The Ramsey Show - App - You Can’t Outearn Your Bad Money Habits (Hour 2)

Episode Date: February 23, 2024

🎵 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 George Campbell, joined by Jade Warshaw. This is your show, America. Give us a call at 888-825-5225. We'll help you take the right next step with your life and your money. Paul and Chris join us up first in Nashua, New Hampshire. What's going on, guys? How are you doing? We're doing well. How are you guys? Doing well. What's going on today? Well, we are having an issue. We're trying to figure out how to increase our debt snowball.

We earn $185,000 a year and are falling behind on our... And is that due to debt payments or you're just not paying attention to the money? What do you attribute that to? Well, we have, not counting our mortgages, plural, we have $287,000 in debt. Can you break that out for us? What type of debt is it? Student loans. We have about $70,000 in student loan, most of it mine. Okay. We have $19,000 in a single car loan. Okay.

We have $122,000 in two different HELOCs. Okay. How do you, can you split the HELOCs out for me? Sure. One is on, we have $87,000 on a HELOC on our property, on the house that we live in. Okay. And another $35,000 on a HELOC that my ex-wife lives in. Okay. And then we have another $38,000 in solar. Okay. And about almost $38,000 in credit cards. Okay. So, and then you mentioned there's two properties. The other property is the property your ex lives in?

Yes. And what's the arrangement there? Yeah. So the arrangement is she and she lives there with my kids and I pay the mortgage on it. And is that the legal arrangement? Is that from the judge or what? It's, it worked out to be just about the same amount as the child support alimony payment would be okay so this is in lieu of those yeah okay so you're you're stuck making this mortgage payment you can't go sell this property for example correct i mean i could go sell the property but

then who gets the money if it sells uh we split it 50-50. And is that part of the deal or you added that part in? No, that's part of the deal. Would that absolve you of having to make this mortgage payment and any financial tie? Or would you then still have to make alimony and child support? I would still have to make alimony and child support. Um, interesting. And you have a new spouse now? Yes. And you're both working? Yep, we both work full-time,

and I have a part-time job that I work 30 hours a week at. Okay, great. So you're working hard, which is good news, but we have a giant mountain of debt in front of us, and do you know what all the payments add up to for all of those debts per month? Yep. Just without the mortgages, it's just $49.83. $49.83?

And that's before food, utility, shelter, transportation. That's just the minimum payments on all of these debts. That's correct. And then you still have the two mortgages. Right. What do those add up to per month? $28,600. Okay.

And what's your take-home pay between your wife and you? $11,500. Okay. The good news is those mortgages together, I mean, you could have a $2,000. You said the mortgages combined are $2,816, right? Yes. Okay. So that's the good news in all this equation is that the two mortgages combined are $2,816, right? Yes. Okay, so that's the good news in all this equation is that the two mortgages combined are still less than 25% of your take-home pay for the most part. Right.

So that's good. And you have $3,700 left that hopefully covers insurance, food, utilities, all of that. Right. But is there anything left over? If you guys got on our tight budget, could you have an extra $1,000, $2,000 left over? $3,000 left over? Well, that's what we're trying to do, and that's why we're calling in. Okay. Well, it starts with the budget to me. That is your source of financial truth, and we'll gift you every dollar premium to help you and your wife put a plan on paper. But right now, you're great at counting up all your debt,

but we've got to start figuring out how we can attack the smallest one with a vengeance, knock that out, knock the next one out using the debt snowball method. So have you laid this out in a budget yet, or is this new to you? No, we have. We have. And we just are struggling to try and find extra to throw at it. It seems like every time we start to get a little bit of money. I'm sorry. It seems like every time we start to get caught up and get ahead, life happens.

We just had a $1,600 vet bill for one of the animals. All those little things just keep happening. Do you guys have any money in savings right now? Nope. Just emptied it out for the animal yesterday. So you had $1,600 to your name. Yep. Oh, well, are you guys done with debt?

No, we have a retirement account. Sure. We're not going to touch that, though. Right. Should we stop investing in retirement? Yes. How old are you two? I'm 56 and my wife is 54.

At what point did you guys decide we probably should stop going further into debt if we ever want to retire? What was your I've had it moment? Well, most of this debt was incurred. We, well, me, we started a business and we just kept incurring debt to try and keep it, to try and get the business to take off. And it just never did. So finally, about a year ago we just that was it we said we're done closed up the business and now we're just trying to clean up the mess how old

are the kids uh youngest is 21 the oldest is 24 okay there's five of them okay what would you net if you sold the other property um i would probably net about 150 170 000 that's after the split after the split and after paying all the that feels like your best bet right now to get above this. Now, long term, you still have to change your behavior. So I don't want it to feel like a shortcut, but that could knock your consumer debt down to $130 if you put all of the proceeds towards that. And of course, you would now have a monthly payment you're making in alimony and child support, right?

Right. But you also have freed up, you know, you've knocked out over half the debt. Mm-hmm. I think that's the move. If you can legally do this without up you know you've knocked out over half the debt i think that's the move if you can legally do this without you know you're uprooting your your family in a sense right and they would have to find somewhere to live right but the kids are all grown but they're yeah the kids are about out of the house if they're not already, right? Yeah, as far as my kids, not my current wife, Chris. My kids, one is out of the house.

The other two are, one's living there, one's still in college commuting. Okay. Well, I think that's the move. And then following that debt snowball method, using the every dollar premium budget that we're going to gift you, hang on the line and our team will make sure you get the link to get that app and we'll hook you up with the premium version. But this is going to take some drastic measures. And I think part of that is taking the proceeds of the home sale and knocking out half your debt to free up enough payments to actually make some traction on this. But you got to cut your life down to nothing for the next probably three years to

clean this mess up and get back to investing. This is The Ramsey Show. This is The Ramsey Show. Open phones at 888-825-5225. If you need to get out of the house, join us. We've got a brand new event called Total Money Makeover Weekend happening on May 10th and 11th right here by the headquarters at our brand new Ramsey Event Center in Nashville, Tennessee. I know there's a lot of you out there. You've been listening a while, but you've been sitting on the sidelines. You've been kind of Ramsey-ish. You're sort of dipping your toes in the water, or maybe you're in baby step seven and you need a little pep in your step because it's a long journey. It turns out after you pay off

debt, life isn't over. You still got to live for decades potentially. So in just one weekend, you're going to get a crash course on everything we teach about money. We have brand new content from every single Ramsey personality, Dave Ramsey, Jade Warshaw, Ken Coleman, Dr. John Deloney, Rachel Cruz, myself. And we're going to light a fire under your butt to keep making progress on those money goals. And this is going to be interactive. There's live Q&As. We've got Smart Money Happy Hour happening on Friday night. So this is a destination weekend event.

So start budgeting for it and get your early bird tickets, which start at just $99 for a limited time. This is it. If you want the best deal, and if you're like me, I love a good deal, this is the time to get it. The Ramsey Event Center holds about 2,400 people. So this event will sell out. So plan to join us. Get your tickets now at ramseysolutions.com slash events, ramseysolutions.com slash events. We'll see you guys in May. All right, Jade, it is time for our question of the day brought to you by Neighborly, your hub for home services. Here at Ramsey, we believe in making home ownership a blessing and not a burden. So we recommend Neighborly's network of service pros to repair, maintain, and improve your home.

Find the help you need at Neighborly.com slash Ramsey today. Awesome. Today's question comes from Ben in Oregon. He says, my wife and I own a house in our hometown where we have deep ties. Local real estate prices have gone through the roof and our home is now worth more than we ever dreamed. I collect VA disability and work as a janitor and my wife is a substitute teacher. We could move to another state and live much better than we do here. Emotionally speaking, it makes sense to stay here.

However, financially, it makes no sense at all. If you were in my position, what would you do? I have free reign over this. This is cool. Well, I have questions. There's never enough information because I kind of want to know what their dream is, right? Like they live in Oregon. We know there's many places in Oregon where real estate has gone crazy. I want to know if they have kids. I want to know. Do you know what I mean? i want to know do you know i mean i want to know more about it what's the relationship like with their family and in-laws and parents is everyone nearby is it close-knit because i said deep ties but we all have deep ties to our

hometown in a sense you know it's emotionally there's it's sentimental yeah we know it well but the fact they're even asking this question tells me their heart is kind of going there's something stern and they're saying i feel like we should just move. Well, there's, let's give them some scenarios to play out. My thing is like, if you are, let's say they live in a really small place and they know they want to start a family and there's no way to get the home that they want for the family size that they are thinking about, then moving could be a good option. But if I'm like, if you're in a house that's working for you, you just know that it's doubled or whatever, tripled in value, and you just are kind of like antsy to get at that money, that might be a reason to kind of slow down and just say,

hey, just enjoy the fact that your property has appreciated in the manner that it has. I really just think that there's, let me be, let me think philosophically for a moment, because I do think that it's great to be able to financially live the life you want, but you have to ask yourself at what cost and are you doing this as a necessity or as something you just want? Maybe because if you're just, if they're debt free, if their house is a fine size for them and they're just like, oh, but, you know, we have six hundred thousand dollars in appreciation, you know, they might just be wanting to get at that

money. But if if if they're out of debt, kids are fine. Space is fine. You know, they might regret moving just to get a bigger house. Yeah. The grass always seems greener. And then you move and you go, gosh, I just miss my hometown and the family and people end up moving back. And so what's good is that none of this is fatal or final. And so what I would do personally, if I was in your shoes, which is how Ben asked it, I would go travel and go to the places I'm thinking about living and explore the neighborhoods and see what's around there. And is this a place we want to live and talk to a real estate agent and ask about schools and all the things you're wondering about before you make a move. And so he said, financially, it makes no sense to stay there, which tells me it may be an expensive area and it's not a sustainable place to live. So the other thing is looking at their careers. They might not be able to move up. Yeah. Yeah. I don't know about

his VA disability income and the janitor and substitute teaching. They may want to find careers that they can really sink their teeth into and increase their income to where they can stay there and make it financially sustainable. Yeah. That's our hot takes, Ben. You got some homework to do, my friend. But thanks for the question. That's an interesting one. Yeah. Guys, when you sign in these questions, be detailed. It helps us. It does help us. That's why we like the phones because we can dig in with the questions. The question of the day,

while fun, harder to do that. So appreciate the question, Ben. Best of luck, no matter what you do. Olivia's up next on the phone lines in Cincinnati. Olivia, welcome to The Ramsey Show. Hi, thanks. Thanks for taking my call. Sure. What's going on today? How can we help?

So my husband and I are both 25 years old. We've been married for about a year and a half now. Pre-tax, we make about $130,000 a year. We have $13,000 in an emergency fund. We have another account with $32,000 in it for a down payment on a house. The only debt that we do have is that before we were married, my in-laws purchased a car for my husband and they said, we'll pay the first 12,000 on it. And then we have to pay the remaining 9,000. Um, and that is going to come up this July. We'll have to pay that. We have 5,500 of it set aside and we will

have the remaining 3,500 in July. So we will be able to pay that off as soon as July gets here. I guess my question is we're renting right now in Cincinnati, and we're kind of in a crossroads, not sure what to do. October, our lease is up, and we're saying, okay, do we keep renting or do we buy a home? We are really young. We're only 25. But we do feel like kind of that itch to have something

that's our own and not just keep renting from someone. So I would be interested to hear what your take on our situation would be. I mean, can you afford the house that you're looking at with $32,000 down? Because at the end of the day, what you're looking at is to fulfill an equation. You want to make sure that you're on a 15-year fixed rate mortgage where the payment's no more than 25% of your take-home pay. So if you can meet that requirement, you know the area you've been renting in Cincinnati, then you're seeing a lot of green lights. You've got your emergency fund here. Yeah. And you're saying this $5,500 is outside of the emergency fund or down payment account?

Yes. So I have all separate account accounts for everything. Um, and so, yeah, I have 5,500 set aside for it. And then by July we'll have the remaining 3,500 that we need to pay the 9,000 off. Um, because my, my in-laws have been paying payments on the car and my parents kind of drilled into my head my whole life, do not get a car unless you pay cash for it. So when they told me we were going to have to have $9,000,

I was like, okay, no, we will not, because they said you could just take over the payment, and I was like, we're not going to do that. I don't want a payment in my life. Absolutely. You're doing it the right way, getting rid of this car debt as soon as possible. And so I would go do the math. We've got a mortgage calculator on our website that you can use to start to crunch those numbers. And so really, it's not about the timing issue. If you

need to sign another six-month lease because you need $40,000 down, I'm totally okay with that. But do not jump into a house before you're ready to where you're like, well, we could do it, but it's on a 30-year and it's going to be 40% of our take-home pay because you're ready to where you're like, well, we could do it, but it's on a 30 year and it's going to be 40% of our take-home pay because you're going to be calling us back going, we're stressed. We somehow can't make this mortgage payment. This house has become a burden instead of a blessing. And I don't want that for you. Okay. That is really good advice. I love it. Well, thank you so much for the call. Love that question. Young couple wanting to be homeowners, but wanting to do it the right way. I looked in the constitution. There's nothing that says you have to be a homeowner by 25 or that you have to

own a home as soon as you're married. So for all the couples out there, whether you're 25 or 55, don't just buy a home because you've heard it's smart to own a home and that you've heard renting is a waste of money because you're not building equity because you're going to be calling the show a few years from now saying the home is too much should we sell it yeah we thought it was going to be fun but turns out home ownership's really expensive and there's property taxes and insurance and maintenance and repairs and the hvac went out and the roof needs to be repaired that's just too much stress life's too short to have that level of stress so just rent it's buying you patience do it wisely and you'll be far better off in the long run. You'll have financial peace, and it's always worth the price you pay for it.

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 Jade Warshaw. We've got a fun livestream happening next week, Jade. Do you know anything about this? I do know about this live stream. What do you know about this live stream?

Okay, so what's cool about it is it's George and I, we're chopping it up right after the Ramsey show. Whatever Ramsey show airs that day, right after, we're going to come on and we're going to pull up. Oh, that's right. It's in the morning. I forgot we changed it.

James, give us the details. 9 to 10 a.m. Central. Oh, that's right. It's in the morning. I forgot we changed it. James, give us the details. 9 to 10 a.m. Central. Okay. Wonderful. Well, there you have it. James tells us all. I don't have the notes in front of me. Okay. So let me run it back. Last time we did it, it was immediately after the show. This time we're going to do it in the morning so that more of you can watch it. But the thing is we pull up every dollar right on the screen. Never been done before. Never been done, except that one time we did it before. That's right.

So the second time in history it's ever been done. But you guys call in and you give us your budgeting questions and we can actually show you in every dollar how to do it. So Tuesday, the 27th of February, 9 to 10 a.m. Central, that's 10 to 11 Eastern if you're doing the math at home.

Give a specific time. Join us on the Ramsey Show YouTube channel. And what's cool is you can go hit the little bell to be notified when we're live. Because a lot of people forget when it's like a YouTube live stream. So hit the button to get notified on the Ramsey Show YouTube channel.

You'll see a little thumbnail there that our team has got prepped. It's called something like How to Build Wealth with Every Dollar. That's right. So check that out. And we're going to have some fun. It is going to be through not only your questions about budgeting, but getting to show you how to tactically live this out with the every dollar app. So looking forward to that. Don't miss it. It's going to be a good time. And it's completely free. So you get nothing to lose. Free. If it's free, it's for me. If you if you hate it you will give you your money back how's that zero dollars all right let's get to the phones alina joins us in

charlotte what's going on alina hi george hi jade hey um i have a question about my budgeting slash um like credit score okay and so i am currently about seventy four thousand dollars in total debt um this is including credit cards student loans an eviction a car loan and i'm including like car insurance and phone bill in there. Are you behind on those? I'm sorry. These are the car loan and the other, or I'm sorry, the insurance, that's things that you're behind on? That's things I'm including in my total debt, but I'm not behind on anything besides the credit card. Okay. So let's not include it if we're not behind. Let's just call that a fixed expense on our budget. Is that fair? Yes. Okay. Okay. So what's your question? So for budgeting purposes, my credit score has gone down. So I wanted to ask you guys, would it be smart to eliminate one of these credit cards to begin with or start paying down like through the snowball

effect, just my smallest amount up to the biggest one. Yeah, definitely. So the purpose of paying off debt is so that we don't have to go into debt again. And when you don't go into debt again, that's also you simultaneously making this decision that I don't borrow money and I don't care about my credit score anymore. They go hand in hand, whether people realize it or not, because you don't pay off debt to go back into more debt. The hope is I paid off this debt. I'm never doing that again. And when you make that decision, credit automatically kind of goes with it because you cannot have a credit score if you're not borrowing money and so the piece I want to give you about that is when you pay this debt off you will have money to where you won't need that credit score so to answer your question I would do the do it

the way the debt snowball says list them from smallest to largest by balance by full balance not by payment amount and if your credit card is not the smallest balance, then I would not pay it first. What is your smallest balance? For my credit card? Well, the smallest balance is like a payment plan. But that's the total balance for that credit card is actually one of the biggest. So just focus on balances instead of payments. If you ignore what the minimum payments are,

what actually has the smallest loan balance out of all your debts? Oh, one where the credit card company is going to pay off half the balance if I pay one half in the next two weeks. Is that a settlement? Yeah, it's like they'll pay the difference to cancel out basically the credit card to zero. Okay. What's the catch here? Why is this credit card company... Has it just been delinquent forever?

Yeah. Are you way behind on this to where they're just willing to settle? They said, hey, give us 50%, we'll call it good? Yeah, I think so, yes. Okay, make sure you get that in writing and make sure that you don't give them access to your checking account. Okay. Did you already give them access to your checking account? No, they just said it's like a credit card reduction

where I pay the 50%, they'll cover the other 50%. Is this the actual company or is this the collection agency? This is the actual credit card company. Okay. Get it in writing. What's your income? My income currently is about $1,400 a month. Okay.

What are you doing for work? Currently, I'm a weekend receptionist at a senior care facility, but I have been looking for more like full-time work, including the weekend work that I currently do. Do you have kids? I do. I have one son. He's three years old. Okay. What's the child care situation? Child care, he's with me during the week, and I will have help with child care if I do get a job during the week. Okay. You need to be working full-time starting tomorrow.

And if that's retail, hospitality, whatever you have to do, you've got to be working at least 40 hours a week if you want to make headway on this debt. Because you're at the poverty line right now. You're making $16,000 a year. And so trying to pay off $80,000, making $16,000, you're not going to have any margin to throw. You're going to continually go into debt because you have no margin in your income.

And so we need to get the income up. That's the big factor here. And then we'll figure out child care from there. What's left on the car loan? Car loan? I just got the car last year, so it's $15,000. Gracious. I think we need a downgrading car. What's it

worth? I actually don't know. It's a 2013 Volkswagen Passat, so it's a used car, too. I doubt it's worth $15,000. Mm-hmm. Yeah.

I think you got screwed on that deal. Tell us about this eviction. Yeah, so basically I chose to work. I switched jobs, so my income did change drastically, like $5 an hour, but I was much happier at the other job that I chose over the other ones. So it was just really just the decision of, you know, my overall well-being and stress level to work a job that was less paying, but I was more happy with the work. Well, your current life feels real stressful financially. And so I'm okay being a little stressed when it comes to work,

if it means we can clean up this debt. So the eviction happened because you couldn't make rent anymore because you lowered your income? Yes. Hey, is there a medical reason you're not working? Like, is there a medical reason, like mentally speaking medical reason you're not working like is there a a medical reason like mentally speaking that you're not working no i just um i moved from a different state so i moved back home with my family here in north carolina and i moved from florida so florida does have like you know high rents and as a single mom

yeah not the brightest idea are you living with family now you've got now you've got your family around you right so you've got the support system yes are you living with them i am okay um i think you need a sense of urgency i feel like you're kind of like lollygagging and it's like oh that's not great but here i am and you know that job i just didn't like it and i mean i'm gonna talk tough to you a little bit but I'm like you've got a kid like you gotta go after it you gotta go get it and right now I feel like you're kind of like leaning back a little bit and I feel like I can talk tough to you now because there's nothing there's not a health issue there's nothing standing in the way other than you just getting after it you moved

back to Florida to be with your family. You cannot use this as an opportunity to get lackadaisical. You've got to get moving and you've got to do it like yesterday. Hang on the line. We're going to send you Financial Peace University. I want you to watch all nine lessons, Alina. I hope that puts some fire in your belly to get outside of this and change your family tree and give that little kid a wonderful debt-free life. This is The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. This is The Ramsey Show.

If you're enjoying this show, be sure to check out all of the great shows on The Ramsey Network. Many of the personalities are out there doing their own thing with Ken Coleman's show, Filming Next Door, and the Dr. John Deloney Show, which has just been blowing up, the Rachel Cruze Show, Smart Money Happy Hour, and of course, yours truly with the YouTube channel. So go check all of that out. We've got content hitting you every day to keep you inspired, keep you on the path, and keep you growing in your money, relationships, and work

life. Christine joins us up next in Chattanooga, Tennessee. Christine, welcome to the show. Thank you. What's happening? So I was just wondering if we should use our gift fund that we have to put towards debt. We're currently in Baby Step 2, but all five of our kids' birthdays fall between November and January. So instead of giving ourselves permission not to put as much towards debt during those months, we put $100 in a fund each month throughout the year.

But at the same time, I just don't know if we should be adding that extra $100 when we're paying off or if we should, what we should do. So you've got five kids. You're putting away a hundred dollars a month for gifts for when their birthdays come at the end of the year yes does this include christmas too yes it's christmas we're pretty much trying really hard to get the debt paid off so we've been pretty light on christmas and birthdays last couple years so that's about as low as we've been able to get it so this covers everything um so you're saying do we forego all gifts this year and tell the kids sorry kids

mom and dad are paying off debt you're not getting anything or what what are you planning on no what i would say is the other option would be to come november december time basically not put as much towards debt during those months i'm just a little afraid to give ourselves permission to stop putting as much as we are right now towards it and become a habit. George, you can say what you're going to say. You have five kids. You're putting away $1,200 a month.

To cover five birthdays plus Christmas gifts for five kids. I'm not going to stop. None of this sounds... I think that's very reasonable. Yeah, it doesn't sound outrageous. Okay. So, I mean, and again, truly, it's not going to make that big of a dent. How much debt do you have?

So we have $42,000 right now. Okay. What kind of debt is that? We have $20,000 to a family member, and then we have $11,000 in one car and $10,000 in another. Okay. What's your household income? So we are doing a lot of side hustles right now, but I make $26,000 a month, and then my husband makes $26,000 a month, and then we bring in about $800 from DoorDash. He does it in the evening, and we do it as a family on the weekend.

So you're bringing home $6,000 a month? Yeah, that's right. Great. And how much are you throwing towards those debts using the debt snowball? Anywhere from $2,200 to $2,300 we budget for $2,000, but if we're able to bring in a little bit more on the side jobs, it goes straight to that as well. Okay, so you're on track to pay the rest off in about 18 to 22 months? Yeah, I would say about 18 to 20 months.

Okay. And you would speed it up slightly by... So, yeah, by pausing your gift fund, this might speed up by a month. Yeah, a month. And so I don't know that it's worth foregoing the gifts for the kids. I'd rather see you guys use side hustle money to pay for that and to try to not slow down the debt process. But I'm with Jade.

I feel like this is a reasonable expense that just stays in your budget. This is not frivolous luxury spending. And you know what I would do? I would try to be on a budget, shopping the sales hard and getting the kids just what they need and nothing more. And then if you have money left over in the gift fund, let's throw it at the debt come February. All right. Thank you for the call. It feels good to have solved one mystery in the show, Jade.

You know, I feel like that was a decent resolution for our friend Christineine but i just i don't know gift for the kids that one just feels yeah especially when the expectation has been like hey yeah you get a gift a year it doesn't sound like these kids are entitled and spoiled no not at all and when you really think about the cost around birthdays and holidays it's kind of hard to do all of that for any cheaper than what she said yeah because you think about thanksgiving and Christmas alone, you're having a big meal. You know, there's Halloween, you buy them a costume or maybe they use the one from last year. But, you know, there's still these little bits of money that add up for all of that.

And what I'm thinking about with five kids, a hundred bucks a month, that goes lickety split easily. So she's doing good. A lot going on there all right let's go to ashley in salt lake city ashley welcome to the ramsey show thank you what's happening okay so we have about 13 000 in consumer debt we had to take out a home equity loan for like our heater that had broken um a few ago. And it's only a 4% interest rate on that. So we've been paying off on that.

And then we got some inheritance money that we put in the bank for, that's like our savings. That's all the savings that we have. How much is it? And then about 15,000. Okay. So not a whole lot, but enough. Okay.

And that covers about three months of our, of our, you know, emergency fund type savings. Then six months ago, I decided to go back to school, which will increase my salary significantly. But I took out a loan for that. And that's a 7% loan, not due yet. How much is the loan for? when i'm done with the two-year program it's going to be 25 000 okay when are you going to stop borrowing money exactly this is the cycle we keep doing we keep having things come up borrowing the money paying it off and if it hadn't been for somebody leaving you money you would have nothing you. You would have zero savings. Like, let's be clear about that. Right.

So what's the plan? You tell me. What are you asking us for today? What do you want help with? Which debt? Which debt to pay? Should I just go ahead and pay for school instead of going into more debt? That's what I think because it's a 7% interest.

No. But it's also, that's what I think, because it's a 7% interest. No. But it's also, it's not due yet. So should I pay off the $13,000? Well, stopping the bleeding is definitely A1. So we want to stop going into debt. So you're saying you haven't gone into the debt yet fully for the school? Well, I have. She did, but it's not due yet.

I've already paid for six months. Okay. It's not, technically it's not due until you graduate. You're already on the hook for the $25,000. Yeah, I'm going to keep going. So we've got to go in order from smallest to largest. The savings, it's not really savings until you've paid off your debt. So yeah, keep the $2,000 aside.

Pay off this HELOC for $13,000. You've got $2,000 there. And then this loan that you have, I would start, especially if it's unsubsidized, I'd start making payments and pay it off. There's no point in waiting until you're out of school to pay it off. Like I said, if it's unsubsidized, it's going to start accruing interest. So keep $1,000 aside and put $1,000 on this student loan, knock it down to $24. And while you're in school, what does your husband make? What will be the income while you're in school? So he makes about $120,000.

What's he bring home every month? Probably $8,000 a month. Okay. And are you guys contributing to retirement? Yeah. He has a 401k and his company contributes as well. Okay, so again, I'm challenging this. If I were in your shoes and the way we teach is that I would pause that contribution because how much is it every single month? If you had to guess. I'm not sure the exact number. Okay, let's say it's... I'm guessing he invests up to the match, probably 4% or so. Yeah. Okay, so that would free up a huge chunk of change every single month

to help you attack the debt. Yeah. And you know what it's going to happen to if he pauses that? He's going to want to unpause it real quick, which means he's going to be willing to do whatever it takes, and so will you,

to get rid of this debt fast. You've all been living fairly comfortably. You know, slightly uncomfortable because you don't like the debt, but, you know, well, the heater went out, we didn't have the money, why don't you take out the home equity loan, which is now secured by your own home, which puts your home at risk. And I want to go to school to increase my income,

but I'm going to go into $25,000 in debt, and then we'll figure it out later. And so we've got to start thinking about future me and making decisions that would make you all proud. And part of that means we're taking this inheritance and it's really not going to be an emergency fund. It's going to be pay off the home equity loan fund. Yeah.

I just worry about not having any savings because we do live in an older home. Y'all didn't have savings before. Yeah, you can't play that card because you didn't have savings before and you didn't do anything to get savings. I'm worried about y'all being in debt for the next 10 years instead of cleaning this up in two. Y'all make too much to feel this broken, be experiencing this level of pain. So I'm doing whatever it takes. Pause the investing, use the inheritance to knock out the debt, get on a tight budget. We're not eating out. We're not going on vacation. And in a year or two,

you're going to be out of this mess. You guys make great money and you don't have that much debt. You can clean this up real fast if you get intense. This is The Ramsey Show. We'll see you next time.