The Ramsey Show - App - Why Pausing Investing Is Essential To Clearing Debt (Hour 1)

Episode Date: February 20, 2024

Девочка-пай Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by the one and only Rachel Cruz. And we are here for you, America, taking your calls at 888-825-5225. It is Smart Money Happy Hour Ramsey Show edition, so we're going to try to have fun if the booth folk will let us. We'll see how it goes. If we're allowed.

Renee kicks us off in Charlotte, North Carolina. Renee, welcome to the show. Hi, thank you for taking my call. Absolutely. How can we help? I just first want to say that you both are brilliant educators, so I'm so glad that I can ask you my question. Oh, thank you. So I have a PhD. I tried the professorship world and have left and now am consulting. This is my first full year in consulting and it looks like I'm going to bring in after taxes about a hundred thousand. So I'm pretty excited about that. Awesome. Good for you. Thank you. My boyfriend and I have been together for four years. He finished a master's last year and we're talking about getting married.

But I do not have good feelings about taking on his debt. And I was hoping that we could talk about that a little bit. Yeah. How much debt does he have? He took out student loans for his master's program. He has $36,000, $37,000. Part of it is that I thought he was taking out a $10,000 loan.

Did he tell you that? He did, yes. So is this more about the fact that he lied to you or the debt amount itself? The debt amount itself really scares me. I took out a very small loan to get through my PhD. I paid it off the minute I had enough money to, I live way below my means. So you have no debt right now? I have zero debt. Way to go. What's his feeling on debt in general, Renee? Does he want to live debt-free as well, but he just took out these loans,

so he's like, I've got to pay them back? Or is he kind of apathetic about it? He does. I've introduced him to your work. He doesn't really love debt. We've talked about gazelle intensity, which was kind of a sticking point for him a little bit. And then it also kind of seems like, well, you're bringing in so much money. We don't have to do that. His income right now is about 55. Okay. Okay. Yeah. So for me,

Renee, what I would look for, because George and I both are married, and I can tell you, you know, we're not, I'm not looking for perfection. And when you get married to another human being, they're going to be bringing flaws with them into the marriage, as do I bring in flaws to the marriage, you know, vice versa. So we know going into this type of relationship that we're not going to, we're not going to be perfect, right? So we're not looking for perfection here, but we are looking for a similar mindset, similar value system in which we make decisions. And you can put that on any category of life, but we talk about money the most on this show, so this is through the lens of money. So I would want to make sure that the value system at which we make decisions as a family going forward is similar.

If it's not, it's just going to cause a lot of tension and a lot of conflict. So it is an easier path when you say, hey, we see this together. So for him, if he's like, yeah, I don't want to live with debt either. I do want to live below my means. I want to be wise with my money. But I did take out $36,000 in debt. To me, I'm like, okay, I can reconcile those two things because going forward,

I know that we're gonna be on similar paths. We're gonna be on a similar path. But I am accepting this imperfect person into my life, including his imperfect money situation and including you, Renee, right? Your imperfections as well going in. So I don't know if that makes sense, but for me, it's more about

moving forward and saying, hey, are we on the same page moving forward? And if we are, I accept all of you. And that includes maybe the mistakes that you made when it came to getting out of debt. But I'm choosing to stand before God and our family and our friends and choose to commit my life to you. And that means every part of you. And that includes, even for me, the $36,000 that we'll work towards paying off. So that's my perspective. I don't know. I think the summary of that is the red flag is not that he has debt. The red flag is that he doesn't care to pay this off. And so that's the part I would really dig into with him. Because if the tables were turned and you had 36,000 that he had no debt, you would hope that he would still go, all right, cool. We'll attack this when we're

married and it'll be fine. And so that's the mentality to have because long-term having a partner and having that spouse is the second greatest wealth building tool that exists outside of your income. We talk about, it is an exponential wealth builder. When two people come together with two incomes like you guys have, you're going to build wealth so fast, and you're going to knock out this debt so fast. Making $155,000, let's say he doesn't get a raise by the time you're married, you can knock out $36,000 making $155,000 really quickly. Way less than a year.

And so I'm not concerned about that. I'm more concerned about what does the next 30 years look like for your marriage and remember this too renee um in the relationship there's always going to be a nerd and a free spirit and there will always be a level of tension with that george and his marriage is the nerd yes i'm a funny daddy i'm the free spirit of my marriage winston my husband is the nerd so there will we will always combat the idea that we're not putting more in investments and we're spending in Winston's head you know maybe some crazy number on a fall break trip with the kids but for me I'm like but that's what I that's what I love too so like you

know there will always be a level of one that wants to be more hardcore and one that's gonna be the saver and be the budgeter and it it's probably going to be you, Renee. I mean, honestly, that will probably be your tendency. Yeah, and he may just be more of the free spirit. And that's okay, too. But again, as long as you guys can make decisions as a couple through the same lens, that, I think, just allows a marriage to thrive better than when you're trying to make decisions out of two different lenses

through everything in life and trying to be these two different people. Does that make sense? Yeah. What's his knowledge with the Ramsey plan and the Ramsey way? I guess, you know, the last couple weeks have been his first foray into it. He's seen the books on my bookshelf, but he's not touched. Is he a reader or does he prefer to watch things? He's a reader. Yeah.

Okay. Well, I'm going to send you a copy of Breaking Free from Broke. I think that's going to put a pep in his step to go, oh my gosh, this debt is disgusting me. I want to get out now. And another step that you guys should take for premarital counseling is going through Financial Peace University. So I'm going to gift you both of those things, my book as well as FPU, if you tell me he's going to go through it. Because I think sometimes it just takes a little bit of knowledge and kind of dipping your foot in the water to go, oh, I get what she's talking about now. And Dave will turn from a cuss word in the house to an exciting plan that you guys can go on together. Yeah, I think he would like that. He likes things explained to him

clearly. Well, I make it fun as well. So hang on the line, Renee. We're going to send you a copy of Breaking Free from Broke and FPU. Watch all nine lessons with him. Have him read the book. Go through it together. And I think that will squelch some of the fears that you have. And congratulations. Yes. It's exciting. But this is... Yes. It's exciting. This is considered, let's say, an early wedding gift. I hope it all works out.

And call us back when you're debt-free. And this is just a memory. More of your calls coming up. 888-825-5225. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell joined by rachel cruz we get a lot of questions about taxes and we get it taxes can be very confusing and to help you get a better handle on it let's unpack a question from one of our listeners and this is a common one what is the

difference between a tax deduction and a tax credit rachel i recently asked people on the streets of Nashville about this on Broadway if they knew the difference, and it was hilarious. Like, well, like, credit is like, that's money you owe, like, that's a debt. And I was like, no, okay, buddy, buddy, okay, let's break it down. Here's the spark notes for you guys. A tax credit cuts your tax bill dollar for dollar. So if you owe $1,000 in taxes, a $500 credit will slash your bill down to 500. A tax deduction, on the other hand,

lowers your tax bill by lowering your taxable income. So you would subtract the deduction from your income, and that less taxable income means less taxes owed. So deductions reduce how much of your income is taxed. Credits reduce the actual tax bill on the back end. So that's how I like to think about it. Deductions on the front end and the IRS says, you didn't actually make that much thanks to this deduction.

And the credit is an actual discount off the total bill. So hope that helps. And if you're confident about filing on your own, go check out Ramsey Smart Tax at ramsesolutions.com slash tax. That's no nonsense tax software, low upfront pricing, no hidden fees, and it might be time to switch from Furbo Wax, as I like to call it, Rachel. Okay. We'll throw them under the bus.

And a lot of people have been messaging me saying, I've used it for the first time or this is my third year, and it was a breeze to use Ramsey Smart Tax. Yeah, it's great. It's awesome. And if your situation is a little more complex, you can always check out our tax pro that we trust to help you out, who's Ramsey Trusted. Just go to ramseysolutions.com slash tax. Dante is up next in Detroit. Dante, welcome to the Ramsey Show. Hey. What's happening? It's going all right. Lay it out for us.

What's your question today? Yeah, I'm just a little bit nervous. I know, you're doing great. It's just us, Dante. So I got $90,000 total in debt, most of it's student loans. I have $17,000 left on my card and then about $10,000 in credit card debt. And the rest is student loans? That's what makes up the 90? Yep.

Okay, cool. And what's your question? Well, you know, I'm only 25 years old and i got almost a 400 a month car payment and i only make uh 32 000 a year working at sam's club right now are you working full-time i'm yeah i am full-time what was your degree in uh criminal justice okay are you not pursuing that a field in that like uh what do you want to be a police officer or what um well i just have a few more classes and i'm done okay you're still in school a little yeah but i took some math classes at the end just to challenge myself and well it didn't go very well And then kind of had to drop those,

and then I still have a few more to finish. But I'm considering police. I have applied to police departments. But I'm also almost a licensed real estate agent. You are licensed? Almost. I have to take the test in Michigan, and then I'd be a real estate agent. Okay.

Which path are you leaning toward? Well, more so the real estate, but I'd like to also, like, if I did pursue a career in criminal justice, whether it's police or i would like to have another income which could be real estate okay gotcha gotcha but obviously i'd like to get the debt yeah you know out of the way totally um don't say how have you kelly blue booked your car by chance do you know how much you could sell it for yeah well11,000. Okay. So, quite a bit of negative in there. Yeah. So, is that private party value? Or is that dealership? Like, trade-in value? Because it's a big difference.

Yeah. I think private party was maybe 15 on the high side. Okay. Do you have anything in savings? I did, but I kind of don't anymore. Okay. Spend it on bills? Yep. Are you living on your own?

Yeah, I moved out in September. My rent isn't really bad, so it's good. Okay, is it a one-bedroom? It's actually a two-bedroom. I have a roommate. Oh, you do have a roommate. Okay. I was going to suggest that to see.

Basically, what we're trying to figure out here, Dante, is how much margin can we create by spending less and making more? And right now, you just need more income. You've got a big hole of that $90,000 in debt. And so one angle we're looking at is sell the car, free up that payment. You would obviously need a much cheaper car to be driving around for now. The other side is we need to get your income up ASAP. And so as soon as you're done with school, you might need to get a different job, a second job, a better job in order to start to really make headway on this debt. Yeah. Yeah. Yeah, Dante, I feel like for you, you know, you're, it feels a little bit just like scattered, right? I just feel like you have a lot

of things going on. You have all this debt, you're stressed about it. You you're worried about your income. And also and again, your career path. I'm like, there's just a lot of things happening. So for you, what I would do is I think that the money stress really is playing a part in this kind of like fog mentality. Right. Of having to make a decision. And so I think there's just something to be said about. I mean, you are just full on. You're working you know five nights a week you're working weekends i mean like you go crazy just to just to allow some momentum to catch up with you to be able to start knocking this stuff out because out of this even these credit cards i mean ten thousand dollars in credit card debt how many credit cards is that four or or five? Yeah, at least.

And honestly, a few of those, they're my mom's. And although I don't even use the cards, but they show up on my credit report. What do you mean they're your mom's? Like she put like to build credit when I was younger. She added me on there. Oh, wow. Yeah. On the account. To build credit, when I was younger, she had added me on there. Oh, wow. Yeah. On the account.

So it shows up my name on the account, even though I don't actually use the card. Okay. So I would talk to her and ask for your name to be removed. And what I want for you to feel, Dante, is just this drastic change in your life. It's almost just like you're kind of going along and you're trying to manage everything that's going on. And I get it. There's a lot of avenues here and a lot of things happening in your life. And it's almost this like we call it shock the monkey. There's like almost this like burst of energy that you need that's going to radically shift some things. And you have to

feel this level of complete change. And by complete change, call your mom, have that conversation, cut up the credit cards, you know, tell Sam's Club, hey, I'm working every night this week, contact Uber or Lyft and say, I'm going to drive. I'm going to drive every Saturday. And maybe I'll sleep on Sundays or maybe I'll pick up more shifts there. I mean, like it's this idea that it's a complete different mindset, complete different habits than what you've been living in. Because, you know, it is true when you continue to do the same thing over and over again, you're going to get the same result. And so what you have to do is completely shift the way you've been thinking. And Dante, honestly, I think part of that is getting rid of this car. I mean, you have $17,000 loan making $32,000. I mean, that's more than half of your annual income. It's too much car. So I mean, my very first goal would be to save a couple thousand dollars, buy a car,

get rid of this one. If you have to take out a small loan, do it. But I would rather you free up that $400 car payment and have $1,000, $2,000 debt for the difference than $17,000 in a car. You know what I mean? But it's these radical changes that you haven't done yet. And it's going to take this level of change to get a completely different result. And you can do it.

Because, Dante, your situation, it's not hopeless. We talk to people every single day with the same situation. And the number one quality that we find with people that go from where you are to actually becoming debt-free and winning with money and investing in the future and doing all of this as they believe they can. And so you have to have this belief that I'm gonna wake up tomorrow morning and I'm gonna be a different Dante in how I handle money. So stay on the line and Christian's gonna pick up and I'm gonna give you George's book,

Breaking Free From Broke. I'm giving away your books, George. So kind. And Total Money Makeover, which is just kind of the playbook of the baby steps. But I really want you to start learning this stuff and doing it. You have to actually do this, Dante, and we believe you can. You can't wander. You can easily wander into debt, Dante, but you can't wander out. You got

to get some mojo here and do something about it. But we believe in you, man. Hang on the line. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours

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So learn more today and join at chministries.org slash budgets. That's chministries.org slash budgets. Welcome back to The Ramsey Show. I'm George Campbell, joined by bestselling author Rachel Cruz, and we're taking your calls at 888-825-5225. You call in and we'll help you take the right next step with your money and your life. Mike is in DC up next. Mike, how are you doing today? Hey, I'm doing great. Thanks. How are you? Doing well. How can we help? All right. So around August last year, I finally decided to accept the fact that I found myself about, well, I'll just tell you,

$11,660 in credit card debt. So I decided to put myself on a budget and start paying it off. I've made about $5,486 in payments toward that debt. Just about? Was that exact? Wow. Yeah, that was exact. And then it leaves me with exactly $6,173 in remaining debt to pay. Is that all of your debt? Yes. Okay. So, and as I'm paying this off, I want to get more aggressive with it, but, you know, I'll be honest, I'm really a little worried about pulling money away from a recurring retirement and savings contributions to do it. I just wonder what's your perspective on, should I stop paying my 401k to get that debt paid down as aggressively as possible, or should I just continue on? How old are you, Mike?

I'm 32. Okay. What are you contributing right now to retirement? I contribute about $300 a month towards it. What percentage of your income is that? So I make $81,000 a year. So I guess, I don't know, back of the napkin math, I'd say that's probably like 6%. You're saying $300 a month? $300 a pay period, so $600 a month.

Okay, $600 a month. Well, I'll tell you this much. That's not going to give you a great retirement anyways. And so our plan is to pause contributions to retirement so that when you get back to investing, you're investing 15% consistently without fail for the next decade or two until you get your house paid off and then you can invest even more. And so that's the purpose of us telling people to pause the 401k is twofold. Number one, it actually frees up the 600 bucks a month that can now go toward the

credit card, right? Right. And number two, it lights a fire under your butt to get out of debt faster because you desperately want to get back to investing, don't you? Yes. And the problem right now is you're a little bit comfortable. Like, yeah, you want to get out of debt, but you also want to invest and, you know, nothing's on fire. And I like the fire that is created when you pause investing. It tells your own body, this is serious. We need to get out of this debt ASAP because I want to build wealth and stop paying for the past. What is the debt of the interest rate on these credit cards? Well, I actually was able to consolidate my debt into a 0% card. So I had some high interest debt that I've already paid off.

And the debt that remains is one single amount on a 0% card. and that 0% goes until March next year. Okay. So how quickly can you pay off if you pause investing, you've got the extra $600 back, you have $6,000 left on the credit card, you're making $81,000. How quickly can you pay this off if you do all of that? Probably seven to eight months. Let's call it six months. Okay. How would you like to be debt-free in six months? Do you have any money in savings?

Yes, I do. I've got about, I've got three grand in a brokerage, 70 in retirement, and 1,500 in my emergency fund. Okay. So you got 4,500 in liquid cash right now. Yes. Well, you could lower this, I mean, more than half today if you wanted to. If you wanted to keep a $1,000 emergency fund

and then throw the brokerage account and $500 that's in your emergency fund at this debt, then you're down to, you know, $2,600. And if you pause investing, now you have an extra $600. This thing's done in like two or three months, dude. It's done like really soon. And then just build your emergency fund back up for a few months and throw some cash in there to get that back up. And then I would, yeah.

By the end of the year, you'll be investing 15%. Yeah. You'll have almost tripled your investing. Do you see the excitement that we have as to why this plan works? Yes, I do. And I think I just needed to hear somebody tell me it was okay because I'm just very wary of liquidating that extra cash, but I totally see what you're saying.

Yeah, and Mike, and the reality is too, people kind of are like, oh, $1,000 emergency fund. what you're saying. Yeah. And Mike, and the reality is to, you know, people kind of are like, oh, a thousand dollar emergency fund. These Ramsey people are crazy. But here's the truth. If a larger emergency fund or a larger emergency comes up, usually you don't have to pay for that like today. Usually you can say, okay, I have two to three weeks. I got to come up with some cash with my emergency fund and figure out how to pay this. You know, you'll pause the debt snowball and figure it out. But the problem is that people try to do kind of what you're doing, Mike, six different things at once, or they try to go and build up this big emergency fund before they

get out of debt. And they never even get to getting out of debt because they spend so much time with just the savings portion to feel comfortable. And there's really never a number that you're like, okay, now I feel good that I can go pay off debt. It's kind of this idea immediately when you become debt-free, what we say your largest wealth building tool, it's your income. It all comes back to you. And it's an amazing thing when you say, okay, all these credit cards are gone. There's no bank in my life left. And now I get to decide what to do with my income. And you're able that much faster than to build up an emergency fund to three to six months of expenses, which is what we want you to do we don't want you to stay at a thousand dollars forever but for you mike you're only gonna stay there for like two

months month and a half right i'm like it'll be so fast um that you're gonna be fine okay all right so uh i think i think i know what i need to do booyah another one bites the dust rachel we did it mike's on the path all right let's see if we can help jordan out in boise up next jordan what's happening uh hi um so my wife and i we've been married about six months and we're just now starting baby step one we're working towards getting a thousand dollars in the savings account. And we just feel really overwhelmed. So we had to move to Boise for my job. And the housing market is awful here. And we only have about $6,000 in student loans left.

And then probably at about another $4,000 because of a medical emergency that happened with the ER. Okay, so you had 10K in debt? 10K in debt, right. So I separated those because we're not getting interest on the hospital. It's just a payment plan. And so, yeah, just this idea of once we get to that point, by the time we get to 20% down on a minimum of a $400,000 house, which is not like that's the lowest I've ever seen it in Boise. It just seems impossible to buy a house.

Well, you're not going to buy a house now, Jordan. You guys are broke. You don't have a thousand dollars in savings. Yeah. Exactly. It's going to be a few years. Yeah, so it's not a 20% down payment. That's a suggested amount.

You can go down to five for a first-time home buyer, so 5%. And by the time you guys do all of this, how much do you guys make a year? Together, we make about $66,000 before taxes. Okay. So yeah, by the time you guys pay off $10,000 of debt and get a fully funded emergency fund of three to six months of expenses, it's going to be, I mean, 18, 24, three years, you know, till that happens. And honestly, Jordan, that's going to be a whole new world. We got an election year. Who knows what interest rates are going to do? Like, we don't know what's going to

be going on. But we would still stick with that at least 5% down idea. And I just don't believe that the lowest house you can find is a $400,000 house in Boise. I don't believe that. Well, you know why? Because I live in Nashville and it's the hottest market right now. And my husband, I mean, he just went and we were doing investment real estate right now. And he got like a great $200,000 house. It's a two bedroom, one bath. They're flipping it in a in a place outside of nashville so i just i just don't believe the

four hundred thousand dollar i get that housing is expensive rachel i'm literally on realtor.com right now there's at least 30 houses that are beautiful three bedroom single family homes under 400 all right jordan let's so you can do this man a little like us when we get dramatic sometimes focus on one thing at a time never gonna happen it's gonna happen get your income up and $400 million. All right, Jordan. You sound a little like us when we get dramatic sometimes. Focus on one thing at a time. It's never going to happen. It's going to happen, Jordan. Get your income up and you'll get there. Calm down. You've been married six months. You guys just be patient. And in three years, it's a whole new world. And hopefully there'll still be these wonderful houses in Boise that I'm looking at right now on Georgia's computer. It's not in the Constitution that newlyweds have to own a home. So I hope that frees you, Jordan.

Thanks for the call. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. If you're enjoying the show, please consider subscribing, leaving a review wherever you're listening, hitting the follow button, and sharing it with a friend. Just hit the little share button wherever you're listening and send it to someone who might need to hear this. We want to spread this message to as many people as possible, and you guys are the best marketing tool we have out there. So thank you so much to all of our faithful listeners.

Aaron is up next on the line in Green Bay, Wisconsin. Aaron, welcome to the show. Hey, thanks for taking my call. Sure. How can Rachel and I help? All right, so a little background. I'm 26. I'm currently on Baby Step 3.

I'll be on Baby Step 2 when I marry some student loan debt. Wonderful. She sounds lovely. She sounds wonderful. She is, she is. So my question is car related. So I have three cars, two of which are with me currently, and one's at my parents' house. And the one at my parents' house is a classic car that my dad and I restored about a decade ago.

And it took us four years to do. Oh, wow. And I'm wondering if I should sell it or keep it um because it's probably worth around fifty thousand dollars probably put me ahead financially about one and a half to two years um but emotionally that would be somewhat difficult so yeah for sure wisdom for sure. How much debt does she have? It'll be about $43,000. $43,000. Okay, and how much do you guys make a year?

How much will you make total together once you're married? I'm guessing $130,000. And you're thinking it would take you a year and a half to pay off the $43,000 with both of your incomes? Well, I mean, getting, you know, if I had $50,000 in cash, I think that would save us, you know, put us a year and a half to two ahead. When will you get married?

It'll be October. Okay. Okay. And how much does she make out of the $130,000? I mean, she's in school right now. She'll be graduating this year. I'm guessing she's going to make around $50,000 to $60,000. Okay. But she'll graduate in May and then get a job. Right.

Okay. Well, she'll have four months as you guys are planning a wedding to be working towards this. You know, I mean... And you have time too as well to just stack up as much cash as you can so as soon as you get married, you could knock a lot of this out.

Yeah, what's the other car worth? Or what's the other car? You said I have two cars at home. One is the classic car with your dad. What's the other one that you have? Yeah, so I have a daily driver. It's worth about $4,000 maybe. And then a sports car

worth about $10,000. Which one do you enjoy more? The daily driver or the sports car? The sports car. I'd probably sell one. I would sell one of those. You what? I can't drive the sports car

in winter. Oh, I gotcha. Honestly, Aaron, I'd sell that one. drive the sports car in winter. So it was kind of a... Oh, I gotcha. Honestly, Aaron, I'd sell that one. Sell the $10,000 once you guys get married. And then, I mean, and then with her, you know, working some of this, maybe you guys get it down to $25,000. And then I would keep the classic car and then just pay off the $25,000. Because you guys make great money.

I mean, you're to the point that you guys could do this quickly. Right. So that's what I would do. The classic car, I don't know why, it kind of tugged at my heartstrings, George. I know, it's a father-son four years. Yeah, it's a big deal. And what we tell people, Erin, just so you understand why you're not special

here, we're not giving you a pass just because you're tugging at the heartstrings. We tell people, if you can't get out of the debt within two years, it's probably wise to make a more drastic sacrifice to sell the car. So if you said, hey, it's going to take us six years and this could speed it up by a few years. And I go, dude, sell the car. But in your situation, you guys are going to knock this out within the first year of your marriage between the money you have in the bank, between her income coming into the picture, you will knock this out faster than you think right so i wouldn't be too concerned about it and then worst case like rachel said if you're really done sacrificing just sell the sports car you can get another

10 000 sports car later on doesn't sound that special right you love cars i imagine for you everything is sentimental somewhat Somewhat, yeah. Yeah, that's what I would do, Aaron. I would sell the sports car before the $50,000. And you guys, how old are you guys? I'm 26 and she is 24. Yeah, so even the year and a half idea that you're going to be ahead a year and a half financially is true.

But if it's to depart with something that you love so much, and the fact that you guys are going to be okay, you're fine financially, like you guys are going to do this, you're going to pay it off. You have the time, you have the runway. So there's not an urgent rush. I mean, if you were having to retire, and you had to put some money in retirement, and you still had a mortgage, and you had debt, I mean, like, you know, there are situations i would say sell this car it's just not one for me personally i don't want you to resent her every time you look at her one you're the reason those student loans are the reason i lost his dad his dad probably like what yeah this woman came in with all that student loan debt well you know what to do aaron you got this man Congratulations. Ryan is up next in Dallas. How's it going, Ryan?

Ryan, are you with us? Yes, I am. It's all we lost you. How can we help? Quick question. So I have a 401k loan. I know it's shaking your heads already, but I'm working on it. SMH.

No, we're good. You're okay. All right. All right. But I'm cranking through stuff. And so my question was, obviously, my 401k loan is through my employer, so it comes out of my paycheck automatically. With the debt snowball method, how am I supposed to make extra payment to that?

Would it be a good idea to move that to a personal loan? One, to get the money back on 401k earning, and then two, be able to make more frequent payments on a personal loan as I get more occasional extra income, or should I just leave it be? Well, you can pay back that 401k loan as quickly as you'd like. Right, it was more of the administrative having to go through multiple steps every time to make a payment. So do I need to like just save up a chunk and then, you know, go through the paperwork to add an additional payment? Right now, is there a monthly payment that's due? It comes automatically. So I get paid twice a month and it automatically comes out of my paycheck and goes to that. So how much is the 401k loan for?

It's right now at the $25,000. Okay. And what do you make? $125,000. Good news. Okay. And this is your only debt? No, I have one other.

It's $25,000. A lot of it was related to home updates and needs. What kind of loan is that? Personal loan. Okay. Well, no, I would not move this to a personal loan. I think we've done enough moving around of debts, and I would just tackle this one with intensity.

And you have equal debts, and so in the debt snowball, these would fall into a very similar spot. So you can attack the one with the higher interest rate if that makes your heart happy since they're the same balance. Which one has the higher payment per month? The higher payment is actually the 401k. Okay. I'm paying, I think, $700 a month.

I'd probably attack that one because, number one, I can tell you're itching to get that money back in the 401k, and I wouldn't be as concerned with the administrative steps needed to pay that down. But I would throw as much as you can every single paycheck, every single month towards the debt. I wouldn't just wait and try to save up cash to do it. Are you married, Ryan? Do you have kids?

Yes. Yes. Okay. So you have a family. Yeah. I mean, I would do anything and everything. Can you sell stuff? Do you have money that you can liquidate that's non-retirement?

Yeah, a little bit. Not much. I mean, I've been on a pretty good track here being able to pay it off. I'm trying not to overestimate myself too much. Well, what do you have in non-retirement assets? Non-retirement assets, just got emergency funds set up. I started just adding everything to that debt to start paying it down, but I didn't know if there would be a better way to do that. Well, going into a different kind of debt really solves nothing. And so that's the problem is you think you did something when you move it to the personal loan, you kind of take that breath of relief. But really, you are not any closer to safety. Yeah, it's just paperwork that you have

to deal with. But I'm trying to make it not so burdensome on the employer to have to handle that. I may just change the deduction now that you say that. You can just increase the deduction you need to pay back.

Yeah. And just crank it out that way and force it out of my paycheck before I even see it, too. That's a great idea. I wouldn't worry

about the employer too much. They're all right. They deal with worse things on a daily basis. That's right. HR team, shout out to Rick and HR. Good job, Ryan. All right. That puts this hour of The Ramsey Show in the books. Thank you to my co-host,

Rachel Cruz, the Booth dudes. We've got Christian, Ben, Austin, Zach, Nathan, Bobby. Appreciate them holding the fort down. And you, America, thank you for tuning in. We'll be back before you know it. Take care.