The Ramsey Show - App - You Are the Problem AND the Solution (Hour 3)

Episode Date: June 17, 2022

Kristina Ellis & George Kamel discuss: The truth about credit scores, Is bankruptcy the only option, Selling a rental to pay off a primary mortgage, How to buy a used car in this market, Student loan myths. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Christina Ellis here today, joined by my co-host, George Camel. Y'all, this is my first time in the driver's seat, so here we go. We're taking your calls today, 888-825-5225. First up, we have Tyler calling from Tampa. Hey, Tyler. Welcome to the show.

Hey, how's it going? Hey. It's going great. How can we help? So, my question is, I just graduated from high school. I got my diploma and all that, and I plan on going to school for like the next year and a half to do airplane mechanics. And I was wondering, because I keep getting two different answers. Should I build credit or should I not build credit to go and purchase a house?

Okay. And who are those two answers from? Well, my grandparents are, there's grandparents who say get credit and grandparents who say don't get credit. Oh, which ones do you like more? That's a good question. I won't make you answer that. I'm sure you love them both dearly. Well, you called into this show, I assume you've listened before. Yeah, I remember going home from kindergarten and my parents listening to the show. Kindergarten? I feel like I'm 90 years old now. That's impressive.

So what do you think my answer is going to be? No credit. Why do you think that is? Because credit means I love debt. You should be hosting the show today. You're doing great so far. I did take a Ramsey classroom in high school.

Oh, I love it. Unfortunately, I got expelled and asked not to come back. Oh, my goodness. It wasn't because of the personal finance class, though, was it? Oh, no, no, no, no. Okay. Hey, but you're calling the show today. That shows you're still a great student.

So, Tyler, when it comes to credit, you're focused on, hey, I need this to get a house. Is that right? Yeah, because what they're saying is a mortgage company will, oh, you don't have credit. You don't have a buying history. Sure. But I got lucky enough to, or unlucky, I got a settlement because I got hit by a car. Oh, my goodness. And I have quite a bit of money.

Are you okay? Are you physically well? Yeah, I just broke my arm. Honestly, after PT, I got more movement in that arm than the other one. Oh, good. Okay, so how much money do you have currently? I currently have $60,000. And you have no debt?

No debt at all. Do you have an emergency fund? Yes, I do. Outside of the $60,000? Yep. You're amazing. How old are you? I'm only 18. Oh, my goodness. You of the 60? Yep. You're amazing. How old are you? I'm only 18.

Oh, my goodness. You're doing great, man. And is that how you plan on paying for your education? Yeah, with some of the 60. Okay. Well, I would focus on that now. We don't need to worry about getting a house yet. I want you to get through college completely debt-free. And when the time comes when you are ready to buy a house, which, by the way, if you graduate college debt-free, you'll get there a whole lot faster. I bet.

So here's why I can say this with confidence, that you don't need a credit score to buy a house. It's because I did it, and I'm not special. I just followed a process called manual underwriting. You'll see it listed as a no-score loan, and there's lots of companies that do it. The one that we recommend that we've been recommending for decades is called Churchill Mortgage. They're a national company, and they'll walk you through it. And what it looks like is they look at your real financial picture. Hey, do you have 12 months of rental history? Check. Do you have a tax return to show us to prove that you made money? Great. Do you have utility bills that you've been paying, like your cell phone and internet? Great. We will give you this mortgage. All right.

Yeah, that sounds great. It's that simple. And a lot of people overcomplicate it, Christina. They say, well, George, you're not telling them how long. It's so complicated and so difficult. It really wasn't. There was just a few more documents to hand over. It took a little bit more time.

It didn't delay us getting into our house. And it set us up for success because we weren't busy playing the credit score game. Right. Yep. And so I would recommend to Tyler, go listen to, we did an episode on this on my podcast, The Fine Print. It's episode seven. It's called The Dirty Truth Behind Your Credit Score.

You can find that on podcasts and YouTube. Just search for The Fine Print. And that will open your eyes. We talked to someone at Churchill, one of their mortgage loan specialists to dig into this topic. I love that you have that personal experience with it too, that you are walking proof that it can be done. And Tyler, my other encouragement is just to make sure you take student loans off the table. You know, you have that 60K, you said it's going to pay for part of your education, but I know there's kind of a question mark for how the rest of it's going to come about. So be determined to do it debt-free. You're young. You have no debt.

You've got a great start. But keep that mindset, especially with two different sets of grandparents kind of competing, telling you different mindsets when it comes to money. Pick the one that leads you to a debt-free future. Boom. Stay determined on that.

Nailed it. Next up, we have Jamie calling from Atlanta, Georgia. Hey, Jamie, welcome to the show. Oh, thank you so much for having me. How can we help? Well, I am a entrepreneur and I have gotten myself in about $50,000 in debt. And I am trying to figure out if bankruptcy is my only option. Well, easy answer is no. Without even knowing anything else about your situation, you're going to be okay. How much do you make? $75,000 last year. Who told you

bankruptcy is the only option? Well, I went and I had three businesses and I went and bought an office, well got an office, leased an office space and it really caused my business to go like just to be in a detrimental space. Now my bills have gotten behind. I've maxed out my business and my personal credit card and essentially I got the office space so that I can run my insurance business and my nonprofit in the same office space. So I can have people come in and I don't have to be in two locations. Well, the funding has yet to come in for the nonprofit, and I guess it was poor planning on my part. So what kind of debt is the 50? It's credit card, and I have $22,000 left on my car. Okay. What's the car worth? The car's worth $30,000. What do you say we sell this car

to help you avoid a whole lot more pain and suffering? Because that'll clear half your debt right there. True. So if you sell it for $30,000, you owe $22,000. That leaves you with $8,000 to go get yourself a decent, reliable car for now. Okay. And this isn't Jamie's forever car. Jamie's going to upgrade. Once we're out of debt, we have an emergency fund, and the business is back up and running.

Okay. Because that leaves you with half your debt, $25,000 or so. Yes. And making $75,000, how quickly can we pay off $25,000? Within a year? Pretty easily. We can do that within a year. So I want you to get current on your bills.

I want you to be proactive in contacting all the credit card companies. Is it multiple cards? Yes. Okay. Be proactive. Communicate with them. Say, hey, here's what I can do right now. I'm going to make my minimum payments.

We're going to get ahead. And then you start paying extra once that car is sold. And now you've freed up a car payment that you can throw at this debt. Okay. You see how this is going to get you out of this now? You don't have to file for bankruptcy. Far from it. Oh, thank you so much. And if you want more encouragement, we also did an episode about this on the Fine Print Podcast. Episode eight is bankruptcy, a quick fix for struggling Americans. I hope that gives you some encouragement along the journey. Call us back when you're debt-free.

I love that. Some of the time, it's just getting the options out on the table, right? You back yourself into a corner. You go, I can't do anything. I have to file for bankruptcy. No, you can get out of this, Jamie. And guess what? She's the solution. There we go. She was the problem, but she's also the solution. There we go. It's beautiful. Giving that she's also the solution. There we go. Beautiful. Giving that hope and encouragement.

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Welcome back to The Ramsey Show. I'm Christina Ellis, joined today by George Camel. If you're a business or HR leader, you know your employees are dealing with a lot. My employee wellness team, SmartDollar, just did a study and found out that living through one of the toughest times in history, 60% of employees say their mental health has gotten worse. Half say their mental health has gotten worse. Half say their mental health keeps them from doing their job to the best of their ability. Good leaders take their employees' mental health and wellness seriously because it's good for your team and your business when your employees are healthy mentally. So give your employees a way to deal with their stress

and put them on a path to care for their mental wellness. John Deloney's Anxiety Relief Checklist gives your employees simple steps they can take to relieve their anxiety so they can start bringing their full selves to work again. To get John Deloney's Anxiety Relief Checklist for your employees, go to ramsaysolutions.com slash anxiety checklist. Again, that's ramsaysolutions.com slash anxiety checklist. We're taking your calls today, 888-825-5225. Next up, we have Michelle calling from Chattanooga. Hey, Michelle, welcome to the show. Hi. Yeah, thanks. How can we help? Well, so my husband and I are in an interesting situation. We are not fighting in any way, but we have a rental home, and then the only debt we have is our mortgage.

So we have no debt except our mortgage, and we are thinking about selling our rental. Our renters are about to move out, and so this is the time that we would do that, and we're just not sure which way to go. We kind of don't think there's a wrong decision, but we don't know which decision to make. Cool. So what is the rental worth if you sold it once they move out? I've talked to several realtors in the last few days, three of the ones you guys recommend, and the consensus is about $225,000 is what we've enlisted for. Okay. What's left on the mortgage? Got the note. $159,000.

Cool. So you'd clear that mortgage, and you have no other debt, and you have savings in the bank? Do you have an emergency fund? Yes. Do you guys have that mortgage, and you have no other debt, and you have savings in the bank? You have an emergency fund? Yes. Do you guys have money socked away in retirement? Oh, yes. How much? It's a lot less right now. Oh, goodness. It's down to about $400,000. Okay. That's your total retirement savings?

Yeah. It was at about $800,000, and then the market started going down in the last year. Well, it didn't go down 50%, Michelle. Well, no. I may not have those numbers exactly right. Okay. So I don't have that pulled up in front of me. All right. But yeah, it's definitely down from where it was. Sure.

And we have not taken any out. Well, we're going to ride this out. You guys are both still working? Yes. Okay. are both still working? Yes. Okay. What's your income? Including our rental, about $170,000. Okay. How about without the rental, considering the renters are about to move out?

What will it go down to? $150,000. Okay. Yeah. So the rental is bringing in about $20,000? The rental is about $18,000. It's bringing in about $18,000 a year. Okay. So the rental was bringing in about $20,000? The rental is about $18,000. It's bringing in about $18,000 a year. Okay.

So not life-changing money. This is not going to change your lifestyle drastically if you sell it. No, it's not. It's just a matter of do we want to be out of debt now or out of debt in three to four years? Yeah. Because that's our new goal is getting out of the mortgage. I think both are fine options. It sounds like you're real excited about having no mortgage payment, and I don't blame you.

I am. I am. And my husband's not opposed to it. He's excited, too, about that in the future. But we just want to use our money the wisest we can because it's not our money. It's not even our rental house. It's God's rental house. What should we do with it? So we're trying to get all of the information.

Well, I love that mentality. So if I'm in your shoes, I'm probably selling the rental. There's nothing wrong with keeping it. I mean, it's paid for. It's not draining you guys and it's bringing in a little bit of income. But the idea of having it paid off, have a paid off house and a bunch of money in the bank that you can now use to do some contributions to retirement to really set you guys up. That excites me more than being a landlord personally. Yes. And if you miss it, you can always be a landlord later, right? You can get another rental property with cash. Yeah. And I feel like your voice just lights up whenever you talk about the idea of having no debt and getting it paid off. So I feel like you're kind of wanting to lean towards selling the rental and paying it off.

I just think that you're going to be able to walk in so much more freedom. Yeah. All right. The housing market's doing great still. So let's sell that thing. Yep. Next up, we have Andrea calling from Gainesville. Hey, Andrea.

Welcome to the show. Hi. Thanks for taking my call. Is it Andrea? Yes, it's Andrea. Oh, okay. A little fancy flair to it. There we go.

We got it. How can we help? Yes, I am receiving a settlement from a car accident I was in a couple years ago, and I need to know what to do with the money. I don't want to have it just sit in my bank account doing nothing. I'm on baby steps four, five, and six. So our only debt is our mortgage. I will need to access some of that money for ongoing treatment, but definitely not all of it. How much money? It's going to be about

$30,000. Okay. And you guys are currently investing 15%. Do you have kids? Yes. And you're putting a little bit of money away for college? Yes. Are you paying extra on the house right now? We are not. Okay. How much do you think you'd need to cover your upcoming medical expenses? I'm thinking like about $1,000 for the next year or two.

Yeah, just co-pays and stuff like that. I probably could cash flow it, but it's nice to have that question. And you have your fully funded emergency fund outside of that, right? Correct. Okay. Well, if you feel like college is being properly funded right now, you could throw a chunk in there into the 529 or ESA, whatever you guys got going on. But beyond that, I would just throw it at the house and

start to knock out this mortgage. Okay. What's left in the mortgage? Like 180. Okay. That'll help. What's your income? We're creeping down. We're creeping down. I'm a little under $100,000. Cool. Yeah, that's going to get you guys a long ways, throwing it at the mortgage. If college is doing well, you're investing 15%, you've got the medical expenses covered, I think that would be the next step. What do you think, Christina? Okay. Yeah, I think that sounds great. And I think you're going to just keep feeling better about having that mortgage paid down. I love that you're already in a great path. You're paying 15% into retirement. You're saving for kids college. And yeah, I think that sounds like a solid. If you were going to park the money, I would just park in

an online high yield savings account. You're going to get about 1%, which is nothing, nothing exciting. But if you needed to park any savings for now, like the medical expenses, that's where I would park it. But other than that, I'm throwing it at the house. I want to see that mortgage go down, less on interest, more on principal. That excites me. Thank you so much for the call. Yeah, thanks for the call. Next up, we have Makita calling from Jacksonville. Hey, welcome to the show.

Did I pronounce that right? Yes, you did. Thank you so much. Awesome. How can we help? Yes, so bottom line up front, I'm in the military, and I want to know should I downsize my house next year when my son graduates high school?

Now, I might PCS next year. I don't know. They may keep me here for my Twilight tour. I have no idea. But my son, he'll be a senior. He graduates, and he may go to college in North Carolina. He may not. He may go back to Georgia where we're from.

So should I downsize my home? Well, I'm a fan of selling it if you don't need all the space and it's going to help set you up financially. Could you rent for a while until you figure out what's next? I could. It might be harder down here because of Hurricane Florence. Still, the rental market is not as good as it was. But I'm pretty sure I can look for an apartment for rent.

How much money would you get from the sale of the house, net profit? Maybe $30,000, $40,000. I'm not sure. Okay. I mean, if you want to put that down on the next house, I think that's fine. But it sounds like there's so many unknowns in your life right now that you're not really sure where you're going to be planted. Which is why I'm okay with you spending a little bit more on rent

because of those unknowns. Okay. Okay. Yeah, it's a four-bedroom, and it's only two of us, so I don't want all that space. Oh, yeah. You don't need four bedrooms. I would sell it.

I would rent for a while, maybe for a year, figure out where you're going to be planted long-term and make a decision based off of that. That's a good question. Thank you for the call. We're taking your calls at 888-825-5225. This is The Ramsey Show. Thank you. Welcome back to The Ramsey Show. I'm Christina Ellis, joined today by George Camel. So, Christina, we both purchased used cars this year. And we thought it would be fun to give our listeners some tips because a lot of people are going, listen, I know it's not a great time to buy a car, but we need to get a car. Right.

And so we want to make sure that they avoid so many traps out there. And there's a thousand ways these days to even get a used car. So we want to talk about our personal experiences, what we've learned, and maybe give some encouragement to those looking to get a car. Yeah, absolutely. It's rough out there. Man, we had been saving for a car for a long time. We saw the market and we thought, you know, let's just wait because this is just too crazy. But then the AC went out on our 2008 Ford Escape with 200,000 miles. And we were kind of forced in that position where it's like, oh, hey, no, now is the time we got to buy a car now. And just going into this market, it is insane out there. And so, yeah, we learned a lot through the process that I think could help other people

who are kind of going through this. And one of the biggest things that I learned in this is just to watch your emotions. So I went to probably over 50 different dealerships here in Nashville trying to find a car, called around everywhere, just trying to find inventory, find what we were looking for. And it's emotional. It's really hard because you think, you know, I've got the money saved up to buy a car. Why can't I find the car? Or why are all the cars marked up five, $10,000? And it was interesting because I had some dealers kind of put that, you know, slimy sales pressure on. And I asked one dealer, I said, you know, how on earth do you think, you know, you could get $20,000 over MSRP for a used car when new cars are going for less than that? And he actually said, you know, so many people are desperate right now that they're willing to just come on the lot. And when they

see a car, they're just going to jump on it and get it in that moment. So just being willing to go, okay, while there's not a lot of cars out there, there's a lot of crazy pricing, just taking a breath and saying, you know, while this dealership is low on cars, there are other dealerships out there that could potentially have a car and just trying to keep those emotions. And just like the housing market, you get stuck on the certain kind of house or this feature or this make and model and you start to do stupid because you're like, this is the only, this is it. This is the only car like this that exists.

We had a call, Ken Coleman and I on the show, and someone said, what was the Schnozberry color Jeep? And they were like, well, we have to have it because it's the only Schnozberry colored Jeep. And I was like, it's a maroon Jeep, guys. There's other maroon Jeeps out there. But people make crazy decisions based on their emotions. So we got to take the emotions out and go, no, what do we actually need? Right.

What do we need? What do we need right now? Another thing is to watch out for hidden fees so when we were shopping for cars I came across this car that looked like it was such a great deal it was like two thousand dollars under kelly blue book and it was beautiful we were so excited about it about to purchase it and I asked thank god I just had this idea to ask for a print out of the pricing and said you know we're gonna go home and think on it for the night we'll come back tomorrow if it's still here and when I looked at the pricing there said, you know, we're going to go home and think on it for the night. We'll come back tomorrow if it's still here. And when I looked at the pricing, there was this

random $3,000 extra fee. It wasn't taxes. It wasn't title. It wasn't license. It was this mystery fee. So I called back the next morning and was like, what is this fee? And they're like, it's a pre-maintenance fee. We're charging you for stuff that we did in advance. And I'm like, I don't want to pay that fee. And after you added that fee in, I wasn't getting a deal. It was over Kelly Blue Book. It was not a deal. So just watch out for that. What might seem like a deal in this market and very exciting because there's not a ton of deals could actually not be a deal once you actually realize the final pricing. And most people at that point, they're so deep in it. They're not even really looking over the sheet. They're just going, it's been three hours. I want to just get out of here and get in this car. And so you got to watch out for all of those random fees. And

they are random. I follow some car dealership guys out there that help people avoid these traps. And they're going through going, the only legit fee is a small dock fee, a small one, under $1,000. That's it. Other than that, you should only be paying your sales tax or tag or those kinds of basic fees on top of the actual sales price. So when I got my used car, I was so excited because it was just the sales price plus tax. That was it. And I went, I can breathe. Yes.

This is good. So make sure you watch out for those hidden fees. And just say, I'm not paying that. And if they go, okay, kick rocks. You walk away. And usually they're chasing you in the parking lot going, okay, sir, sir, sir, we're going to cut those fees. I talked to the manager in the back. They're always having to go to the back to this mystery manager, which is really just them taking a smoke break and going, all right, I'm going to go back out there and wheel and

deal a little bit more. Right. Well, and a lot of times when you see those fees, you're already like sold on the car. So by the time you get that pricing printout, you're already picturing yourself dropping your kids off at school in this car and taking vacation in this car. So it's like before you really decide this is our car, make sure you ask for a printout of the pricing so that you truly know before, again, you get your emotions wrapped up in buying that specific car. And you got to do your research ahead of time to even know, is this actually a good deal? Is this a fair price? And so I want you to go in that dealership knowing more about that car than they do. That is how you win in these negotiations. That's so good. And the other thing is to just

keep looking. So, you know, in our situation, our AC went out on the car. So it is tempting to get desperate and it's tempting to go, we need a car today and we need a car right now. But if you can find a way to build on a little bit of margin to give yourself time to actually explore and look and see what's out there, that can help so much. And this is going to sound really crazy, and I can't believe I'm admitting this on national radio, but we actually went on Amazon and bought two $25 little AC units to put in our old car to give us a couple more days to search for a car. That is scrappy. That's pretty gangster.

I'm looking at your husband out there, and he's giving me the thumbs up. Yeah, I was like, man, I can't find a car tonight, but we still need a car. So what can we do to stretch this out and give us some time? And here's the cool thing. Buy us some patience. Buy us some patience. And the cool thing is when we did finally find the car that we were looking for, it was the cheapest one of its type within a 200 mile radius. And I found it within an hour of it being posted. So having that extra flexibility to look and explore and take the time actually helped us save thousands of dollars in the long run. And you're ready when that time does come, and you see that car, and you go, oh, we have the cash, which is the biggest tip of all, pay cash.

Do not fall for their financing. They'll go, oh, we'll take $1,000 off if you finance it, because they're getting all their kickbacks of $1,500 if you finance it. So avoid those traps. People say, well, wait, don't tell them you're paying cash because if they're not going to sell me a car because I'm paying cash, I'm moving on. I don't want to do business with these people. And when we say cash, we got to make this clear. We don't mean take a briefcase of cash, which someone I know actually took a briefcase full of cash to the dealership and they went, we legally can't even take this. It's a liability.

We can't take over $10,000. So don't do that. I'm talking about a cashier's check. Yes. That's the way to do it. And when you have that, you can supplement that with your debit card or with a personal check because people go, what if it's not the exact amount to the penny in the cashier's check?

It's okay. You can supplement that. You'll be okay. You'll be okay. So there's a lot of research that has to be done, and cashier's check. It's okay. You can supplement that. You'll be okay. You'll be okay. So there's a lot of research that has to be done and it can be overwhelming. So I want to give people a few tools that they can use to start their research online.

Edmunds is a great reputable site. Car Gurus, True Car, of course, Kelly Blue Book. This is a great way to figure out what kind of car do I want? What is a fair price for what I'm willing to pay for it? Then you know kind of how much you need to start saving up to pay for that in cash. And there's a lot of different sites for buying online cars as well. CarGurus will show you local market prices. Carvana and CarMax are great for national market prices. Kelley Blue Book has suggested retail

value. Your local dealer might give you some anecdotal insight about what's going on locally in your area. And so you combine all these data points, you go, oh, this gives me a really good true picture of how much this car should cost and what I should be looking for. That's so good. Yeah. Of all times, it's always good to do your research. It's always good to have options. But especially now in this market, it's good to go in with all of your ducks in a row, doing the research in advance, knowing what the price should be for the car, and just really being able to come in prepared. And last thing, always get a pre-purchase inspection. This has been a big one. We've

taken a lot of calls where people buy a car, they thought it was a good deal, and three days later, the transmission goes out, or it needs thousands of dollars in repairs that they didn't know about, and all these cars are sold as is. And so unless you can take advantage of some kind of lemon law, you can get screwed on these deals. So always get a pre-purchase inspection from a mechanic of your choice. Do not let the person selling it tell you, oh yeah, I'm gonna go to my buddy here because that's just not a trustworthy way to go about it. So find a local mechanic that you trust to look over the car. It's going to cost you probably a hundred bucks, 200 bucks, but it's so worth it to know that what you're buying is exactly what

you thought it was. Exactly. That's so good. It's that concept of taking the time in advance, you know, taking the time to do the inspection, taking a little bit of extra time to search, to not get, you know, panicked and desperate and kind of fall into that trap of buying something, you know, just because you're in a state of needing it right then. Being willing to breathe. Oh, yeah. Do the inspection. Here's what I found, Christina.

The person with the most patience, information, and options always wins. So get you all three before you make a giant purchase. So good. We'll be back. This is The Ramsey Show. Our scripture of the day is, The Lord will fight for you. You need only to be still. Exodus 14, 14.

Our quote of the day is, We do not have to become heroes overnight. Just a step at a time, meeting each thing that comes up. Seeing it not as dreadful as it appears, discovering we have the strength to stare it down. Eleanor Roosevelt.

That is so good. Welcome back to The Ramsey Show. I'm Christina Ellis, joined by my co-host, George Camel. So, Christina, we got to talk about this. You are known for having gone to school completely debt-free, winning over a half million dollars in scholarships, cash flowing your bachelor's degree, your master's degree, just a great success story.

And you're encouraging the next generation to do the same, to show them that it's possible to go to school debt-free. I am, on the other hand, the guy who did dumb, went into student loan debt, didn't have the right conversations with my family, and ended up in $36,000 of student loan debt, kind of wandering into it going, okay, I guess we're here. And so I got rid of that very quickly following the Ramsey plan. But I wanted to talk about some of the student loan myths that are out

there. And I kind of like that people are riled up about student loans, because it shows me that we're breaking the myth that student loans are, quote, good debt. Because if it's good debt, why would we be in the business of forgiving it? Right? Right. So America's waking up to this, and we're seeing some of the stats out there. 47% of Americans who use student loans to pay for school have delayed other things they want to do in their lives, like buying a home, getting married, or having a child because of student loan debt. That breaks my heart.

That breaks my heart. It breaks my heart too. We've been on some coaching calls recently with people with six figures in student loan debt and just hearing what it's causing in their lives, hearing the pain in their voices, the things that they're putting off. I can't sit with saying this is good debt when I see the way it's destroyed lives and I see the people in the pain on the other end of the line. It's just, it's rough. And student loans are killing the American dream. And it seems like the new American dream, it feels too far away for someone to be a homeowner and have this kind of car. Now the American dream is, can I be debt free in my lifetime? And so we're out here trying to preach from the street corners going, yes, you can. And you don't have to wait your whole life to become

debt free. And the average person that follows the Ramsey plan, the baby steps, the debt snowball, they pay off their consumer debt in 18 to 24 months because they get intense and angry at it. That's so powerful. And I love that you've walked through it, that we're coming from completely different places. So it's like, you know, I went to college debt free, you had debt, you paid it off. And we're both so passionate because it's like this whole system of college with student loans and people getting gripped in student loans, it's not okay. And we can help you all fight it, whether it's paying off student loans or going to college debt free, it can be done. But I think one of the things that people are really frustrated about right now,

we're talking about student loan forgiveness, which is great, but we also have to fix the problem of how the new generation is going to pay for college. It's such a challenge because it's like we have two problems here. It's like we've got people gripped with student loan debt, and then we have people who are signing up for more student loan debt. So it's just so important that we stop the bleeding and people start attacking the problem, figuring out how they can pay off theirs. Oh, yeah. The forgiveness is we're trying to bail out the water from the boat without plugging the leak. Right. And that's a major problem. And a boating analogy coming from me, that's impressive right there. But according to

Ameritrade, this is from earlier this year, the average student loan debt per borrower is $38,792 with the average monthly payment coming in at almost $400. And seven out of 10 graduate with student loan debt, around 45 million Americans walking around with this monkey on their back, $1.7 trillion. And it just feels overwhelming. And so what I like to do is zoom in and go, the numbers are scary. So what can we control? We can't control what happens in the White House. We can't control the forgiveness programs. But I can control the guy in the mirror. and I can get on a budget and I can figure out where to find the margin. I can go get a side job and I can take control of this instead of hoping and wishing and praying that someone does something about this problem.

Right. And one of the thing is, is right now, the reason it's so important to talk about this is a lot of people haven't been paying on their student loans for a few years. We have people who graduated from college a year and a half ago and they're not paying on their student loans for a few years. We have people who graduated from college a year and a half ago, and they're not paying on their student loans. And the thing is, is they didn't know really what that was like to start with. They don't really know what it looks like to put a student loan payment in their budget. And then we're hearing all these promises about potential forgiveness. So they're hoping it's never going to happen. So like you said, you got to start attacking it and looking at it and getting on a budget. So it's like, even, even if you're sitting there waiting and thinking, you know, I want to see if forgiveness is going to happen. You know, I don't want to pay anything until we see what's

going to happen. You can still start setting apart that payment and start getting on a budget and carving out that space so that, you know, you're ready regardless. Because we saw a study and it, you know, I think it was like 97% of people are not ready to start resuming payments. And that's a scary statistic. That's a scary thought of all these people are going to kind of be shocked when it comes back, if it comes back. Yeah. And we take a lot of calls in the show, people saying, hey, should I wait?

I mean, what if forgiveness does happen? And the chances of widespread, just unlimited student loan forgiveness happening in my lifetime is slim to none. Now, if they do forgive, let's say $10,000, we are barely going to make a dent. And it's not going to affect all people. It's going to be federal loans. So if you've got private loans, sorry. And the people who go, well, I don't want to pay off my loan because what if they get forgiven later and I've already paid them off? And I go, well, you just got free earlier. And it changed your character.

It changed your work ethic. It changed how you view money and how you view debt. So I'm totally okay with you paying off your debt. And if forgiveness happens later on, you go, whoop-dee-doo, happy for all those people. But the calls that we take, it's not $10,000 in student loan debt. It's 50. It's 90. It's 150. And so we're not even scratching the surface. And this is not a solution. And also, it's a talking point as we headed to the midterms. Yeah, no matter what political party it is, this is a great way to get voters excited to vote for you when you can dangle that carrot in front of them, which is which is sad, because it's a carrot that's really confusing people like the

fact that there's not clarity on this. I think so many of us just wish that they would decide one way or another, so that real people could figure out, you know, what they're going to do. Hey, I'm wondering, can you share a bit of your story about how you paid off your student loans? Because I just love it. You really hustled for this. Like the way you made sacrifices. I honestly kind of get goosebumps when I hear your story because I love it. That means a lot. So I had $36,000 of student loan debt, got a communication degree, bachelor's of science in that. And when I got36,000 of student loan debt, got a communication degree, bachelor's of science in that. And when I got out, I started working here as an intern in the temp,

and I got an entry-level job. I went through Financial Peace University, and I saw other people around me who were paying off their debt. And I went, oh, you can just pay it off, like faster. I thought it was a thing you just pay off for 20 years and hope it's gone. So I went about the business, and I did it my first budget. And I went, oh my gosh, I'm spending $700 on food as a very small single man. This is a huge problem. So I started getting really intentional and creative and going, I'm going to go to the grocery store and wait till Lean Cuisines go on sale five for $10.

Because like that's $2 a meal. And if I do that, I can shave off so much money on food. And I started going to downtown Nashville, not to party, but to pick up the party goers because I picked up side hustles doing Uber and Lyft to make extra money. Love it. And on top of that, I went, what are my skillset? What is my skillset? What can I use my talents for to make extra money on the side? And I was in marketing at the time. So I started building websites for people and I became a marketing consultant. I started getting paid, you know, $25, $30 an hour to do this work from home, after work, on the evenings, during the weekends. And I really started to see the momentum. And I stopped eating out. And I got on that budget. And I saw the progress. And 18 months later, I was completely debt free. I had cut up my

Discover card, my American Express card that I was like, but the Delta SkyMiles, the 5% cash back at restaurants from Discover, they're blessing me with these amazing rewards. But why am I broke and unhappy and miserable and filled with anxiety and stress and frustration? And so once I cut those cards up, got rid of the debt, it freed me. I mean, I felt a weight lift off my shoulders. And this past December, me and my wife who works here, we paid off our house. And to get that weight off our shoulders and go like, I didn't think, you know, this was 10 years ago that I was in this position. I never thought 10 years later I could be completely debt free with a paid for house with savings in the bank.

I just thought that's for someone else. That's for rich people. That's for different kinds of careers. That's not for me. And so I want to encourage people that they can get rid of this debt. They don't have to have it hanging around. They don't have to wait on the White House to change their life. They can just be about the business of doing it themselves. And I think that is such a powerful character changing spiritual journey that they can set themselves on. That is so powerful. You are willing to do

the work to make the sacrifices, cut back on your grocery budget, work extra jobs. I mean, you are walking proof of what this plan can look like and the freedom, baby step seven, that can come from this. That's just incredible. I love your heart for helping this next generation avoid student loan debt and show them how to do it. You're awesome. Well, that puts this hour of The Ramsey Show in the books. Thanks to my co-host, George Campbell, and to the people in the booth, thank you. And to day, Brandt? Want to see the latest Ramsey Show videos going viral?

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