The Ramsey Show - App - Your Income Is Your #1 Tool to Build Wealth (Hour 2)

Episode Date: March 1, 2024

Девочка-пай Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Rachel Cruz. Open phones at 888-825-5225. You call in and we'll give you our advice. Not telling you you'll like it, but we will give it to you. Unfiltered, unbiased, just wanting to help you take the right next step and live your best debt-free life. Reagan joins us up first in Knoxville, Tennessee. Reagan, what's going on? Hey, George and Rachel. I am a little sad that I can't talk to you guys for five hours,

but I'm excited to be here. Hey, five minutes is better than nothing. All righty. Well, I've got my question I can read to you, so I sound a little bit smarter. Okay. Use some big words. Okay.

I have been married for two years, and we are currently gazelle and tense paying off my wife's nursing school debt. As we plan for the future, we are eager to bring children into our family we both come from single income families and we've always imagined that that's how our lives would turn out as well in fact we borderline consider it part of our faith to build a family with a stay-at-home mom i work as an entry-level construction estimator making 55k and i can make this decent money down the road uh it scares me to think about trying to save for a down payment or afford large purchases on my income if we were to have a child

soon, but I also don't want to wait four to six years for my income to go up to start having children. Do we need to put off our goal of having kids soon or do we need to have more realistic expectations about my wife's future employment? Oh, that's a good question. Well, let's start with this nursing debt. How much does she have? About 50. Okay. Any other debt you guys have? Nope. Is she working right now, Reagan? She is. She's just barely graduated nursing school. She's making about the same as me. Okay. Okay. 55K. So let's say the household income is about 110. Yep. Okay. Yeah. I mean, Reagan, I will never tell someone not to start a family, get married, you know, big life decisions. I would tell, you know, I would never tell someone not to do those. And instead you should

pay off debt or you should do all these other things we talk about i mean i think um when you want to start a family you guys start a family and people want to wait until they're financially stable and all that and and i hear that and i and i get it but also i think sometimes that finish line can move and you can feel like you're never really there and then you look up like oh man it's been four years and we've wanted a family and we haven't started well we're out of debt should we wait till we have a house? Okay, well then we'll wait another three years so we can get the down payment and be in a house because a baby can't survive in a rental for some reason. So there's a lot of just weird things that happen along the way.

And that's why we tell people, hey, if you want to have a family, go for it. It might be a little more difficult, but it's not going to ruin your life by any means. It's only going to be a blessing and a joy. So what I would be looking at is, number one, the actual budget and reality of the numbers is, hey, if we have a kid and you're staying home, can we actually cover all the bills? Can we cover the four walls, food, utility, shelter, transportation, insurance, and still hit our financial goals? So I'm wondering, can we knock out the debt while she's working and then stay home. And that's the goal is to have her debt paid off in the next six months is what we're tracking towards. And then after that, I mean,

we're just, there's a lot of big decisions we can make. We both need, we both drive old cars and we want to save up for a house and things like that. And it's just trying to balance, you know, the excitement of being out of debt and taking the next step with taking on these extra responsibilities that might harm our income. Yeah. Well, I mean, getting the emergency fund in place once you're debt-free is going to be important. If you want to upgrade the cars with cash, that would be a future goal. And then beyond that, you might need to rent for a few years until you have that down payment saved up. And the problem is a lot of people have a kid and they all of a sudden go, we don't have any room now. We have to go buy a house even though we're broke.

And so I don't want you to fall into that trap. So can you stay where you are renting right now even through the first kid? That's the plan. I think what scares me more is just having the space in my income after we have a kid, if we were to go to a single income, and and it's a priority thing for you guys if it's more of a priority for her being home then the house is going to be down below that or if you guys say no maybe she she works you know four days a week or something and you know works through the first baby and once we have baby number two then she's going to stay yeah or figure you know or you know you guys decide something else because the house you know that's more important then that goes first and then you know her being home goes second but it's up to you guys i mean yeah it's what you guys value right and then out of that is where you

say okay now we have to make these decisions and and no so um so it may mean you know move into a to a cheaper area it may mean you know some other things when you go down to one income but that's what you guys are gonna that's what you guys value is what I heard. Is that right? That's correct. Yeah. So I think, yeah. And I think it's one of those things, Reagan, like it's kind of that adulting situations that you get in and you say, okay, what is best for our family?

And what's best for us may not be the same as X y and z person down here so you may be watching x y and z family do things that you guys may not be able to do on that one income right away right not that you can never do anything on one income but it will just take longer and i think that the more confident you guys are in that conviction is it's gonna that's gonna that's gonna create create the board at which you have your life in. Does that make sense? Yeah, that's perfect advice. All of these actions, Reagan, they have a blessing and a consequence. The blessing is my wife gets to stay home.

The consequence, our income got cut in half and it's going to take us five more years to get a house. And so we have to weigh what's more important to us. What are the priorities right now? Because we can't have our cake and eat it too. I wish I could snap my finger and you guys are debt free with an emergency fund, living your dream home. She's staying home.

Everything is great, but there's going to be sacrifices. That might mean you work a side job for the next three years. Yeah. And Reagan too, just know this, you know, when it comes to the, and I know you guys don't have the baby right now, but if that is in her that she wants to be home, you don't regret that stuff. I don't you know, that that's you know, you don't regret being home with your baby if that's where you want to be. Now, I work.

Right. So I'm I'm not in that situation. But I did pull back some from work a few years ago to be home with the kids more. And I look back on that. I'm like, I don't regret that. Right. There may have been some opportunity cost at work or whatever it is, but I don't regret that. So making decisions about things like family and kids and all of that,

if you have the option and that's the decision you make, I don't think you'll regret that because she always will have the ability to go back to school. Now she got a freaking expensive degree to be a nurse and she's going to go home. So all of you 18 year olds out there, that's what happens. You go to school, follow your dream, go $50,000 in debt. Now you want to stay home and be a mom, you know, and, and, and, you know, it's hard. Just, just be aware of these decisions. I want to give a shout out to all the moms out there. Rachel, there's so much mom guilt on either side of you should be at home. You should be working. You should do this.

And I just feel for the moms out there struggling with these decisions. Yeah, and some moms don't have the choice either, right? That they have to be working. You know, so it is. It's a complicated thing at times, George. You've got to do what's right for you and accept that there may be sacrifices needed. Yes, and you guys just had Mia, your little baby. Yeah, she's just turned six months old.

And I think, too, you could plan as much as you want, and then once the baby's here, things shift. You may be like, get me out of this house a little bit, please. Can I get out? Or you may be like, no, I want to be here more. So you can plan, but sometimes that plan even changes. Amen. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Camel, joined by Rachel Cruz. If you want to check out more great shows from The Ramsey Network, be sure to check out Rachel Cruz on YouTube and podcast, and search George Camel with a K on YouTube and Spotify, and you'll find my channel over there. We're making, what, three episodes a week for both of us on top of Smart Money Happy Hour? Oh, yes, yes.

Wow. On top of this show. You can't ever say that we're not, people are like, you need Smart Money Happy Hour every day. I'm like, listen, we got 19 hours of content coming at you guys. That's plenty. We really, we.

Go be with your families. Go on a walk. Listen to some music. You know. We'll be we, go be with your families, go on a walk, listen to some music, you know, we'll be with you once a week. Hey, well, we've been getting a lot of questions about taxes and I get it that taxes can be real confusing.

And so to help you get a better handle on them, let's unpack a question from one of our listeners. What's the difference between a tax deduction and a tax credit? Ah, it's not a trick question, but people get confused i i just uploaded a video about taxes for beginners on my youtube channel today yeah i went on the street on broadway in nashville the answers were hilarious oh like asking just like basic if they knew the

difference between deductions and credits many people were like well tax credit credits like dead so i was like no it's okay so here it is well that's fair context clues So I was like, no, it's okay. So here it is. Well, that's fair context clues, right? If I was on, yeah. Yeah, fair. It's a decent guess. Here's what tax credits actually are. They cut your tax bill dollar for dollar. So if you end up owing $1,000 in taxes,

a $500 credit will slash your bill another 500 bucks. And a tax deduction, on the other hand, is more on the front end. It lowers your tax bill by lowering your taxable income. So you simply subtract the deduction from your income, less taxable income equals less taxes owed. So deductions reduce how much of your income is taxed, credits reduce the actual tax bill on the back end. So if you're confident about filing on your own, we've got a great tool for you, Ramsey Smart Tax. You can find that at ramseysolutions.com slash tax.

That's no-nonsense tax software. We're not going to try to sell your data and sell you debt like the other guys. It's low upfront pricing. We're not going to nickel and dime you. And if you want to work with a pro, you can connect with a tax pro who's Ramsey trusted, again, at ramseysolutions.com slash tax. Well, it's time for our question of the day. Rachel, would you do us the honors?

Oh, yes, I will. Today's question comes from Mark in Florida. I'm 64 years old, retired executive with an encore career, happily married, no debt and $3.4 million net worth. I want to lease a new Maserati that will cost a total of $60,000 over three years. My wife is against it

since this provides no financial benefit. Our net worth and liquidity will continue to grow. Can I afford this lease? Wow. This is an interesting one. Yeah, can you afford it? Yeah, you can afford it. You could afford a lot of stupid decisions. you afford it? Yeah, you can afford it. You could afford a lot of stupid decisions.

Yeah, I was like, you can afford it. It doesn't mean you should do it. It's just that, yeah, I mean, leasing a car, it is the most expensive way to finance a vehicle. And it's going to be you basically just renting a car for three years. So, I mean, if... car for three years so um i mean if it hurts my heart that you're just gonna blow 20 grand every year for fun and then still have to get a different car three years at the end of this so i wouldn't do it just because obviously we don't talk we don't we don't affirm leasing and all that

if they're gonna if they have a 3.4 million dollar net million net worth, just purchase it in cash and you'll still end up in a better spot. Because guess what? After three years, you can go sell that Maserati. How much is a new Maserati, George? Google it. It depends on the actual model. I know you know cars so well, George. Well, I've been in the market, Rachel.

You've been in the market, been test driving some Maseratis. I'm so excited. I bet I'm'm gonna get ads now for maserati they're gonna be like this guy wants a maserati i know i'm terrible at guessing prices of stuff what would you guess they go for because like a maserati i don't even know what it looks like i need to see what it looks you know the oh yeah yeah yeah we're gonna go here we go we're gonna go hey don't don't even know what it looks like. I need to see what it looks like. You know the... Oh, yeah, yeah, yeah, yeah, yeah. We're going to go... Here we go. Don't tell me.

I'm going to guess. I'm going to guess. 200? No. Oh. I mean, I'm sure you can soup it up. Oh, 150? But for like their normal, you know, 63, 85.

And it goes up for there. Really? Now, it's starting from from and most people that buy these they want to soup them up with extra features and you know do custom 63 000 we got a guy that had a honda civic loan for 60 000 with me and jade you know what i might do here's the thing these like ultra luxury cars they tend to depreciate and so what i might do if i'm in his shoes is take that 60 grand and go what used maserati can i get for 60 grand well that or just go buy a new car brand new one just go buy it this doesn't feel like it's worth the juice

ain't worth the squeeze on this but i feel like suvs when we were in the when we were in the car shopping season after we had our third we We ended up with a Odyssey minivan. Mm-hmm. But we did look at SUVs. Like, you know, you look at, you know, Suburbans.

You look at all those. Some of those big boys. I mean, those are like a hundred thousand, like brand new. It hurts my soul. So I don't understand how Maserati,

I'm just shocked. I don't know why. I don't know why I'm so shocked. Should I go get a Maserati? I think it's time. This has now become an ad for Maserati. Anyways, all right, Mark in Florida, go get you a Maserati.

Pay for it in cash. Don't lease it. I'm looking at slightly used Maseratis. They're going anywhere from $40,000 to $60,000, maybe $70,000 for 2023. So if I'm him, I'm going to take that $60,000 and just go buy one in cash. Golly.

What are the other cars that are like insane though? Why did I jump to like- What are you thinking? Like Lamborghinis? Oh yeah. Maybe that's what I'm thinking. Bugatti? There you go.

I've heard of those. There you go. Okay. Maybe that's what I was thinking of. Are those like 200 or am I just crazy? Are there any cars for 200? I mean like a Ford GT is like $300,000. Okay.

Okay. So I'm not off. All right. All right. All right. Well, we're not car experts. Yeah, I don't want to go too far before the car bros come at me, Rachel. They're very aggressive. So yeah, leasing, it's a bad idea.

You're just renting it and you're prepaying that appreciation on behalf of the dealership while they make a whole bunch of money. And the interest rate is hidden in the lease. You don't even know what you're paying interest wise. Like, yeah, it's just not. That's the craziest part about leases. They don't legally have to disclose it because technically it doesn't count as a loan. Oh, it's how they met. That's how they get away with it. Interesting. So they just bake it into the price. And so you think you're getting a deal, but really you're just renting very expensively. Yeah. No, thank you.

All right. There you go, Mark. You do what you want. Go get a brand new one for $63,000, apparently, is what we just learned. But the key word here is my wife is against this. That would be all it takes for me to go, all right, we're not doing it. If you're not in agreement on this big financial decision, don't do it. Yeah. Yeah, that's fair, too. All right. We did it.

We figured it out for Mark. All right. Let's go to Florida, the Tampa we go. Alex joins us there. What's going on, Alex? Florida, the Tampa we go. Alex joins us there. What's going on, Alex? Hey, guys. Thanks for taking my call. Sure.

How can Rachel and I help? Alex, do you own a Maserati? I wish. We'll get you there. How can we help? So my question is, so about a year, more than a year ago, January of last year, I got a new job that doubled my income. Awesome. And when that happened, before I knew you guys existed, I started the debt snowball kind of on my own.

I was like, that just makes sense. I'll pay off the little stuff first. Oh, good. So that's already here. And I found you guys somewhere in there. And the baby steps make sense, and so meanwhile, I've started budgeting and planning for that. But with my career, it's a little volatile. There's been a lot of layoffs lately in the industry, and I'm a little concerned that once this project is over, if it doesn't go well,

I could be, you know, without a job for some amount of time. Okay. So what's your question? Should I, my question is, should I do the emergency fund first just to have a little bit of a fallback before I continue down the debt snowball. How much are you making now? I make $110,000. $110,000. Okay. How much debt do you have? A lot. $375,000, including mortgage. Oh, okay. What about outside of the mortgage? Just the consumer debt? Just the consumer debt is $125,000. Okay okay what kind of debt is that

um a lot of the student loans about 60,000 okay the line of work you're in Alex quickly because we're coming up on a break um are you would you be able to find a new job if the layoff happened uh yes eventually but there's been a lot of... Yeah, if I were you, I would start attacking the debt because the layoff, it's not imminent. It's not that it's going to happen. It's a fear of it. If it happens, you'd pause the snowball and get to work doing whatever you could until you find stability.

That's right, that's right. But hope that doesn't happen, man. Follow the steps. It works. I'm George Camel, joined by Rachel Cruz. This is The Ramsey Show. Give us a call at 888-825-5225. Kim joins us up next in my old hometown, Boston, Massachusetts. What's going on, Kim? Hey, how are you?

Doing well. How are you? Good. How can we help today? Okay. So the situation is that about three years ago, my boyfriend sold his house to move into mine. And the plan was to buy a bigger house for the three of us because I have a son. Obviously, the market went crazy. Don't want to buy another house. So now the thought is he's going to buy in to own my house. So he's going to give me a large chunk of money, put his name on the deed. I don't need to refinance because I don't want to lose my third percent,

but I don't know what to do with the money. Is this deal already done? No. Okay. So I'm confused. How much is he going to give you? He's basically buying equity stake in your house? Yes, exactly.

$50,000. Okay. What's your house worth? About $400,000. And how much equity do you have? Right now I have $200,000, but that's not the mortgage. What's left on the mortgage? Left on the mortgage is $220, and I bought the house for $270.

Okay. So how much equity will he actually have in the house if he does this? Let's say, I'm going to play it out, a worst case scenario. Let's say you guys break up. What happens then? He has 50K in the house. You guys break up. You say, hey, you got to get out. This is my house. I would pay him back the amount that he put in. The lawyers are going to drop the paperwork

so that I would pay him back what he put in plus any additional equity or... Why are you doing this, Kim? Why are you doing it? We're going to get married. So we're gonna get married so like i don't even i haven't even really thought about like what would happen if we didn't so it's kind of like why not get married and he doesn't get married and do it then so he doesn't have to do anything if you guys get married today you're i would not ask my future wife to be like all right once we get married you pay me 50 000 to live in my house now right that's what i was thinking too i was like this crazy do i just tell him to put it into retirement and yes so when we're older that like we have a better nest egg

well i wouldn't even say put it in retirement i would just say let's pause on this whole transaction until we're married and then once we're married you you know you can add them to the deed you can refinance the mortgage whatever you want to do at that point to get him you know financially involved here and combine bank accounts but this is a really messy situation when you don't legally when yeah because when you're married you have legal standing right to be able to split assets and all that you don't have any of that kim um so and it's going to be messy because you're saying 50K plus equity. Well, how much equity? Is it a percentage? Is it a number? Right, right.

I understand what you're saying. Yeah. And we're on the unfortunate side of this call, Kim, that we have received your types of calls when you break up and they're like, my boyfriend, we thought everything was going to work out. And how do we do, you know, and it ends up just being this complete mess when you do things financially with people you're not married to. And so, yeah, we really advise that keeping everything separate. And then when you guys get married, then you're able to combine finances, which is awesome. Because then you're like, oh, great. We'll have some extra money here. His name can go on the house then.

And you guys own that together. And you really see yourselves as one at that point but i would not do anything until you're married okay that makes sense so when we do get married what should we do good yeah i would hang on to it because you who knows what expenses you're going to have wedding we need to do this upgrade we need to do this so i would leave that money you. Do you guys have debt? Yeah. Are you debt-free and is he debt-free? No. Yeah. We're both debt-free. I have about 50,000 in liquid assets right now and then my retirement. Oh, great. Awesome. You guys invest 15% of your income. If you have the emergency fund, he has his emergency fund. Keep it separate. Both of you invest 15%. Any money beyond that, you can just stack up and you're going to need it in the future. Both of you invest 15%. Any money beyond that, you can just stack up and

you're going to need it in the future. And if you don't, let's throw it at the mortgage once you're married and he's on the deed and the loan. Okay. That makes sense. I like that plan. Yeah, I do too. I hope we talked you off the ledge, Kim. It just scares me every time. Not because we want to be mean, but because we've just seen too much on this show and everyone wants it to work out on paper and then life happens and it probably will work out right you guys will you know you'll get married and it all it all be great but it's always that it's a risk when you start combining finances before you're married yeah i mean this feels like a

weird episode of shark tank it's like i'm gonna give you 10% equity. I'm like, this is a love relationship, not a weird business partnership. Yeah, yeah. But I'm pulling for you. All right, let's get to another call. We've got the time. Hadley is in Winnipeg, Canada. How exciting. What's going on across the border, Hadley?

Not too much. Pretty cold over here, but good to talk to you guys. You as well. How can we help? I just have a question about my truck loan and um me and my wife got married uh last june and uh we're we're pretty young but um we're gonna have our first kid in uh august this coming august so congratulations thank you very much yeah we, we're just kind of debating on what we should do with our finances.

Like we have, we're in the process of putting all of our stuff together right now. And my truck, I had, I bought it a long time ago, or I guess a couple of years ago. And at the time, I didn't know about you guys

and pretty big purchase, especially for my salary at the time and even now. But I've paid off quite a bit of it. And I'm just wondering if I should leave it and just pay off the rest or if I should sell it and whatever I can make off it. I think I could make a little bit off it based on how much I have paid off already. What's left on the loan? I have $22,000 left on the loan. And you're saying it's worth $23,000?

It's probably worth more than that because, well, this is based on private listings. I can't tell you exactly what it would be worth, but I'm guessing at least $25,000. Okay. So let's say you went through with this. you sold it, you, you bank $3,000. Now you need another vehicle. Yeah. And then the problem I'm having with getting into different vehicles, everything I've looked through a lot and my dad, he's a, he works at a dealership and he's looked for me too. He's a mechanic as well. And everything that's out there is really high in price for what you're getting, and lots of it is just completely mild out at the price range that I was expecting to get into. How much do you have in savings?

Together with me and my wife, we have about $12,000, maybe a little bit more than $12,000. In savings? Yeah. Okay. How much do you guys make a year? She, I can't tell you exactly how much she makes a year, but because she's having a kid, that will be gone right away. So that's kind of why we're debating this.

I make, after taxes, I make like $41,000. And she's going to stay home? But what is she going to make between now and August? She makes about a month. She makes about $1,400 after taxes. $1,400 after taxes? Yeah. Okay, okay.

So you've got about six months of her continuing to work? Yeah, and yeah, she's going to stay at home. Okay. Are you guys going to be able to cover all the bills? Yeah, I'll be able to. I went through on every dollar, and I made a budget, and it'll be tight. And that's kind of why I would like to get rid of this. I'm looking to get rid of this truck loan.

Yeah. Well, with a baby on the way, there's also this element where you may want to pause the steps and stack up cash to make sure we have plenty of money. So I may wait on all of this until baby's here in August. And if mom and baby are home safe, we have a giant pile of cash, then we can sell the truck and upgrade to the next car in cash. Yeah. So you're saying hold on to the truck for now, save up cash, and then... Because unless... The other thing you could do is sell the truck now you got three thousand out of that deal take five thousand take five or eight out of your savings and go get an eleven thousand dollar car that gets you around i mean your dad's a mechanic so

get a pre-purchase inspection from him and uh get a reliable make and model yeah but keep the rest of that money in savings and then just stack up cash from there on out. Yeah, because how much is your car payment every month? For the truck? Yeah. It's $640 a month. Yeah, I would get rid of the truck. I would do that. I would do what George said. Take a couple thousand out of the savings.

That'll add an extra $3,800 to your life. Exactly, yep. I'd get rid of it today and then don't do anything else big. Wait till the baby's here and then you guys have your emergency funds basically funded, which is awesome. Yeah. Keep saving on that. And then you got no debt, emergency fund and a different car with no payment on it, my friend. Great. Congratulations. Welcome to the baby club. So fun. This is The Ramsey Show. Welcome back to The Ramsey Show.

I'm George Camel, joined by Rachel Cruz. Open phones at 888-825-5225. Rachel, I don't know if you know this, but there is a retirement crisis happening in America. Is there? Here's the stat that shocked me. Nearly half of Americans aren't saving at all for retirement. And those who do aren't saving enough. So for those of you, maybe you're in your 40s or 50s, retirement isn't a far off dream at

this point. It's a fast approaching reality. And we get tons of questions from people asking, do I have enough money to retire? How is this actually going to work? And people that listen to the show, they want to retire with dignity. It's a goal. But sadly, many people, they're not that serious about saving for retirement. They haven't made it a priority. So let's get a benchmark of what the average person in their 40s and 50s has saved for retirement. You ready? According to a recent survey or a study done by Ramsey Solutions, the average American in their 40s has an average balance of $93,400 saved for retirement and contributes 8% of their income towards

retirement. The average American in their 50s has an average balance of $160,000 and contributes 10% of their income into retirement. So with those averages, though, it's still, it's not enough. No. So here's the deal. If you're doing these five things in your 40s and 50s, you are not serious about saving for retirement. So we're going to call this. If you're doing these five things in your 40s and 50s, you are not serious about saving for retirement. So we're going to call this five signs you're not taking retirement seriously. Number one, you have no goals. Oh, man. I know.

It hurts to hear. But we've realized, Rachel, retirement is not an age. You don't just get to retire at 60. Right. Because the government said so. It's a financial number. And you need to know that number. And you can use our free

retirement calculator to do that on our ramsaysolutions.com and set a goal for retirement savings. Now, obviously, we have no magic eight ball to go, well, you're going to have 4.8 million if you just do this. We don't know what the market's going to do. But we do know if you consistently invest over time, we know what the average track record has been of the stock market with mutual funds, that you'll have a good nest egg. That's right. Next, when you know that you're not serious about retirement is that you're not saving 15% of your income. We just saw that in the stats.

The average salary for Americans in their 40s is around $59,000. And if you started investing 15% at age 40 and did that every year until you retired, you would be a millionaire by 65. Wow. From 40 to 65, it's still possible. Yep. Making $59,000 if you never get a raise. And 15% of your income. So this is why we always say in the baby steps to pay off your debt first, get your emergency funds, and then you actually have money to do 15%. Because I think for a lot of these- They're just doing too many things at once. They're trying to pay off debt. Yeah. They don't have the cash to be able to do it all.

They can't put 15% away. That's right. That's a huge problem. All right, next sign you're not taking retirement seriously, you still have consumer debt. You're still hanging on to that student loan, the credit card balance that you were working to pay off. Well, we did the HELOC too for that pool

because we needed the pool for the kids. And here's the thing, debt is actually just borrowing from your future, which is not a good plan if you want to retire's the thing. Debt is actually just borrowing from your future, which is not a good plan if you want to retire in the future. So use the debt snowball method. It's the one you hear about on this show, smallest to largest balance, regardless of interest rate, and focus on paying off all consumer debt other than your mortgage. And what that does is free up debt payments that you can now use to invest that $700 truck payment. it's a beautiful thing amazing it's a beautiful thing uh next one of these this is why you're not serious about retirement is that you

overspend on non-essential costs of living cost of living is the top reason people don't save for retirement the average american spends 1500 on non-essential items every month it's almost 18 000 a year on things like eating out, impulse purchases, and subscriptions. So cut your cost of living. That's true. And we had a call earlier, Rachel. A guy had spent, what was it, $68,000 on credit cards largely from door dashing. Yes.

From using door dash to get food out of convenience. Yes. So these non-essential costs, the subscriptions, the door dashing, the whatever it is you know pick your your poison right it's at it adds up every single month in compound so you got to cut things out that's right and that's hard to do right we i mean we talked to so many people here on the show that they cut their cost of living way down to get margin to pay off debt and they do the sacrifice i mean they do it all so it is possible it's not always fun but then on the on the flip side you really, oh my gosh, I have so much crap and stuff that we just don't need. We don't need the 18 subscriptions that we're paying out. And even physical stuff. I mean,

have you ever passed a garage in your neighborhood and you can't put a car in there? It's just become a storage unit of just crap that we might use one day or we used to use. Or it was stuff from grandma and we just can't get rid of it because it's sentimental. I'm like, guys, we have an obsession with stuff. All the things. Yep. All right. Last sign you're not taking retirement seriously.

You knew we were going to say it. You're not doing a budget. Having a monthly budget is the foundation of winning with money. Budgets are not for broke people. They're not for when you have money. It's for people who want to have money and want to keep that money. You got to know where every dollar is going and you can sign up for our free budgeting app at everydollar.com. Every dollar is named after the zero-based budgeting method where you give every dollar a

name, income minus expenses equals zero. I will forever be thankful for budgeting because I am such a spender and we were doing our every dollar app because it's the it was the end of the month right we're about to we're starting a new month and I was closing it out and those dang transactions just kind of kept coming in I'm like crap crap and I'm sitting there and it's just it just keeps you accountable so you're right it's not Amazon Amazon even on baby step seven you want to be yeah you want to Venmo Venmo Venmo you want to be doing a budget because you want to be able to say this is where my money's going. And it is, it's like a mirror in front of your face. I mean, like, this is what I'm doing. And you're actually seeing it. And if you're not budgeting, so much money just slips away

and you don't even realize it. You really don't realize it. So being accountable in that way, it is so good. It's so good. That's huge. And what's beautiful about investing is you don't have to overcomplicate it. I mean, we've got a Roth 401k here at Ramsey, so you can do all 15% of your investing into that Roth 401k through your employer. And if you just invest a menial amount, I mean, we're talking a few hundred bucks a month, which may sound like a lot if you're drowning in debt payments and you don't have a few hundred bucks. But most people, if we got out of debt and we had the emergency fund, we can find a few hundred bucks to invest.

Yeah, that's right. But if you invest 15%, goodness gracious, you can build some serious wealth while having margin to help cover kids' college and pay off the house early. And when you're in baby step seven with no mortgage payment, you can increase investing. Yes, that's right.

And build exponential wealth. And so I have less empathy for people that say, well, you can't be a millionaire today, Rachel, because it's easier than ever. If you just get this on autopilot, start as early as you can. Best time to plant the tree was 20 years ago. Next best time is today.

So I feel like the old guy. Yeah, that was a grandpa saying. It is. But I love it because it's just like, listen, I get that you're 45 and wish you got this stuff sooner, but it's not an excuse to not invest. Well, and the reality is it's going to happen.

Like retirement, right? At some point, you won't be able to work. Yeah, that you live up to that age. I'm like, you're going to want to retire. So you'd rather have some money than nothing. So starting that, but it's creating new habits. It's creating a new mindset. If you're not doing it now, putting that a few hundred dollars away it it can feel like oh my gosh like this this feels scary or i don't know

if we can do this but there is something powerful about actually doing the action and once you start doing it and it becomes the norm then you're not thinking about it again because you're like yeah this is just what we do it becomes a part of your identity right the atomic habits he talks about that that it's an identity thing if i am a person that saves for retirement, that's who I am. The amazing part is you just over time learn to live on that smaller amount of money that ends up in your bank account. Because 15% already left your paycheck before my bank ever saw it. That's right. That's right. So you just learn to live on that smaller amount, live on less than you make. We teach that all the

time. And I know future George is going to be real happy about this. I always say that. Future Rachel's going to be bougie. Yes. I can feel her. I can feel the nice trips. And do not rely on social security. That's going to be icing on the cake.

Gravy icing if you're in Canada. If it's even there when we're there, George, have you read all these articles? Oh, yeah. They're saying, hey, it's going to be down to 80% by 2034, and it could be gone. I know, y'all. How scary is that? I'm like, what are we doing? So anyways, yeah, depend on yourself and you guys can do it regardless of what age you are. Start this now. There's no reason to call us at 64 and go, I have zero in retirement. What do I do? I know, and people do though.

And they go, oh, and I can't work anymore. Well, now's a tough time to be calling us. Get a time machine because I don't have a magic silver bullet that's going to help you retire with dignity and live all your retirement dreams. Yep. So that's my plan is have more than I need. And then I can leave it as an inheritance to my children's children. That's right. And cover their colleges. Quoting scripture.

Did you see that lady who donated to the university a billion dollar donation to the medical school? I did see that. It's amazing. Yes. Who was she? I didn't read the article. She was a board member and professor and her husband was very well to do, left her a bunch of money.

And she said, you know what? He said, do what I want with this. I'm going to give a billion dollars so that no medical student has to pay tuition ever again. How incredible is that? That's amazing. So there you go. There you go. That's one thing to do if you're a billionaire. Bye for that school. So take retirement seriously. Go to ramseysolutions.com.

We have tons of resources there. And of course, get your every dollar budget going. Everydollar.com. Get started for free today. That puts this hour of the Ramsey Show in the books. I'm George Camel. She's Rachel Cruz. Thank you to the Booth Folk, keeping the show afloat. And you, America, will be back before you know it. you