The Ramsey Show - App - Wisdom is Knowledge That You Get to Apply (Hour 1)

Episode Date: June 5, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, this is The Dave Ramsey Show, where you learn to take control of your money and create a life you love. Filling in for Dave this hour, I'm Ramsey personality, Rachel Cruz, and it is an honor to be with you, America. We will be taking your calls about life and money, and it is a free call anywhere in the country at 888-825-5225. So part of my job, if you will, I travel and speak and write, create content. We have the Rachel Cruz Show where we talk about everything from what's talked about here on this show of budgeting and getting out of debt to how to save money at the grocery store,

like all the things in between. And also what I do is a lot of interviews for media outlets. And so I just finished an interview right before I came in here, all about contentment. And it is something that I've kind of been focusing on when it comes to your life and your money, realizing how important the heart issues of money are,

not just the tactical. We're great at helping you with the tactical, and that's key to win, right? Knowing how to live on a budget, how to get out of debt, how to save, fund retirement, like all those things. But what is your motivations? Like, where is your heart in the process and how important it is? And so this interviewer was just kind of like astonished. She was like, oh, yeah, the heart part of money. So like, tell me about that. And so I just explained to her contentment and how we find when people are content in their lives, they win with money faster. Not only do they have joy and they have peace in their life, but they win with money faster.

People who are content will sacrifice their lifestyle to get out of debt. People who are content can save money. People who are content actually end up living life with an open hand and they're givers. Contentment is something that goes all through our life and our money. I have the Contentment Journal out, and I was doing it this morning.

I'm doing it with some of you guys on Instagram. Again, it's just a reminder of, yes, the tactical side of money and our money habits are so important, but think about the motivation side as well. Think about your heart and why you're doing the things you're doing in this process because when you can get the why behind it, that can help springboard you faster as well. So just a little thought I had is when interviewers just stunned that contentment is a really important issue when it comes to money. And I was like, people in America probably need

to hear that. All right, we'll go to the phones. And this is Natasha from Orlando, Florida. Hey, Natasha, welcome to the show. Hey, Rachel, how are you? I'm doing well. How can I help? So my question is about changing bad money habits. If I get stressed, when my emotions start to kick in and I end up swiping my debit card instead of using cash or if I see a good deal like I can't

say no to it so you're so I just don't know like yeah are you finding it's in stressful situations like when you're at a point that something's going wrong you're running to purchases is that what you're is that what you're telling me um oftentimes. But even like I could just be going to one store and then I see, oh, look, this store is closing. It's 70% off the entire store. Sure. I just feel like I have to buy it. Totally. Well, and people fall for this mindset that if it's on sale, it must be a great deal for me.

Like I hear a lot of people say that like, oh, yeah, you know, all this on sale. So I spent a hundred dollars on all these Kleenex boxes or something just crazy. And I'm like, okay, you don't need a hundred Kleenex boxes. Why did you spend that much money on Kleenex boxes? And so sometimes we get wrapped up. We've been told over and over, oh, if it's on sale and it's a great deal, you need to take it. You need to take it where that's not the case just because it's a great deal. It doesn't mean it's a great deal for you. So are you budgeting? Do you have a pretty strict budget? I have a budget in place, and I do. I find myself like, okay, I should be able to follow this, but I can't.

I don't know that I can't. I don't know. I struggle with that. Okay, so I think that's going to be one of your main issues is when you are finding that you're living on a budget, that is the permission to spend. That's when you can say, oh, hey, this store is going out of business and there's a great sale and I have some money here, my clothing line item. I can go buy that freely without guilt. But you're not spending on purpose.

It's sounding like to fill a void masked with the myth that, okay, it's a great deal. So there's something deeper there for you. And then my next follow-up question would be, so have you tried budgeting? Like are you, you're sounding really discouraged with it. I am. I think like it's set up

and I've gone through it with my husband. I don't know if we were both spenders or something, because when I tell him, you know, this is a really great deal, it's like, oh, yeah, it was a great deal. And so we kind of end up back in square one. Okay. Okay, here's what I would suggest. You need to sit down with your husband, and you guys have got to, it's almost like

you kind of have to grow up in this area because you're basing a lot of your financial decisions off of emotion. And there's not a lot of logic in place. And that's going to create a really bad financial future for you. And I don't want that. And so you need some boundaries and some limits in your life when it comes to your money. Where are you guys at with debt how much debt do you have like 60,000 okay how much do you guys make a year uh roughly

like 125 okay all right Natasha I'm about to be your girlfriend right now. I need you to step it up, okay? Because the way you've been living is really mediocre. And I hear it in your voice. I don't want to be too harsh to you because I know when you try something and you keep failing over and over and over again, it's so discouraging.

I get that. But you have to realize the outcome of your results, of your actions at this point got you to a place that you do not like you're sounding stressed to me you sound like you don't really know what's going on you don't know where the money's going and you're running to purchases when you do feel stressed it's just kind of feeling like a ball of emotion a little bit and I need you to have some facts in place and a plan and so what I'm going to do for you Kelly's going to pick up and I want you

and your husband to go through Financial Peace University because you guys need a jumpstart into how to take control of your money. And you're very normal. Okay, Natasha. And I say that, we say that's not great here on this show. We don't want you to be normal. But a lot of people live like you, like you're describing, where it's just kind of like off the cuff. It's here or there. We have this stuff and you guys make an incredible income i mean in in months you could have this debt completely knocked out if you get gazelle intense if you get intense about paying off your debt and so you guys need a step-by-step plan which is the baby steps you need to learn to live on a budget you need to start doing these things because you're going to get control of

your money and the great thing is is that when you are both willing and you're going to get control of your money. And the great thing is, is that when you are both willing and you're both to say, okay, you know what? We're going to grow up in this area. We're going to stop acting like a child. A child does what feels good. A grownup, an adult devises a plan and follows it. And so if you want to continue with the outcome you've had with your money, you can continue on your life as is. But if you've gotten to a point where you said, you know what? I'm so tired of this. I've tried it. I've failed, but you have to continue to get back on the horse and try again. And the budget specifically, it takes 90 days for it to work. It'll take you three months. But girl, if you want a different outcome, you have got to change what you've been doing, which means you need a

plan. All right, America, call in. Free call anywhere in the country, 888-825-5225. This is The Dave Ramsey Show. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and has struggled to make ends meet, but they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen. Their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible,

let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things ahead. Welcome back, America, to the Dave Ramsey Show. I am Ramsey personality, Rachel Cruz, filling in this hour for Dave while he is out traveling.

So I'm filling in the seats. So there's a free call anywhere in the country, 888-825-5225, to talk about you, your life, and your money. I have Ivy's question from the official Rachel Cruze Show community. It always sounds so official. I love that we have official before the community. But this is my Facebook community. And if you want to jump in there, there's tens of thousands of you now. But you are just a great group that we come into weekly almost to ask questions,

get your stories, get your feedback. We just love interacting with you. So if you want to check it out there on Facebook, that would be awesome. We'd love for you to join. And Ivy asks, I'm on Baby Step 2 and I want to go back to school. The thought of taking out student loans makes me sick to my stomach. Good, Ivy. It should.

Being on Baby Step 2, the only other option would be stop paying extra on my debt while I cash flow school. Is that a bad thing? Or should I just take going back to school completely off the table? I would say neither. I would give you answer C, which would be to don't go back to school

while you're getting out of debt, but go back to school after you're out of debt and you have an emergency fund. You definitely don't want to go back into debt by taking out student loans as you're climbing out because it's just like digging out the bottom of a hole you're trying to climb out of. That makes absolutely no sense. So I would definitely pause going back to school. Go ahead and get your debt paid off.

On average, people pay off their debt in 18 to 24 months. So it's still out there. You can do this quickly and go back to school and save up and cash flow. And the great thing about that, Ivy, is that when you plan ahead like that and you have a solid financial foundation under you, you have no debt, you have an emergency fund in place, you go get this degree, you cash flow college stress-free because you actually have money in the bank. And whatever that degree provides, maybe it's a job change. And you can say, hey, you know what? I can take that leap more or faster.

I can have a bigger risk tolerance because I have no debt and I have an emergency fund in place. It just gives you options. And that's the power about being debt-free that a lot of people don't take into account is that it gives you options when you don't owe anyone anything there's a lot of freedom in that in so many different areas of your life and so the and then the power of going back to school and cash flowing it when you have no debt is that you're actually going to have income coming in that you're able to put towards it and you can make it faster through uh paying through school so ivy again i would say definitely

do not take out student loans. Pay off your debt, get your emergency fund, and then go back to school after that. But great question. All right, up next is Shannon from Denver, Colorado. Hey, Shannon, welcome to the show. Hi, Rachel. Thanks so much for taking my call.

Absolutely. How can I help? Well, my husband and I are very close friends with a couple who makes really poor decisions. With anyone else, their money is their business, and I would never interfere. But the wife often brings financial stresses up in conversations. But on the flip side, she'll also confidently talk about how they paid a stranger to co-sign their home loan, just bought a brand new Beamer, leased her car.

So how do I respond to these conversations without sounding judgmental, but also being genuine because I don't agree with what they're doing. Sure. So she is coming to you with stressful, like, like stressful comments. She's coming to you. They're stressed. She's not in a place where she's like, oh no, we're good. We're just making dumb decisions and you know, that they're living life. She's struggling. She says that she's good, we're just making dumb decisions and, you know, that they're living life. She's struggling. She says that she's good, but then she'll also tell me how she didn't have anything left on her credit card to get gas the other day.

So they're not good, but she'll say she's good. Sure, totally. Well, whenever it comes to talking to friends and family about money, it's always a little bit of a sticky situation, especially if they're not coming to you to ask for help. OK, so like when someone comes to you and says, hey, I need help. I see what you guys are doing. What is it? Obviously, that is a wide open door.

You can walk right in. They have given you permission to enter their life in that area. But when they've not just explicitly come out and said, hey, I need help, it is a little bit hard to dance around. And so I would say in those moments that she comes to you and says, hey, gosh, you know, this is so stressful. We're fighting about this and we didn't have enough money to pay this. Like, I just don't know what to do. You know, I would say as a loving friend, I think it's especially if you guys are close just to say, hey, listen, this is your life.

You do what you want. No judgment here. And even preference with that. Just be like, no judgment here. But what we've done,'ve done because have you shannon have you guys gotten out of debt or you're getting out of debt are you living on a budget like are you living opposite than her when it comes to money yeah so we're we're on baby sets four five and six right now okay awesome so i think you could say you know what i because have you felt how she's felt before stressed out with money at one point in your life?

Not to that extent. Like, we didn't pay a stranger to co-sign her. Yeah, totally. I know, that's stupid. I know, totally, totally. We've definitely, like, had moments where we wish we had more. We didn't have an emergency fund. But we have been without an emergency fund before. So I think being compassionate and empathizing with her and saying, hey, I know that's hard.

Like, I remember, you know, eight years ago when we were in that spot and I hated that because the top financial fear for women is the lack of security. And so I think a lot of women can relate with that and just say, gosh, I know what that feels like to not have money in the bank and even not being able to like how you are. You're not even able to pay for gas. And that is a scary place to be and be like, but it doesn't have to be that way. Like there is a totally different way to live with your money. We're doing this.

Like we got out of debt. We're funding retirement and kids college and money is not a stress point for us. And if you ever want to know more about it, I am an open book. I'm here for you. I want to talk to you and I even want to help you guys. Like let's go to dinner and talk about it if you're comfortable. But so open the door open the invitation but obviously it's going to be up to her to decide because I guess her husband is probably off the wall as well when it comes to

money right right yeah he owns like a credit repair company so he loves credit and so when they when they get excited about like this is our new BMW or we just leased this or we just got a HELOC out for our basement. Like, I just feel so disingenuous getting excited for them. Does that make sense? Oh, yeah, totally. Yeah. And I don't think I don't think you're, you know, agreement or you're, you know, just, oh, good job. I don't think that's enabling bad behavior because you're not saying good for you.

That was the exact right decision you should make. Right. Like if you're going that point out with it, then, yeah, I'd say that's enabling bad behavior because you're not saying good for you that was the exact right decision you should make right like if you're going that point out with it then yeah i'd say that's disingenuous but i think you know it's it's their life like they're grown-ups i mean if we're talking about 10 year olds here that's a totally different story but they're grown-ups and then that's when you really have to separate yourself and you can't be the one to force the change you can't be the one to put everything on her because it's going to be up to them to decide. And honestly, Shannon, not to sound like a hopeless situation, but considering what he's doing,

unless he has a complete revelation of something that's completely changed in his life, more than likely they'll stick with those bad habits, which you hate to see. But I'd say as her friend, when she comes with those moments of stress, empathize, be compassionate, but give another option and show a different way through your

story. And that's sometimes the most powerful testimony is what you've experienced and what you have lived. All right. Up next is Chelsea from Omaha. Hey, Chelsea, welcome to the show. Hi, thanks for having me. Absolutely. How can I help? So my husband is on salary and plus he gets a commission check every year. And with this year's commission check, we would be able to pay off our debt, put money away, our six-month expenses away. And then what we're wondering is if we should go ahead and pay off our mortgage in full or if we should invest some money and then put the rest towards mortgage but it wouldn't

pay it off yes plan b what you just described considering that you guys will have no debt that fully funded emergency fund which is absolutely amazing congratulations that's really exciting uh yeah do all that and then go ahead and start funding retirement because i don't want you to miss out even if it's just a few years when you're at that point. Go ahead and open up the retirement account, start investing, and then you will have time and money to pay off that house really quickly, I can tell. Because depending on how much money you guys have, you're probably going to be maxed out. You possibly might max out retirement, Roth IRAs and 401ks and all of that. So go ahead and do that 15%. Do you guys have kids? Yes, two.

Okay. Do you have any college savings for them? No. Okay, so I'd say go ahead and open up that beyond the 15% with that money from the commission check. Go ahead and start the process. This is just the baby steps. That's what I'm walking you through. But yes, there is a part of you which I totally understand where you're like, oh, we could just pay off the house so much faster.

It's so great. But I don't want you to miss that on the time, even if it's just a year on retirement and getting your kids college because the house will be paid off soon. I can tell that you guys are motivated and you're going to do the right thing. So I would go ahead, finish out the steps, complete baby steps four or five, and then pay off that house. And you guys, man, moving on to baby step seven already, Chelsea.

That's really, really exciting. Congratulations. This is The Dave Ramsey Show. I am Rachel Cruz filling in this hour while Dave is out. And it is a free call anywhere in the country at 888-825-5225. All right. Up next is Autumn from Salt Lake City. Hey, Autumn.

Welcome to the show. Hi. How can I help? So my question is I'm almost done with my – so I'm 19 and I just finished my freshman year of college. Wow, awesome. Completely debt free. I'm paying for it by myself and did it with scholarships. And I'm almost done with my six month emergency fund. Okay, Autumn, do you know how weird you are? Like in a really great way?

Yeah, all my friends are like, like oh i'll pay for it i want to get the points on my credit card and i'm like uh yeah so you're 19 you're paying for school for college debt free in 2019 through scholarships so it is possible you're doing it and you've saved six months of expenses sorry i know we're gonna get to your question i just always have to stop when situations like this come across because like it's incredible and so I just want to know what did you do to get the six months of expenses if there's another college student out there listening um well I made less I made about nine hundred dollars a month all school year and I just budgeted for it and I didn't like I tried I brought lunch to school every day made it at home and I'm

living away from home too so I'm rent, and I just would bring lunch and not go out to eat for lunch with my friends. I'd just bring a packed lunch with me. Yeah. And just budget, really. But you're working through school still, even though your school's paid for. You're doing it for living expenses and to save.

Yeah, I had enough scholarship left over to pay for my rent, usually, but then it was for food and everything else. Okay. Okay, that's awesome. Okay, sorry not to bombard you with my personal questions but again it's always an incredible thing just a testimony of like this is still possible even for a 19 year old as you're going through college so well done autumn okay what's your question yeah thank you all right so with all of that and with what i've realized like how easy budgeting is and how it makes it so easy because i've spent a lot of money on stuff that I didn't really need either, even though I'm not

making much, just because I was budgeting for it. But I want to share that with my parents, because I learned it through my financial literacy class in high school, not through my parents. And I want to help my parents start budgeting, because I know that they don't, and it stresses my mom out, but they, like, I'm 19. I'm the daughter. Yeah, sure. No, totally valid question. Did you take our Foundations in Personal Finance course?

I'm not sure, but... No, but that's great. My teacher wasn't, like, 100% with it, but he was like, yeah, this guy's cool. Here's the baby steps. And I was like, okay, I'm doing that. Yeah, but it was the Dave Ramsey curriculum, though, that you learned in high school and that you took it and applied it and yeah you're living proof that it works it's amazing so when it comes to talking to your parents Autumn this

is at any age this is at 19 or this is at 39 it's always an awkward conversation okay and I would honestly say probably the older you become the the more awkward it is because just in general going through life and all of that. So you starting out at 19, I think you almost have this fresh perspective that you can bring to the table in a really respectful way. And so what I would do is maybe to call out, maybe if you're talking to your mom or something and say, hey, go ahead and just say, this may be awkward that i'm saying this mom because i know i'm your daughter uh because it is awkward when you talk about money with your parents we always say it's the powdered butt syndrome like when someone's powdered your butt they don't want to hear about money politics or sex from their kids like it's just kind of a thing and so yeah and the thing is is i feel like i've had a really open relationship with my parents where we do talk about that stuff.

It just feels weird to actually be the one giving, like, fall-on giving advice. Absolutely. Nope. So I would say, Autumn, go ahead and call out the awkwardness. You can say, Mom, this might be really weird. Like, I'm 19. I'm in college. I'm doing it.

But, Mom, like, I'm starting to, like, live this stuff out with my money, and it is unbelievable. It is crazy how budgeting works. And do you use EveryDollar? Do you have a budgeting tool? Yeah. Okay, so I would say even... Yeah, I use EveryDollar. Yeah, open it up on your phone and just show her right there.

Just be like, look at this. It's categories. EveryDollar Plus, it connects to your bank account, so your expenses come in. Just kind of show her. And it's a very casual conversation. There is nothing preachy about this. There is nothing you going to them and saying what you're doing is wrong before you've done that before. And like, we even got, like, I even like helped her set up an account. But then once we started doing it, she's like, I need to do this with that. I don't know how much the mortgage payment is. I don't know this. I don't know that. But my dad got a minor in family finance and so it's a lot more intimidating to talk to him about

it. Yep. Absolutely. Because I feel like he has all the numbers in his head. He just doesn't write them down and my mom doesn't know what's going on. Yep. Absolutely. So another call we had last segment was about talking to friends about money and it's always hard in a relationship when the door is not open for you to, that you're invited in, in that area of their life for your opinion. So I would say continue on just dropping things of like, yeah,

I'm doing this stuff and like, it's amazing. It's helping me. It's working. And maybe if you know people that are doing it, that's a married couple and you're like, yeah, our friends X,

you know, X, Y, and Z, they're doing it. And it's incredible that they're on the same page and all of that. So just dropping little things like that. And then I would say for you bringing in a third party to talk about this, whether that's a total money makeover book, whether it's Financial Peace University, you buy them for Christmas,

it's something else. But what you're doing is you're inviting a third person, another voice that's not yours coming in and maybe helping them and teaching them through that content versus you as the daughter, especially if they have not completely opened up that door. But I always say whenever it comes to sharing your story about how you've won with money and how you're winning with money and you're getting that progress is through your own story. Talk about you and it's not

selfish or, you know, you're not just like making a big head about yourself, but just to be like, man, this is working. Like, because ultimately you want those people in your life to have hope. You want your friends to have hope. You want your parents to have hope when it comes to their money. And so one of the best and most efficient ways to do that is through your story. All right. Up next is Victoria from New York City. Hey, Victoria. Welcome to the show. Hi, Rachel.

Thanks so much for taking my call. Absolutely. You're living in one of my favorite cities in the world, Victoria. Awesome. I love it, too. I love that you're going from here. How can I help? So, yeah, I'm 25.

I'm married, debt-free, and I'm babysat three with my husband. And we make together $106,000 a year. Okay. And so we're currently cash-flowing his grad school, which will be done in one year. Okay. And we kind of planned it so that when he's done with grad school financially, it would make more sense for me to start my dream, which is to go to law school. But I don't think we could cash flow that because I anticipate around does follow through that I attend school, how to approach that financially.

I should mention that we are set on, I mean, we're working towards saving $25,000 as an income replacement instead of three to six months of savings. And so that would be for my first year of school that we could just drop from. And summer internships during law school typically pay $2,000 to $3,000 a week. Again, that's conjecture. If I get them, that's what I would work towards. And so that would kind of replenish savings again for the next year of school. Sure. Okay, so if you go back to law school or you're working now,

I'm assuming. Yes. Would you stop work to go full time or will you be doing this on the side? I would be going full time. Okay. So that $106,000 is going to be cut until you do your summer internship and you make some money doing that. Yes. Okay. All right. Well, whenever it comes to higher education, whether it's college, law school, grad school, you know, going to get your MD, whatever it is, I'm always going to tell you to cash flow it. I do not want you going into debt. So the idea of, okay, well, I don't know if we can do this.

Like, you know, we may have to just take out some loans. Like that's not even on the table for me to discuss. So like that's not going to be an option. But what you want to do, and it sounds like you guys are pretty good planners, like you have your numbers, you know what you're doing. And so what it might be, Victoria, which is not a fun answer, but it may be that you pause law school for another year or two, which is always hard. We are so used in our culture of instant gratification, getting what we want right when we want it. But for you guys to cash flow this, if that means you working a whole other year and saving that and living on nothing

in order to do that, that's what I would do is to cash flow it there. Never, never, never take out loans, even for higher ed. This is The Dave Ramsey Show. Thank you. Welcome back, America, to The Dave Ramsey Show. And I am Ramsey personality, Rachel Cruz, filling in for Dave this hour, taking your calls. Again, it is a free call anywhere in the country at 888-825-5225. All right, up next is Jonathan from Columbus, Ohio.

Hey, Jonathan, welcome to the show. Hey, thanks for having me. Absolutely. How can I help? So my wife and I just had a baby in March. Oh, congratulations. My wife had some medical complications during the pregnancy and is actually going to be off work until around October. So we started the snowball debt,

the debt snowball, excuse me, and started working that. We've got a thousand dollars put away as our little fund, but now our income has taken a significant hit. And I'm wondering, do we keep trying to snowball or do we just tread water? How do we find encouragement? What do we do? How do we keep going? Yeah, absolutely. And she will be able to go back to work in October, even with the medical diagnosis? We're hoping so, yes. Okay. You know what? I would say since it's a few months, I would pause your debt snowball and I would save up a larger emergency fund than $1,000. I would treat this just like if while she was pregnant or if you know a job loss is coming. If there's something you can anticipate in the near future that's a little uncertain and sometimes when it's really certain that you say, okay, we're going to just pause it and just save up

a lot of cash in case another something medical comes up again and just for you guys to have a little bit of breathing room because you have a brand new baby in your home which I know is exhausting in and of itself, let alone more complications. So yeah,

you guys, I think as a couple, 100%, I would recommend pause the debt snowball. You're going to come back to it. I want you to get back to being gazelle intense and motivated to pay off that debt. But for right now, through October, pause it and save up some cash and have a good buffer. Again, because when the unknown is out there, a specific unknown like that, I would want some financial buffer for sure for you guys. And that is not irresponsible at all. And I think when she starts back work, starts up work again, I would want what can I ask what the medical diagnosis was? Was it

something that's going to be ongoing? Yeah, it'll be ongoing. She was diagnosed with epilepsy. She started having. Okay. Oh, I'm so sorry. She's a nurse and she travels, so that kind of takes out the driving aspect. Totally. Well, and when you have a new medical expense, kind of this new thing in your life, having some buffer there will give you guys peace of mind in case something else flares up and something else happens. So having that is for sure what I would do. So I hope that helps Jonathan for sure. Pause that dead snowball.

Save up some cash. When she goes back to work, keep that emergency fund there. I wouldn't drain that back down to $1,000. Maybe wait a few months. Get your feet back under you. After the holidays, then kind of realign and look. Okay, how much debt have we paid off? Can we take some of that savings?

Throw it back at the debt if you guys are feeling good about that for sure. But yeah, anytime that there's something major, you guys, again, pregnancy, unexpected job loss, you know something is going to be changing. We're okay with you pausing for a season. We don't want it to be forever. But pausing for that season is wise and good to save up some cash and then start plowing through the debt snowball again. All right. Lauren from Facebook says, hey, Rachel, I am brand new to your Facebook community and I love it so far. My question is, what do I do about birthdays, anniversaries, holidays, etc. when it comes when wanting to desperately be debt-free. This is hard, Lauren, because what ends up happening is life continues on,

other people's lives continue on while you're getting out of debt. And so what I would say is keep those things minimal and some of those things you're gonna just say no to. So saying no to, hey, my friend has a birthday and usually I get a gift, but this year I'm just not going to right now. I'm working on paying off this debt

or there's a wedding and it's, you know, out of the country, destination wedding. And usually you'd be like, oh yeah, I'm on board. I would go. And this time you may say, you know what? I'm going to sacrifice this, especially if it's not like a family member or super close friend in order to pay off this debt.

So the sacrifices are there. Keep those expenses at a minimal and plan ahead. If you know it's coming, like holidays, aka Christmas people, yes, it's coming in December. So you know that. So it may not be the biggest Christmas of your life of you giving away tons of stuff, but planning ahead and knowing it's coming. All right. Kyle from Kansas City is up next. Hey, Kyle, welcome to the show. Hello, how are you today? Hi, I'm doing great.

How can I help? Great. So my wife and I just had a baby. Congratulations. Thank you very much. From that, we just acquired about $5,000 in medical bills. And my question was, we do have an inheritance. Can my wife and I just take the inheritance, throw it on the debt, take care of it? We can also take the inheritance and put it

in our three to six month emergency fund, you know, take care of that. And then we could just start from step four. Would you or Dave Ramsey approve of that? Yeah. Is the $5,000 medical debt the only debt you guys have? That's it. Okay. And how much is the inheritance? It's roughly a hundred thousand. Awesome. Wow. And you guys have that now or it's coming your way or what's the status? We have it now. Okay. That's great. And who left it to you guys? I'm just curious. This is a great grandpa. Okay, how cool.

Well, I love that because when people call in about inheritances, I think putting the money towards things that are going to create a new legacy and to honor their legacy is always a great thing. Like when you can put it towards something that you know, okay, this is so good and setting my family up so,

so well, like your great grandfather will be so proud that you did that. Do you know what I mean? Like versus going and just like spending it all. So, so my advice would be 100% pay off that medical bill today. Go ahead and write the check, get that out,

do your three to six months of expenses, and then start putting some of that. If you can put it towards retirement, I would open up a kid's college fund since you just had a new baby. Because when you can start when the baby is brand new, that college fund will be growing, growing, growing. If you use an ESA, it'll grow tax-free, which is incredible. And just go down the baby step line.

And if there's other things you guys are looking at, if you're needing to upgrade your home or maybe some cars or something like that, you could do all of that on the back end. But I would definitely, definitely recommend, and Dave would say the same thing, if you're sitting here, pay off that debt, get your fully funded emergency fund, start some retirement and some college investing, and then go from there. But man, what a great spot, Kyle, to be in. And what a testimony to your great grandfather of you being able to get this money. I mean, that's absolutely, that's life-changing. I mean, it really is. And I always think about that from my perspective of like, man, when you can start winning with money at any age, but especially you young people out there, I'm like,

gosh, when you are investing early on all that, like you're going to be the Kyle's great grandfather someday. Like you're going to be able to build so much wealth, be super generous and truly, truly change your family tree. I mean, it is a powerful, powerful principle that when you look to see, man, you create good character in your kids and their financial legacy could be changed from the choices that you are making today. And that's part of getting out of debt. A lot of you guys are on baby step two. You're working the debt snowball. You're getting out of debt. And sometimes the motivation there can be hard because sometimes it's a long journey

depending on how much debt you have. But always keeping your why in front of you is so, so important. Like, why are you doing this stuff? Why are you budgeting and saying no to that expensive trip when you know you could put it on a credit card, but you're choosing not to? Why are you working that extra job to get out of debt? Why? Why are you doing these things? And having that why continues on the motivation.

And I think it's just, it is so powerful. And I'm speaking from my own story. I mean, my parents, like, man, they filed bankruptcy the year I was born. And because of their decisions to say enough is enough, my life has been changed. And not just from the monetary perspective, but the knowledge, the home I grew up in, knowing how money works, it being talked about, good money habits being shown, my parents putting limits and boundaries on themselves, saying no to themselves. And as kids, we're watching that. I mean, all of it comes into play, you guys.

The character qualities that you're instilling in those around you as you're going through this process is incredible. And then at the end of the day, when you are able to leave $100,000 to your great grandson, Kyle, and he's able to get out of debt and have an emergency fund for his family, like it's beautiful. Like that's why we do what we do. And so I do, I love, love stories like this. Well, it's been an honor to be with you all this hour. Thanks to our producer, James Childs and associate producer, Kelly Daniel and you America. I am Rachel Cruz, Ramsey personality, and hope to be back with you soon. This is The Dave Ramsey Show. This is James Childs, producer of The Dave Ramsey Show.

Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.