That's right. You don't have to go beg your boss. You can just go get out of debt. Come on. Stick to a proven plan. Yep. Start investing.

Yep. And then you don't have to show up to work stressed out because you feel like you're not making enough. Because the truth is we have debt-free screamers that make $30,000 and they pay off $16,000 and they feel freedom. And they're able to live their life. There's also people out there making $200,000 who are broke because they're bleeding out. And I've never heard a debt-free screamer talk about inflation. Not once. It just doesn't seem to – they're inflation-proof.

So good stuff there. Yeah. Let's get back to the phones. John joins us in Chicago. John, how can we help? Hey, how are you guys doing today? Good. How can we help today?

Good, good. So just to give you a little background information, I just turned 20 this month, and I went to trade school about two years ago. I've been an electrician for about a year. I got this new job basically at an industrial plant, and I agreed initially just to work nights, 40 hours, which I'm happy with. But now they moved it to six days a week, and it's been like this for a month. And they said it's until further notice. And last time they did this, about two years ago from what I hear, it lasted about two and a half years. And really, I don't want to do that.

I'm almost debt-free. But I know if I leave, there's only two other electricians, and they're probably going to make them work six 12-hour shifts. I'm going to feel bad if I leave. It's a weird situation. I get it. And I'm sorry you're in this situation. Are you getting paid overtime for this? Or is it just, I mean, they are paying you overtime.

But it's mandatory. Yeah, it's mandatory. There's no question asked. How confident are you in moving out of there into another electrician's company or whatever with just the, I'm assuming the demand is high for what you do. Is that true? Yeah. Yeah. So you're pretty confident you could move to another job and not have to work those crazy hours, correct? Pretty much. It's just the only thing is, you know, I feel bad. I'm going to have to leave. I know. I know. I'm going to address that in a second. I'm addressing. I'm addressing your possibilities first, right?

Yeah. So you have plenty of options where you can go make good money, maybe even a little bit more, and not have to work six days a week. True or false? Oh, yeah, true. I'd start looking now. You probably already have. But this is a pattern that they've done before,

and there's nothing that would lead me to believe they won't do this again. You could certainly bring it up to them and go, hey, how much? I mean, it sounds like you already have. And they just said, this is indefinite, which means don't bother me. It is what it is. All right. So you have leverage. I would use the leverage once you have another situation ready to go.

I can't keep this up much longer. Let's just find out where they really are. Second thing, you do not need to feel guilty about leaving. It is your life. You are not doing anything unethical. You are not doing anything that is a jerk move by taking care of yourself and doing what is best for you. Is that a true statement or a false statement in your mind?

No, that's a true statement. I agree. Well, listen, man, your buddies can leave too. Yeah. If they can't, they can't. Or if they don't believe they can't, then they won't. But the reality is you don't stay in an unsavory situation, an unfortunate situation, a soul-sucking situation,

just because you feel bad for the people that are going to stay on the ship. If the ship is sinking, and this is an emotional ship that is sinking for you, you've got to get off the boat, true or false? True, very true. Then get off the boat, and don't look back. Because here's the deal. If you were to stay there just because of these really cool guys that you like, guess

what happens? You'll eventually resent them, because you just because of these really cool guys that you like, guess what happens? You'll eventually resent them because you're going to make them the reason that you didn't leave, and that's garbage thinking. It's stinking thinking. Stop. Go do what's best for you. Don't move. More of your calls coming up.

This is The Ramsey Show. We'll be right back. All right, folks, welcome back to the Ramsey Show. Thrilled to have you with us as we talk about your life, your money, your work, your relationships, one phone call at a time. Thrilled to have you with us. George Kimmel is with me as we take your phone calls. And we're thrilled that you have decided to join us. And any time here, if someone's listening in, you've got a question, pops up maybe from one of our other callers, jump in, 888-825-5225. It's 888-825-5225.

Let's go to Moorfield, West Virginia. Alex is there. Alex, how can we help? Hi, thank you for taking my call. So I'm 19 years old and I have more debt than I would really like to have. And honestly, it kind of feels like a pretty heavy weight. And I just want to know what my steps should be as far as some of the things are valuable, and I feel like I can get my way out of this and never get back into this. And so I just, I guess, wanted to talk to the people who know best. So, Alex, riddle me this. How much debt would you like to have? None.

Perfect answer. Never. Okay, I just needed to know the level before we continue. That helps me. Okay. So 50, how much debt do you have total? $58,000. Wow. What kind of debt? Okay. So I have $22,900 debt in a new truck. I have $24,800 debt and a John Deere tractor. And then I have $7,600 debt and some landscaping equipment that I do for a side hustle with my neighbor. We have some equipment together. And then I have a personal loan for $2,700 that is just leftover negative equity from where I've already sold out of a lot of debt.

Are you in business with this John Deere tractor, or is this just a big toy? Okay, well, essentially it's become a big toy because I've been fortunate enough to get a really good job. I work from home in the retirement industry, and I love it, and I'm kind of getting out of these smaller things because it wasn't really panning out. It wasn't bringing in what I was sending out for it. Is the tractor, are you upside down on the tractor, or is it still worth more than what you owe on it or worth the same? It is worth about the same with plus or minus $1,500, so manageable.

Sweet. So how much do you make? So with my new job, I make about $48,000. As I say, I have some other income coming in from the side hustle that my neighbor and I do, landscaping stuff, essentially lawnmowers, not related to the tractor. Okay. What's the truck worth? The truck is worth a little better than $60,000. What? The truck is worth $60,000 and you owe $22,000?

Yes,000. What? The truck is worth $60,000 and you owe $22,000? Yes, sir. It's a case. I'm very passionate about vehicles. It's a truck that I've saved a lot through my childhood and a lot through my first working years. And I put a ton of money. I knew better than to go into debt. I did it anyways. I put a ton of money down and I've put everything I've made this year from both jobs on it trying to knock it out.

It's like 5.4% interest and watching that occur every day is killing me. Hey, Alex, Alex, if we want to talk about interest, you're on the wrong show, man. I'm trying to help you become debt-free. That's what I'm passionate about. Sell it. So here's the deal. The truck is gone today. The tractor is gone today. You're debt-free

today. And some money left over. And some money left over possibly. And some money left over, which is going to become your emergency fund, because I assume you don't have a lot in savings. I do. How much do you have? About $13,000. Okay.

Well, you won't have to touch that $13,000. That'll become your emergency fund if you do all of these things. Now, the question is, are you willing to sell the truck and the tractor today? To be debt-free? Yes. Are you willing to pay the price? That certainly sounds like what I need to do. Are there other trucks out there?

Are there other pieces of metal on wheels that you could love one day? Certainly are. That's what I figured. And can we do it all with cash going forward? And any side hustles we do, we do with cash going forward? Yes. How about the landscaping equipment? Can you sell that?

I can. Do you need it? Because it sounds like the side hustle is not panning out versus the $8,000 debt you have on the equipment. Yeah, I can sell it, and I think that would be my best bet. It's a good move because if you want to keep messing around on the side hustle with the landscaping job, that's fine. But you can rent the equipment, and you build that into your job. Renting that equipment is very affordable if that's something you want to continue to do. I would sell all of those things, man.

Now you're debt-free. You've got a nice emergency fund. You can still buy a decent truck. So what would you suggest then as far as a vehicle? A decent truck with what we can afford. You make $48,000, and our rule of thumb is everything with a motor in it doesn't add up to more than half of your annual income, which means everything with a motor in it that you own shouldn't add up to more than $24,000. So if whatever cash you have left over, that's not your your emergency fund leave that at three to six months of expenses outside of that get a reasonable

truck for 15 20 grand that's what i'm doing if i'm in your shoes understand now the question is are you going to go back into debt for some other you know harebrained idea down the road no no that won't happen i'm already working on how i want to go about getting out of this debt and saving up to purchase some property up front with cash and well i like that's a different mindset you're very ambitious and i like this and keep in mind you can always buy a used tractor if you're just putzing around on the tractor with a cold i don't even i don't even think i need it i think looking at it now, it was just a mistake. Yes, of course. Well, it's all right.

You paid a stupid tax, but the truth is you can reverse all of this very easily right now because of the market and because of them being vehicles and tractors. So I'm undoing this thing ASAP, man. And once you're out of debt with a pile of cash, never look back. Never touch debt again. At 19, you're going to be unbelievably wealthy if you do that. Thank you for the call, Alex. You know, I've got to tell you something.

You may be surprised by this. I've always wanted a John Deere tractor. Really? Yeah. What is it about it? I have no use for it at all. Is it a brand association thing? I think the idea of, you know, like late summer evening, cutting the lawn, listening to something.

Well, no one mentions tractor unless it's a John Deere. Then you go, it's a John Deere tractor. Otherwise, you just call it a tractor. Yeah. It was a great country song, I think, by Joe Diffie, John Deere Green, if I'm not mistaken,

for country music fans. Do you want to sing it for us or is that going to get us taken off the air? Well, Kelly's singing it behind the glass. It kind of goes like, maybe I need to get

the melody in my head, but in John Deere Green on a hot summer night, something, something, something I can't remember. That's all we can do legally on air. Thank you, Ken, for that beautiful melody. Oh, see, you were setting me up. See, there's licensing issues. I can't even sing it. I don't know. I just wanted to hear

you sing. It makes me happy. But you know what's interesting about this is, George, there's a psychology involved in selling something that you really like that's really shiny and i heard it in his voice and and there's nothing wrong with alex he's just like the rest of us i want you to address that because in his situation um the landscaping equipment the tractor and the truck he can

eliminate all of those debts by simply selling them. Boy, that's an easy way out. It's not always that easy. He's lucky in that those still have some value, but there is something psychological. You can't sell your student loan. Sorry. You can't sell a piece of paper. So what's he going to face when he gets off the phone and he now starts figuring out? What's he going to be facing? Well, first is going to be the emotional decision of letting these pieces go that were a toy that probably a lot of people justify this because they go, well, it's part of the side hustle. I need this for my job. I need a $60,000 truck for my job. I've got to have the tractor because the side hustle is making $400 a month. That's good money, even though I'm $30,000 in debt on the equipment.

So part of it is emotional. The next step is, what are the tactical pieces now? Where can I get the best price? I need to take good photos, clean this up, sell it on Facebook Marketplace. I don't know where you sell it. I'm guessing Facebook Marketplace is the best place for tractors these days. Yeah, I don't know. Who knows? I don't know. But those are the pieces that is next for him are the tactical once he deals with the emotional.

Yeah. But once he does that and those checks clear, there's going to be such freedom. And see, that's the key right there. You've got to focus on what's on the other side of this because here's the deal. He's driving a sweet truck just by the sheer cost of that thing. The next truck he gets is going to feel so awful comparatively. Yeah, it's like the ugly duckling. You know, it just is what it is.

But when you drive crappy cars your whole life and you finally upgrade, my 2013 feels like a Maserati brand new off the lot right now. Oh, yeah. And it's because I drove terrible cars my whole life. What did you just upgrade from? Honda Civic 09. 09 on Honda Civic. To a 2013 Tesla.

You feel like you're in a spaceship. It's only four years older. Yeah, but the technology is. Can I tell them, Kelly? Go ahead. Kelly bought my old car for her son, who is about to take his driving test. George didn't sell you a lemon, did he, Kelly? No, it's a great... it's a Honda, man.

I think we'll go for 400. Those things will run forever. We had it checked out and everything, and it's a great car. George. My son's loving it. I love that. Integrity. All right, so here's the deal, folks.

Short-term pain on selling those really fun toys. Long-term gain. But long-term gain. Way to go, George. Great advice. Alex, thank you for the call. You're just a couple transactions away go, George. Great advice. Alex, thank you for the call. You're just a couple transactions away from financial peace.

Do it. Welcome back to The Ramsey Show. I'm Ken Coleman. George Campbell joins me in studio. Our question of the day comes from Blinds.com. Blinds.com 100% satisfaction guarantee. It means even if you mismeasure or pick the wrong color, they'll remake your blinds for free. You get free samples, free shipping, and with the new promos they run every month, you'll save even more.

Make sure that you use the promo code Ramsey to get the best deal. Today's question comes from McKenna in Oregon. My husband and I are in our early 20s. He earns $90K a year, and I make $45K. I also have a side business in the wedding industry that brings in between 25 and 30 a year. We're debt-free, have an emergency fund, and are over halfway to saving our 20% home down payment. I hate my job and would love to pursue my own business full-time because I know I could make it grow quickly to replace my salary. The problem is

that my husband's job doesn't provide health insurance, so we'd have to be self-insured if I quit. To complicate things, we'd like to try for a baby this year, and once we have children, I plan to quit working entirely. Should I quit the job I hate so I can focus on my personal business and lose our insurance, or do I just suck it up so we can save as much as we can and try to juggle both jobs until a baby comes? Wow, George. Now, this question is loaded. A lot going on in here. A lot of layers. Well, McKenna, I got to tell you, if I read this correctly,

that once you do have babies, you are going to be a full-time mama, meaning that the business that you're talking about potentially starting is going to go away. I just wouldn't start a business that I'm going to eventually close down. I would work in the job. I know you can't stand your job, and that stinks. So either change jobs, change locations, and keep letting someone else pay you is probably the best route just overall.

I don't think it is a wrong decision if you want to hustle. Because here's the thing, George. There's no guarantee that just because we start trying to have a baby that we're going to have a baby. And that could be, I hope it's a quick process, but it could be two years, three years. It took Stacey and I seven years. So we have to plan for the future, act towards the future, but then make decisions that are best for us in the present. Agreed. And I think replacing the job she hates is absolutely a must.

It's just the issue of, do I start it on my own and we don't have health care? And then our costs are increasing when you self-fund health care. And I don't mean to take anything away from her or discourage her, but it's not as easy as she makes it sound to just start that business and replace her salary. There's a lot of financial risks that could affect the ability to have the baby. So my advice is probably to consider the same type of work, making the same money she's making now or more, in a place that she doesn't hate or replace the job altogether. Maybe it's the work. Maybe it's the location, the environment, the culture.

Maybe it's both. That's what I would do. I would not take on the added stress of starting a business to try to replace your current income and increasing your health care costs. I wouldn't go that direction. Agreed. And the other option is maybe the husband can go find a job making $90 or more that has those benefits, and then she can quit, stick to her side hustle, baby comes, and we're all good. So that's another option too. Good. That's a very good option there, George.

Absolutely love that. But thank you for the question, McKenna. Russell now joins us in Phoenix, Arizona. Russell, how can we help? Well, yeah, how you guys doing? We we're having a blast what's going on with you uh so a quick um funny story uh when you were trying to sing in the last segment i'm actually a voice teacher oh well now i want to point out that i did i was like i wish i was on the phone now yeah but i didn't try to sing. There was no attempt at all.

I actually held back because I needed to work the melody out in my head. But I do appreciate that you're available in case I decide to do that after the end of your question. Thanks for the disclaimer, Ken. Yes. No, so the reason I was calling was I'm just starting my journey on the Baby Steps. And I've been listening to the show for a few weeks and finally you know got on the website and said you know it's time to do this so i'm at this point um i'm a based up one with the emergency fund and i got that uh every dollar wrapped to start

creating my budget uh which i've never done before with my wife and i so i can be pretty new but um as i was doing this process, I began to create, gather all of our debts and all that, all of our things, and just getting ready for the snowball once we get our emergency fund. And the question I have for you guys is my car loans. So I've heard, you know, we're just going to show you, try to sell the cars off, get rid of that if possible. But unfortunately on my car loans, all of them,

I am too far negative to be able to cover the negative. It's just outright seldom. So my question is on the snowball, usually going smallest to largest. If I know I need to pay an additional $8,000 off my car where I can break even, should I move the car up to an $8,000 instead of I owe $18,000? So should I move it up to an $8,000 in my snowball to pay that off and then sell it to get rid of that debt instead of leaving the $18,000 car loan lower on the snowball.

Based on what you told me, it doesn't sound like that makes the most sense. What are the cars worth? Okay, so there's three cars. So the smallest one, which I owe 18, the car is worth about 10. Okay. The next one, I owe 32, and it's probably worth about 24. All right. And then the biggest one, I owe 60, and it's probably worth 50. What's your household income? Take home is right under $100,000 a year.

What's the gross on that? Probably $130,000? I don't know. Somewhere around there? Yeah, you have $110,000 in car loans, which is more than you make in a year. And our rule of thumb is to have all that add up to no more than half of your annual income and so we have to get rid of these cars regardless i'm gonna do the lesser of the evils here could you sell the 61 for 50 and make up the difference because that's the biggest one anyways i don't have the 10 i don't have the negative to cover at this point. No. So the only time we tell people it's okay to go get a loan from a credit union or local bank is when they're underwater on a car like this. Now, I don't want you to go rack up another 30

grand in personal loans and just move the debt around. But if we can get rid of these cars and then have a much smaller loan to face, I'm okay with that. That was my thinking as well. I just wanted to kind of confirm if that should be a good option to go that route. The question is, how are you this far underwater with a car market like we have right now? Bad impulsive decisions on my wife and my decisions. That newest one, that 60,000 car one, we just got that probably a few months back before I started listening to the Ramsey show.

And in a few months, it's already depreciated that much? It's already depreciated that much in a few months? Well, yeah, well, they marked it up pretty, I didn't realize how much they marked it up, so I wasn't feeling enough on what they were doing. And why do you guys need three cars? Do you have three drivers? We did.

No, again, with the three-car thing, bad decision. My wife was impulsive about wanting a third car because she wanted to put a bunch of miles on her car, and she regrets it now. But, yeah, she got in the idea that she could afford a small payment and not put so many miles on her car since she drives so far to work. So unfortunately, we have three cars. Okay. What other debt do you have?

We got credit cards. So credit cards probably maybe $11,000 to $12,000 worth. And then student loans, it's about $18,000. And then a solar loan for $40,000. Oh, boy. Okay. I'm going to put you guys through Financial Peace University on us. It's our gift to you.

That's all part of Ramsey Plus, including Every Dollar Premium. You said you just started your first Every Dollar budget. And so what I want you to do is watch the lessons with your wife, have a conversation after each lesson with takeaways and action plan. Do the every dollar premium budget, which is going to connect to your bank account. This is an emergency situation. This is not like, ah, yeah, we're going to do the debt. This is we don't see a restaurant.

We don't see a drive-thru. This is rice and beans. This is cutting every expense possible. You guys have been living La Vida Loca, and it's time to stop and be adults. So we're rooting for you. I hope this gift helps. So hang on. Austin's going to pick up.

We'll get you plugged into that. Yeah, all of a sudden I've got Ricky Martin in my head. Oh, boy. I'm sorry. It's all I can do to keep my shoulders still. But I've got to keep my shoulders still. Not with a voice teacher on the line. George Campbell, thanks, pal, for hanging out.

Thanks to our team behind the glass and you, America. This is The Ramsey Show. Hey, folks, Ken Coleman here. Did you know The Ramsey Show is one of the most popular podcasts in the world? Get your daily dose of advice on life and money. Check out all of our shows from The Ramsey Network wherever you listen to podcasts.