The Ramsey Show - App - Your Debt Should Make You Uncomfortable

Episode Date: December 13, 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 Rachel Cruz, hosting this hour with my good friend and best-selling author Jade Warshaw and we are taking your calls America about your life and your money. So give us a call at 888-825-5225 and starting us off this show is Nick in Detroit. Hey Nick, welcome to the show. Hey, thank you for having me. Absolutely. How can we help? My question is, I'm 21. I'm in college. I paid for my education with my dad, and I've got baby steps one done, and I have no debt. I need to pay $3,000 per semester

so that I don't go out of college with student loan debt? And would it be more beneficial for me to any additional money that I don't make to put it into step three? I don't feel like I can be gazelle intense with that. Or would it be more beneficial to take 15% of my income and put it into mutual funds for something further down the line? Okay, so you have extra money. I just want to make sure I'm understanding your question. And you're asking if you should be using it to cash flow college or do something else with it? Mainly to, I won't, me and my dad have got it covered, I just need $3,000. So should I put it towards the three to six month emergency fund, which is baby step three, or should I just put it to a mutual fund and be able to gross money on it over time? If it's the $3,000 that you're using for your college, I just throw it in a high yield. Like if you get ahead, like say you've paid for the upcoming

semester and you've also got $3,000 set aside for the coming, you know, the next semester, even after that, I just throw it in a high yield. I would not invest it because the horizon is so short. Is that what you're asking? I want to make sure I understand. Yeah. So you would just, instead of investing it because I'm able to, you'd say just save it in a high yield and then just put it to the next. Yeah, for sure. How many more years do you have left, Nick? How many more semesters? I only have one more. So three more semesters total next semester and then senior year. Oh, okay. Okay. I gotcha. Yeah. And honestly, Nick, in that state, when you're in something like college and you are cash flowing out, which is so great, I still would recommend not even investing really at that point because just

having liquid cash in case something happens, it's always a smart idea. And even after college, right, you graduate college and if you move to to take a job somewhere moving expenses and moving costs like there's just a lot of reasons to have money liquid at at your age and then once you graduate you get settled you get your first job then you can really dive into investing and at that point for you you'll be at 15 automatically which is so great for some people they have to wait a few years to start investing so um so i wouldn't i honestly wouldn't rush into it and i think um it can feel like it goes against this idea of compound interest

because we celebrate that so much of how great it is. And the earlier you start, the better off you're going to be, like all of that. But you'll catch up. Like if you start all of this at 23, you will be fine financially.

So I think it's more important to have as much money, just cash available for these big transitions is the smartest thing. The way to go. And then would you also recommend me taking that out of that investment and then putting it back or just leave it there and from here on out just save the money? Yeah. So there is money invested right now?

Yeah. About $2,000. How much? $2,000. Yeah. I would just. Sure. I would leave that. I would only touch that money if you needed it to get through school without debts. But I think it sounds like you already have a plan on the other end to do that. Okay, thank you so much. That provides a lot of

clarity. Perfect. Thanks, Nick, for the call. All right. Up next, we have Jay in Anchorage, Alaska. Hey, Jay. Welcome to the show. Hello. Merry Christmas. Thank you for taking my call. Merry Christmas. Absolutely. How can we help? Yeah. So I just received a promotion at work, and the new compensation package makes me ineligible to contribute to the company 401k plan. So they've offered a different plan, pre-tax dollars,

a small match, but it's unqualified. And I'm curious what your thoughts are on unqualified plans and if this is the right. Yeah. I'm curious why you're not able to contribute to the 401k because you chose a different package for a benefit for your benefits. No, they have told me that if the compensation exceeds a certain amount, the plan is not able to be contributed to. Oh, gotcha. Okay. So are you a very high earner? Evidently so. Okay. So I can't, yeah, so I can't contribute to the 401k anymore. So explain to us what your options are again. Sure. So they've offered a different retirement plan, pre-tax dollars, a small company match, but it's unqualified. So it's unfunded.

That gives me pause. And I'm curious what your thoughts are on those types of plans and should I contribute? What are they invested in? Do you know? The rate of return is based on a specific bond fund. I don't have that in front of me. Recently in the last year, it was about 5%. That's not very good. That's what I thought. I mean, if I were you, my guess is you're not able to just do a traditional Roth IRA, but I might start with backdoor Roth IRA,

and I might ask a smart investor pro what my, what other better options there are, because I wouldn't want to be investing primarily in bond funds. No. And considering it's, you know, is it pre or post tax? It is pre-tax. It's pre-tax. Okay. So yeah, so I would probably, I think you're going to be better off. And again, talk to a smart investor pro, but when you actually look at everything, I mean, even from index funds to mutual funds, you'll get a better rate of return just doing something like that even though you'll have to pay capital gains when you take all the money

out um that still it's going to be a better growth rate yeah absolutely um but yeah how much how much do you make a year so the new compensation package base is $165 with a potential up to $250. Okay. I think you'll still qualify for a traditional Roth IRA at that range. So I would definitely be funding that. You can fund up to $7,000 and that. That might change in 2025. But I would do that 100%. And then I would probably just look at index funds or mutual funds beyond that.

It's not retirement and you're not getting that match. But how much are they matching? What percentage? It is 50% of the first 6%. 50% of the first 6%. Okay. Interesting way. Okay.

It's hard because it's free money coming from the company, right? But again, your rate of return, I just think that you could... 5% is... I think you could still... High-yield savings. Yeah, I think you'll end up better just doing it on your own versus putting money into this. That was my thought,

but I was just looking for a second opinion. Thanks for all your info. Yeah, absolutely, Jay. Thanks for calling. Yeah, I would do that. But then definitely, you know, sitting down with a smart investor pro is always what we're going to recommend.

I always, yeah, I hate giving blanket investing advice, you know, in a three-minute call because there are some ins and outs and different employers are offering different things. I mean, the amount of changes that's occurred with retirement funds within companies in America, even over the last 10 years, you know, companies offering now Roth 401k is up by 20% versus what they were offering even five years ago. But good on him for looking deeper and seeing what those investments are and what their track record have been, as opposed to just saying, this looks good, I'll check the box, right? Yes, absolutely.

Yeah, digging into that and looking at those numbers. But yeah, so yeah, I would get with the SmartVestor Pro, Jay, double check all of that. But that's my knee-jerk reaction for sure is because when you look at all of these and the older people get, there are financial advisors out there that start to recommend more conservative funds. That's true. Like bonds and all of that. That's true. That's true. But still, I think even then, you know, it's advice you want to look at because I think on the flip side, when you're still in quote unquote riskier,

which is mutual funds aren't even that risky, you're still going to get a better rate of return. You know, I'm just never a fan of bonds is what I'm trying to say. Even as you get older, I just don't think that it's worth like, yeah, the limited growth. So thanks again for the call, Jay.

This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries.

CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of over $11 billion in medical bills since 1981. And CHM has also helped them stay true to their values and avoid miles of red tape. And CHM support goes far beyond meeting financial needs. They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event. So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month.

So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Welcome back to The Ramsey Show. Today's Ramsey question of the day is brought to you by our sponsor, YRefi. When you're trapped in a maze of defaulted private student loan debt, it's hard to find your way out. But YRefi can offer you a lifeline with a custom refinancing based on your ability to pay and a lump sum payoff option that you could qualify for after 24 months. So go to whyrefi.com slash Ramsey. That's whyrefi.com slash Ramsey may not be available in all states.

All right. Today's question comes from Carissa in North Dakota. She says, should a couple getting married have guests pay for their plate at the wedding to help with costs? I'm afraid we won't get enough money in wedding gifts to pay for the reception. Oh, so it's you. You're the one that wants to charge. She was asking for a friend at first.

I know, right, right. Should a couple, aka should we? Um, no. No. You should not. Okay, I was like, I don't think so. Do you? Listen.

I think that's kind of tacky. There's a difference between- To ask for your wedding guests to pay? So bad. I think that's like, huh? there's a difference between tacky and hacky yes this is tacky this is not a this is not a money hack here's the thing like you have to set your budget based on what you can afford to spend on the wedding not at don't treat it as an investment and say, well, I'm going to get, if I spend this, I'll get the money back in gifts, right?

Right. Because that's what she's saying. She's saying, I'm afraid we won't get enough money in wedding gifts to pay for the reception. Well, that means you're basing it off of future money that you don't have now. That's right. So you've got to set the budget of what you can afford

based on what you can afford today and let the gifts be the gifts like you can't yeah no no it's not good no no having guests pay for their plate at the wedding no yeah that's a hard pass and it's different if it's like your birthday dinner and y'all are all going out to you know to for a big dinner and everyone covers their their meal right like it's that kind of thing but there is a an etiquette I feel like when you invite someone to your wedding uh to celebrate you their their presence is the gift not them having to fund yeah fund it yeah otherwise just do something less expensive that you can afford and that way there's no like awkward you know there's there are trends

and we've talked about this i think george camel and i debated this a little bit of people asking instead of a wedding gift to venmo money to the bride and groom so that they can help pay for their honeymoon and like that kind of stuff i think i have a problem with it me too jade i think that's a little weird too i have a problem with i'm like let people give you out of the now don't get me wrong like a baby registry let's let's let's break this down if somebody's having a baby and they make a baby registry like buy them buy them something off the registry yeah like don't just go off like they've said here's what I'd like yes so follow the registry yes that I'm with but when people just want money and they're telling you don't get me anything just give me money I'm kind of like and if they want to do that because some people they will just give money for

a wedding gift because that's their choice yeah and that's their choice and that's great but the but like forcing people into a lane of how they're going to be generous to help you I also feel like I don't know why it just feels off I think the digital quality of it and i i might feel old-fashioned i also think the digital quality of it like venmo me i'm like can i can i give you a nice crisp two crisp hundred dollar bills and a card and then you get to decide and then you decide what you do like don't put don't put cash app like that is so not it a qr code hey i don't know maybe we're just like am i just like a gen xer is that what the problem is no because i'm a millennial and i still okay yeah maybe it's the gen zers maybe they all think it's okay maybe i don't know maybe it is no no more i

don't know even if it's a gen zer would you put a venmo would you put a qr code yes or no at your at your wedding reception she says yes what does the audience say vinmo or let them get you a gift oh good okay everyone's saying okay okay okay good good i'm glad we're all on the same page we're all old together we'll just we'll we'll blame gen z like i feel like we do too often too often all right all right well let's head to the phones we have hannah in saint george utah hey hannah welcome to the show hi thank you for taking my call absolutely how can we help so my husband and i are on baby step one and i'm wondering where i should put that emergency fund when it comes to like my bank account so right right now we have 10% that goes to our church and then we do 10% of our income into savings. I'm wondering if that emergency money

goes with my savings or should I put it in a different account? Okay. So in your mind, what's the difference between savings and emergency fund? Emergency fund, I wouldn't touch. Whereas like savings is, oh, I didn't know I needed an oil change and I didn't budget for that. So it would come out of savings. And is this your starter emergency fund, like your thousand dollars, or are you talking about three to six months? Okay. So the way we would teach is if you're in baby step one, thousand dollars saved, and then everything else that you have money saved would go towards baby step two, which is paying off your debt. And to answer your question,

that thousand dollars, I would not keep it in my normal checking account because you might accidentally spend it. I would put it in a separate savings account. Still keep it very liquid, right? It should be something that you can get to if there's an emergency. Don't put it in a CD or don't put it in something that you can't get to. But I do think that there's value in getting it out of your normal checking account into a savings account. I don't like when there's a debit card attached to it. I like when it's just there and if you need to e-transfer over, whatever. Yeah, a good high yield savings account, Hannah. I would go ahead and open that and put your $1,000.

And I wouldn't do right now the 10%. I mean, the 10% for giving. But we don't talk about percentages for savings until maybe step four. That's right. And so this like, oh, we're going to put 10% of our income for savings and do an emergency fund. I would put it all together.

And I would not worry about the percentage. I would find whatever money I had in my budget and get that thousand dollars as quickly as possible. So you may be able to do it, you know, depending on what you guys make and what your budget is this month, right? And it may be 25% of your take-home pay and it fills up your emergency funds that way. But I would not look at percentages for saving right now. I would get that $1,000 as quickly as possible. Then once you guys are completely debt-free, then you bump it up to three to six months of expenses using that same high-yield savings account.

That $1,000 will then kind of be that springboard into the fully funded emergency fund. How much? Yeah, Hannah, what do you have now combined? Combined income or savings? Savings and what you were calling emergency fund. So currently the emergency fund is at like 140 and the savings is about 300. Okay. How much does it make a year? My husband makes about $55,000 to $60,000 a year. Okay. So yeah, to Rachel's point, combine all that together. And just at this point, you have $440 in your emergency fund. And so you've got another, you know, $550 to go. And then

baby step one for you is complete. And then it's moving on to baby step two. And Hannah, you would have, you could use that $1,000 if something came up that you weren't go and then baby step one for you is complete and then it's moving on to baby step two and hannah you would have you could use that thousand dollars if something came up that you weren't expecting because that's kind of how we qualify an emergency it's when it's urgent and it's unexpected so you you know something comes up and you're like i have to do it now right it's not like oh something comes up and i could fix it in six months right that wouldn't be the emergency fund this is like oh this has to happen today. And also, Hannah, in your checking account,

we always say to have a buffer in that as well so that you're not, you know, there may be enough of a buffer and you're checking out to cover some small expenses that come up because you're going to have a miscellaneous category in your budget, ideally. So there will be things that come up throughout the month that you don't expect. But ideally, it's coming out of the budget there, you're not having to touch

the emergency fund, the emergency funds only when it's kind of big expenses, that you're like, oh, gosh, a couple 100 bucks. And it's, you know, we may have to dip into that. But I always like having a cushion jade in my checking. And depending on where you are in the baby steps, you know, if you're in baby step, went through three you know it may be a couple hundred bucks in there As padding and maybe you bump that Up more as you get into baby steps Four five six and seven but I do Hannah want you to have a buffer in your checking

That's not emergency fund Driven or savings Driven but it's more lifestyle driven If you will just so that you don't Go into the red and you're checking So I hope that helps. Thanks for the call. We have two more segments coming up this hour. Give us a call at 888-825-5225. I'm Rachel Cruz hosting with Jade Warshaw, and we'll be back.

Hey, George Campbell here with a not-so-fun fact. Every American social security number, including our children's, has been hacked and is now on the dark web. And this is not a scare tactic. This isn't fear-mongering. It's a reality that could turn into a nightmare for a lot of people. And believe me, I've been a victim of identity theft, and I would prefer it never happen again. Because once the bad guys have your social, it's the lifeblood for all of their activity. Think of all the places you use your social. Your banking, your employer, government offices, utilities, cell phone companies, everywhere. And once they've got it, thieves can open new accounts, drain existing ones, steal payroll, and wreak havoc all in your

name. Not cool. And to be real, it's not a matter of if, but when. So you've got to protect yourself with Zander's ID theft protection. Zander has all the cyber tools to help, including home title monitoring, full recovery services if you do become a victim, and stolen funds protection. Not to mention, it's the best value on the market. They've been protecting my family for over a decade, and I trust them to protect yours too. So get enrolled today by calling 800-356-4282 or just visit Zander.com. That's Z-A-N-D-E-R.com. Really the best way to make the most of your money is by sticking to a budget, creating a budget and sticking to it. I mean, it's probably the most powerful tool from a tactical standpoint

when this comes to gaining control of your money, knowing where your income's going, knowing where margin is so that you can pay off debt and save and all of it. There's just something proactive about telling your income what to do. And if you've not downloaded EveryDollar, make sure to check that out. This is our budgeting app, and you can actually download it for free, create your first budget, and really get in this habit and this rhythm of your life of budgeting. And do this regardless of where you are financially. Those of you, like the last caller who's working to save up $1,000, all the way to those of you on Baby Step 7 that the house is paid for, everything's done. Tracking your monthly expenses

is so important because it just gives you this gauge of where your money's going financially. And it just gives you a sense of where your money's going financially. And it just gives you a sense of control. There's so much in life that we can't control. So when you can't find these things that you can actually get in a rhythm and be proactive with, that is your income and that is a budget. So download EveryDollar for free in the App Store or Google Play, or you can click the link in the description. If you're watching or listening on YouTube or podcasts, we'll put a link down there, but go and download EveryDollar. All right, link in the description. If you're watching or listening on YouTube or podcast, we'll put a link down there, but go and download EveryDollar.

All right, going to the phones. We have Austin in Nashville. Hey, Austin, welcome to the show. Hi. Hello, hello. How can we help? So I am a full-time college student. I'm graduating next week,

and I'm currently on step one. I'm just having trouble racking my head around paying off all of the debt that I have. How much? So I have, I don't have any student loans to start out with. I have about $15,000 in car loans and credit cards. Okay. And what's your degree in and do you have a job? Like, do you have a job lined up? But I don't have a degree. I have a diploma for graphic design. Got it. Graphic design. And do you have a job lined up for graphic design? I have recently, I've just looked at the job market and I've decided that's maybe not something I want to pursue. Interesting.

Okay. What do you want to pursue? I've been looking more into becoming a mechanic. Okay. Well, just generally speaking, just from talking to you briefly, I think you're more overwhelmed by that and not having a clear prospect to pay off the debt than probably the debt itself. Because I thought you were going to say, oh, I've got, you know, $50,000 or $60,000 of student loans. $15,000, we can make that happen. You just need a job. Any job, really. So are you working at all right now? And if so, what are you doing?

And what are you earning? I am. I currently work at like FedEx Warehousing just moving boxes around and I was doing part-time. I should be going full-time here and I projected to make about $35,000. Okay that's great. You said $35,000? Yes ma'am. Okay cool and then what's your living situation like? I'm currently living with parents. Okay. So there's no money. Are you paying them rent or anything? Or are you pretty much kind of square there? Just helping around or helping around the house. So I think for you, the biggest thing is let's, once you graduate next week, let's move from full-time to, from part-time to full-time so you can get that full paycheck. And in this phase, it's good that you're not really paying rent because you can put the

full force of your income on this debt. How much of it of the $15,000, how much of it is the car versus the credit card? Credit card, it's very minor. It's just $500. I'm mainly worried about the car. Okay. So we're $14,000. What's the car worth? About $ right now okay uh yeah i think with this i think you can buckle down and pay this off but you're gonna be working like a madman yeah are you able to pick up shifts coming up here i mean we're two weeks from christmas and you're working at fedex are you able to do you know overtime yes ma'am okay I would, Austin. Honestly, like you're in a great position. No kids? Seasonally, just to like all the way.

I mean, like I would tell them I will work as many hours as you will give me. And then another thing to think about, Austin, the ratio of car debt to your income, it's right on the line. We always say we want to know more than 50% of your annual take-home pay or your annual income. And so that, you know, your 35 is kind of what you're projected at right now and 14. Yeah, you're just kind of on that line. And I think it's one of those questions, even though you are upside down on it. I probably, in your case, would just pay it off.

But always be thinking through with debt, what is worth it? Because you want to, you know, calculate how many hours and how much money it's going to take to pay this car off versus if you're like, you know what, it's worth, is it nine private sale or nine to a dealership for a trade-in? Did you look online? Nine private.

Okay. I mean, yeah. At that point, you probably keep it. You're probably break even. But just, yeah, in the future, it's just a good mental exercise, even for people listening or watching, especially with car debt to say, okay, how many how many hours extra am I going to have to work to keep this car versus if I sold it took out a loan for the difference, maybe a couple 1000 more just to buy a beater. And you know how

significantly you'll get out so much faster. But again, Austin, in your case, it's kind of a break even from that point. So yeah, I would just be working extra. And then at the same time, Austin be looking for a full time job of something that you want. And you're in a great, I don't know, I think FedEx, UPS, a lot of those places, it's great employment. So if you are there for longer than maybe you're expecting, I think that's OK. But also know your next step into the job market is not going to be the perfect job. It's not going to be the thing that like, you know, you've always wished for in the dream job. You're right out of college. So remember, kind of just like take what you're going to get.

Yeah, that's right. And I think for you, I love what Rachel said, and I want to take it even a step further. With your car, you decide, you say, you know what, I'm tired of being in debt. I want this thing paid off in six months. And when you say that, then reverse engineer it and say, okay, what does that mean for me job-wise? How much do I have to work to make that happen? Right. And that way you're you're the one in the driver's seat and you're the one that's in control of this as opposed to I make this and it's going to take me X amount of months making this money. Does that make sense? So kind of run it back and that's going to force you to work probably harder than you've

ever worked before. And as far as the graphic design to mechanic thing, I think that you, I don't know what your plans are, but I feel like you kind of put that on hold for a second because you've just spent money on an education. You've just spent time on an education. Work for a while, get this mess cleaned up. And then during that time, research what it looks like to become a mechanic, as Ken Coleman would say, like get in that proximity follow some people around

but don't just jump and make that choice before you've done detailed research so yeah where uh where are you graduating from austin is an online school or um it's a local uh it's a um tech school in tennessee oh okay okay gotcha um yeah well i hope that helps austin just uh in the sense of just some encouragement that you're you're in a great line of work with FedEx right now from a seasonal perspective. So so take that take advantage of that overtime. And and this plan hopefully will lower that stress. And Jade's right to map out a specific timeline of, OK, you know, September of next year where am i going to be um if i if i start paying this stuff off and i would pay the credit card off like by new year i mean yeah i mean like it's 500 bucks too and we talk to people austin so all the time yeah all the time who are doing um extra side gigs and jade when we talk about this on the every dollar webinars and i and

we ask them like hey how much what do you do for a side gig a side hustle and how much are you making some of them are making 2,000 right I mean just for extra side hustles like so there is ways to get this thing paid off in six months it's very very doable Austin so I think that will really propel you into some motivation to to pay this off yeah the moral of the story for me is of all the types of callers that call in that have debt to pay off. If you are single, if you do not have children, and if you are still living at home, you are in the best because you've got time, like time is at your disposal that, you know, you don't know true tiredness yet. So like you can really get in there and get, get tired. Yes.

And for all of you graduating, you know, now we're in may live like a broke college student until this debt's paid off. That's right. That lifestyle. Cause I think the problem is, is when you get your first job and you're getting a salary, you know,

this career you're thinking, Oh my gosh, I'm a grownup now. And you, and your expectations of life suddenly kind of creep up of what that lifestyle looks like. But if you stay low on lifestyle while you get this cleaned up, I would rather be doing that at 21, 22, 23 than 31, 32, 33. I know that's right. You got it, Austin. Thanks for the call.

There's a time in your life and at the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget, because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner you can rely on. Churchill Mortgage. Churchill is Ramsey-trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget.

Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American dream of home ownership today at churchhillmortgage.com. That's churchhillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLS consumeraccess.org. Equal housing lender.

1749 Mallory Lane, Suite 100. Brentwood,essee 37027 welcome back to the ramsey show we are in the holiday spirits jade we are in the middle of uh i don't know still shopping i think i'm pretty much done i have nothing wrapped oh man um but santa at our house doesn't wrap gifts he just pulls the gifts out of the bag and they just are there under the tree not wrapped um so that's always convenient for santa so what goes does anything go under your tree ahead of time gifts that mom and dad buy like we'll buy you know i see like one or two things that we'll wrap but uh but they unwrap a lot of gifts from

like parents grandparents uh there's a lot of gifts from like parents, grandparents. There's a lot of unwrapping happening there, which is great. But yeah, so. That's a good idea. I might take you up on that. Yeah, that was my Santa growing up. Childhood never wrapped either. So that was the same Santa I think that visits our house too.

It doesn't wrap. That's a good idea. Which is nice. But we're still going through our lists of gifts for like, we draw names on both sides of the family. Smart. All the things. So where are you at with all of it, Jay? Listen, for me, like me myself, because I'm not in debt,

I have purchased gifts for the kids. And my husband and I have done that. I've not fully finished with my husband. But this time of year, you know, this is the time of year where it really becomes a hot button topic because obviously we're a financial show we want people to make their way to peace and I said it last year but posted it this year a very like controversial statement controversies I like to say and I think I was on with you right so before we talk about it let's

show you the clip so you see where we're coming from. Roll tape. You don't have to buy gifts for adults. They're grown. They have their own money, their own job. If they want a new blender, they can go buy it. They do not need you to go buy them slippers. Like they can buy their own slippers. I said what I said.

Rachel, I said what I said. Okay. And I actually, when you were saying it last year, I remember it and being like, that is so true. Like if aunt Linda needs something, like, yeah, she's fine. Like let aunt Linda, especially if you are getting out of debt, you're on a tight budget and it's been hard and it's been a hard year or two, you guys, with inflation and stuff. I mean, it's just, people are just getting the necessities paid and there's not a lot of room. And so it was this guilt-free reality that adults can take care of

adults that's right you're saying did you get hate from it i got so much hate and here's the thing don't don't don't misunderstand like the reason we're talking about it is not like to try to qualify it because like i'm drinking water i'm fine it's for you guys because there are so many people rachel a always read the caption because you need to see more and i did explain i was like like I'm drinking water I'm fine it's for you guys because there are so many people Rachel a always read the caption because you need to see more and I did explain I was like here's what I'm trying to say to you yes I'm not saying adults can't have gifts I'm not saying it's not nice to receive a gift I'm just saying it up on your Instagram right now I'm just saying that if you're in this situation I'm giving you permission to back away from the spending because we don't need them. You know what I'm saying? Like I will get by if you don't buy me

a precious moments figuring, you know what I'm saying? I will get by if you don't buy me lotion from Bath and Body Works. I don't need your $15 gift. Thank you. 10.8 million. 10 point. Yes. 10.8 million of you. Not all of you, but a lot of you were concerned with jade this sounds a little like grinchy this sounds like a little scrooge and it's not that it's for people who are struggling with debt i used to be one of those people and i was the person who continued to buy gifts on credit cards and when you're broke and i'm gonna i'm gonna say this lightly because i think people will know what I mean. When you're broke, you buy broke people gifts. You know what I'm saying? Like you go to the dollar store and

you rack up and you buy like $10 and $20 gifts, but I'm like, you can't afford it. And that $10 gift is not breaking them free. They're okay without it. But it is causing stress for you because now before you know it, you spent $200 or $300 that probably you should have put towards a collections bill or probably that you should have put towards paying off your car and that's what this whole thing is about it's about changing our behavior and not feeling pressured to spend our money that's right you know and some of you are like well jade i don't feel pressured to spend like it's my love language i love giving gifts and if that's you fine you don't feel the pressure but now let's just look just look at what is it wise for us to do? Like, is it wise for me to spend in this type of way? And I'm not saying don't participate. I think Christmas is great. It's the most wonderful time

of year. I think there's a way that you can participate. And here's what I would say, Rachel. And this was in the caption, if you had read it, okay? In the caption, I was like, make a very short, very prioritized list. I would start with kids, like nieces, nephews, your own children, right? Sure. And buy for them first and use cash. No problem. I'm not mad at that.

And then if you have some adults, like VIP only. Yes, yes. I would say they're next. For most of us, it's our mom and dad, or maybe it's like our sister and brother. But I would not get too crazy with this. If you're shipping packages across the US, it's our mom and dad or maybe it's like our sister and brother but i would not get too crazy with this if you're shipping packages across the u.s it's expensive totally you can't afford that yes somebody needed to tell you that you couldn't afford it and it's not out of shade it's really out of love because i don't want you to be further in debt and i think that most of us don't do this but we probably should rachel. When the holidays start, like when Halloween ends, right? We need to stop and go, okay, what was it about last year's holiday season

that went well? And what was it that didn't go well? And kind of set that intention ahead of time. And most of us will go, man, I was so like overextended or man, I overspent and it really didn't have the effect I thought it was going to have. Right. Yes. And we can go back and say, you know what? I made all those freaking side dishes and spent all that money. And we would have probably like half of it didn't even get eaten. Right. And you can see the ways that you spent your money that didn't make a huge impact. And I think it's the same way with Christmas. There's so many gifts and it's like, you know, the kids probably would have been just as happy. Like I could have cut back a little bit and they would have still been happy. Absolutely. For sure. So there's some moderation that has to be going on here, Rachel.

And I think that's the, yeah. And I think the level of discipline and planning, some people just don't, they don't do. And it's a little bit on a whim. And that's where people get in trouble with money is because it's so emotional. And all of these emotions are driving your decisions. And usually when that's the case, when our logic isn't doing it and it's our emotions, we do tend to overspend. We make spontaneous decisions that probably are not great in the long run because in the moment it feels good, it feels right.

And then you look back after logic is set in with maybe a level of regret of realizing, oh my gosh. And this is the reality too, Jade, is that, you know, we're again, we're not like the Grinch stole Christmas kind of people,

but 28% of Americans are still paying for Christmas last year. I heard a stat that said 49%. Oh my gosh. Oh wow. Any, like any level of that. So there's obviously a clear boundary issue that we're having that, that, that we're not able to afford.

And so to your point, the kids are the priority Christmas and the Christmas spirit and all the stuff, right? It's the kids. The adults are going to be okay. Right. So prioritizing that. And then even within your kids, right. Of your family, if, if it's going to look different than last year, because maybe this

year is the first time you are doing it on a budget. Talk about it. Communicate it. Talk about the difference. Christmas may look a little different this year. Yeah. And then even thinking through the motivation, too, of why you're buying everything in the first place. That's always a big question for me because even for kids, like I, this was probably two years ago, Jade.

Everyone, like, on social media, on Instagram, they were just posting, like, Christmas Eve. Like, you know, and it's just like a picture of media on instagram they were just posting like christmas eve like merry you know and it's just like a picture of like their tree and like all the gifts and stuff and i was like oh i was just flipping through i was like well that's kind of sweet so i did it as we're going to bed like we had our lamps on and it was just a pretty little picture so i just you know and then we had our gifts out from yeah we had our gifts out and so i took the picture and just captioned merry Christmas. And I got so many comments on my minimalist Christmas. They're like, Rachel, where's the gifts? Oh, whatever.

So refreshing. It's just a minimalist Christmas at the Cruises. And I was like, this is regular. I thought we were doing, I thought we had a great Christmas. But then as I looked through, I'm like, oh, no. From what people, the amount. People go hard in the paint. And again, it is not bad.

If you have the money and this is where you're choosing, that is totally fine. Yeah. You're grown. You're grown. And we're also the moms. You and I both talked about this yesterday during a break when we did the show yesterday. I also had three trash bags full of crap that our kids just don't use in the playroom and in the closets in the room.

I'm like, so then it's just stuff just ends up building up. And that's the consumerism where I'm like, I'm not going to buy you stuff just to buy you stuff either. So that's such a good point. I think you're right. At the end of the day, everybody's grown. You can spend your money on what you want to spend your money on. I mean, that's the that's the cold hard fact.

But if you want our advice and if you're a person who's trying to get out of the debt, the point is you have permission to back away. Like you don't have to opt in to all of the things that the holidays want you to opt in. And we're just trying to give you that out. That's really what it amounts to. I'm going to end with a with a hater comment, Jade. You ready? If buying slippers hurts your wallet, you have other problems.

This is very financial illiterate advice. So I would say, yes, if slippers hurt your wallet, you have other problems. Is exactly what we're saying. Yes. Yeah, it does. So then we got to dig into that. Why that is. All right.

Well, Jade. It's been real. Great segment. Thanks for giving us the Christmas spirit. We appreciate it. Thanks to all the guys in the booth. And thank you, America. This is the Ramsey Show.

We'll be back. 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 am Rachel Cruz hosting this hour with bestselling author Jade Warshaw. And we are taking your calls on life and money. So give us a call at 888-825-5225. We are here to chat with you. All right, starting us off this hour is Allison in Philadelphia. Hi, Allison. Welcome to the show. Hello. How are you guys today? We're doing great. Thanks for calling.

How can we help? Well, okay. I'm just going to be quick about this. My husband passed away. I'm sorry. Yes. You know what? You had to love him or you had to hate him.

It was one or the other. My question is, he hid everything from me. The day he died, I found out. We had a sheriff's sale also on that day for my home. And I had absolutely no clue. He hid all the paperwork, everything. Sent me to the store, sent me to Atlantic City. You know, like we had nothing wrong. And so I'm in a pickle. I'm not really sure what I should do about this.

Holy smokes. Okay, so you're surprised. Yeah, when did all this happen, Allison? September 17th. I also moved my father into my home six weeks prior to that. He was in Colorado. He's been there 56 years. I just moved him back here, and then this happened.

Man, I'm so sorry. Okay, I mean, it would be so difficult to be grieving the loss of your husband and then at the same time uncovering this other reality that you had no idea was happening, financially speaking. Yeah, I felt like I got hit by a two-by-four. Yeah. He's knocked out onto the ground. Oh, Allison. Yeah, and I have my three-year-old

grandson lives with me and two of my adult daughters um because it's very expensive here you know um the taxes are really my taxes are 10 grand i don't even have a quarter of an acre you know it's just really uh expensive yes okay so walk okay so walk us through um you may have said at the beginning of the call but um what what's the state right now of where you are financially? After you've uncovered everything, where are you? I believe he was in the rears for $86,000. He was in a bankruptcy for three years to save the home when he was in the hospital a couple years ago. And that was fine. He was paying $3,700 into the bankruptcy and $24,000 to a regular mortgage. And I guess he just ran out of money and never told me.

So what does that leave you? What are you, after everything's kind of come out in the wash, what does that leave you with? And what are you still trying to sort out? Well, I have, I don't believe that I owe what they're saying. I understand there's interest in all that. But they, they kind of put us in that position. It's a it's a servicer that has been taken to court many times and had to pay up

millions of dollars for wrongfully taking people's homes. And this is what I was battling for a few years before I stumbled on that when he was in the hospital. So I just wanted to know what is the bottom line? Like, what can I pay to get it out of foreclosure? And then possibly just keeping the mortgage and paying that off. I don't even know what I think. How far behind are you? Well, he stopped paying that mortgage or the mortgage and the bankruptcy in January. Oh, okay.

So it's about to be 12 months of no payments. Right. And have you had contact with anybody about this or is this you just looking at, you know, the statements that come in the mail or whatever? I get physically ill opening those statements because of what happened five years ago. They actually told me they couldn't talk to me because I wasn't on the mortgage, but I was on the mortgage. So they made me behind even more time. And you're sure that you're on it at this point? I'm positive. I got my own paperwork hidden. It was hidden in the closet. Okay. So when you, you're going to have to call them up and you're going to have to find out what's going on with this. And's not gonna be fun and i know that you're dreading it you probably have a pit in your

stomach now but you're gonna have to go okay where are we in this process is there anything that i can do to pull it back from foreclosure what what would i have to pay and then once you find that out you have to look at your own finances and go can i even pay this and then there's part of this i don't know if you want to hear this but what you're describing sounds like absolute like he double hockey sticks like i do you want the house or do you want to find a way to to sell it let the bank sell it and move on with your life my my what i would like to do is at least keep it so that i can sell it because I have, it's worth 620 and I owe, what they say I owe is 320. My mortgage was for 340, 315 years ago. So you owe 320, it's worth 620. Usually it would

be like, okay, once I can get back on track with the payments, let's come up with a payment plan so we're back on track. And then then at that point you're paying the mortgage and then you can decide if you want to sell it or not the question is let's pretend I mean let's pretend like I'm the servicer and I say all right uh Allison you're gonna have to pay a payment and a half for the next two years let's just I don't know what they'll tell you could you even do that yeah are you are you making an income Allison right now right now? No, I'm not because I was taking care of my uncle who passed away last Christmas. He was dropped off at my grandson's birthday party and they're saying, here you go. You get to take care of him. I took care of him for two years,

so I didn't work. Allison, there's a lot of you taking care of people, including your own children, your grown children right now, which I'm not defaulting you, but there is something to understand, Allison, that you have to take care of yourself first and foremost, right? And that's not a selfish idea. You can't take care of people while you're drowning, right? You have to get yourself in a very stable position. And so he had this life insurance. Did he have any retirement? I mean, I'm assuming with all the foreclosure stuff, he like. Yes. Yes. It was it was it's in stock. OK.

How much is that a year? I'll get 20 grand a year for six years. And it was 117. And I guess I don't know how well that works, but I get 20 grand every September for six years. And I can roll it back into it or, you know, use it or whatever. Was he working before he passed? Yes. Okay.

What was he bringing in at the time? He was making about 11 grand a month. Okay. And then, yep, and you have a 200,000 in life insurance. How old are you? I am 58. 58. Okay. Before we get off,

I want to set you up with a coach to help you go through all of this because I think that there's a lot to go through. You probably, with this all said and done, you probably have the money possibly to keep this house, but I don't know. It's hard to know because it sounds like there's a lot of secrets and a lot of skeletons and a lot of closets. And you have to determine what Jade was saying earlier, too, Allison, that with this house, you got you were, you know, essentially should have been be able to make these payments on, you know, $150,000 income is what he's bringing in around that. And to supplement that, you don't have that. And so I don't want this house holding onto this house. I don't want you to drain everything just to keep the house, to Jade's point earlier.

So yeah, if you hold on the line, Emily's going to pick up and we are going to set you up with a financial coach because getting all of this and from a legal perspective, the contacts that you need and all of it, and they're going to be able to ask even more questions, Allison, than we can in six minutes here on one call in the segment. Because there's probably other things there as you start pulling a string to really figure out and get yourself in a position of all knowledge to start making wise decisions with all of the information possible. So hold on the line and we will give that to you as our gift. And we are so sorry that that is what you're up against.

It's terrible. Welcome back to The Ramsey Show. Up next, we have Katie calling us from Dallas, Texas. Hi, Katie. Welcome to the show. Hi. Hello. So glad to be here.

Well, thanks for calling. How can we help? I have a big problem. Well, I don't know if it's too big, but my question is, how do I tackle my debt while establishing an emergency fund and investing at the same time? Oh, well, I can see how you're overwhelmed with that, because that is overwhelming trying to do all of that at the same time. Well, I can see how you're overwhelmed with that because that is overwhelming trying to do all of that at the same time. What's causing you, what's the motivation in trying just to get it all done? Do you feel like you're behind on investing? You don't feel like you have enough

savings? There's a lot of debt. What's causing you to do this? So I've held on to this large amount of money in my savings account. I started saving since I was 16. And I just, I'm exhausted of seeing it just sitting there. I want to do something with it. My frustration is I'm not knowledgeable in investing and I don't even know where to start. I don't know. Yeah. How much is it?

It's $47,230. Okay. And that's just sitting in savings. And then how much debt do you have? I have $24,516 in debt. Okay. Well, the good news is we'll give you a plan so that you feel like you're going in a direction and you feel confident about what that direction is. Also, the good news like you're going in a direction and you feel confident about what that direction is. Also, the good news is you're going to be out of debt basically today if you follow our plans. Bye tonight. Oh, my goodness. That's exciting to hear.

It is. Listen, you've done a wonderful job saving, and it sounds like you weren't really sure what direction to go, so you kind of just try to do everything. And the way we teach kind of narrows it down, and you do one thing at a time for a period of time, and then you kind of are freed up to do everything. And the way we teach kind of narrows it down and you do one thing at a time for a period of time and then you kind of are freed up to do more. But for you, the first step, and you've already covered it, we always say the first baby step is you just need a thousand dollars saved. You got that. So check that one off the list. The next step is we take any additional savings that we have or we work really hard to pay off our consumer debt. And for you, you have the money to do that. So that would be baby step two, pay off consumer debt. That would get the green check.

That's right. And Katie, what is the $24,000? What kind of debt is it? One credit card in the amount of $65,000, $63,000. Another credit card in $67,000, $83,000. And my car, that is 11 170 okay um so yeah so part of this paying off debt for most people that call the show katie i would say nine out of ten of them don't have money to pay off these credit cards in this car so we're going to be talking to them about working extra sacrificing lifestyle all of it but your position is is completely flipped because you have that cash. So like what Jade was saying is that's a big green check light. But also, Katie, we want to

establish new habits so that we don't get back into this place of debt again. So what were you using the credit cards for, the two? Just spending. Monthly spending. I have a problem of, I like seeing the money there. I like feeling secure. I like feeling safe. My problem is just letting go of that money.

Listen, I think for personalities like you, when we reframe what security and safe is, I think they thrive even more because if you're a person who loves being secure, being safe, you're going to love a debt-free life because debt really does equal risk. Because using credit cards, that's a form of debt. It equals risk. Because for most of us, we go about our life, right? Maybe you put shopping on the credit card. Maybe you take out a car loan. But if you were to lose your job, suddenly you feel the risk of that because you go, oh my gosh, I don't have the income I used to have coming in and have this car payment due. I have to pay the credit card off. And suddenly we feel the risk of that weight that we've been carrying in debt. Right. So if you're a person who says, no, I love security, then paying off your debt truly is ultimate security.

And then turning around and saving up three to six months, which is the next step, baby step three, having that three to six months of cash sitting there that's actually your money. It's not money that you owe to credit cards or car notes. That is the ultimate form of security because then you can say, no matter what happens, I'm prepared for a storm. If I lose my job, I know I have the money to keep everything going for the next six months. If an emergency comes up, the water heater goes out or something happens with HVAC, I have the money that I can cover it. Yeah. And the three next six months. If an emergency comes up, you know, the water heater goes out or something happens with HVAC, I have the money that I can cover it. Yeah. And the three to six months to Katie is enough to to what Jade's saying when these big things come up to cover with cash. But it's also not so much that you're getting frustrated that you're not making a lot on return. Right. So it is that perfect medium. Are you single married kids?

What's like your life status? I am married. I have one baby. Okay. So since you like security, Katie, I would go more of the six month emergency route versus the three month. Yep. So I would stick with that six months. Do you know from an operating budget perspective, how much money you guys need per month just to keep kind of where you're at? And I'm thinking, you know, mortgage payments, utilities, gas in the car, food, all of that. What's kind of a, what would you guess to keep you guys afloat for a month? How much money? For him and me, myself together? Yeah, as a household. I want to say roughly $6,000.

Okay. So the good news is you have that. Even after you pay off the debt, I mean, that still leaves you with a little over $20,000. So you could effectively say, okay, now I've got my three to six months. And then to answer your further question about, like, do I invest this? What do I do? That three to six months, you just keep it in a high-yield savings account. It's there. Like we said, it's just that fully funded emergency fund for

when you need it. And then above that, technically, and I know I'm not going to dig into this too much right now, but it sounds like after that, your household is debt free. Your household has three to six months of expenses. Now you could start to invest. And the way that we'd say to do that is really just taking 15% of y'all's combined income every single month and putting it towards your 401k, your Roth IRA, that sort of thing. And it just becomes a kind of set and forget rhythm for you to invest. Yeah. And when you were talking about you didn't know much about investing, a great place to start, Katie, a Roth IRA is a great option. You and your husband both can open it up. You can both put $7,000 in and that grows tax-free. And within that Roth IRA, you'll invest in mutual

funds. And I would sit down with a smart investor pro to kind of get all this started. And then do you and your husband both have retirement benefits at work, like 401ks or a 403b? I do not. I believe he does okay so yeah so um I would you know use that 15 to fund two Roth IRAs uh go up to the match with his 401k and how much do you guys household income wise are you making a year um I'll say 60,000 okay. Are you guys working together with your money? Do you guys have a combined checking account? How do you know? No, we don't.

I think that's something you need to work towards. What's he say about all this? Does he feel out of control money-wise? Is he feeling a little bit like, oh gosh, are we on track? Have you guys been talking about it and that's why you called? or is this just you on your own feeling it and you don't know where he's at with finances it's kind of um you earn your money you make your money um we share the mortgage so you just sell me the money and we're okay with that um okay all right yeah my money's my money and uh yeah How long have you guys been married?

Five years. Okay. How are you feeling about that? Do you like how that is? Or would you rather say, hey, we're a team in this and all together, we're like working towards our future together with investing and we know what's going on? We're okay with working together. I'm sure he'd be okay with that too. Good. I think you should work towards it. I mean, the truth is for a couple of reasons. A,

just practically when both people are working together to accomplish one goal, you go faster and there's not much confusion. It's this is what we're working towards and we're all pushing towards that same thing. And then's just the the relational spiritual side of you're married and so you're one in all of these other areas and so yeah sorry jay does he have debt katie do you even know yes how much too much for me to handle oh okay interesting so is that why you like it separate because his feels overwhelming to you yes okay we don't we really i don't want to hear about um um who that's it's hard to say his financial struggle no you're good katie do you would you care to stay on the line? We have to go to a break right now, but I'd love to keep talking if that's okay.

Are you okay if we hold you over to the next break? Yes. Okay, thanks, Katie. Katie, you stay on the line. We have a hard break right now, but we'll be back and unpack some more of this because I think this is a great to be able to help her and for you all. This is where a lot of people are in America from a financial perspective. So we'll be back. Hey, you guys, I'm not a fan of the big banks and you probably already know which ones I mean,

but I do like credit unions because they're nonprofit organizations that focus on their members. And I'm proud to endorse Fairwinds Credit Union because they share the Ramsey mission of helping people get out of debt and live generously. In fact, they design products to help keep you from going into debt in the first place. Fairwinds has been in business for over 75 years, and they serve hundreds of thousands of members worldwide. You can feel secure because your deposits are federally insured by the NCUA up to $250,000. It's easy to join and Fairwinds partners with more than 5,000 credit union locations around the country so you can bank in person wherever you live. But if you prefer the online experience,

you can log on to Fairwinds and do anything you could do at a physical location. So go to fairwinds.org slash Ramsey to learn more. And while you're there, look at the combined checking and savings account bundle they created just for Ramsey fans to help you take control of your finances. That's Fairwinds, F-A-I-R-W-I-N-D-S dot org slash Ramsey. Welcome back to the Ramsey Show. We have Katie on the line from Dallas from the last segment. And Katie was telling us she has $47,000 saved, $24,000 in debt, which was car and credit cards. And she was wondering initially when she called in about how to invest and how to pay off

debt, not just let that money sit there because she wants to make progress. And as we kind of were digging into the numbers in her situation, kind of unpacking the relational side of money and marriage and money is so closely related. When you are married, working together with your spouse and being on the same team is a crucial part. But also we know on the other end, it's one of the leading causes of fights and tension and divorce and conflict. And when you're not on the same page

and when you live kind of separate lives financially. And as we were unpacking with Katie a little bit, that's what we've kind of started to discover is where they are from a relational standpoint when it comes to their money. Katie, is that a good overview? Would you change any of that or add anything? Oh gosh, that was unexpected. Yes, you've definitely unpacked it.

We unpacked it. Yeah. So before we were getting off the call, we just kind of asked and I feel like you it kind of struck some emotion in you of knowing that you guys don't work together, but yet he has a lot of debt. And you said it was just too much debt for you to even want to handle or to face. Is that right? Yeah. My parents, they got divorced because of money. So that's a big fear. So that's kind of the background. My husband, he has let a few credit cards go to collections recently, as soon as my daughter was born. He's been underwater for what feels like a long time, probably two years already. And if I mention this, you're going to say sell it. Well, tell us. The truck. It's the truck.

He has $11,000 left on it, but it's these monthly payments of $600 that he wants to be free from. Okay. What other debt does he have? What's the credit cards and collections? What are those amount to? Do you know? I want to say roughly it's $7,000. Okay. Anything else? Now you've opened my eyes. No, not that I know of.

Maybe I need to have a discussion with him. I think so because, don't get me wrong, I hate debt. And I don't like any amount or form of debt. But I was, again, expecting for you to say, like, he's got $200,000. I was expecting something way more astronomical. And when you told us, hey, yeah, he's got $18,000 of debt, I kind of just was like, oh, okay, cool. Like, we can pay that off.

And he's working, right? Yes, he is. Okay, let me dig deeper. It just came in. So we have this watercraft boat. It is under both of our names, but he takes financial responsibility for it. And the balance is $11,000. Okay, so there's another $11,000. What else? Anything else? Aside from his truck, the car and a few credit cards, there is nothing else.

So a truck and a car? Sorry, the truck and the boat. Okay, truck and the boat. So we're $28,000. How much is the boat worth? Do you know? No idea. Okay, okay.

We haven't looked into it. It's very precious. Okay. And does he have any money saved in his name? No No, okay So, Katie, I think What this starts to open up

And what you're feeling And correct me if I'm wrong But it is touching every security, insecurity part of your story and in your life. Like you've done everything you can to stock money away, even taking out credit cards and spending over here, but just knowing the safety of money has been a lifeline for you

and probably coming out of a lot of pain from your parents' experience. And you've done everything to safeguard yourself, right? Against, I would would say against debt but what's funny is you've taken on some debt right so there is still a level of risk there but you've padded yourself with the savings and it's kind of become your lifeline and you're gripping on to that and letting go of that is one of the scariest things for you to do would that that be correct? Yes. Yeah. Which is very understandable, Katie. Very understandable.

And so I want you to, as much as you can, because with money, emotions drive so much of this. And the more logical we can get, the safer I think you're going to feel with some of these decisions. And one of the first steps I would do is sit down with him because I don't know his, I'm not on the phone with him and I can't ask him these questions. I don't know where he's at. If he is at a place, Katie, that he's like, I'm so overwhelmed. I'm so mad at myself. Right. He's probably not feeling great about himself. And it's like, I want to change. I want to turn this around. That's, that's one scenario, a scenario. I would have a red flag and cause you to pump the brakes a little bit on all of this if he's like i don't care i don't care katie i'm

gonna do what i want and we get those calls too with some guys that are like well he wants to buy the truck he doesn't care he's gonna buy it and we're you know we can't make the payment but he doesn't care right so like that is a character issue if it's that would you say it's kind of the first scenario or the second i'm pretty sure he will call the show tomorrow tomorrow okay yeah but so he's more of on the first and on that first you know scenario you would say he's all for it okay okay so Katie okay I I just I want to encourage you that you're this is all good right like I know you feel overwhelmed and we're going to walk you through a very clear plan right now so the first thing I want you to do is you guys together tonight you can open a bottle of wine if you need like just a good sip of something

whatever you got to do to relax and say okay together we're going to look at everything we're getting out our pay sub stubs we're going to look at everything. We're getting out our pay stubs. We're going to know exactly, because when I asked you how much money you guys make a year, you said, I think around six. I want you to know to the dollar, here's what we make combined. Here's every debt. We're going to write it out, and we're going to know everything here. And we're going to, tonight, shake hands and say, we are now a team.

Together, no longer are we roommates Venmoing each other for the mortgage. No, screw all of that. No, we are one. When our income hits our new checking account that we're going to open on Monday morning, when our income hits that account together, we are working as a team. Because when you do that, Katie, not only from an emotional perspective, does it create so much unity and so much of a more beautiful marriage because you see yourselves as one, which is what you do when you choose to get married, to live life with another person. You're living that out on a tactical sense with your money. So that's such a beautiful part of it. And then together tactically

as you start to trust each other in this, you're going to have this cleaned up, Katie. I would sell the boat immediately. But then by Monday, you guys can take this $47,000 And this is going to scare you But I would pay off I would keep $1,000 And you would have I think $42,000 If you don't count the boat because I want that sold You're going to pay off everything else

Okay And so you're going to have $5,000 left And you guys together are going to have a goal I would say to save up Probably I going to have $5,000 left and you guys together are going to have a goal. I would say to save up probably, I don't know, 26, 27,000 for an emergency fund. And you're going to, that's your next goal together. Katie is to work to, to buff up that emergency fund. Okay. And that's going to take you guys, you know, maybe the next eight, nine months, 10 months to do all of that For that emergency fund but together That's going to be your goal for 2025

Together doing this getting Rid of the payments we're done with payments And now you're going to have your full income To be putting towards this emergency Fund What say you What'd you say Yeah I would have 5,000 left. What'd you say? 5,000 left.

Yeah. I would have 5,000 left. So I'm paying off my two credit cards. Yes. I'm paying off my car. Yes. Selling the boat. Mm-hmm.

And you suggested paying off the truck. Yes. Mm-hmm. Oh, gosh. That's scary. Is it scary because of what's going to be left? The $5,000 or it's scary that you're paying in credit card payments, what he's paying in credit card payments, what he's paying in boat payments, and what you're paying in truck payments. Add up all that money. And when you see that, that you're going to have that back every single month, I think that's going to make you feel less scared. Because that's a hefty chunk. You have a lot of your income, Katie, leaving. And a lot of it's going to be coming back to you.

And you'll be able to build this emergency fund up back very, very quickly. And then beyond that, you can start investing. Hold on. Stay on the line, Katie. And Emily's going to pick up. And we're going to put you guys through Financial Peace University. It's our nine-lesson course and give you every dollar premium. So when you guys start looking at numbers today, you can start building out your first budget. Thanks for the call, Katie.

We're cheering you guys on. All right. Christmas is almost here. And if you are still buying gifts for people on your list, buy them a gift that actually will create change, kind of a positive gift that they can use beyond Christmas. And we have almost 30% off some of our best-selling products in the Ramsey store. If you go to ramseysolutions.com store, you can check it out there. The Total Money Makeover, Building a Non-Anxious Life, Breaking Free from Broke,

all of these best-selling books are 30% off. And also the Questions for Humans deck are just $12. And that's the couples, friends, and parents and kids editions. So there's a lot there, you you guys at RamseySolutions.com Slash store The Christmas deals are ending soon Because Christmas is right around the corner So again give a gift that can

Create some change in people's lives That you love Alright we're going to go to John in Midland Texas Hey John welcome to the show Hi guys thanks for taking my call. Absolutely. How can we help? Well, so I'm an hourly employee and I have an irregular income, so I've really kind of been struggling with a budget in the past. And I found out the other

day that with my employer, I can set my paycheck to go into different accounts. So would it be a bad idea to basically set up to where I'm like a salary employee? Like I have $2,000 or whatever, every paycheck go into like my working account, my daily account. And then everything extra goes into like a high yield for a house? Or do you have any other advice for something like that? So in essence, you're saying you don't need all of the money that you're being paid. And so you want to throw it towards another goal. That's really the question. It's not really the difficulty of budgeting it, right? Yes. I guess whenever I just look at my whole paycheck with it being different month to month, I don't know why it just doesn't click with like,

okay, I have this random amount of money left over. Um, and so I guess that's kind of what I'm trying to overcome. Okay. So just again, to clarify, are you having trouble budgeting? Like, are you, are you ever finding that you don't have enough money? Uh, no. Okay, cool. Then yeah, I live very frugally. I love love that essentially you're saying i'm budget i'm i have enough money for the line items in my budget but i have an overage and for you the overage you feel like you're at the point that you want to save for a down payment yes and so then at that point for for rachel and i to decipher is whether you're at that point financially if that is really the best move for

you or not. Okay. So our first questions would be, do you have any debt? No, I actually paid off all my debt in September. Okay. So I'm completely debt free. Cool. I make about $100,000 a year. Okay. Part of paying off my debt was I got a large settlement from my previous employer for a sale. So I have about $60,000 of that left over in savings. Okay. Some of that is going to be taxes though. Okay. And then, you know, I'm contributing right now 10% to retirement because I am trying to save for a house. So that's kind of where I'm at. Okay. So the $60,000 you got, you set the taxes aside, that's fine. What portion of that would you consider a three to six month emergency fund?

Probably, I mean, really probably $15,000 would I'd be that'd be more towards six thousand or six months I mean okay so I'd set aside what you would consider six months of expenses and that's kind of separate and then aside from that yeah you could consider the rest this is my working pile of debt payment money um and then for you and just to clarify for anybody listening so technically you're on baby step three B and step four, and what you're doing is totally fine. If you say I'm not ready to go all in on 15% investing, like we'd say, because you're saving for a down payment, that's totally fine. Um, how long do you think it'll take you to save up the down payment that you want?

Um, well, I'm just trying to save up big, I guess. I know that in August I'll be getting a retention bonus as well. So that should be about half a year salary. So between that and then another $1,500 a month or so going into savings, I would assume by the end of next year, I will be in a comfortable spot to do, you know, 30 or 40% down on a home. Okay, great. I love that plan. I think that that sounds wonderful. The only thing that I would caution you about, and this is something that you, if I were in your shoes, I'd work it into the plan now. When you have that house, like once you buy the house, your expenses are going to go up is my guess right

i don't know what you're what you're doing now are you renting i am i am renting okay so calculate okay is my payment going to go up or down does that affect my emergency fund does that affect what i would need to make things sustainable over three to six months do you see what i'm saying okay yes yes ma'amam. And that's basically it. Congrats. Yeah. I mean, you've done a fabulous job, John. I mean, it's incredible. I mean, yeah, I think that that's exactly right. And if you want to make it easy and make it that automatic transfer to a money market account or a high yield savings account to save for that down payment, I would say, yeah, absolutely. You know, there's always, you know, I don't feel

this with you. That's why I just want to say it out loud, though. There is something when you're starting something new, you all that are listening and watching, and you're starting to build new habits, I do think being as hands on as possible, and going through the motions is really important. And so some people just want to automate it their whole life and be like, Oh, I don't want to have to like feel anything, it's just going to happen. There is something about stepping in and saying, No, no, I'm going to transfer the money like feel anything. It's just going to happen. There is something about stepping in and saying, no, no, no, I'm going to transfer the money myself. So I'm practicing and seeing this happen. And there's something about taking control in this discipline over your actions, which is a big part of winning with money long term. But John, I think

you have some of these disciplines already in place. It's not like you're trying to change something big from your habits. It's more of a tactical change um and so doing something automatic at that point i think is great right when you can yeah when you have stuff that just automatically comes out because you know yeah we're paying for electricity or paying for cable like yes and it's just coming and it's making my life easier in that way uh that's a benefit for sure and that would be the same with savings so if you do want to create an automatic you know transfer and and knowing that that high yield savings you can want to create an automatic, you know, transfer and, and knowing that that high yield savings, you can get to that money for some reason, right? If you lose the job or like,

whatever it is, you know, you can get to that money. But yeah, but that's great, John, how old are you? I'm 25. Okay. Way to go. And what do you do for a living? I'm a lease manager. I work for an oil and gas company out here. Okay. Okay. That's great. I know it's always encouraging to talk to people when they're young and in their 20s. And you're making, yeah, I mean, incredible money doing it. And handling it really well. So that's incredible, John. Good luck to you. I think that that's, yeah, that's amazing.

Way to go. I liked what you said about the automating because I think that's very, very important. Yes, for sure. All right. Let's see. We got, oh, this is a fun Instagram handle. Okay. Ready for this?

Yeah. Jacuzzi 101. Okay. You like a good time. At what point should my adult children's finances be none of my business? Oh, I'm going to go with at the point they're adults so probably now since they're adult children yeah um i mean let's think about this if they're in your home like if you have adult children that live in your home i would say that it's some of your business because

they're still in your living space right but if they don't live with you if they are out on their own and in their life or in their marriage I'd say that it's none of your business unless they ask for your help that's right yeah this is always a a tricky one because you hear uh parents still wanting to be involved in their kids decision making and probably some of it out of a good heart right seeing kids maybe making mistakes or making decisions that you wouldn't make and you want to still be the parent in that way and intervene um but i feel like the the more life i've lived jade the more successful relationships i see with parents and adult children happen when they start to become more peers yeah right when you step into adulthood and your parents actually see you as a fellow adult and they're still not trying to parent you or lecture you and they see you as a peer, usually from

the people that I've seen in my life that have great relationships with their parents, it's because of that. There's kind of this mutual respect and the ones where there's usually tension when it's like, oh God, my dad's still telling me how to load the truck or my dad you know what i mean or my mom is still critiquing this or that or like you know whatever it is uh that's usually relationally when there's some some tension so i'd say none of your business yeah but it goes both ways because a lot of times kids try to get into the parents that's so true yes that's so true i don't like the way my mom and dad handle their money. You know what I mean?

People call in with that all the time. And if they don't ask, not much you can do to change other people. You really can't, really can't. Well, thanks to all the guys in the booth for making this a great hour. Jade, thank you as always. Always.

Being a great co-host. Thanks to everyone out in the lobby at Ramsey Solutions. And thank you, America. We'll see you on the Ramsey Network app, podcast, and YouTube. Make sure you guys download the app. So we'll see you next. 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 am Rachel Cruz hosting this hour with best-selling author and my good friend, Jade Warshaw. And we'll be answering your questions on life and money. So give us a call at 888-825-5225. Up first, we have Jessica in Anchorage, Alaska. Hey, Jessica, welcome to the show. Hi, thanks so much for taking my call, Rachel and Jade. Absolutely. How can we help?

Well, I recently completed Financial Peace University, and I had, if there's time, two questions about the insurance lesson. Yes, absolutely. My takeaway from listening to Dave's lesson was that everyone of a certain age and financial standing should have some form of life insurance until they are considered self-insured. My question is, I'm a 44-year-old single woman. I have no children and a positive net worth. So I'm wondering if I need life insurance since I don't have a partner or dependents. That's a good question. Yeah. And no, I would say you do not need life insurance

with that. Yeah. Life insurance is only needed when someone is dependent upon your income. And that should have been said in the lesson. If it wasn't, that's a miss. But yeah, that life insurance specifically is for if something were to happen to you someone that has needed your income to live off of would need supplemental income right so um so in your case no i would have some money set aside just for if something were to happen to you for burial expenses funeral right like that kind of thing um and if you want some money maybe that's your emergency fund that they get that out of. But I would have, Jessica, a will, and everyone does need a will. Do you have a state-specific will? I do, yes. Oh, good. Good, good. Yeah. So that's all I would do if I were you. Way to go. All right. Can I ask a quick follow-up question? Sure. Okay. So I also have umbrella insurance.

Does that mean I can get lower coverage limits on my vehicle because of that? I wouldn't say that. You might be able to bundle it all together. Like I know with Xander, I bundled it all together. And because of that, I've gotten lower rates on everything as individual. Does that make sense? So if you're trying to save save money I feel like that'd be the way to save money as opposed to lowering coverage okay okay got it wonderful well thanks Jessica yeah thanks for the call up next we have Melanie in Philadelphia. Hey, welcome to the show.

Hi, thank you guys for taking my call. I'm a big fan of both of you. Oh, thanks. Thanks. I'm looking for some advice on how to stay encouraged during these baby steps. So my husband and I are in baby step two. We've paid off a lot of debt so far. We've been doing this for about a year and a half, but we still have a lot to go.

And it's overwhelming, a little, you know, it's hard. This is a very hard thing to kind of deal with. And how do you stay motivated? How do you stay encouraged to keep going when you still have a lot left to go? Yeah. I mean, what you're saying is 100% accurate. It is not easy to work the baby step, specifically baby step two, because for a lot of us, it is a long journey. It is not easy to work the baby steps, specifically baby step two, because for a lot of us, it is a long journey. I mean, how much are you paying off? So total is $254,000 and we've paid $75,000 of it. Okay. Way to go. That's excellent. I'm really proud of you. I mean, maybe you know this, maybe you don't. My husband and I also paid off a giant chunk of debt and our horizon for that was about seven and a half years

of just baby step two, because we had stupid debt. And what we found were focusing on milestones and really celebrating those made it easier to keep going. And then we also, so I'll kind of flesh that out a little bit. So for instance maybe you and your husband set a goal and say you know what um when we pay every time we pay off fifty thousand dollars we're gonna celebrate in this way right and so you kind of have to create that within baby step two so that you kind of feel those that what you've done right it's easy to be

like oh my gosh i still have so much to do and not really realize feel what you've done, right? It's easy to be like, oh my gosh, I still have so much to do and not really realize how much you've already accomplished. So I would say that you guys sit down and figure out what's a reasonable amount and say, okay, every time we pay off $35,000 or every time we pay off $40,000, whatever you guys decide, and then figure out what's that thing that you're going to do to celebrate. And it's not something that's going to throw you off track. I'm not saying you go to Disney World whenever you do it, right? But maybe it's something

special and unique to you guys that you're going to find that way to celebrate. So that's thing one. I think the other thing is, have you projected how long this whole journey is going to take? Yeah. So according to EveryDollar, we should be done by August 26. August of 26. Okay. So I think within that, just knowing there's an end point is really, really good. And both of you knowing the why behind the what. So for you guys, it can't just be about we're paying off debt because we don't want debt anymore, right? There's got to be this bigger picture around it. I know for my husband and I, it was when we're debt free, we can start a family. And I had this vision for what I wanted my family to look like.

And it's got to be like this deeper drive that causes you to want to go forward. So do you guys know what that is? We eventually want to be homeowners. So, I mean, our goal is to once this is all over to be homeowners. We're in our mid-40s and we've never owned a home and we have two kids and you know that's like what we want my kids have never had a yard you know things like that that really kind of stay us in focus um but it's just so like you know you get like discouraged because even though you paid a lot it's just it almost sometimes

makes me want to cry that I'm like man we put ourselves into this huge hole and, you know, I get migraine headaches about it. And I'm like, I just, I need someone to kind of tell me. I mean, my husband's been great about it. Don't get me wrong. He's a great partner and we're doing this together. I'm not alone. But sometimes I just need to hear it from maybe someone who's, I know you can say I paid off a huge amount of money. Yeah. And it's just one of those things where

it's just like, okay, I know I'm doing the right thing for me and my kids, for us as a family, but it's hard. It's hard. Listen, I just want to validate that it's difficult. And it's, it's not one of those things. I think a lot of times people think, Emily, we say, oh, work the baby steps. I'm sorry, Melanie. We say work the baby steps. And it's like, OK, you just flip a light switch and you do it. And that's that. It's not that.

It is an emotional journey. It is everyday choosing. It's like marriage, everyday choosing to recommit to what you've said you're going to do. And you guys are doing that. You really, really are. And honestly, one of the things that helped me stay motivated, two things. One was this idea, hey, the time's going to pass anyway. The time is going to pass, Melanie, and you're going to look up 5, 10, 15 years from now. And in 15 years, you can either go, oh my gosh, I am so glad that we walked through that valley. Like

it was two years, but in the grand scheme of of things it's a drop in the bucket right and so really just honing in on the fact this time is going to pass and in 10 years I can wake up in that house that I want to be in with my kids with the yard or I can wake up and be the same off or probably worse and so when you just it's like you've just got to keep your eyes stayed on that thing and at the end of truly, you know, don't grow weary in well-doing because at the right time you reap a blessing. That's what the Bible says. And it is so true. Don't go.

Don't be weary. Don't faint. Like don't tap out because this is coming at the it's like climbing a mountain. You know, you climb and climb and climb and you don't realize how far you've gone. But when you look down, you realize, holy crap, like I climbed Everest and you are going to be at the top of this. And you're going to be standing on top of all of that debt, all of that shame, all of that fear, all of that stress and anxiety. And you're going to be victorious. That day is coming. I can see it. I've been where you're at, but keep climbing.

You are going to make it. Thank you. or more in their tax advantage accounts like a 401k or an individual IRA. 58.4% of Americans have less than $10,000 saved for retirement. So as a listener of The Ramsey Show, you may be asking yourself, okay, where am I on track financially for my goals when it comes to the baby steps? So you can actually take a quick quiz to check your progress and receive an actual personalized plan for you to get you in a point where you're out of debt, have an emergency fund, funding retirement, doing the things you need to do with your money. So if you want to do that, then make sure you go to RamseySolutions.com and check it

out there or in the show notes here in the app. Or if you're listening on the radio, you can go again to ramseysolutions.com, but we will put a link titled, Are You On Track With The Baby Steps? You can click that and complete the quiz for free. Up next, we have Emily in Cleveland, Ohio. Hey, Emily, welcome to the show. Hi, thank you so much for having me. Absolutely. How can we help? I'm calling to figure out what I should do with the savings I have for my current situation. All right. So tell us kind of what's going on. How much savings do you have? I have a good amount. I have 300 or well, I have $285 right now, including my IRA and my Roth.

So I did start with a more sizable amount, and I put it in stock, thinking that was the smart move. And I'm just watching them drain. And I'm renting. I'm a single parent. I'm sole custodian. And so I keep thinking, should I be continuing to rent? Is it smart to invest in the rental or in a housing market at this point? Should I keep the money in there and let it perform long term? I just don't know what the right step is. Sure. Okay. So out of the 285,

what is in not in retirement? So not in 401k or IRAs, what is like in non-retirement funds? How much? Well, actually, actually I lied. It is 285. The way it's pulling it apart here,

I'm looking at my account. And that's what's in it. So that's all in retirement savings. That's in what I've put as a trust for savings. The retirements are separate. Oh, okay. How much do you, I'm curious how much you have in retirement then? My IRA is $84,900 and my Roth is $28,000. Okay, great. Okay, so the $285,000 and they're invested in stocks, individual stocks or mutual funds or where are they invested? This is where it gets a bit out of my wheelhouse. Okay.

You may not be sure. I know that I'm conservative. There's a lot of different... Is there bonds? The biggest one is corporate bonds. Okay, so There's a lot of different. Is there bonds? The biggest one is corporate bonds. Okay, so there's some bonds. Short-term government. More in large blend and large blend.

How did you get this money, Emily? And how was it invested? Did someone do it for you or was this given to you? How did this happen? I got incredibly lucky and in my last place I lived, I was qualified for a housing program and I got kind of a half price home for being in public service. So I had to relocate and sell my home during COVID. I had my baby and that was the net that I came out with. It was the 329 was what I came out with. Okay. Okay.

That's great. It was the best thing that's ever happened. Yeah. That's great. That is incredible. I didn't want to make a misstep. Well, no. Well, and you can see it as, you know, part of it too,

as you being wise, this was equity, you know, coming out of a cell of a home. So what you're going to want to do is, yeah. I mean, I think that there's a was equity you know coming out of a cell of a home um so what you're going to want to do is yeah i mean i think that there's a very you know realistic plan to put some of this money back into a home do you have any consumer debt right now i have i am debt free your debt for you do you have any money that's just liquid like in a high yield savings account or a checking account or um a traditional savings account? Anything there? Yes, I have $30,000 and that's my emergency.

That's good. You've done such a good job with this. It's incredible. It's incredible. What are you making? Yeah, what are you making a year? I make $30,000 right now. I had to make a big career change. So luckily I had put everything away aggressively when I had better income. And now I make $30,000. I work part-time to be a mom full-time. Yeah, that's great. And is that $30,000, is it pretty sustainable for your lifestyle right now? It's not. So I work part-time doing outdoor work just for cash seasonally. Okay. So are you able to keep your lifestyle afloat or are you having to dip into any kind of savings? Right now I'm dipping in depending on the season when I don't have that extra cash flow, I'm taking $500.

That's worth $30,000 a month. That's worth $30,000 really built up because I wasn't using it on my goods part of the year where I'm making additional funds. Okay, okay. So that's kind of your, yeah, because we have like what we would call peaks and valleys, right, seasonally. This is kind of you that if there's, you know, a great month, right, you kind of put yeah because we have like what we would call peaks and valleys right seasonally this is kind of you that if there's you know a bet a great month right you kind of put some money aside so in the low months you can take money out of that account to keep everything pretty much afloat um okay so i mean yeah emily if i were you have you looked at um housing in your area how much are houses going for that that you would be interested in that would be realistic for you? The houses I'm looking at to suit my needs are around 220, and I feel uncomfortable with the cost of that mortgage.

And everybody I've spoken to says put as little down as possible, and it makes more sense to me if I were to do that, to put a huge chunk of my stocks down on the home. And then I would be able to lower my monthly payment. So I'm at an affordable mortgage. Exactly. I think that you have really good instincts on that. And I would even, in your situation, if your long-term plan,

because it sounds like it is, but correct me if I'm wrong, it sounds like your long-term plan is to work less so that you can be home more taking care of this baby, right? Yeah, at least until she's older, yeah. Right. So there's part of me that I'd be wondering, is there something I can buy? And possibly if what you're looking for is 220,

is there something that's even a little bit below that that you could possibly pay cash for and not have a payment and you've got this wonderful place that you live at that point? I mean, because right now you're at baby step four. If you were to invest, you'd be investing 15 percent of your income. I don't know that you have the margin to do that. But is there a way that you can create stability on that line item? Because the purpose of buying is to create stability on the highest line item for most of us, it's our mortgage, and to build wealth. And so you have the ability to do both of those things. And if you're not comfortable, then yeah, maybe it's, you know, you put down 50% or something like that. But the idea here is to really create stability in your life.

I do think that over time, of course, and you know this, you're going to have to get your income up because 30,000. Yeah, to live off of. I mean of i mean yeah i mean emily a crazy thing would be right um and you'd want to make sure the taxes you'll pay capital gains and some of the growth on this but if you have 285 000 that's non-retirement right correct what if em, you took $200,000 and you paid cash for a house? And then you have no mortgage payment. You have no bills. And you have a paid-for house, Emily. You still have $80,000.

Or maybe you even put a little bit more, right? Maybe $60,000. Now, taxes are going to be involved in this. So I want to reiterate that. But you're in a pretty incredible position emily to be able to say oh my gosh my largest line item which is the house uh housing goes up continually is done i don't have i don't have a payment now i want to make sure you have a fully funded emergency fund which you do you have 30 grand sitting there so if something were to happen you have that covered

and then i mean the flexibility of your income at that point is a lot of freedom. And $30,000, I want to make sure that for retirement and stuff, future thinking that you are putting enough away. I mean, right now, yeah, you have a little over 100 grand in retirement specific. So what I would do, Emily, if you hang on the line, our Emily is going to pick up and connect you with a SmartVestor Pro to sit down and look at all these numbers. But sitting here for what you've given me, Emily, number one, in a fabulous job as a single mom, like this is, it's crazy. You've been so wise and so smart. But I mean, you're at the point that, yeah, you would, I mean, you could pay cash for a home and call it a day. So we'll have Emily pick up and you guys can chat. This is The Ramsey Show.

Well, let's be honest. Marriage can be one of the most challenging but also rewarding parts of our lives because it does take a lot of work and intentionality and all of that to keep a strong connection. That's why twice a year we host Money and Marriage Getaway. This is a weekend long event here in Nashville dedicated for you and your spouse. And we had one this October and it was incredible. And we have another one coming up actually this Valentine's Day weekend of 2025. It's Dr. John Deloney and myself. And we are with you all weekend Talking about your money

And your marriage So everything about communicating better Strengthening your emotional connection Getting on the same page with money And this is a really fun weekend I mean we've done this twice now Weekend long types of events And they have been a blast

And Nashville is such a great destination weekend And we pack in a lot of fun it's a very fun weekend with so hopefully some you know great conversations great teaching we do live Q&A's and we just get to talk about the real when it comes to marriage and we try to make this event as authentic and honest as possible we're kind of done with the fluff around you know theories and stuff we're just going to get down to it. And we do. So it is very, very fun. Tickets start at $799 per couple. And don't wait. One of our tiers have already sold out from a top VIP level,

but there's a few regular VIP tickets left and then standard tickets as well. So you can get those tickets at ramseysolutions.com slash events or click the link in the description if you are seeing this on YouTube or podcast and we are we're pumped about that weekend so make sure to check that out all right up next we have Mike calling from Baltimore hey Mike welcome to the show hi Jade hi Rachel thanks for taking my call absolutely how can we help all My wife and I, we are in baby steps four, five,

and six. We have a household income of $200,000 and we want to follow the Ramsey path and do the 15% contribution. So 15%, 200K would be $30,000. We have these different retirement accounts that we could potentially invest in. We have the 401k Roth plan through my work, two Roth IRAs, one for me, one for my wife. We have our HSA. Each of those has its benefits, but also, as you know, each of those has its own IRS contribution limits each year. Right. So as we're moving into 2025, $30,000 would not fully fund all of those accounts. Like I wouldn't meet the contribution limits on all of those. That's right.

So is there an order of operations that we should look at to fund one first and then move on to the next one and then move on to the next? Absolutely. Or should we try to spread them out between the three accounts? Well, like you said, you're not going to have enough to fund all of them. And there is a way that makes more sense and that you would get more bang for your buck. So did you say that your 401k is Roth? It is. I have the option to do Roth or traditional, but listening to Ramsey for so long, I know that Roth is the preferred. For sure. And is there any match there?

There is. There's 6% match. Listen, that hits on some really nice benefits there. So I would start there. I'd fund that completely. And usually if you were in a traditional, but you had the match, I'd tell you only to fund it up to the match and then move to the Roth IRAs. But in this case, since the 401k itself, it also has the Roth treatment, I'd say fully fund it. And then after that, you can move to the IRAs. And so you'd be able to fund most of that. And then later on, if your income goes up after that, I would start with the HSA and I would do it in that order. Okay, great. And that's the exact answer I was looking for. It you know it sounds like there is an order of operations rather than just trying to like put a little bit of money into each

of those yeah the kind of formula we talk about mike is match beats roth beats traditional so going up to the match and then going to the to the roth ira but since yours is a roth 401k like jade was saying you could put majority of it i think it's 26 000 to max out a 401k, like Jade was saying, you could put majority of it. I think it's 26,000 to max out a 401k discount this year. It's around that or 26,500. But yeah, you can go ahead and max that out. And then whatever is left, you guys can go over to a Roth. Or if you want, Mike, you could, you know, say, hey, we kind of want to max out the Roth IRA because it's 7,000 each. And then the rest, you know, half and half, that would be literally down the middle. You'd put 15 basically in a Roth 401k, 14 in two Roth IRAs. Either one works, right? There's a part of me

that it's more simple just to go ahead and do a ton into the Roth 401k. But I personally just like to spread it around into different accounts. Like there's something about it for me that I like fully funding the Roth every year and then, you know, putting up to that match or even more in the 401k. Now the HSA, I really wouldn't do that until you are at baby step seven

and the house is paid off and all of it. I would stick to, as your income grows, just fully funding the Roth 401k and Roth IRA. The HSA, I think, is a great option eventually. But yeah, you guys are probably a few years down the road for that. But there are benefits to it. You're right. But those other two is what I would concentrate on. Unless for some reason your income shot way up and you had a lot more that you're like, listen, I've maxed all of these out. Where else can I go to get to 15%? Then I'd say you could go in there or even a brokerage account at that point would probably be fine. But way to go. That's exciting. Yeah. Great job, Mike.

Thanks for the call. All right. Next, we have Greg in Phoenix, Arizona. Hi, Greg. Welcome to the show. Hey, Rachel. How are you? We're doing well. How can we help? So I was wondering what to do after baby step three if I don't have a home yet. Just to give a little bit of background, I've never had a problem with gazelle intensity. My dad taught me that from the beginning whenever we got into debt as a family. We'd go on the rice and beans diet, stay at home, be super frugal, get things paid off. But then there was never any plan after that, not even emergency funds. I have no problem with the intensity on the emergency fund, but the second I'm done with that,

I don't know what to do. We're renting right now. My wife and I have been together for almost two years and we're wondering, should we just gazelle and tense our way into a house keep saving a whole bunch of cash to to get into that home or should i start you know investing in the match program i have at work yeah it's a great it's a great question yes the next step would be baby step 3b is what we call it so maybe step two is getting out of debt maybe step three is your fully funded emergency fund. And then once that's complete, then saving up at least a 5% down payment is what we say. So I would make that my next goal because honestly, Greg, you know, the housing markets, it continues to go up, right? So if you guys continue to wait a long period of time,

those houses are just getting more and more expensive. Now, we don't want you to be house poor. So which house you decide is very important. So we always talk about that your mortgage should be no more than 25% of your take-home pay on a 15-year fixed rate mortgage with that 5% down payment. So that's kind of the parameters at which to look for, hey, what can we buy? But honestly, Greg, i mean i i would get in as soon as possible because you know it's so interesting like you look back two or three years ago when housing prices just like continued to go up and everyone's like well it's a bubble we're just gonna wait we're gonna wait we're gonna wait and nothing really popped and it continues it's not they're not going up as drastic as they did uh but they continue to raise. I mean, it's 2% to 3% every year, the growth in real estate still.

So they're just getting more expensive. Now, again, hear me say, I do not want you rushing in to get a house if you're broke. So hear that, America, please. But, Greg, you guys don't have debts. You have an emergency fund. So that next step, I would. And even, Greg, is it just you and your wife, or you guys have kids we do not have kids okay not yet I mean I I mean not to sound like crazy urgent but I honestly would go and it doesn't have to be a single family home like if you guys want to go

like buy a townhome that's a great place to start just like jump in and go ahead and start building some equity and then as you guys move up in house at least you have a starting point I think that's fun I think it's fun for you guys to get online, start researching what that could look like, you know, hop on our home base. I think it's ramseysolutions.com slash real estate and start putting together a plan, something that you can start now or in the new year. And I think that's one of the fun things. You said you've been married two years.

So this is a great time. Yeah. And you don't have to be, you know, gazelle intense at that point. I mean, you know, you guys can still still enjoy life but be saving that down payment and um i wouldn't worry about funding retirement right now because i think you guys can get to that five percent pretty quickly i wouldn't wait five years and not fund retirement but i mean you guys can be you know putting some money away for the next year or two for that and then after that down payment is saved then move on to 15% of your income into

retirement. But with Baby Step 3B, we've had a few calls to the show where people, it's a longer tail. So they're funding some retirement and saving on the side. You can do both at the same time. But for you guys, Greg, I probably would just let that be my sole focus because you guys are young and yeah, I'll get into the housing market. So thanks for the call, Greg. Our scripture of the day comes from 1 Timothy 6, 5-7. This is one of my favorite, favorite scriptures, Jade. But godliness with contentment is great gain

for we brought nothing into the world and we can take nothing out of it. Boom. All perspective there. One of our other faves, Joanna Gaines, says, It's up to us to choose contentment and thankfulness now and to stop imagining that we have to have everything perfect before we'll be happy. So true, though.

Oh, so, so true. Especially this time of year. Yes, that everything has to be perfect and good. No. Embrace the chaos, people. Indeed. Life is better when you just embrace the chaos. Indeed. All right, let's go to Chris in Minneapolis.

Hey, Chris, welcome to The Ramsey Show. Thank you for having me. Absolutely. How can we help? Well, you're listening to a man who's going to be 71 in a couple weeks and has been trying to formulate this question for 11 years. Long and short of it, 11 years ago, my wife and I had to make a decision to go through bankruptcy. I'm a Christian, but my second religion was never being late on a single payment. And I took a very unwise road in panicking.

We are a one-income family to raise our kids. And I kept borrowing and borrowing and borrowing. It'll get better. It'll get better. I won't have taken out payday loans. You know, that's a nightmare that's just waiting to throw gasoline on the fire, so to speak. Okay. So 11 years ago, we went through that. And here we are 11 years later, our home is paid off first and second mortgage. We saved up enough with our retirement accounts now. We had none back then.

Wow. So we're close to, we might at the end of this month possibly have $100,000. That's with HSA and two different traditional IRA loans and so forth and so on. Way to go. But here's my question. I used to listen to Crown Money Matters on the way home from work on the radio. Yeah. And I remember quoting one verse,

the wicked borrows and does not repay. And bottom line, I don't want to be that guy. And I'm wondering if there's a wise way. Let's just use a round number. Okay. We were $33,000 in debt on one income, and we went through my wife, since the kids had grown up, was able to start doing a part-time job, and the Lord blessed us. And, well, let's just say $33,000, the biggest chunk I could pay off would, let's

say we owed $13,000 to one MasterCard. Can I approach them, their bankruptcy department, with our old information and present to them what was worth $13,000 and $2,012 is today worth, let's just say it's $21,000. Can we, Discover Card, pay you $21,000 in some legal manner? Now, I did read someplace from an attorney at an online site, and he says, I would suggest that those that want to do what you would call a conscious payment seek out legal help because without the potential of somebody saying, well, they're acknowledging their debt, now we can take their own. And in a payday loan situation, that is certainly a reality,

I would think, anyway. Yeah, so for Chris, me let me make sure i'm right so you guys 11 years ago filed for bankruptcy you completely turned your lives around financially speaking and now you are above you know i mean paid off house retirement all of it now you're wanting to go back and repay what you quote-unquote owed because of just that conviction that you have. And so how to do that is what you're asking. Is that right? Yes. And I did call one place, and she misunderstood me. And then when she realized what I was talking about, she gave me a, you know, a real compliment. God bless you for trying to do that. And she gave me the number of the bankruptcy department. Well, you know, Chris, I mean, I can tell you, I know people that have done this,

that have gone through bankruptcy. And then on the other end, they go and pay the debt, right? It's not, there's no legal, it's a complete moral, spiritual, right? Decision, like from a legal standpoint, you are in the clear, right? You went through the bankruptcy and you did what you had to do. So I know it can be done. And I would say that that's definitely

a personal conviction. I don't think everyone feels the call to do that, but I do know people that 100% have done this. So I would get legal counsel if you feel that way. I would make sure too, Chris, that you want to take care. Scripture also talks about taking care of your own household first or you're worse than an unbeliever. So I know the house has paid off, but I would make sure you and your wife are well taken care of, for sure, into retirement and sit down with a financial advisor and make sure that all of that.

I want you to be in a good position there. And then anything above that that you have, you know, I would follow that conviction for sure. But you're dealing with a really crappy industry. You're talking about MasterCard. You know what I mean? Like all the, oh, it's just so gross. So I would make sure that you are above reproach on how you do this. So I think seeking legal counsel is very wise in that,

making sure that it's there. And then I've also known Chris too, just to like, again, not to sway you not to do this, but people paying it forward to not necessarily that industry and their debt, but they take the money that they had owed and they find five single moms in their area and help them.

Like taking the money that you had filed bankruptcy for and kind of paid it forward towards other nonprofits and you kind of give that money instead of paying it. Not that you have to do that, but that's also another option too. I love that. Some things to kind of think through. I'm sorry, go ahead. No, that's it.

Go ahead. Well, I was just going to say, after reading what that person had said, suggesting seeing legal advice, and I thought through that remark that, you know, you could have shysters that are going to come after you for everything you got because you're acknowledging it. Then I thought, well, why don't I go to, let's just say, for example, I decided to go to Crown and Money Management and give that amount that I owed to them in a monthly amount, which is they kind of prefer that, I think, than doing a big lump something because it's easier for them to handle it, so to speak. Not to get too far off course, what I'm saying is that thought had crossed my mind about how to pay it forward in a charitable way. Yeah. What does your wife say, Chris?

She would not be in disagreement with me, but she doesn't get into the conversation, so to speak. So I guess I've kind of carried the whole ball On this as far as Yeah You know what I'm saying The pressure and the And I think that there is something you know That you are still carrying

A level of that Of shame and responsibility That you didn't withhold you know Uphold your word and Take care of your family in that. So there is a part to Christopher, give yourself in this. I mean, you're still holding on to some of that 11 years later. Again, this is not to discourage, you know, this conviction that you have. Because again, I've known people that have done this. And I think it is a very honorable

above reproach thing to do. And I would say follow the spirit of that is what you feel like in your wife. Yeah, get on the same team and make sure so this is not that but but also I think there's a deeper emotional um you know issue there even you know even even my dad talking through the pain of bankruptcy like there's a there's a shame element like when you're you know and not to like categorize it as like male versus female or anything man versus woman but but I think for for a man you know there is something about taking care of your household. And when you feel like you have failed that, it takes a part of your self-esteem.

And again, women can feel the same way for sure. But just hearing dad talk through that. So Chris, I hear some of that in your voice too. So I want you to feel free from that. This does not define who you are. But I would continue to walk this road. And I think it's a beautiful thing, an absolutely beautiful thing that you feel this 11 years later in the sense that you want to make something right. Make it right.

I love your idea to pay it forward. That is money well spent. Yeah, so great. Thanks, Chris, for the call. Thanks to all the guys in the booth. Thanks to our audience here in Nashville, here at Ramsey Solutions. And thank you, Jade, as always, for being a great co-host. And thank you, America. We'll be back. you