The Ramsey Show - App - What’s the Best Way To Give Financial Gifts to Our Kids? (Hour 2)

Episode Date: January 20, 2022

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Live Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, George Campbell, Ramsey Personality, host of the Fine Print Podcast on Ramsey Networks. Here's my co-host today. Open phones at 888-825-5225. As we talk about your relationships, we talk about your work and your career, we talk about your money, and we talk about you. It is the Ramsey Show, 888-825-5225 we are celebrating uh news that we got this morning

that the book baby steps millionaires uh has debuted as a number as a number one bestseller in the nation thank you guys all of you that bought it we appreciate you and uh very much and we're going to keep our promises that the book will do the things we told you it would do if you do the things in the book that we told you that you should do. How Ordinary People Built Extraordinary Wealth and How You Can Too. That's what it's all about. So, again, open phones here at 888-825-5225. Brad's in Phoenix.

Hey, Brad, how are you? I'm okay. How are you, Dave? Better than I deserve. What's up in your world? Okay, so I've been married 32 years. I'm going through a divorce that's not going to get fixed. And I have two options the way I've been looking at it.

The wife has a lawyer. I have a lawyer. I can take 50% of her pension, which would be $1,700 a month. Our house appraised at $650,000. I think it's a little high, but it appraised at $650,000. We owe $90,000. I make $80,000 a year. That's without half of her pension.

My option A is, which she said she might honor, even though her lawyer is probably not going to want her to honor it, would be I give her $100,000 cash and she walks away from the house and I don't touch her pension. Option B, which my lawyer says I should definitely do, is to definitely take 50% of her pension, which would be $1,700 a month, but then I have to pay her $230,000 cash, which means I have to refinance my home. So I'm not sure which way to go. Where's the $100,000 coming from if you did the option A? A gift, if you will. My father would probably help me out, or I could just simply refinance

$100,000 out of my equity. I see. But everybody keeps telling me, do not walk away from that pension because if she dies before me, that pension will keep paying out. At least that's how it's written up. She may want to change that and say, no, when I die, Bradley is not getting anything else. And I think that's how it's written up now. But my lawyer is going to argue saying the only way Brad's going to honor taking your pension is if it keeps paying whether Kathy pre-deceases you or not. Yeah. So right now it sounds good.

Give her $100,000. I'm sitting on a $650,000 house. Now I owe almost $200,000. I could rent it out, sell it, do whatever. That would always be a good nest egg for me. But everybody's telling me definitely take half of our pension because that's constant income that you don't have to worry about. What do you do for a living? Security technician.

Okay. A friend of mine that does divorce recovery says that divorce turns a marriage into a business transaction and that's what that's what you're doing you were very calculated and walking through this how long has this been going on the marriage has been kind of on the rocks for the past 10 years i mean how long was this divorce declared and you got lawyers? How long ago was that? We started, she filed for divorce late October. Okay.

And we have a meeting on Monday to, it's not the final decree or whatever you call it, but it's a meeting saying, here's what Kathy wants, here's what Brad wants. And the judge says, okay, get your stuff together and come back to me with a decision. Yeah. that Brad wants, and the judge says, okay, get your stuff together and come back to me with a decision. We were going to go through just a mediator, but I wanted to play it safe and got a lawyer, which I'm already $8,000 in. That's okay. You need to do that. There's a lot of money involved here, and you need a lawyer. You did the right thing.

The other side of this is she keeps saying that by me taking half her pension, I'm going to be broke. I've got to find an apartment, you know, by me taking half her pension, I'm going to be broke. I got to find an apartment, yada, yada. I understand that. The best apartment we can find for her and her lifestyle is going to be about $1,500 a month. But I got a feeling she's also got a little nest egg from an old boyfriend that's going to inherit about $25 million. So I got a feeling he's going to take care of her in some fashion also. But I'm putting all my social things aside and looking at this as a strict business transaction. It's hard to do.

Yeah, it's hard to separate the finance with the emotions, because what I'm seeing is if you take half her pension, it's going to create this weird tension where you're still intertwined in her life. And so the part I like about the other one is you got kids all grown up out of the house grandkids negative um mathematically i would do option a hundred thousand dollars and take the house and be done with it let her have her pension uh relationally i would take option a and let her have her pension because it's a clean break you're not stepping all in each other's stuff i don't know if there's such a thing as a clean break after 32 years but i guess there is no but

we're still going to be friends but there's you know we don't say I love you as much as we used to. That's weird. Well, if you're taking half of your friend's pension, it's going to hurt that friendship for sure. The thing is, I think you're fine. You're going to be okay, and she's going to be okay. The pension's not that big a deal. It's not that big a d 100 grand right now sounds real good uh i'm sitting on a house that i owe 90 now it's going to be i owe 190 yeah that's what that's exactly what i would do and then you're probably not going to keep that house

but basically you're trading you're trading the equity in the house the majority equity in the house for uh her pension that's what it amounts to and that's that's the that's the negotiation that you're her pension. That's what it amounts to. And that's the negotiation that you're proposing. Yeah, that's what I would do. Your lawyer's calculation. You guys are putting way too much value on a $1,700 pension. It's not that big a deal.

It's not that much money. That's what I'm thinking, but it is. It's not that much money. It's an income. It's not $17,000. It's $1,700. You's what I'm thinking, but it is. It's not that much money. It's an income. It's not $17,000. It's $1,700. You make $80,000. Right. But what if something happens to me and I can't work?

Well, you need to get a disability policy, and you need to start saving some dadgum money and setting yourself up for retirement. You need to do that anyway. $1,700 isn't going to save your butt. Or $850 for sure isn't going to save your butt. You know? And so y'all are acting like this pension is some kind of big deal it's not it's not enough money here

to spit at it's nice if you send it to me i'll cash the check but it's not i'm letting it go your your plan is the best one on the table you you've already thought through this and i'm with you 100 grand you get the house let her pension go that's what i would do and if she don't take that she's a fool but there's a lot of fools in divorce court a lot of them a lot of them this is the ramsey show We'll see you next time. If current times have shown us anything, it's that the least expected events can and will happen, and we have to deal with it. That's why everyone who has a family counting on them needs term life insurance. For over 20 years, the only company I've recommended

is Zander Insurance. Not only because they search all of the top term life plans to find you the best rates, but over the years they have constantly changed and updated their systems to make the whole process simpler and easier to get the protection needed. You can now apply with a completely touchless experience with everything being done either over the phone or the internet. They also have plans with super competitive rates that don't require an exam, allowing you to skip a step and get the coverage you need faster. Go to Zander.com or call 800-356-4282. Great rates and a simple process mean there's no excuse to not get this done, people. George Campbell Ramsey personality is my co-host today here on the Ramsey show he's the host of the

fine print podcast very popular podcast you should check it out at Ramsey networks George we got a good question in by social yeah let's do this's the question. My husband and I were blessed with a significant inheritance after the passing of my father last year. Since we have no debt, we would like to give a portion of this inheritance to each of our three adult children, and we would like to make a significant donation to a local non-profit children's home. What advice do you have on how we can do this without paying additional taxes? Wow, okay. Well, I don't know how much it is. We don't have the amount there, but we do know that this year the gift tax amount is $16,000. What that means is if an individual gives an individual more than $16,000, it is

taxed at the gift tax rate, the amount over, or 60 percent it's crazy how much they take so you don't want to violate that now individual to individual is the key here so that means if you got grown kids you and your husband and your grown kids are married then there's four individuals involved so mom can write her son and her daughter-in-law, two separate checks for $16,000. Dad can write son and daughter-in-law, two separate checks for $16,000. So we can move $64,000 from an adult couple to an adult couple with four checks, and it'll survive an audit. But don't let anything be more than $16,000 individual to individual. If you do, you're going to get into gift tax, or you're going to have to check out with your estate tax planning attorney what's called the unified estate tax credit meaning you use up some of your federal

exemption with this gift if you're trying to do if you're trying to give somebody a couple hundred thousand dollars that's what you're going to do you're going to step over into that uh rather than this but most people can couple to couple that's 64 000 will take care of now as far as the children's home goes that's probably a 501c3. Yeah, so if you're going to donate to something like that, there are no limits on how much you can give. There's no $16,000 limit. You could give $100,000 if you want, and you won't pay additional taxes for giving to a 501c3. In fact, it can actually lower your taxable income.

It is a tax-deductible. It's a tax-deductible donation to aprofit if it's a verified 501c3. And so you can take a tax deduction on that, and depending on your income as to how much of the deduction you can use and so forth. Some people do standard deductions. Some people itemize. So I like to work with a tax pro when it comes to these situations. If it's going to be a large amount, you may be better off itemizing versus going the standard deduction. You will be. you will be if it's a large amount because you're going to have given enough that you're going to get more tax break on the gift that to this 501c3 if it's substantial if you're giving five thousand dollars it might

not be but if you're getting like 50 grand 100 grand or something like that out of this to that to that children's home then you're going to want to itemize and you're going to want to do that with a tax pro and you're going to want to lay that down that way and make that happen. And the big thing here is do not let a tax situation determine your generosity. It's a great benefit to have your taxes lowered, but I want your giving to be from the heart if they want to do this, not because, oh, we can lower our taxes. No, it doesn't determine my generosity, but it does determine you don't want that spiritually. You don't't want that emotionally but you just want to be wise about it for instance if you wanted to give your kids um more than 64 000 couple to couple uh you might do some of it uh in december and some of it in

january so you have two different tax years now we got 128 000 and so you can you know you can if you're just careful about how you do it it's not it's just the timing and the process that you're just careful about how you do it, it's just the timing and the process that you're laying out there that allows you to do this without any taxes on it. And so you don't want to be one month away, eight months away from saving taxes on something. And so don't determine your generosity, but it could determine the structure of your generosity, how you're going to go about it. And we're going to write four checks instead of just write one big check, you know, that kind of thing. And each one be itemized in the four column, mom to daughter-in-law, mom to son, you know, names on there. So in the event there's an audit, you can come back and you've got a trail here. You've got a paper trail that will cause you to be able to survive that gifting process.

That's a great question. It's very quite very detailed very interesting but yeah uh i oftentimes run into people who make the mistake of just um and it's it's it shows how philosophically broken our tax system is that i own something i can't give it to somebody without getting screwed you know i mean that's broken so but i mean a lot of people don't think through the taxes and so like a mom will have a house and uh she's like 75 and she goes you know i don't want to leave it in the will i'm just going to go ahead and deed it to junior huge tax mistake you can't just give it away this house is worth three hundred thousand dollars

you're in yeah if you get audited there's gonna going to be a, you know, you have tax, gift tax money due on that. And so if you don't go under the unified estate tax and go get an estate tax planning, someone to help you with the tax planning on this, you can get hammered. And it just feels like, you know, it's my house. I'll be able to give it to my son. You know, it's my house. I'll be able to give it to my, the neighbor down the street. I don't care. You know, it's mine. I ought to be able to give it to my son you know it's my house i'll be able to give it to my the the neighbor down the street i don't care you know it's mine i ought to be able to give my stuff away but no by god if it's not a 501 c3 you're gonna get tagged and uh so you you it be smart about this yeah you know the laws work with a pro understand that situation

it's really important get get you know get with one of our endorsed local providers for taxes and get some advice it's really there's about three or of our endorsed local providers for taxes and get some advice. Really, there's about three or four little things you can do where you can sidestep this stuff if you bother. But if you wait until, oh, well, I've already deeded it over, geez, man, quickly undo that before somebody finds it and then go do it right. And it's just you get yourself caught in this sideways big time. It's a big problem. Good stuff. Good stuff.

Thanks for joining us there by social good things. How would you feel if you knew you could retire with dignity, that you could leave an inheritance to your family? Now, that'd be nice. The truth is you can have that kind of life, and you can build wealth, and you can become a millionaire. That's what this book, Baby Steps Millionaire, is all about. That's what Financial Peace University is about. That's what premium version of every dollar is all about.

And so, you know, we're about getting you out of debt so that you can be generous, like we were just talking about. Getting you out of debt so that you change your family tree. Getting you out of debt so that you build wealth. I don't want you to be rich so you're a jerk. I want you to be wealthy because you can do good things with that money when you get it outrageous generosity is one of the things we teach you all the time around here so you can use here what we're doing right now we got the best year ever bundle here's the bundle access to financial peace university the premium version of every dollar the two resources to help you take back control of your biggest wealth building tool your income and a copy of the brand new number one bestseller baby steps millionaires to learn

the right way to invest and get to a million dollar net worth all of this is called the best year ever bundle and you just go to uh ramsey solutions.com slash best that's ramsey solutions dot com slash best and um i i just want to do my pip of the pig i would love to best year ever there it is there it is that's pretty good well i've got granddaughters and so i didn't know that they they now have an english accent that's the language you have to use of the pig yeah so uh hillbilly kids with english accents it's pretty interesting strange times at the the Ramsey House. Best year ever. That's a good bundle, though. And what I love about this, even if you're not in baby step four through six and you're going, well, I got a pile of debt. Why even read this book? What I found reading this book is it's so much more than just investing advice. Yes, there's a little bit of

that, but there's so much about belief and mindset and realizing that it doesn't have to be the way I thought it had to be. It unlocks some things. Belief is everything. And it's not just positive thinking stuff. I mean, you know, Zig Ziglar used to say, you know, positive thinking will do more than negative thinking, which is true. No question about that. But it won't make you grow three feet. It won't make me have muscles that are big.

I'm 60 years old. I'm past that issue, okay? So that's not a thing but the uh but but here's the thing if you don't believe that pushing the button that says start on your car is going to cause it to start then you won't push the button you know if uh you ever sat there when the battery went dead you go oh yeah click click click sad situation finally quit believing that it's going to work right and so you don't do it anymore but if you know that when you push the button it's going to start you would do it and say that's belief yeah belief causes action you don't you have to be some kind of psychologically you know john deloney problem right if you if you acted on things that you didn't believe to be true yeah

it's just like you know why did you think it was going to work well you know but here's the thing millionaires 97 of them when we interviewed them said they believed that you could become a millionaire and they went and did it when we interviewed the general public only 69 believe you can still become a millionaire and if you think you can or you think you can't you're right henry ford said you're right. We'll be right back. In the lobby of Ramsey Solutions on the debt-free stage, Paul and Daly are with us. Hey, guys. How are you? Doing well.

How are you doing? Doing well. Thanks for having us. We're honored. Where do you guys live? We live in Louisville, Kentucky. All right. Welcome to Nashville.

Yeah, thank you. And all the way down here to do a debt-free scream. How much have you paid off? $83,000. All right. How long did this take? 11 months. Good for you.

And your range of income during that time? $200 to $225. Wow. What do you guys do for a living? We're both physical therapists. Ah, PTs. Good. Very good.

Well done, guys. Well done. Good. So I'm going to guess and say some of that $83,000 might have been a little PT student loan. It was all. All of it good. Well done, guys. Well done. Good. So I'm going to guess and say some of that 83 might have been a little PT student loan. It was all. All of it. Most of it, yeah. All of it.

Okay. We started at 290. Yeah, we started at 290. Wow. Wow. And it worked your way all the way down to 83 before you started our program. Yeah. So how did you meet us 11 months ago?

Well, actually, it's a longer story. We took FPU at southeast christian yeah in 2013 um yeah like daily said start out with 290k um she's the saver i'm the spender so i spent the money while she's tried to save it um fast forward to 2019 um you're saying you flunked fpu i did i did she passed successfully i did not he was pretty good for a few weeks. Yeah, a couple weeks we did the envelopes, and then I fell off the wagon. So, yeah. But fast forward to 2019, did my first Excel spreadsheet and was like, you know what?

We could pay this off. I think I gave ourself the goal of paying off my student loan by the end of 2021 and then hers by 2023. Then COVID hit in 2020. Started doing some overtime. Started paying off more. Paid off mine six months early, which was awesome. And then hit hers heavy and paid it off in November. So we finished a year early.

Just like that. Yeah. So what happened, Paul? I mean, what'd you do with the evil twin? Well, I think when I put together that spreadsheet that the interest was in

a red negative number. We're Kentucky fans, and so going against, you know, Louisville's red. Yeah, don't want any red on there. No, we don't. And so the lower I could get that red number, the better. And so when I was able to play around with the numbers and say, you know, if I put this much more towards it, that number goes down. And so that was my main motivator. So put the investing in blue.

Yeah, yeah. Yeah, okay. I haven't seen sports rivalry be a debt-free driver. Such a strong motivator, right? There's a lot of reasons to get rid of red, and that's not a bad one at all. That's not a bad one at all. I'll a bad one at all i'll take anything i can get if we get going here so yeah so uh daily he comes in and says i did a spreadsheet and i think that you're a genius what did you say yeah that's about how that went we had separate bank accounts at that time

um and he wanted to merge them and i pushed back pretty heavily against that because we had everything set so well and it was going to take a lot of phone calls and internet things to merge at that point because all the auto drafts and all that kind of stuff. But I think that probably helped us the most because we stopped kind of going at each other. Like, you know, we would send a text and be like, hey, we're out of diapers.

Can you get them on the way? And he'd be like, well, I got them last time. It's like that's a ridiculous thing to worry about when you're, you know, making $200,000 a year. So it just got to where enough was enough. Wow. So the first time you guys combined bank accounts was in this debt-free journey. Yes. Oh, yeah.

So early last year, we got hit with a surprise IRS debt from the year before. And so we sat down at the table and I said, look, we had the goal of finishing it by the end of last year, and then we got hit with that $9,000 tab that we had to pay. And we buckled down. She started taking PT students at work. I worked in the kitchen. I worked as a patient aide.

I helped my dad build and repair pools and so just getting it all together and we were able to do it you made it anyway yeah we did wow we made the go yeah we actually made it almost a year earlier than we ever intended to right because of all the extra work but also because of covet overtime yes yeah covet in a lot of ways i mean it's been an awful time financially it was a blast but it out a lot because, you know, they were really short-staffed at work, so he was able to pull overtime that he normally isn't able to do. He had more free time because he was doing less patient care, which enabled him to really hammer those spreadsheets.

Ah! So, yeah. Okay, so now that you did it, what do you tell people the key to getting out of debt is for me it was the budget uh communication is key um you got to have a big dream you know our kids are sitting over there right now so that's definitely our why um we want to travel as well um and you gotta you definitely got to you got to stick to it um we had we had that irs debt we had our furnace go out do you know how to change a blower motor on a furnace i'm afraid i do i do as well thanks to youtube um so that saved

us some money there but just sticking to it it's easy to make excuses but if you lean into it and commit um persevere and keep going wow so um paul talked to the guy guy that went through FPU and has not done this spreadsheet yet. How do you get him to do that? Gosh. Put the opposing team's colors on it? Yeah, that worked for me. Just sitting down and seeing that negative balance, you know, how much money was going towards interest. It's painful to see, you know, how much money you're just basically throwing away.

And so that was my big thing to try to get out of it faster. Daly, talk to the people who don't want to combine accounts about how inefficient it is and also how relationally stupid it is to be separated. It was. It really was. I will say that. I came from a family where my parents had separate accounts, still have separate accounts, and they've done fine. It's worked really well for them, but it has worked better, I think, in the long run for us to put them back together. It was a headache for a month or two working it out and figuring it out because he

would come to me and be like, okay, how much is the water bill? How much is lgb lgb bill what is this bill where i always knew all of that because i had been the one managing it for the last five years um but i think in the long run it has really saved a lot a lot of irritation like a lot of tit for tat and a lot of just like nitpicking at each other of who's buying what the diaper thing yeah yeah or. Yeah, or dinner. Sounds more like roommates than husband and wife. Yeah, in a way. Yeah, in a way it was. You guys are incredible. You're not afraid of work. You may have been afraid of doing a budget and spreadsheet

early on, but you guys have never been afraid of work. And that really propelled the journey. I get that honestly, yeah. Amen, that's true. Well done, you guys. I'm proud of you. Thanks for your help. Well done. Very cool. And you brought the kiddos. Bring them up. What are their names and ages? Come on over, boys. So we got Finley here, who's six years old.

And then we got Sawyer, who's three. And Finn wanted to say something. You want to say it? Go ahead. No. You don't want to say it? No. Come on.

Go ahead. I changed my mind. Okay. He changed his mind. All right. That's okay. Very cool. Very cool. Well, we got a copy of Baby Steadicam Millionaires for you. That's the next chapter in your story for you guys to go on and be millionaires.

You're on your way to do that. You got two good reasons there to change your family tree. Very, very fun. And a copy of Total Money Makeover for you as well for you to give away and stir somebody up with. Paul and Daly Finley and Sawyer. Global Kentucky. $83,000 paid off in 11 months. Making 200 to 225.

Count it down. Let's hear a debt-free scream. Here we go. Three, two, one. Say, we're debt-free! This is how it's done, ladies and gentlemen. Wow. Wow.

Just in time for them to rip off the headsets off the parents there. They were just. There is something about the sports headsets with the microphone in front that attracts little kids like nothing you've ever seen. It's a handle. It's supposed to be grabbed. But they do a great job with it. What a cute family. Very well done, you guys.

Very well done. Man, there's some important lessons there. Oh, yeah. Number one, if you didn't get started when you took the class, you still can get started. Yep, not too late, even if you flunked. If you haven't combined incomes and combined your money and working together with the efficiencies of communication and relationship efficiencies and even money efficiencies by combining and relationship efficiencies and even money efficiencies by combining your accounts you can still do it yep a lot of reason to do these things

it's it's never too late to change you know they say more is caught than todd and her parents never combine accounts and so they well i guess we don't need to combine accounts it worked for them but it's never too late to decide to do something different. Yep. Yep. It's amazing. Hey, you know what? If we're wrong, you can always take them back. That's right. But we're not wrong. Not yet. Not yet. 100% chance of being right when you're Dave Ramsey.

Oh, wow. I'm 100% sure that I'm an expert on my opinion. This is The Ramsey Show. We'll be right back. Thanks for joining us, America. George Campbell, Ramsey Personality, is my co-host today. Dani is with us in St. Louis. Hi, Dani, how are you? Hi, I'm good. How are you guys? Better than we deserve. What's up?

Hi, so I was calling because my husband and I are looking for some advice regarding transitioning our mindset as we enter baby steps four through six. Okay. So for a little background, so we got married in August and we became debt free in December. Way to go. Thank you. Since then we've finished baby step three and we started our 15% to our retirement plan. But we're struggling with balancing short-term goals like saving for larger purchases versus just living more freely and starting to enjoy things more now that we're debt-free. Okay.

You do have your 15% going into retirement. Correct. And you are committed to finding some money to throw at the house and get it paid off in baby step six, right? Yeah, we have a teeny tiny mortgage left, and that's not a huge concern at this point. Okay. Well, I still want to finish it off. Of course. Still baby step six.

So your issue is just enjoying some fun money versus purchasing a car in two years. Yeah. So I'm 27, and I've been driving the same car since I turned 16. So I'm a little tired of it. You need a car. You need a car. I need a car. What's your household income?

We make about $175,000. Oh, you make a lot of money then. Okay. Thank you. Yeah, we do well. So when you lay out the budget and you're having this discussion with your new husband, is there too much money going on fund or not enough money going on fund? Because you ought to be able to buy a car at $175,000 and still have a lot of fun.

Yeah, I think it's more just that we're balancing them both. I mean, we're doing pretty good saving, but I think we thought it would happen faster because of how much money we were able to put towards our debt. But now since we've started like going on weekend trip, I mean, we're not being reckless by any means. We're still working our budget and everything. It's just been like, we'll book that flight and then we'll be like, man, that money could have gone towards a car, but we really want to enjoy things too. Because it's not an emergency. I mean, while I'm tired of my car, it runs and it gets me to work every day. No, this is a normal dilemma. A lot of people deal with because you've been so gazelle intense

and now it feels like, well, we should be focused on the goals. Having fun is not part of the deal. But remember, you live like no one else so that you can live like no one else. And so if I'm you, I'm putting it in the budget, and then there's no guilt about the trip because we budgeted for the trip. Yeah, that's the thing you're not doing, I think. Let's step back at that a minute and go, okay, if we allocate X number of dollars in the budget for weekend travel, let's just give it a category. Okay. And having done that, we agree we're saving $1,000 a month towards a car. I'm just making up a number, $2,000 a month towards a car, whatever the number is.

Okay. And then you go and you spend what you said you were going to spend on weekend travel, not more, then there would be no pull. So that tells me you're not allocating these things until after the fact. Yeah, I think I'm more tempted to be like, okay, well, let's see how little we can live off of. Yeah, but I mean, if you put it down the budget, you have that discussion before the money leaves and before the trip happens. Okay.

You and your husband are sitting and looking at it on the paper, and you're going, okay, this is what we're spending on this. This is how I solve the problem with my wife, because she is a tightwad, and she would not spend money on herself afterwards, after we went through all that hell with bankruptcy and everything. And we had no trouble allocating clothing money for the family. But she would spend 100% of it on the kids and be Scarlett O'Hara. I'll just wear the drapes, you know, which is a bunch of crap. And so finally, we had to break it out to where we had a separate envelope for Sharon's clothes to make her spend money on herself on Sharon's clothes. And that kind of helped her almost heal from this tight-fisted trauma that we had been through, right, that causes your fist to be so tight. And so we went from intense to intentional

and said, okay, this money, the money in this envelope it says sharon's clothes cannot be spent on anything except for sharon's clothes and you don't want to you want to know what's weird we still have that envelope that's weird i just thought of that that's weird wow we should stop that she has plenty of clothes but um oh my gosh but i mean the point was that what exactly what you're experiencing was uh you know you're okay, I want to be more mature, but I also want to have fun. While we're going on this trip, we should not do that. We should just still be gazelle in tents. But if you lay it out and you put a name on it and you say,

this money is to be spent on weekend travel, you can't be spent on your car. It's already spent. It's not spent on paper. It's gone. Like, sure, it's closed. The money's gone. You can't spend spent on your car it's already spent it's not spent it's been on paper it's gone like sharon's clothes the money's gone you can't spend on anything else it's already been labeled sharon's clothes you can't just associate yourself emotionally and say hey this two thousand dollars for the weekend trip this is not car money so we're not going to see it as money that could go towards the car and when it's part of the this is a great discussion by the way and and and when it's part of the overall budget you say okay, okay, that means we're putting, I'm making up whatever number it is.

You can make up whatever number you want, Danny, but $2,000 a month on the car, okay? And so I'm still going to get the car at Christmas. I'm still going to get the $15,000 car at Christmas. I mean, still going to get it. And so it's not knocking me off of a reasonable goal. Now, yes, I could get the car in August instead of December by doing no travel, but we're making the adult decision to be intentional and say, we're doing some weekend trips, make $175,000. And it's going to slow down my car a little bit, but I'm still getting the car,

so I'm still being an adult. We're not out of control. But I think you've got to label it and release it. Okay, yeah. That's what we – it took me back to a memory from 30 years ago almost, you know, for me to do that. But that's a really good question. And the other thing you've got to do is you have to follow the narrative of

we're going from intense when we leave baby step three to intentional. Okay. Yeah, we go from sprint three to intentional. Okay. Yeah, we go from sprinting to marathon. Yeah. One through three is a sprint. We're running from the cheetah. We're trying to keep from getting killed. We're getting the mess cleaned up, getting the emergency fund in place.

Then four, five, and six is a marathon. We slow down because it's a longer run. We're pacing ourselves. We're keeping the nutrition the hydration coming we're going to finish this 13 and a half this 26.2 we're you know 13.1 or 26.2 we're going to finish here and we're going to finish it up we got to have a plan to do it all the way out and i can't you know i can't sprint until i see the tape yeah and if i got a little left i'll sprint that last little bit but that's so, yeah, go ahead and knock that house out.

Go ahead and get that car bought. Go ahead and buy that couch or fix up that kitchen. Or you budget those things and you go, okay, this month I'm going to be able to do this month over here in the future. If I label this. And then you label the fun money and you're released of guilt. Yeah, if you look down at your budget and you're in baby step four through six and there's not fun things on there, then you're doing it wrong. That's not the plan. The plan is not just to be gazelle intense forever and have no fun because Dave said so. Dave didn't say that. You got to do this stuff. And so put it in the budget. And even if you have to force yourself and go, we're going to go on weekend

trips, we're going to have a date night budget. Look down to where there's things you're excited about as a couple that you look forward to doing that's in your budget. That's going to help you release some of this. And you guys are doing great. You have more emotional maturity and financial maturity than most of America. So know that you're not doing anything wrong by not putting it all towards the car. But it's a common struggle. Me and my wife struggle with this as we paid off the house, Dave, because we wanted to pay it off so badly that it was always going,

well, that money could go towards the house. When you get there and you finish, it's surreal. Yeah. But then there's also almost like this confusion because you get you do have to she said it at the early in the call you do have to switch a gear yeah you know you got a downshift from intense to intentional and then label it and labeling the money means it has to be spent on that, releases you to do that. And early in the budgeting process, you'll experience that same kind of a thing

when you do your budget the first time and you actually label this number of dollars is for food. So when you go to the grocery store, you don't have this angst, this knot in your stomach, like when I buy food, is the electricity going to cut off because i i didn't pay the electric bill no because you got the electric bill covered in the budget and you've got this much allocated for food covered in the budget and so you get this sense of peace a sense of power when you start doing the written plan you get on your every dollar app and you start running your budget out yeah there's amazing freedom in that so it's the same thing though that label and release. Label and release. Release the emotion around it.

Label it. It has to be used for that, whatever you labeled it, unless you come back and reset the whole budget. Good discussion. Really good. Really good. That puts this hour of The Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register.

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