The Ramsey Show - A Life Built on Debt Is a Life Built on Risk

Starting point is 00:00:04 Brought to you by the every dollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm George Camel, joined by my good pal and co-host of Smart Money Happy Hour, Rachel Cruz. We're taking your calls at AAA 825-5-225. Mohamed kicks us off in Halifax, Nova Scotia. It's a fun place to go. What's going on, Mohamed? Hi, how are you?

Starting point is 00:00:41 Good. How can we help today? I have a question. So my grandmother is going to visit me in July. Now, I love her very much. This is more of a love question. I know it's not one of the most smart decisions to make. I drive a really nice car right now. I drive a 2022 Nissan Pathfinder.

Starting point is 00:01:01 I paid all cash for it. Good. And now when she's coming, I want to get an even better car just because I would love. the spoiler with an even better car. Is it wise for me to sell this for, I'm going to probably be able to sell this for 35 and buy around a $90,000 car?

Starting point is 00:01:23 For your grandmother? I'm so confused. For her to keep? Yeah, no, no, not for her to keep, for me to keep, but just, it's just I'm making an impulsive decision because she's coming and I really want her to see how. how well I'm doing for myself. So you want to make a six-figure impulsive decision to impress somebody who's there temporarily

Starting point is 00:01:46 so that they think you're doing better than you are? No, I am doing. I can easily, I could pay full cash for that car. That wasn't the question. The motivation is what we're asking about. Oh, it is. Yeah, basically. Does she actually care?

Starting point is 00:02:04 All people in the world, nannas love their grandchildren. I was like, there's what they're like. I'm feeling she would appreciate having like massage seats and, you know, and just like, are you, how often are we getting? Are we living in this car for five months? Is this a joke? Is this, are you in for real? No, no, no, no. I am. I'm being very free.

Starting point is 00:02:23 I went and checked out the car yesterday. I told the guy I'd come around like five or six o'clock today and tell him if I wanted or not. What car is this? It's a Yukon. What is grandma need a Yukon for? Is she sleeping in the back? Is there a mattress? Oh, no. It's also because what my brain grandmother comes. Are you single?

Starting point is 00:02:43 How old are you, Mohamed? I am single. I am 22. Okay. I kind of wish you were married because your wife would slap you right now if she heard this call. This is insane. No, yeah, I know. It's like it's insane. But my parents, like when my grandmother comes, she's like a magnet. So when she comes to, like, North America, she's going to all of her relatives. She's coming from India, my home country.

Starting point is 00:03:09 Okay. And in their culture, is it big to like, hey, look at how impressive my life is? It's not as so much like that. How much do you make a year? So I currently own two companies. I started one when I was 16 and one I started six months ago. The one I started when I was a clothing company, which does really well for itself. It has non-employees full time.

Starting point is 00:03:34 I maybe go there twice a week to just look at stuff. Way to go. But nothing. Just to like the warehouse we have. So what did your taxes show last year? What did you bring in? What was your taxable income? Last year I pulled in around $250.

Starting point is 00:03:50 Amazing. Dude, you're crushing. If I'm grandma, that's what I'm proud of. Not the car upgrade. Or just you. You're successful, bright young man. She loves you for you. Yeah.

Starting point is 00:04:00 And if a car is going to be the ticket for her to love you even more, this relationship is built on a farce. Oh, no. It's not like he's going to love me more. because of the car. No, you just want to impress your grandmother. They just rent a car for five months if you want to impress her. No, Mohammed, you got to, like, you got to detach your identity from all this stuff.

Starting point is 00:04:18 This is not who you are. Like, if you woke up tomorrow, if you woke up tomorrow and you're driving a Honda Civic, would that absolutely trip you out? And if it would, then I would ask some deeper questions of what's going on. How much your identity is wrapped up in this? I have a Honda Civic right now. My second car is a Honda Civic. So you have two cars?

Starting point is 00:04:40 I use it for short trips. Oh, my gosh. Yeah. You got two cars. I use it for short trips. Okay. I think you need some problems, Muhammad. Right now you don't have enough.

Starting point is 00:04:49 Oh, gosh. I do. I do my own. You need some reality. And you've done so well, and I think that's caused you to go, well, I have to live a certain way because I've done so well. And the more you can realize that your identity is not wrapped up and stuff and how much money you make, the better relationships you're going to have and the better life you're going to have. Listen, we're not mad at $90,000 cars. And if you can pay cash for a $90,000 car, and that's what you want, Mohamed, because you want to upgrade your car, you enjoy cars and whatever the motivation is.

Starting point is 00:05:17 But asking yourself, if nobody sees this purchase, would I still want it? And if the answer is, yeah, I still would. I would still want this. Like, if that was your, if that was the beginning of this call, it would be a green light for me because I think you could afford it and you would be fine. But what I'm scared of is that if you make this purchase because of the motivation, you're going to be a good thing. that you just explained to us. You have set up a pattern in your life and a lane which is unrealistic and unfulfilled.

Starting point is 00:05:46 It's an unfulfilling lane that you're setting up, that if I just get this purchase, I'm going to feel good from the ego stroke of my grandmother who says, like, oh my gosh, you're just amazing and look how successful you are. Whatever you need from her, whatever that need is, that need is still going to be there. And you're going to look to other people to fulfill it.

Starting point is 00:06:04 And so I want Muhammad to be content and happy with what Muhammad has, regardless of what anyone thinks, and especially grandma. I mean, my gosh, grannies and nannas, they're like the number one fan of grandkids. I know. She will be happy to be in a Honda Civic, you know?

Starting point is 00:06:21 What is she driving? That's the question. What she used to? Is she rolling around and rolls royces? No, what she, well, my parents do very well for themselves, too. And they have obviously spoiled my grandmother a lot. And her husband did very, very well. So my

Starting point is 00:06:37 grandfather who just passed away this January. So she drives, she does not drive, but she gets driven around in a Toyota lane cruiser, which, according to their family. You do. You come from a successful family and you want to graft into that message that's been told to you. And what we're giving you is a different perspective on life. And again, it's not that this stuff is bad. But when the stuff has you at that point to the point that you're going to go and make a purchase, again, solely out of wanting someone to feel good about it and feel good about you because of this purchase, all of it. I just don't like the motivation. And I think it's going to end up, you're going to end up in a, like a rat in a wheel,

Starting point is 00:07:20 running and running and running your whole life because it's not going to be a grandma next. It's going to be the girl next. It's going to be a parent. You know what I mean? Plugging anybody. And then the goalpost moves too. Because now it's like, well, you don't have a sports car. you'd be nice to add a Lamborghini to the mix if you really want to keep up.

Starting point is 00:07:35 And then it becomes a lifestyle you can't keep up with. Even if you can afford it, you admitted this is impulsive and there's better ways to spend this money, right? Do you have a mortgage? No, I currently rent. That was my second question. I have two options right now. I rent a two-bedroom apartment. I live alone.

Starting point is 00:07:52 Don't need two bedrooms. I know that's great, but I like an open space. Now that grandma's coming and she's a magnet, she's going to pull maybe my parents or my brothers and everything. here. Hence, I'm going to need a little bigger of a space. I was talking to a realtor yesterday, and she showed me this house that's up for sale for $3.95. Now, I could scramble and gouge and get that $3.95 to get that house. And she gave me a second option. Near where I live, they built new townhouses that are up for rent. I currently pay $2,500. Those townhouses are up for $3,500. It's all the same philosophy. No, I would not be making it.

Starting point is 00:08:31 An impulse, I would not make an impulse decision on buying a house, Muhammad. They can afford to go stay somewhere. Wait six months and wait until they leave and then you make a decision for your future for you. No, we do not need to be impulsing townhouse. If I was going to drop money, I'd rather be on a house than a car, but do it for you and for nobody else. Listen, identity theft doesn't just happen just because you're careless. You can do everything right and still become a victim, whether your information is skimmed online, stolen through a scam, or exposed in a data breach, which happens every day. Then it becomes your problem, your time, your money, your paperwork galore.

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Starting point is 00:10:03 Zander is how you fight back. Patty's up next in Salt Lake City. Patty, welcome to the Ramsey Show. Hi, how are you? We're doing great. What's your question today? Good. My husband has worked for his parents, his family farm for the last 31 years.

Starting point is 00:10:36 They're super controlling. Is it crazy for me to expect the plan for succession? They control his salary, his time. They even control the house we live in. We paid for half of the house, and they refused to put any of it in our names. Like, we can't even remodel it. I went to them because it's built in the 70s. I have like electric blue bathrooms.

Starting point is 00:11:00 I asked them to remodel it or he wouldn't ask them. I asked them by a letter. They wouldn't even respond, but they told him that I wasn't grateful enough for the house that they provided for us. But we paid half of it. So it's paid for in cash, but they paid half you paid half. Yes. This is insane, Patty. You know that.

Starting point is 00:11:27 I know. Nothing about this is normal. Okay, so on one end of the spectrum, they control his income and time, yada, that would be like having a boss, right? You're the company. You could say Dave Ramsey controls my income and time. Yeah. So there's a level of like I'm working for a person and they have set up a company in a certain way. But the housing situation for sure is not, yeah, you guys are not in a good spot because if the house is not in your name and you put half of your money into it,

Starting point is 00:11:57 You legally have no assets, right, from a home perspective. Correct. So what is your husband saying? These are his parents. Does he see that as not good for your future? He doesn't really mind. He thinks that they will just be fair when the time comes. But my thing is I will ask him, like we have no retirement plan with

Starting point is 00:12:27 him because of course you expect your ground on a farm to be your retirement plan. And that is fine. When we started this 30 years ago, we used to have family meetings and it would be like, oh, we're going to let you start signing checks. We're going to let you do this. We might have you buy some more ground and put it in your name. None of that ever came to fruition. And so now, here we are 30 years later.

Starting point is 00:12:55 You're in a bad business, too. Yeah, you're in a bad business deal. If they were going to be fair, they were done by now. So that's a marriage problem, Patty, between you and your husband, deciding what you want your life to look like. And it's as much his fault and your fault as the parents' fault. They've just set up the life they want, and you guys have chosen to go along with it until you're fed up and you've called this show.

Starting point is 00:13:18 So at that point, it's going to be, yeah, you and your husband have to figure out what you want your future to look like in a pretty big way. because it'll probably, if you do it the right way, I think, the healthiest plan is going to include a lot of boundaries that have not existed for 30 years. And I don't know if his parents will be up for the task, but your husband kind of asks to decide, do I want my future and my marriage and my family to be taken care of? Or am I going to just still be a child and still do what mom and dad say, right? I mean, to a degree. Oh, absolutely. I don't think they're going to take kindly to him all of a sudden having a degree.

Starting point is 00:13:54 a backbone, do you? No, no. They won't. And he knows, like he tells me he's stuck between a rock and a hard place. And when I ask him, I'm like, so basically we can't make a plan for our family. Yeah, you're trapped. I mean, you can't even get the money out of this house because you can't even sell it. No, we can't.

Starting point is 00:14:15 I mean, my question, Patty, why did you write them a letter? Why did you not just call and talk to them? Is the relationship strained right now that you can't just call and have a discussion about it? I can talk to my mother-in-law, but the father-in-law doesn't talk him home, or, you know, or he doesn't talk or, you know, he doesn't want to. So I just thought it will be easier than I could just express myself a little better with that. And I thought my mother-in-law would call me back, but she didn't. And then she just went to my husband and she wouldn't even show it to my father-in-law because she said, I wasn't grateful enough. Because he's very...

Starting point is 00:14:51 There's some narcissistic behavior that I'm capturing. here. And I think this is going to have to come between your husband and his parents. It's your, yeah. I mean, at this point, Patty, it's you and your husband that it's the issue. There's a marriage issue between you and your husband and your husband. And there's a business family issue between your husband and his parents. And it's going to get awkward. And for him to continue to choose them over you, Patty. That's what hurts. That's where the resentment is coming. I mean, I hear it all in your voice, which I get. I would be pissed too, probably. But also, have you said anything for 30 years?

Starting point is 00:15:21 Oh, yes. Lots of times. Lots of times. And so what does he say? What does your husband say? He just shut down. He's shutting on it. You guys need to go to marriage. You guys need to go to marriage counseling. You'll have a breakdown in your marriage. Well, we tried that.

Starting point is 00:15:35 He showed up for two times, and then he wouldn't do it again because they told him that it was crazy too. Okay. So, well, Patty, you have some decisions to make about your life. So I don't know if we can fix that on a seven-minute call. I'm so sorry. Fixing 31 years of toxic relationships. Yeah.

Starting point is 00:15:51 So, I mean, it would, I mean, there would be some ultimatums for me. not for like, not in a threatening way, but just in a, hey, I'm sick and tired of this. And I don't feel safe. I don't feel like we have a future. I don't feel secure. I have a lot of fear. I don't like how I've been treated in this part. And Patty, if you've had stuff in the past that you've done wrong, admit that too, right?

Starting point is 00:16:12 I mean, like, it's all their fault. I'm sure there's been tiffs and tafts throughout the years. But if my, but yeah, if I'm married to a guy and as a wife that you're saying all these things, and he doesn't at least listen, take into consideration, have conversations about it, figure out a way to make this life work for you. I don't know what else. I don't know what else tell you. Yeah, that's kind of what I thought.

Starting point is 00:16:37 And he makes it like when I say, so basically we are not going to know what we're going to get until your parents are no longer with this. And he'll go, so now you want my parents dead. And I'm like, that's not the case. This is just common sense in planning. And so, well, then you guys need a, yeah, I think an ask would be that we need to create our own retirement plan. How old are you guys? 55 and 52.

Starting point is 00:17:04 Okay. Well, I would say for me to feel secure, I need a path of retirement that has nothing to do with your family and the farm because nothing is documented. And so there's not security there. We don't have security in it because we don't know what's going on. And so I want to start putting money away for our family in retirement, right? And you guys put that in the butt, you know, and I don't know if he'll go for it, but that's what, that would be a plan. Are you working outside the home patty or have you? I have.

Starting point is 00:17:35 I have. So about 10 years ago, I started my own business and I was super blessed. And so I have been putting away for me, you know, we're putting into retirements and stuff, set plans. Ross plans. Good, good. That's what I would be doing, is creating your own little island to be insulated from the chaos that could ensue. But, like, I was just told, like, that he's like, well, now you're becoming financially independent from me and you don't need me. And I was like, yeah, that's been part of my plan because you just didn't care for our family and you just do everything with your family.

Starting point is 00:18:14 So I had to take care of myself. So I have been blessed to be able to do that. Yeah. I would continue that. Yeah, and conversations moving forward, something John Deloney always talks about is the more you point the finger, your family, you know, all of that, immediately defenses go up. Like, that's just human nature. You're immediately, he's going to want to defend himself. And, you know, I mean, that's natural.

Starting point is 00:18:39 So as much as you can talk about you, Patty, and what you can control is you and what it's doing to you. and that's how I would approach the conversations with your husband. But yeah, you guys need some deep untangely. And there are a lot of generational farmers that we've talked to on this show. That's very difficult from a financial perspective, a passing down generationally between siblings. I mean, there's just a lot there. And people have done it really well and communicated. Very clear expectations.

Starting point is 00:19:13 Everyone is in the know. it's, you know, very, very, I don't know, it's been very clear. This sounds like the opposite, Patty, that it's very, very muddled and a lot of questions. All you can do is continue to ask for clarity and set up your own boundaries and set up your own financial world, not because you don't trust your husband, but because you need security in your own life, whether that's with him or without them. You deserve that. So I appreciate the call.

Starting point is 00:19:40 This is going to take a lot of untangling, and I don't know that you can do it in their lifetime, but I hope there's a lot of redemption and healing on the other side. Hey guys, health care is one of the biggest stress points in your budget. It's confusing, and most of the time, it feels completely out of your control. But there is a better way to handle it. Christian health care ministries isn't health insurance. It's a health cost-sharing ministry where Christians share each other's medical bills. And it's not a new idea. T.HM has been around since 1981. It's predictable and proven. And they've shared over $13 billion in medical bills for their members. Plus, you get more flexibility. There are no network

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Starting point is 00:22:20 Joseph is in Columbia, South Carolina, up next. What's going on, Joseph? Hey, what's going on, man? Not much. I am 24 years old living paycheck to paycheck, have been since I was 18, can't never seem to get ahead. I'm just trying to figure out some way to get ahead. What do you think is the cause of that? If you look back over those six years? I've just just been one thing after another. Every time I get ahead, get money saved up, whatever else, something happens, something breaks, something, and I just, I can't never seem to get ahead.

Starting point is 00:22:57 So you got a lot of emergencies. Murphy's moved in with you. What's your income right now? Has it been going up over those six years? No, not really. I'm making 22 an hour right now, which would be, what, like 40? a year. Yeah.

Starting point is 00:23:12 What are you doing in that career or that job? Right now I am a service technician. Okay. What does the latter look like in that world? If you were to move up and up and up. I can move up pretty well within probably the next, I've only been doing this for six months now. But majority of the time, within about eight years, I can move up to a position where I'm making and a hundred grand if I work really hard at it.

Starting point is 00:23:44 But right now it's just trying to make it to that point. Yeah. How much debt do you have? I'm sitting at $26,000 in debt. Break that down for us. What types of debt, what's the balances? I have $15,000 in debt on a truck loan. I have $6,000 in debt on a boat loan.

Starting point is 00:24:07 And then the rest of it is stuff I did when I was younger, and stupid and it's like Amazon affirmed stuff. Buy and out pay later. Okay, so what I'm hearing is you said, man, life's just been coming at me. I've never heard of a boat coming at you. You know what I have? That could be kind of scary. But you know what I mean?

Starting point is 00:24:27 Yeah, that's true. But you see what I'm saying here? If I looked in the mirror, I go, man, like, yes, life has happened. There have been some emergencies, but that's not the problem. The problem is I want some stuff, and I can't wait until I have the money to buy the stuff. so I'm going to borrow money from other people. And so if we can get out of that mentality, then we can get you out of this cycle.

Starting point is 00:24:45 But it's going to have to start with you saying, I'm done with debt. I'm never touching this stuff again. Tried it, got burnt. I'm going to sell the boat. I'm going to work those three jobs. I'm going to live on nothing in the meantime so that I can get an emergency fund so that it's a never getting to debt again insurance plan. Well, the thing about that is so when I turned 18,

Starting point is 00:25:09 my grandma had had some money she left to me. It paid for my truck and my boat. I didn't know anything on them. I bought them right out in cash. My truck broke down five years later. I had to buy another one. It was that big of a money pit. It had to buy another one.

Starting point is 00:25:24 My boat motor that I had, it blew up, had to buy another one. I'm in my boat any and every chance I can get. Okay, Joseph, Joseph, Joseph. We got to change our language, okay? You did not have to. No one had a gun to your head that you. you had to, okay? You wanted to.

Starting point is 00:25:43 That was a want. Well, yeah. Okay, so just, I'm being for real, though, because when there's a mentality of this thing breaks, so that means I immediately, and you're normal. We get calls like this all the time. People, this is people's mentality. Well, there's no other option. I have to go.

Starting point is 00:25:59 I have to go and get a car. And I have to go and buy a new boat. I have to. No, you don't. You really don't. I mean, you'd like to. Yeah. I mean, like, you could, you could get a ride from a friend.

Starting point is 00:26:14 You could bike. Like, do what I'm saying? Like, I know those are not. I know those are not realistic. You could get a canoe. Those are not realistic. I get that. But the point is, when you start separating needs and wants from like a very extreme degree,

Starting point is 00:26:28 it causes you then to say, okay, this is not a need. I now have to make other decisions of debt is not on the table. So that means I have to go by a 2,000. $1,000 truck that barely puts, puts, puts down the road, but it's going to, but that's what I can afford. I don't have money for a boat. So I'm going to have to say no. I'm going to say no to myself. I can't get a boat. So there are this, you do have to filter through some of these decisions because that has what's caused you to be here. And when you go that extreme, Joseph, which just sounds extreme. But when you do, I'm telling you, every purchase you make, you're going to be thinking,

Starting point is 00:27:06 do I need this? And in this point of you getting out of debt and all of it, a lot of it's going to be like, nope, I don't need it. Nope, I don't need it. And Saturdays, I'm going to be working. Sundays I'm going to be working because I need to be making some extra money to pay all this stuff off. And then once we have money, then we can start saving towards goals of things that we want because boats are not bad and trucks are not bad. But the way we've gone about them has caused a lot of stress and a paycheck to paycheck living because you have payments. Like if all those payments were freed up every month, you wouldn't be paycheck to paycheck. Yeah, what's your truck payment? My truck payments actually, it's only $426. Okay, do me a favor. Never say only in front of a payment again, Joseph. You hear that? Because that was you justifying the payment. Yeah.

Starting point is 00:27:51 You don't have that money. You're living paycheck to paycheck. $425. That changed your life. That was just sitting in your account months a month. So we got $4.25 on that. What's the boat payment? The boat payment is $1.16.

Starting point is 00:28:05 Okay, and then what are the rest of those payments for all the other stuff you mentioned? One of them's $60, the other one's $80, and I think the other ones, there's one more, and it's like $60. Okay, so we're over $700 in payments. Yeah, $750 is what I have. So if I gave you a $700 raise, would that help you get out of this paycheck-to-paycheck cycle? It definitely would. You see where we're going with this? It's time to aggressively attack the debt with no other folks.

Starting point is 00:28:33 You don't need to be on a boat. You don't have time. You're going to be working too much. That's the great news. So what could you sell the boat for today? Not much. It's a piece of junk, honestly. The motor is the only thing that's worth anything.

Starting point is 00:28:45 And that's because it's brand new. I'm so confused. Did you buy it as a piece of junk? So, no, I bought it in 2018 as a decent boat. And over the years, it has proven to be a piece of junk. It sounds like you destroy everything you touch. So you put a $6,000 motor on a... Piece of junk.

Starting point is 00:29:06 Oh, no. Joseph. See, bad, right? Not good. Would you agree? I do. Okay, great. I'm glad we're like tracking.

Starting point is 00:29:18 Some people, you know, you don't really track. We're tracking with Joseph. Yeah, we love Joseph. I'm not trying to justify it, but at the time, at the time. Continue, this is going to be good. 60 to 80 hours a week. I was making the money. It wasn't a problem.

Starting point is 00:29:33 but life happened and you have risk in your life and suddenly it does become a problem when things change. That's what happens with debt. That's what happens with debt. Everyone's fine. Everyone can afford the house payment. They can afford the car loans. Everything's fine until there's a job loss. Until a kid gets sick.

Starting point is 00:29:51 Until whatever life happens and you've built your life on risk and it all comes to tumbling down. So, Joseph, I'm excited for you. I feel a lot of work in Joseph's future. I can wait. And I really think Joseph is. you can get out of this. Yeah, Joseph, here's the truth. When I was your age, I was $40,000 in consumer debt,

Starting point is 00:30:08 and I wasn't even making $45 grand like you are. And I got out. And the way I did it was by cutting my expenses down to nothing and working two, three extra jobs. And then all that margin I created by doing that, I threw only at my smallest debt. The rest you're going to make minimum payments. That's called the debt snowball method.

Starting point is 00:30:26 Then once you get rid of all the debt, now we can focus on savings and our emergency fund. So hang on the line. I'm going to give you every dollar. budgeting app, that's the one thing it does is it helps you create margin to throw at your debt, but you've got to actually do it. You've got to look at that budget every day because that's going to be your ticket to saying no to the next thing that's going to be happening to you that you had to do. Hey, Joseph, call us back, though. We're cheering you on. If you need help through this process,

Starting point is 00:30:51 we are here because I really do believe in two years your life could look so different. You're going to be a success story. Hang on the line, we're going to get you every dollar and a copy of my book, Breaking Free from Broke. That'll give you the roadmap to getting out of this thing. You've worked hard to buy a car the right way. You paid cash with no payments hanging over your head. The last thing you want is to worry about it every time you drive it. That's why we trust Christian Brothers Automotive as the official auto repair partner of the Ramsey Show.

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Starting point is 00:32:22 Use the promo code Ramsey, and you'll save 10% off your visit, up to $250. C-BAC.com slash Ramsey, C-Store, for details. Marie is in Columbus, Ohio, up next. Marie, how can we help today? Hi, and thank you for taking my call. I started listening to you guys in 2020, and by that time I think I was in that situation right there. My current living boyfriend, who I plan to serve a 30-day notice too, very soon, he ran up to my credit card, and I've been following the baby steps, and I paid everything off except for those two credit cards.

Starting point is 00:33:21 And it was actually the baby steps that helped me realize that those two cards have been run up. I didn't realize it at the time. And I guess I'm just looking for, I guess, a way through to figure out if there's a possibility for me to recoup my money back. I'm paying for it because it's on my credit. Yeah. Well, was he an authorized user on your card? How did he get access? He was not an authorized user on my card.

Starting point is 00:33:51 So at the time, still we're living together, and we had a mosquito tick sleeve service that we were supposed to be paying for. They said they wanted to do like the automatic, they wanted to charge us automatically. And I was at home at the time as though I used my credit card and gave it to them. And he said, you know, don't worry about it. I'll pay for the service. And so that's how it started. So he grabbed your credit card while he was at home. You saw it on a table?

Starting point is 00:34:24 What happened? No, I gave it to them. You did it, okay. With the promise that he was going to pay it back. Yeah, and they would be charging a card every month. It's a monthly recurring charge, and then he would, you know, that was part of one of his bills. He was part of the household.

Starting point is 00:34:40 But then what happened? You said he ran it up. Well, yeah, I didn't realize he had ran it up because he was just supposed to be paying that recurrent charge. And then it was in 2023 that I realized that this card had like a really big balance on. And I was like, hey, what are you doing? And I said, and I noticed like your payments aren't covering the charges. And he told me, don't worry about it.

Starting point is 00:35:08 I got it. I'm going to keep paying it. And he said, you know, like we haven't done this before. That was three years ago. So what happened since then with the balance? It continued to balloon. What does the credit card statement say? Is it all this one company on this credit card?

Starting point is 00:35:30 This particular one, yes. He actually ended up doing it to two, but what I was on my radar was this one credit card, it's one company. Okay. Well, if it truly was without your knowledge, it was unauthorized use, that's fraud. And you can call your credit card company.

Starting point is 00:35:46 She gave him the card to the company. Well, do you know what I mean? From a legal perspective, she... What was there other things on this outside of the flea and tick service? That's what I'm wondering. Is he buying other stuff? Yes, that's what, and that's what I didn't realize. So he was supposed to be paying the recurring charges for the flea and tick company.

Starting point is 00:36:02 But then I started looking in there when I noticed that the credit card balance had gone up. And then he started using, I saw he was using the car to pay for our car insurance. You know, like $7, $800 to pay for the car insurance. For your own car insurance? For yours or his or both? Hours, because we were in the house together, and he had two cars on the insurance. I had one car in the insurance. The insurance was another bill he was supposed to pay.

Starting point is 00:36:31 I did not know he used my card to pay the insurance. And then I started seeing other transactions for like advanced auto parts and car parts this and car parts that. Okay. And Richie. Marie, I have a question. Random other stuff. For the credit card statement. every month. Where was that being mailed to or sent to?

Starting point is 00:36:51 It was being mailed to our address, our home. And you just didn't see it? Or he would take the bill and you never saw the bill? I never saw the bill. He would take the bill because he was supposed to be paying it for the green next company. Okay. Okay. And so I just didn't, I didn't think anything of it that he was taking the bill because he was supposed to pay it. So some of this, Marie, so some of this from a legal perspective, George, correct me. But some of this, if it really was without your knowledge, I think you can flag that as fraud. But Marie, if you willingly gave your credit card over and you just have a crappy boyfriend who's not paying it, that's more on you guys. That's not a legal standing. Especially after three years and all of a sudden you're calling the credit card companies and

Starting point is 00:37:31 hey, there's some fraudulent charges here from three years ago. Yeah, I didn't call the credit card company and say there were fraudulent charges. I noticed that I didn't tell say that. I went to him and say, hey, what are you doing? Like you're supposed to be paying these bills. Have you called and put a freeze on that? I'm sorry? Have you called and put a freeze on anything on your credit or this account or for more money not to be taken out? Well, by that time, I had, so what ended up happening is I told it, what ended up happening is he just stopped paying the bill, just period. Okay.

Starting point is 00:38:12 And I said, why aren't you making the payments? He said, I'm sorry. I missed the payment. And he was going off of the fact that we had done this before. I haven't just met the man. I've known him for a very long time. He's used my credit card to do other things like buy tires, and he paid the bill, and we just kept moving.

Starting point is 00:38:37 It had never been an issue. Okay. So from today where we stand, Marie, how much is on the card balance? As of right now, the card balance is, $8,100, but that's because I paid it down. Yes. At the time, it was $10,900. And are you guys broken up?

Starting point is 00:38:55 What's the status of the relationship? I don't consider myself to be in a relationship with him anymore, and I've planted him with an addiction notice really soon. What do you don't consider it? Are you guys broken up or not? It's not like a feeling. Well, I don't consider, you know, I don't identify as a single person. It's just, did you guys break up or did you not?

Starting point is 00:39:18 I have broken up. He keeps saying he's in a relationship, and I can't change his thoughts. Who is he saying it to? Yeah, yeah. So, okay. So, yeah, so, yeah. He's in denial. He's in denial.

Starting point is 00:39:29 He's in denial. It's his name on the lease. He loves Marie. I own the home. Okay, so there's no lease. I own the home and he won't leave. Yes, so that needs to be a sheriff will need to show up in a victim, correct? Because this has gotten so entangled.

Starting point is 00:39:44 Yes, from a financial perspective, so entangled. And this is what happens when people commingle finances. when you're not married, you have no legal protection really on your end. I learned that in 2020 once I start listening to you guys. Yes, so I'm so sorry. So by that time you've already. Okay, so you got $8,000 left. So Marie, we got to figure out.

Starting point is 00:40:05 Is that the only debt you have is this card? He did the same similar thing to the Lowe's card. Now that card, I didn't know he was using that at all. Okay, how much is on that? And the current balance is now $4,000. $900, but he ran it up to like $5,600. Okay. And outside of those two bills, I have no other balances because I started with your debt snowball.

Starting point is 00:40:29 Oh, yes, you said that. Okay, perfect. Okay. So what I would do is I would investigate as much as I can calling these two credit card companies. And in good standing of faith of what you can say, honestly, yes, these were charges I did not know about. You probably can't say about the flea tick company because you willingly gave over your

Starting point is 00:40:48 credit card and he just never paid you back and that's between you guys. but from a legal standpoint, here are charges that I did not know about. And I would try. I would see what, you know. See if they'll reverse it. Yeah, if they can reverse any of it. I don't know if they will because it's been so many years, but it would be amazing. If not, and then if it doesn't, Marie, it's, I mean, yeah, this gets chucked up to $12,000 of stupid tax is what we call it of just like a really hard lesson, which is so frustrating for you.

Starting point is 00:41:14 It's so frustrating for you, because you've been working this plan and you've been doing it. And it's just, it may be a really not fun lesson to learn. You know what I mean? If this is the bills that you have to end up paying because it's all in your name. But I would cut off any, any access of any accounts from him and making sure he has no access to you financially. And yeah. And I would go on to every credit bureau's website, TransUnion, Equifax, all of them, and freeze your credit completely so that nobody can open up any accounts in your name.

Starting point is 00:41:48 He didn't do it to any other card, just those two, and he hasn't done it. And it just... I don't care. As far as you know. I don't trust him. I've already checked. No, he hasn't done it. I would still freeze your credit.

Starting point is 00:42:00 Freeze your credit. Don't not. No, I don't trust him. Who knows what he would do when he gets pissed that you evict him? I mean, uh-uh, nope. I'm closing down every credit card account. You can still pay it off after that, but close him down, freeze your credit, and get this guy out of your life, and then clean up the debt yourself. This is not going to.

Starting point is 00:42:18 going to be fun, but it'll be a lesson well learned. You'll never do this one again. No, I won't. Hey guys, George Camel here. Listen, we need to talk about your phone plan because for a lot of you, it's like a bad roommate. You know the one. Unpredictable moods, always asking for money, hard to get rid of. And they never do the dishes. And that's what the so-called big wireless carriers are like. They're counting on you overpaying forever. But Boose Mobile flipped the script. You can unlock up to $600 in savings per year over the big guy. when you switch to Boost Mobile on their unlimited plan.

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Starting point is 00:43:48 Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Camel, joined by Rachel Cruz, open phones at AAA 825-5-2-2-25. So, Rachel, we recently just took a call from a lady who was going through a hard time because she, has had this sort of toxic relationship. The ex is living in her house, who she now has to evict. He's been using her credit cards within, without her knowledge, running up 13 grand in credit card debt. And it just was a great reminder of why we tell people to not combine your life and your money before marriage. Because some of it, it wasn't outrageous stuff, right? It was like our car insurances. We're just going to pay them together. Right? It's like, it's very normal things. But when you combine your life with someone, even from a financial perspective,

Starting point is 00:44:33 yeah, you just, you set yourself up for a lot of chaos and untangling that is exhausting and it ends up costing you a lot of money. That's what we end up finding over and over again. Because usually the person that is the financial responsible one ends up getting the bad into the deal, right? It's usually the one that's not great with money, ends up kind of mooching or figuring out how to like, not necessarily, I don't think they're always malicious by doing that. It's just the way it happens. And when you're not married, yeah. there's no protection for you. And what's funny is we get a lot of flack for our advice that you should combine finances once

Starting point is 00:45:10 you're married. And they all get so angry at that. They want to combine when they're not, but once they're married, they want to stay independent. Yes. I'm like, okay, so let's stay codependent while we're not married. And once we're married, we want to be independent. Right. That is insanity.

Starting point is 00:45:22 Yep. Crazy. So aside from any of like your faith background and some moral judgment on living together, it is just a really bad idea to combine your financial life, to co-sign, to add someone an authorized user or to buy a house with someone. Yeah, a big purchase together where both your names are on it. When you're not married, not good, not good. So much risk, so much drama.

Starting point is 00:45:43 And you're assuming everything works out perfectly. And this show would not exist if everything always worked out perfectly. We wouldn't have jobs. We're on the other side of it when they go, well, I could handle the payment until I couldn't. Well, everything was great until I found out he was using my credit card. to, I think, more of the heartbreak because not only when you break up and you got to untangle everything, not only is it just your heart's broken, right, or the situation is really sad because you've been, you were obviously very close to that significant other, to share finances.

Starting point is 00:46:15 And when you break up, if you break up, not only are you dealing with like the heartache of just the breakup, but then you're sitting there trying to pull your credit report, right? And figure out who's, you know, who's on it. what debts and what do you owe me? And then it's just, it just gets so messy. And there's anger and guilt and resentment. And why did I waste so many years with that person and try so hard? All to leave with this mess that I have to clean up. It just sort of makes you look in hindsight to realize how messy it was and how you didn't see it. So you were too close to it. That's right. So clearly, you guys, do not combine your finances until you are married. And when you are married,

Starting point is 00:46:53 yes, we are a proponent of combining your finances, sharing a checking. account when both incomes or one income hits the household. That is the household budget. We both have a say in it when we're married. We both have opinions. We both are able to agree on this. This is what we're doing with our money because when you do that, you agree on your life at that point and where you're going. Now, there's always the asterisk if there is, if there is a divorce coming, if there is abuse, addiction, like there are situations that you have to protect yourself 100%. We need to untether, have your own account. Yes, yes, that's right. Protect yourself from this person. Yep, that's right. But for all the other marriages in the world that are just going along, I'm telling you, combine your finances, be one in that. And it creates so much unity. Yeah. And the other thing is, you noticed she wasn't paying attention. She wasn't checking the credit card statement. She was just assuming that he was telling the truth. And so you've got to stay on top of this. Your money is your responsibility and nobody else's. So don't ever assume that they've got it under control. That's usually a sign that things are going south. And you don't even know.

Starting point is 00:47:57 know about it. So there's our soapbox. We are now stepping off, although I like the height boost it gave me. Thanks for listening to our TED Talk. Back down to Earth. All right, Karen is in Toledo up next. Karen, welcome to the Ramsey Show. Hi, thank you. What's going on? So my husband and I can't decide if we can afford a new vehicle or a new task vehicle for $30,000 to $40,000 just with our other expenses, our mortgage and potential other expenses with our 100-year-old home as well. All right. Walk us through this. How much money do you guys have right now saved up?

Starting point is 00:48:38 So we have about 120 in our savings. Awesome. And do you guys have any debt? We have our mortgage, but no other debt. Okay. And what's your household income? So I just went part-time. So it was 180 now.

Starting point is 00:48:54 it's going to be about 160. That's still a great income. Okay. So what's the argument about? This sounds all reasonable. You're going to pay cash. It's not a huge part of your world. Are you going to buy it used or brand new?

Starting point is 00:49:07 Well, I previously would have bought it new, but since being married, we're probably going to get new to us, but maybe a year or two, maybe three years old. Okay. And is your husband not wanting to do this or are you? So my husband does not want to buy a vehicle. I do want to buy a vehicle just because I think we need the space. We have two small old cars. We have a 2017 and a 2014 car.

Starting point is 00:49:33 Space for kids or what? We do have a new baby, and then we also have a large dog, so yes. Okay. So new baby, large dog, you want more space and he thinks it's a waste of money? Is it the financial part of spending that much money, or is the idea that you guys don't need a car at all? So he agrees we do need a car, but it's the financial aspect of it just because we live in a 100-year-old house. We're living on borrowed time with our AC furnace units, potentially a new roof, potentially a new sewer pipe.

Starting point is 00:50:07 I mean, all this is all functioning now, but it's just kind of we're on borrowed time for all these very expensive items. Have you added up, if everything hit the fan and everything went out at the exact same time, what would that cost you guys? So the sewer is probably about 15. The AC furnace, I would have to say, probably about $6,000,000. And for a roof, we don't know the roof. We haven't looked into quotes because it's working well now. That's probably in the next couple of years or so. Okay.

Starting point is 00:50:38 Because I'm just doing some quick math that if you guys have $120 saved, if you had an emergency fund of $40,000, if that was a fully funded emergency fund for you guys. I'm not sure what your household expenses are per month, but that would be a hefty, good emergency fund. You'd have 80,000 left. Let's say you spent half of that on a car. You'd have 40,000 left. And if everything hit the fan,

Starting point is 00:50:58 I think you'd still have enough to cover all of that, right? Yes, but that's very scary to think about. And then plus, we just didn't know with having a mortgage, we still have about 130,000 to owe on that. If that's something we should be prioritizing over purchasing a car. Not necessarily. Yeah, I mean, buying a new car. is totally acceptable and baby steps four, five, and six, which is where you guys are.

Starting point is 00:51:21 Your life is a priority. And so if you need the car for your life, because your lifestyle, you guys are doing it right. And I think having $60,000 still left over after covering the car and the emergencies, you're going to knock out the house fast, knowing you guys. You're going to just start throwing chunking money away at that thing after the renovations are done, repairs, the car's here. Now you've sort of freed up all the savings and money, right? Your future income?

Starting point is 00:51:46 Right. That is very true. It makes us, you know, it's unnerving to think about all this potential, very expensive things that are savings just dwindling. Yes, I hear you. But you would have enough still in savings to cover those things. And they have not happened yet. And more than likely, they'll be staggered while you can be saving money on top of that. So it's not like your savings completely stops after you buy this car.

Starting point is 00:52:09 Pick it back up and save some more if you guys want. And then if you have too much in savings, you throw some at the house, right? And I would earmark each savings account. One is for the car, one is for the house stuff. That way you're not confused as to where this money's going. Buying a home is one of the biggest financial decisions you'll ever make. But too many people base the decision on opinions or what the market is doing that week. Churchill Mortgage has been our trusted partner for over 30 years because they do things the Ramsey way.

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Starting point is 00:53:32 That's Churchillmortgage.com. This is a paid advertisement, NMLSID1591, NMLS ConsumerExus.org, Equal Housing Lender. John is in Richmond, Virginia up next. John, welcome to the show. Thanks for having me, guys. Absolutely. What's your question today?

Starting point is 00:54:01 I feel like I've hit the job lottery. I'm kind of a specialist in my field, and I recently just got a humongous increase in income. my wife is also getting a raise starting of July. So we're suddenly, we feel like we're kind of suddenly wealthy, but I'm kind of panicking because I don't know what to do, and I'm really behind on my retirement. And I'm 48 years old almost, so kind of lost as to what to do.

Starting point is 00:54:30 I'm happy, but I'm nervous. Yeah, no, that's actually a good feeling, John. That tells me you're going to be very wise with this and cautious and actually use it to build wealth. If you were just like, yeah, double my income, we're going to go buy some stuff. like, all right, we got to slow down. So walk us through this. What is your household income now? What will it be? Okay. So it's going to be 330.

Starting point is 00:54:54 Fantastic. Yeah. I think we're getting about 120,000 between the both of us, increase all of a sudden. So are you both getting increases or just one of you? Both of us. You both are. And it just happens to fall at the same time. Yeah. Yeah. My job. Just my new position just started. My wife starts in July, so, you know, right there right there around the same time. Congratulations, John. Good for you guys.

Starting point is 00:55:21 That's awesome. Where are you guys at financially? Thanks. Do you have any debt? What's that? Well, we have our mortgage. We owe $214 on our house. We do have two used car loans that are fairly recent, and that's it.

Starting point is 00:55:37 That's it for debt. No credit card debt. What's the balances on the cars? combined at 24,000. Okay. How much do you guys have in savings right now? 22,000. Okay.

Starting point is 00:55:50 Is that just liquid or is that retirement? It's liquid. Okay. And then how? My retirement is very low. My retirement's like $45,000. $45,000. Okay.

Starting point is 00:56:00 What's your wife's? Yeah. She's, her retirement's at like $340,000 or so. Oh, okay. So hers is, okay, hers is more. Yeah. Okay. Great.

Starting point is 00:56:10 So, yeah, so I would make a plan to probably feel like you didn't get a raise for a hot second once it starts to get these cars paid off. So pay off the 24,000. And honestly, you could do it with the next paycheck. If you take your next paycheck plus most of the savings, these car loans are knocked out. And now you free up those payments for the rest of your life. Yeah, that's right. And the cars are fairly new, even though they're used. So I think that's great.

Starting point is 00:56:40 But, yeah. So we have like, like, basically that leaves us with the little bit we have in our checking account. And that drains our savings slash emergency funds. Yep. So then you're, that's what we were. Yeah. Then you'll bring it back up with the new income and have a good fully funded emergency fund. And all this hits in July.

Starting point is 00:57:01 We're what, it's almost May. So that's two months. Yeah. So I would, I would throw all, I would throw your savings at this car. you'll have a little bit left on it on one of them and keep $1,000 in there and go ahead and pay everything off. And then once July hits, you guys start really stocking away some money for a fully funded emergency fund. And then beyond that, John, you just go down the baby steps. You guys need to invest 15% of your income into retirement through all the extra you can at the house.

Starting point is 00:57:29 Sure. Okay. And have some fun in there too, right? If you guys want to take a trip or something, that's okay. But have an aggressive goal to pay off this house. I mean, if you guys said, hey, what if we did this in two years, right? Like a pretty aggressive way. Because once the house is paid off and everything, then to your point about retirement,

Starting point is 00:57:47 all that's left is to stack money in those retirement accounts. And then even beyond that, because you guys will probably max out a lot of your Roths and your 401K even. Yeah, because you guys, 15% of 330 is almost 50 grand. So it's over $4,000 a month you guys are going to be putting away. And that's without any employer match. So I did the math for you, John. My company won't start letting me have a retirement for a year, and my job just now started.

Starting point is 00:58:16 So I'm kind of like, well, do I start, like, talk to a financial advisor, get it. You can still do a backdoor Roth IRA. Yeah, I would do the Roth. And then I would just put some money. Yeah, I would sit down with a financial advisor. I'd probably open up like an index fund or something and just throw some money in investing. It may not be retirement specific, but I would get in that habit of 15% of my income. become being invested.

Starting point is 00:58:40 And then once the 401K is available next year, then maybe, you know, turn down the index fund and put the rest in the 401K because you'll have great tax benefits with that. But even in the meantime, I mean, 15 grand would fully fund two backdoor Roth IRAs for you and her spouse. You still have options even before you can contribute to the employer plan. Yeah. So let's walk through this real quick for you, John. How much money would you free up?

Starting point is 00:59:06 how much could you throw if you didn't have those car payments? How much could you set aside every month in savings? With the new income? Well, with the new income. I have a daughter just, I have a daughter that's starting college. My new income is $330,000.

Starting point is 00:59:21 The college expects us to pay about $30,000 a year for my daughter. And we're not, we don't want to take out loans for it. We want to pay it. Okay. So my bills are, my bills are going to be like $12,000 a month on average with all that going on. That's without the car payments or with?

Starting point is 00:59:38 That's without car payments. Okay. Great, but you're still going to be taken home like 20K a month. Yes. Okay, so you still have eight grand to put away when all said and done, if you do it right. Are we taking home eight grand? How much are we taking on a month? Because I have like my...

Starting point is 00:59:56 20K a month is $2.4. So if you're making $3.30 after your after tax income. My after tax income is going to be about $16.8 per month, I think. And that's without your wife? Yeah, it's with my wife. Okay. That feels low. That feels low. That feels low. I'm a W2 employee in my, I mean, federal taxes, state, social security, all that stuff is like 75 a year off my 225 that I'm making. So I will be making. So.

Starting point is 01:00:26 Yeah, but you're not paying 130 grand a year in that out of your 330. That's what it amounts to is you taking home 200. So I would look into that. This is about 60%. It might be a little bit more after all of your deductions, 411, K, all of that stuff is hitting. But either way, you're going to have some margin of four to five grand a month to sock away, which means your emergency fund is going to get built up quick. Then we'll be investing 15%. So let's even say you're 49 and you start investing a little over $4,000 a month. Between you and your wife's retirement, it's sort of the base nest egg.

Starting point is 01:00:58 If you just do that from 49 to 62, you guys would have about $2.7 million at $62. When you're a 62, I don't know how old she is, I assume, younger. Is that a fair assumption? older than me. Oh. Oh. What for the older lady, John. So she's 63, you're 62. You get 2.7 million. And then you guys can decide do we want to keep working or not. You probably will have the option by then. And with a paid off house by that point. And that's without you increasing investing or making more money, which at this point, you guys are only going to make more money in your careers if you keep this up. Yeah. Okay. So I hope that's encouraging to you. If you do this right and you just stay out of debt, pay off the mortgage, follow these baby steps. And when the daughter's, and when the daughter's out of college, that's, that's, you're going to be just fine. And when the daughter's out of college, that's.

Starting point is 01:01:40 That frees up money in four years. You know what I mean? That's the tuition. That'll free up a lot of money. That's like $2,500 a month. You can go on a vacation every month, John. Sounds good, George. You're doing great.

Starting point is 01:01:52 Don't beat yourself up, John, for the past. You guys are crushing. Yeah, and the caution is very fair because as you run the numbers, you're looking, it's like, yeah, it's not a million bucks. You know what I mean? Like, it goes fast if you're not careful. That's why we get people that make $300,000, and they're still living paycheck to paycheck, right? It's like that's what ends up happening.

Starting point is 01:02:11 So the intentionality is key. I think writing out the numbers, you and your wife seeing it, I think having a great financial planner on board, especially with some of this retirement stuff that's going to be picking up is really wise. And yeah, I think if you guys just plan it out month to month, you're just, you know, you have that level of intentionality, have a goal for paying off the house, all of that lined up.

Starting point is 01:02:31 You're going to do great. You really well. Great. Thanks. You got this, man. Thanks, John, for the call. I love a call like that. That's a fun problem to have. Our income doubled and I want to be wise with it.

Starting point is 01:02:42 Yes. And the truth is, I mean, $214,000 left in the mortgage, if they just take the daughter's college money, when she's done, they just throw that at the mortgage. Right, right, right. Well, some of the extra margin they have, they're done in a couple years. Yeah, that's right. So before they're 60, they're going to have a paid-for house, maxing out retirement accounts, millionaires.

Starting point is 01:02:58 How unaggressive? I said two years. That was too aggressive. I like, you know. I love that spirit. Why not go big, right? Rachel goes big and she goes home. She does it all.

Starting point is 01:03:09 Most people don't struggle with money because they can't do math. They struggle because they don't stick to a plan. And when your bank makes your money feel confusing or hard to track, plans fall apart fast. And that's why I love Fairwin's Credit Union and their mobile app. Because let's face it, most banks build systems that make it easy to swipe and hard to stay organized. But with the Fairwin's app, you open it and you know exactly what to do. No clicking through 11 menus just to move your own money. Just tap, transfer, and done. You can deposit a check from your couch by taking a picture. You can get real-time alerts so you're not guessing what's in your account. And you can add your Ramsey Be Weird debit card to Apple Pay and tap to check out. See, a lot of banks leverage

Starting point is 01:04:22 convenience to make it easier to go into debt, but Fairwinds offers convenience to help you stay in control. It's a huge difference. That's banking that actually supports the baby steps instead of working against them. So if you want to bank someplace that's both faster and wiser, check out Fairwins. Go to fairwins.org slash Ramsey. That's fairwins.org slash Ramsey, insured by the NCUA. Ramsey is taking over an entire cruise ship. Not like pirates. We're just, we booked it legally. Don't worry.

Starting point is 01:05:09 But this is 2,500 people coming together for the ultimate debt-free celebration. This is so much more than buffets and deck parties, which I am personally excited about those things. But you get to hang out with Dave and all of us, Ramsey personalities, for seven days, hear new teachings on wealth building, join the world's largest debt-free scream, watch live episodes of your favorite shows on stage, and so many more surprises. Who knows? It's so fun. It's a fun week. Yeah. I mean, ever since the last one, I was like, I was kind of riding a camp high after. Like, that was something special.

Starting point is 01:05:40 I know. It was. It was such a great week. The people working on the cruise were like, who are these people? They're all so kind. Yes. They kept saying that they're like, this is the nicest, like week of people we've ever had. Yeah. And there's no strangers because they all have, you have like-minded people on one place. Well, not to make anyone uncomfortable, but everyone's like, yeah, they would be standing in line for the buffet and be like, how much debt have you paid off? You know? And they just talk about things that you would never. ever probably share, but a place to celebrate and get to go to the Caribbean. It's going to be fun. Not mad about it. It's going to be fun. All right. Click the link in the show notes or go to ramsysolutions.com slash events to book your cabin. Hopefully we'll see you in 2027. Iris is in Bismarck, North Dakota.

Starting point is 01:06:19 What's going on, Iris? Hi, George and Rachel. How are you guys? Doing well. How can we help today? Okay, so I'm in quite a bit of debt, and I actually started going through the baby steps at the beginning of the year. Started like going full, like full intensity about two months ago. Already paid off about $5,000. Awesome. Great. And my boss offered to lend me the money that I need to pay off the rest of the money.

Starting point is 01:06:56 my debt and just paying him without interest. Lend you the money. How much is this? So I have $41,805 left to pay off. And this is, so credit card, 9,373. I have 6,573 I owe to the IRS and a nasty personal loan with one main financial for $25,859. Okay.

Starting point is 01:07:32 No, I would not do that, Iris. I know it sounds good because you don't have to pay interest and all of that, but suddenly now you are tied to your boss as a bank, basically. And any mispayments, anything that happens in your life, any, I mean, anything that is going to be happening, he's going to be just there, right, from like an emotional financial perspective. And so keeping things clean and just saying, hey, keeping the creditors, the creditors and keeping your boss the boss keeps very healthy boundaries and keeps everyone in the lane they should be in.

Starting point is 01:08:16 I mean, you start muddling those, it can get messy really quick. And the truth is interest, the way you're attacking this thing isn't going to be the issue. That's a good point. So the issue is the behavior that got us here, and you are actively transforming that. And I think there's something really powerful about using that dead snowball method to knock out the next set, the next set, freeing up the payment. And if you just owe your boss one weird giant payment, it's just kind of hit different. And it's probably going to take longer. You're probably going to get a little comfortable because, like, well, I'm saving on interest.

Starting point is 01:08:47 I don't need to be that aggressive. He only said I needed to pay 500 a month. And again, to Rachel's point, it just adds risk. It changes the relationship. I would much rather owe all these other people money than my own boss. Yep. Iris, how much do you make a year? Yeah.

Starting point is 01:09:03 Well, it varies. I work in a restaurant. So this year I made 54 before taxes. Okay. And I started doing some side hustles so I can pay off this debt. Good, good. Hopefully by my goal is February of 27, 2027. Awesome. I love how specific you've been. You knew your exact numbers on your debt. You have an exact debt payoff date. That gives me a lot of encouragement confidence.

Starting point is 01:09:28 I have a concert to go to, so I need to see this. That's hilarious. What concert is it? It's not back-shed boys. It's Carol G. She was in Coachella this year. She's going to perform in Puerto Rico February 26. Ooh, a destination. How fun. Iris is the boss at the restaurant that you work at? Yes. Okay. So I'll be honest, even more so why I wouldn't because that has that industry turns over so much. You could look up in six months and get a great paying job somewhere else. But then you weirdly have this like loyalty to him because he like did this big favor for you. And so I. Or he leaves and goes to a different restaurant. And now he's like, hey, I need all that money up front. Yeah. Yeah. Well, he's the owner of the restaurant. The thing is, I've been working with him forever. I've known this guy for 11 years. And. He's seen me for 11 years. And the thing is that he asked me, he's like, hey, Iris, like, I've seen you be stuck. I mean, you know, why haven't you bought a home? Just last things.

Starting point is 01:10:31 And so that's why he asked why I haven't, you know, progressed in a way. Yeah. And his heart's probably in the exact right spot, right? I don't think there's any malice or anything. We just see these situations go sideways. Like we do. When you start mingling relationships and money, especially when it comes to borrowing money, it just it changes the relationship and even though I think the heart of him is probably gold and it's

Starting point is 01:10:57 probably great. I just, I would have the more conservative approach of keeping him my boss and not my banker. Like that's just basically, you know, at the end of the day. So that's what we would do. That's what I would do. George, I guess you could speak for yourself. But. Well, 100%. The more I'm thinking through this, I'm just going, this just feels like I can count on zero fingers how many times someone's called into the show and said, hey, I borrowed 40 grand for my boss, and it worked out perfectly. Pade them back and everyone was happy and the relationship was great. It just doesn't happen. It's sort of a pie in the sky thought. And anytime you lend money to anybody that you know, it usually ends up changing the relationship for the worse.

Starting point is 01:11:35 And to your point earlier, George, is so true. Iris, like you are the secret sauce of getting yourself out of debt. It's not rearranging debt. It's not consolidating here, getting this lender there and all of this. People shuffle their debt around, even if it's not their boss saying they'll pay it off. But like to get a better deal here with the interest, all of it. But listen, at the end of the day, it's really not going to matter. It may save you a month or two, right? But at the end of the day, it is you that's going to be paying this off. And you're the secret to it all. It's you. Not trying to finagle the interests. And so because of the risk of the relationship and your employment and all of it, yep, keeping it safe. And you're less than a year away.

Starting point is 01:12:15 according to your goal, right? Yes, so great. Yes. So less than 12 months. I'll call you guys back for the debt-free screen. Yeah, you will. And I hope you get to go to that concert. I'm not hip enough to know.

Starting point is 01:12:28 I mean, I know Coachella. And I have heard of Carol G because I know that it's a really hip. I need to look her up. I'm so out of touch. Rachel and I only know music from like the early 2000s, so we never learned anything new and exciting. Let me see. Oh, she's pretty.

Starting point is 01:12:44 So fun. It's about the music. Okay. We will. I know. I think it's great. But thank you for that. Give me a millennial boy band and I'm there.

Starting point is 01:12:53 And dangle a carrot. I love that she has a thing that she wants to do that gives her a Y. Yes. Sure. I'm going to work an extra shift to pay it off. It doesn't have to be this really deep why of like, you know, childhood trauma that I'm running from. It could just be a fun concert and you go, I want to feel like I earned it. That's my finish line out there.

Starting point is 01:13:09 And not put it on a payment plan. Yep. That's my finish line. I was just at Disney, Rachel. And we did these street interviews. Can't wait for you to see the Disneyland version. You did the Disneyland in California. Yes.

Starting point is 01:13:19 And how was it? Everyone I talked to, it was like an 18-year-old on a payment plan for the annual pass. It's only $130 a month. That's what they tell me. And her mom's on the payment plan too. So they're doing this together. Dude, just not paying it off. Just paying the monthly payment.

Starting point is 01:13:33 Some generational debt to the old Mickey Mouse. It's like a family tradition now. But it's funny how we teach her kids that payments are okay as long as you can afford them. 100%. 100%. and just stupid financial decisions we get ourselves in, from time shares to car payments, all of that. And it's like when it's so normalized, that's what your kids pick up.

Starting point is 01:13:53 That that is how you do life. And that's what ends up, I think, of being average, right? Of just being paycheck to paycheck, barely have enough for retirement, if that, but really having to depend on Social Security and you work your whole life for that ending. And it's like, no, you can get rid of all of that. Pay yourself instead of paying other people. And it's very peaceful enough. Let that be a peaceful on the other side when you're in control.

Starting point is 01:14:14 Humans are really good at one thing, and that is justifying the things that they want, even when they don't have the money. That is the American way, and the sooner we can go the other way, the better off we're going to be. Caesar is in Colorado Springs up next. Caesar, welcome to the Ramsey Show. Hey, George, how are you guys? We're doing great, man. What's going on with you?

Starting point is 01:15:10 Well, I'm in a little dilemma. I feel like I have been for about a year now. My question is, like, what will give me closer to happiness, money or experiences? You know the right show. What do you think, Caesar? I think you know the answer. I think so, but I, like, I know experiences will, but I know, like, at my age, I'm 21, so I feel like right now everybody says it's split.

Starting point is 01:15:43 It's like everyone, some people say, oh, you're, you should have go, have fun. And some people's like, oh, you should go work and make your money now and later have fun. And I'm like stuck in between those two. Yeah, I don't think it has to be an either or at this point for you. I think there can be financial goals that can set you up to have a peaceful life because money does bring options and choices. And instead of being stressed and living paycheck to paycheck, which will rob your happiness, you know, you can set yourself up well. and especially at a young age, yes, investing and all of that will do that for you, Caesar.

Starting point is 01:16:20 So on one end of the spectrum, absolutely. But the other end, the lie that money at the end of the day is going to be the thing that fulfills you, that's a lie. I mean, it doesn't. Even people that have a goal of like, oh, I want to get a million dollars. Once they get it, it's like, okay, it's still me. So I got to do something else, right? It's not the, like we always say, the finish line always moves.

Starting point is 01:16:41 So, yeah, I think it could be at both end. I think you can enjoy your life and save some money and be wise with it. And also no amount of experiences will cure you if there's something going on inside. And so I want to tell you that as a 21-year-old, I think that will free you to go, there's not a single trip that's going to like, well, that did it. I'm happy now. Like, it's all ephemeral. It's all temporary.

Starting point is 01:17:05 And so the key is what's going on in you, in Caesar that's even stirring this up? Yeah, well, like, I feel like it's more like on a lookout for the future. Because like right every now and then I'm like, wow, like I'm happy right now in life, you know? Just I guess what like a lot of young people, it's like I want an exotic car or like I want a mansion one day. You know, it's like I see like entrepreneurs go like don't like they work seven days a week, 15 hour days for 10 years and they finally have it. But then they're like empty inside. And at the same time I got I know people that just like. have like the normal life and they go on vacations and and they they they invest a little bit

Starting point is 01:17:54 and later on they're like oh I wish you know I guess what my fear is that I don't want to be limited by money in my life to be able to like to live you know if that makes sense uh yeah I think so and I think it's just a mindset of what money is where money's placed and your values to and how you see it. So if you worship money and you think it's the thing that is going to cure all, I think you're going to get to the ends of your life. And like you said, you're going to be, you're not having anything to show for it from a relationship standpoint, right? Like nobody lays on their deathbed and they're like, man, I wish I had a little bit more in my 401k, right? They're asking for their family and their friends. Like the things that money can't buy in life, I really do believe

Starting point is 01:18:38 are the things that give us the most joy and where we can actually find levels of contentment. We put our time and energy into our families and into our marriages and our friendships and our spiritual life and our health. These things are really – those are the important things in life. Our friend Arthur Brooks talks about this, though, about how there's five things you can do with money. Four will actually bring happiness, and one will not, yes. And the one that will not, Caesar, is everything you listed out, which is stuff. that's the one thing that like from a chemical reaction in your brain like genuinely scientifically the stuff does not it will give you a momentary hit dopamine hit but it wears off

Starting point is 01:19:22 quick yes so the things that will give you happiness that he talks about is spending money on experiences especially with people you love buying your time back that can bring happiness because you're not doing something you don't want to do and you get to refocus that time saving money and investing, that actually brings happiness to set up your future self for success. And then generosity. Making giving a habit in your life also brings you happiness. In fact, it's the most fun you can have with money. So the sooner you not only learn that, but you believe it and you act it out and it becomes

Starting point is 01:19:52 the habit in your life, the better your life is going to be. And my friend Sahil Bloom wrote a book called The Five Types of Wealth. And he goes through relationships, family, social, your physical health, money, and work. Like all of those things combined, if you're healthy in all of those areas, you're going to be a happy person. List those out again, George, what are they? So family, social life, relationships, your physical health, your finances and money, and lastly, your work. Gosh, I just, I basically did the book. I just rambled off some stuff. But that's the stuff money can't buy right there. Like, if you have a miserable job, you're going to be a miserable person. If you are broke your whole life stressed, you're not going to be happy.

Starting point is 01:20:29 If your health is in poor shape, all you care about is your health at that point. And if you don't have good, social relationships, you become the loneliest person on earth, even with a pile of money, and in your big mansion. And you find that people who have the big mansions, who don't have a lot of people in their life and family, they want to go get a small apartment somewhere that feels cozy because it's just so lonely. It just amplifies the loneliness. So all that to say, Caesar, you're on the right path that you're even asking this question. It's a good fellow question. You're not, you're not calling saying, hey, I want to buy a Lamborghini. You're calling saying, hey, I know the Lamborghini's not going to bring me that joy. And the last thing I'm going to

Starting point is 01:21:04 throw in there is faith, Caesar. I don't know your faith background, but I would say faith brings a deep level of grounding and a deep level of joy that the worldly treasures can never give you. That sermon hit you? Yeah, I'm like a little speechless right now because I thought you guys were going to tell me something else. But yeah, I guess, yeah, that makes a lot of sense. Yeah. Yeah, because like, I just don't want to be like at the top of the hill and be like, oh, this is not what I want. on it, you know? 100%.

Starting point is 01:21:38 Can you do me a favor, Caesar? Go ahead. Can I recommend a book to you if you promise me you'll read it? And I'm not going to give it to you because you can access it for free right now, like on your phone. Perfect. Read the book of Ecclesiastes in the Bible because this is a tale as old as time and Solomon did it bigger and better than anyone else, and he has the best message for you at the end of it. Okay. Have you heard of that book?

Starting point is 01:22:03 Yes. Okay. Great story. Richest man on earth had it all. And at the end, he goes, everything is meaningless. George loves. Spoiler alert. George is such an eccles.

Starting point is 01:22:12 I love an emo book of the Bible that's just like, yes, dude. It's like a goth kid. You know what I mean? What are we doing? What are we doing with our lives? But this is like, I have this existential crisis, you know, once a week where I go, what are we doing? I know.

Starting point is 01:22:26 When you just pan back, you go, okay, what really is meaningful in life? That's why I liked the book Die Was Zero. Not that I agreed with everything in it. But you're like, okay, what do we do? Like, you know what do you get to a point? financially, which again, all of you listening, you know, everyone is at a different place financially. But, you know, if or when you get to that place of like, okay, you know, we've done it all, what am I doing? Am I just like stockpiling money? And then when I die in my 80s or 90s,

Starting point is 01:22:51 my 60-year-old kids just get everything. Like, is that it? And it's like, no, live life now. Like, again, you have to set yourself up well to do that. So I'm not saying go into debt or spend everything every single month because no that is from a biblical perspective that's going to cause stress like that will but but getting to a point of like okay if you work hard and you're smart with money and yes and you're in your you know mom and dad I think they're a great example of this they're in Argentina right now they're texting texting me pictures of waterfalls waterfalls and I'm like there's day in front of another waterfall but you know what I mean but it's like enjoy it and then they like love our family so well and they you know they take take us all on a trip every year and

Starting point is 01:23:32 it's like some of the best time. So it's like, spend some of your money. Like, yes, when you have it, spend some of it and enjoy it. And then the other part is the generosity part, George, which is you're exactly right. When you actually have the means and the ability to reach into someone's situation and completely changed their life, like that is wild. And you know what? Like a $8,000 car for a single mom sometimes we'll do that or a $10,000 car. And you can just pay for it and you just give it to her and that's it. Right? I mean, like that that kind of, of stuff when you can use your money while you're alive to do those kind of things. Like, that is. Like there's a level of satisfaction that you're actually using your money as a tool

Starting point is 01:24:10 to create a life that you love. That's it. In my book, I say, I talk about money so we can stop talking about money. Yes, yes. To become the tool that funds the rest of the things. That's right. And then ask yourself this question. Give us the clues. Well, I brought up this one from Galatians, because this is really it for me. But the fruit of the spirit is love, joy, peace, forbearance, kindness, goodness, faithfulness, and self-control. That to me is the goal. That's why we get our money rights so that we can focus on have peace and peace and love and all the things that are on T.J. Max stitch pillows. That's what it's about, Caesar. So I appreciate the call. It launched a good sermon for

Starting point is 01:24:45 Rachel and I. Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm George Camel, joined by Rachel Cruz. The number to call is AAA 825-5-2-2-25 if you want to join the conversation. If not, just keep listening. You'll have a good time. Joseph is in New York City up next. Welcome to the show, Joseph. Thanks for taking my call. Absolutely. Yeah, so the issue that I'm trying to sort through right now is my daughter is heading off to college this year.

Starting point is 01:25:26 I do have two other kids to follow behind her about four years apart, which is a good thing. I have a lot of debt, about $200,000 worth of credit card debt and loans with personal loans in HELOC that does not include the mortgage of about I pay about $4,400 a month there. So, you know, the issue that I'm having is that I make too much money that we don't get any financial aid.

Starting point is 01:25:54 We were fortunate enough that we got some merit aid. My daughter's going to be going to an SEC school, and they're giving us, like, in-state tuition, so that helps a lot. But we're still going to be left with about $30 some thousand after the fact. So I'm stuck with the question. do I try to pay that in cash? Because I can work extra that I could probably do that. Do I take the $20,000 parent plus loan out and put that extra money towards the debt that I have? I just don't know which way I go.

Starting point is 01:26:31 My wife and I are, you know, not that we fight about it, but we argue about, you know, what the heck we're going to do. Because we totally miscalculated and we were just, just didn't know, we didn't know anything about calling for college. I was still living in the 80s and 90s, and things have changed since then. Yeah, for sure. Yeah, the affordability of college is, is tough. So we, you know, we find that, you know, we are not a proponent of any kind of debt, Joseph. So no, we will say no to the parent plus loan. And we're about going to a school that that everyone can afford, and it sounds like you guys can't afford this college. Right.

Starting point is 01:27:17 So that puts a awkward conversation in the air with the 18-year-old, because it's May, and I'm sure the acceptance has already happened, and the plans have already started rolling. But the truth is, if you guys don't have the money to pay for this, you don't have the money to pay for it. So either your son or daughter, who's going off to college, works and finds a job. and has a different looking college life than just sorority houses and frat parties and football games. And, you know, he or she will be working and or they can't go to that school. At least not right now. Have they already like, have it in their heads that are going to this school? Yeah, how far are we?

Starting point is 01:28:00 Yeah, we already committed. Got the T-shirt and everything. Yeah, for sure. Okay, so let's talk through this. How much money do you guys make a year? Combined income about $340,000. Okay. So help me understand how a family making $340,000 is $200,000 in consumer debt. What happened? So we have a lot of credit cards.

Starting point is 01:28:30 You know, we have, I took a HELOC loan out probably about five or six years ago. There's about $50,000 on that. We had a roof leak. There was about $20,000 on that. But what was happening to the actual income you had coming in? Because this is all outside of your, you know, 15 or 20 grand take home every month. Sure. Where was that going? A lot of credit card, misspending, bad, bad, bad decisions.

Starting point is 01:28:58 Bad decisions. Over a long period of time? Yeah, when we bought our first home, we were, which, again, I'm financially illiterate. and we'll take the full blame on that. When we bought our first home, our agent set us up with this financial person, and then we were making the minimum payment at the time, but I didn't realize that despite me making the minimum payment, which I thought was satisfying everything,

Starting point is 01:29:29 it was borrowing against the principle of the mortgage, and my principal was actually going up. So that put us in a hole there. where we have since sold that house and have moved on. I knew we couldn't afford the house that we lived in. We had a couple friends, family, actually family to front us some money so we could get the house. Right now our mortgage is about $4,400. And what's your take-home pay every month?

Starting point is 01:29:55 What's coming into the bank between the two of you? So my wife is about $6,000. This is take-home after taxes. My wife is about $6,000. I'm about eight, nine, roughly about 10,000. That's before overtime and extra shifts. Okay. I can work pretty much as many extra shifts as I can.

Starting point is 01:30:18 And after taxes, I get about $1,000 per shift. Okay. After taxes. Cool. Well, the math should be pretty clear here on how we're going to cash flow this. And if that means it slows down your debt payoff a little bit to get her through this first year and buy you guys some time, that's what I would do. because I do think it's a great goal for her to go to school debt-free,

Starting point is 01:30:36 but I think she needs to have some skin in the game versus dad just working his tail off so she can go enjoy the frat parties and sorority parties. So that would be the game plan. And then the long term, we need to clean up the $200,000 of debt using the debt snowball. So attacking the smallest one first, we need to rent, you know, really dial down our lifestyle

Starting point is 01:30:56 because my guess is your total expenses are close to 16K month, if not more. Yes, definitely. What's coming out of the bank account every month? Mortgage. I mean, is it more than 16K or is there any money left over? No, no. There's, I would say, you know, I was doing rough estimates over the last week or two.

Starting point is 01:31:20 I would say it's roughly about the like 14, 15,000 that's coming out. Okay. So maybe a thousand or two thousand. Because you said 4,000 is the mortgage. Right. Right. So you got 12,000 left. How much there are all the money?

Starting point is 01:31:33 the payments on all the debt, the credit cards and everything? Let me see. We have, I just paid a car off. We have two cars that are about $700 total between the two. The HELOC is about $500 a month. The credit cards are at several thousand. It's a couple thousand a month You know

Starting point is 01:32:08 It's like 30% interest Which is killing me Yeah I'm trying to think of what else Yeah Well I mean I'm at 7,000 right now I mean it's just to the point yes That these are and these things

Starting point is 01:32:20 I don't we don't want you to get behind on So yeah So Joseph I mean I would sit down tonight And we'll give you Every dollar Our budgeting app We'll give you a year subscription to it Because I would

Starting point is 01:32:32 I would want, if I were you, you and your wife, to sit down and list out everything that we spend money on in the month. And my hope is, and my sense is that you guys are going to look up and be like, oh, crap, $3,000 to $4,000 is just getting blown on subscriptions and how to eat and just whatever the flip we want to do. And all of that has to be tightened up to not only pay off this debt, but if you guys are serious about this college of starting to save to cash for, flow and have to make payments for this college, forward payments, not back payments of debt. And so getting on a really strict budget, Joseph, I mean, even looking at selling some of these cars if you want, like whatever you can do to get out of this as fast as possible is what you need to do. Yeah, I would not turn to any more debt.

Starting point is 01:33:19 That's what's got us here. It's not going to get us out. So no more parent plus loans, no more just kind of phoning it in. You guys make too much to be this broke. Cut up the credit cards. Be done with them. Dave Ramsey here. Most people stay stuck with their money.

Starting point is 01:33:48 because they're not paying attention to it. Most people are living paycheck to paycheck, stressed out, and broke. Don't be most people. You work way too hard to be broke and feel broke, and you deserve to have something to show for it. That's why we built the Every Dollar Budget app. It gives you a personalized plan for your money that shows you how to free up extra money every month

Starting point is 01:34:12 and use it to beat debt and build lasting wealth. Plus, you get real coaches guiding you through your, plan step by step. Look, most people hearing this will just keep hoping something changes, but not you. You're ready to make change happen starting now. Go download every dollar in the App Store or Google Play and start for free today. Today's Ramsey Show Question of the Day is brought to you by YREFI. If you've lost control of your private student payments, your financial progress has stalled out. But YREFI helps borrowers explore refinancing options with payments built around their real-life situations. Learn more at

Starting point is 01:35:01 at Y-R-R-R-R-E-F-I-com slash Ramsey. That's the letter Y-R-E-F-Y.com slash Ramsey. May not be available in all states. Today's question comes from Susie in Washington. I recently paid off my Tesla. I love that. As two Tesla drivers, we appreciate that. And have $20,000 in credit card debt.

Starting point is 01:35:20 Should I take a loan against my 401K to knock out that debt? Not in a thousand years. No, no, no. You paid off the Tesla. use the same intensity and get rid of the credit card debt. The problem with this loan against the 401K is there's multiple reasons. Number one, you are unplugging all of that compound growth that was happening. Yes.

Starting point is 01:35:44 So that $10,000 loan you took out against your 401K is now not growing for you. On top of that, you're basically double taxed on it because you likely pay taxes to put the money in, and now you're going to pay taxes as you pay it back in while paying interest on it. So no, I would not do this 401K loan, and it also puts you at risk with your employer. And we've gotten this call recently of, I got laid off, I got fired, and now the entire loan is due within 30 days. Yes. Or else it gets counted as an early withdrawal, which then gets IRS penalties. That's right.

Starting point is 01:36:15 And if you know the money, it's just gone then. Yep. And doesn't change the behavior that got you here. It feels like a little shortcut, robbing your future self. That's right. We say to never cash out retirement. That's 401Ks, Roth IRAs, traditional IRAs, unless. you are facing a bankruptcy or foreclosure.

Starting point is 01:36:32 So we are not pulling it out to pay the house off early. We are not pulling it out to pay off consumer debts. So none of that. No withdrawals, no loans. That's right. None of it. Just pay it off with your future income, with your savings, with your gazelle intensity, with extra jobs.

Starting point is 01:36:46 And you've got it, girl. She's doing it. Susie's on it. Yeah. I don't know how much that Tesla was and what the loan was, but if you can knock that out. Yeah. Hopefully it free it up a couple hundred bucks in the payment and throw that at the credit cards.

Starting point is 01:36:58 Love it. Thanks for the question, Susan. All right, Azealia is in Raleigh up next. What's going on, Azealia? Hi, thank you so much for taking my call. Sure. How can we help? So I want to know if it's a smart idea for my husband and I to invest in his business,

Starting point is 01:37:19 or should we pay off all of our debt first? We have about, I forgot about his 401K. I was just listening to whatever was going on on the phone, but we have about $15,000 that he, a loan that he took out of his 401K that we need to pay back, and about $25,000-ish dollars in credit card debt. We don't have any car payments, and our household income is around $200,000 a year. And his business is growing, and he wants to invest a trailer, a dump trailer, and a new truck, the van he has is so old.

Starting point is 01:37:55 It just can't do the work that he needs reliably. So with the truck and the done trailer would be a total of about $70,000. But that would immediately, he would be making around $2,000 a month extra immediately with the work that he would be doing. Okay, so he wouldn't recoup that. That's like five years to break even. I was going to say three to, yeah. And you guys would have to go into debt for this. Yes, we have zero.

Starting point is 01:38:28 We don't have any savings at all like cash. What we do have assets, but we don't want to, like, touch that. What do you mean assets? So we have land. We own land. We bought that cash, and we have gold. We have a total of that, those assets is around $90,000. How much is the gold?

Starting point is 01:38:50 About 50. What are you hanging on to that for? Is this like apocalypse? Yes, like rainy day. you never know what's going to happen. We just want to be able to have it. More than a rainy day, like the world ends kind of thing. Yeah, that's a little bit more than rain.

Starting point is 01:39:06 A rainy day is like, we'll get an number of. H-FAC goes out, but you're not going to pay your H-FAC guy in gold. I'm sure he'd take it. Right. So it's just for us, it's just a question that we feel comfortable with, God forbid, something really bad were to happen. We feel like we have that to, like, you know, it would be easier to grab a piece of gold and trade versus, like, selling.

Starting point is 01:39:29 land. Food. What about money? Did we forget money's an option? Yeah. So, well, with all of that being said, we don't know what to do if we should just pay off our debts completely or if we should invest. No, you should not invest, no, because the return is opposite. If you said, I need to get a $2,000, which we had this call, I think earlier this week or last week, I needed $2,000 to get a new license for my career and I'm going to make 5,000 more a month because of it. And it's like done. That's different. And you're paying cash. This is flip-flopped. This is $70,000 of debt to make $2,000 more. Even if you had the cash, I would say this probably isn't worth it. You guys could go be Uber drivers at night and make $2,000 more. Okay. So no, no, no, yeah. So pay off the debt.

Starting point is 01:40:20 Pay off the largest balances. So the small, I'm telling you, I would, and you're not going to do it, I take that gold and I'd pay off your pay off your debt. You guys will be debt free. You'll have some cash from that and then use that to slowly save up to invest in his business for his, for like the truck, like one thing or the other, right? Because I do want him to be able to grow his business, but we got to do it at the speed of cash and not at the detriment of slowing down getting out of consumer debt. So how much does he make a year off this business?

Starting point is 01:40:52 So his main job, thankfully, he works from home and he has a lot of flexibility, which is why he's able to run his business. His main job pays him about 110. And then he makes around $40,000 to $50,000 with his business. Gotcha, okay. And then you make another $40 or $50? Yeah, I'm a home baker. So I make money from home. I'm home with my kids.

Starting point is 01:41:17 I homeschooled. Okay. So, yeah. I make an extra $50 to $60. So from a business perspective, I would have, which I'm sure you guys do, you know, his own business account with that. And then I would break out, yes, what's the cheapest truck I can get? Not a new nice truck.

Starting point is 01:41:33 Like what's the cheapest truck I can get to do what I need to do. Make that, you know, that goal number one after you guys have paid off debt. Okay. And have an emergency fund. And then the, you know, what was it? It was the truck in a what? Credit cards? Oh, you're saying for the investment.

Starting point is 01:41:50 Dump trailer. Jump trailer, yeah. Or one or the other. You're right? So like, yeah, but we're going to be cash flowing those purchases. It's easy to try to justify it with the money on the other side. The problem is that's not a guarantee. And we're not doing the math on what it's really going to cost us to break even, all of that. So I would pay off all of your debt now. I personally would sell the gold. Otherwise, you're just going to be, I would love for you guys to sacrifice and get rid of this debt over, you know, a fast period of time. but the scary part is to me is that you guys are bringing home $12,000 a month, and yet you still turn to debt. So what's causing that behavior underneath it?

Starting point is 01:42:26 Well, the majority of our debt was from when we moved from, we moved from New Jersey, and honestly, it was completely my fault. I accumulated a lot of debt buying things that were unnecessary, and that really is a lot of the debt. And also, yes, it has. And the other debt that we have, a credit card was from investing in my business. I've invested a total of $50,000 in my business, which means basically I've only made $10,000 last year. Investments, however, have stopped. I have everything I need to continue making money.

Starting point is 01:42:57 So at this point, it's just making my profit. Yeah, and I do want you to, I want you guys to critically think, though, of the situation. I keep going back to let's go $70,000 in debt. We'll make $2,000 more a month. But the debt payment on that may be $1,000 between the truck and the trailer, you know, so that you're really only making $1,000 a month. And again, plus there's interest. Yeah, people are doing that.

Starting point is 01:43:22 Dog sitting. Do you know what I'm saying? Like I'm just like just keeping perspective of reality of these numbers because it's not to me, it's like a non-starter. So I'm just so afraid to sell the gold because we bought like $20,000 worth and now it's at 50. So like I'm afraid to. Hold on, hold on. Are we doing this to get rich or are we doing this to, you know,

Starting point is 01:43:47 know, secure ourselves in case of an apocalypse. Because right now you're mixing a lot. You told me it's just in case, and now you're keeping it because now it's like, well, we could make more. And gold's the fear commodity. When fear happens, which is happening right now, the market's kind of up and down, the war, everything. As soon as that calms down.

Starting point is 01:44:04 Yes, if that comes down. The market's already come back up. I would get rid of the gold and get off the internet because that's what caused you to buy this. If the internet didn't exist, you'd own zero amounts of gold. Or cable news. It's all gold and. Reverse mortgages and walk-in bathtubs.

Starting point is 01:44:19 Let's don't go down that path. Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help any time with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey today. That's Ramsey Solutions.com. Welcome back to The Ramsey Show. I'm George Camel here with Rachel Cruz.

Starting point is 01:45:34 You've heard us mention Every Dollar. And if you're working the Baby Steps, the best and fastest way to do it is by using the Every Dollar app. And it's more than just our budgeting app. Now the plan is built right in. And the singular focus of Every Dollar is to create margin to throw at your focused financial goal. You can track your progress, get personalized recommendations and coaching, and that will free it more money to work to plan even faster. So start every dollar for free by downloading it in the app store or Google Play. Diane is in Philadelphia up next. Diane, welcome to the show. Hello, and thank you for this opportunity to get your advice. Oh, we're honored to give it. Hopefully it's good. I hope it is too. But anyway, let me give you. I'll give you.

Starting point is 01:46:17 you some facts. I'm a caregiver for both my parents. They live with me in my home. They were divorced when I was like 12 years old, and they each remarried, and each of their spouses have passed. So I've had my dad, and they each have dementia too, by the way, but I've had my dad for eight years and I've had my mom for five. My mom had a condo, which we kept. I didn't sell it. I rented it out. I was a landlord too with all this. That's a part-time job too, girl. No. Tell me about it. So anyway, I rented it out for about four years. This is in a really quaint little town, really nice town that I'd like to move to when all this is done. But, but, my question is, okay, the renter moved out.

Starting point is 01:47:19 I've had it for about a year where I use it to go to just relax and get some respite. I have a sister. I'm the power of attorney. We're both on the will for both of them to receive one half each. I want to know, the condo still has a mortgage on it. And most of the mortgage payment, not most of it, about half is still going to interest. So what I'd like to do is pay off the mortgage, remaining mortgage on the condo. My sister has said she hasn't been helping.

Starting point is 01:47:57 I've been doing most of it by myself. She just started helping maybe about eight months ago. She said that she would forfeit her inheritance for the condo, just because, you know, it would have been gone anyway had they been in a nursing home or anything like that. They would have taken any assets they had or that my mom has. So I want to know, one, is it okay?

Starting point is 01:48:24 Would it be good to pay off the mortgage? It's about $33,000 left. And second, if I should get what my sister said in writing so that there are no problem, you know, and inheriting that property and having it for myself to move into. Okay, so you're saying you're going to, you want to take the condo and she'll take the rest of the inheritance. No. I mean, what do you mean?

Starting point is 01:48:56 Any other, there are no other assets. Is that what you're asking? Oh, it's just the condo. Right now, yeah, for my mom. Yeah. In fact, yes. So what is your sister getting in this? She wouldn't be getting anything.

Starting point is 01:49:09 Not for my mom. My dad, my father has money. I've been, you know, a good steward of his money. So he has, he has money left. And they each have, they each have insurance, but like an insurance policy that should we get have from life insurance? Yeah, but my mom's is a small policy. Okay.

Starting point is 01:49:25 It's only about $15,000. Okay. So, but on my dad's side, she would get money. She hasn't really done anything for. Yeah, I was going to say the compensation of you being the caregiver. is something usually most siblings, you know, talk about because to your point, you would be paying for someone to be doing this and you've been doing that. And some states you can get paid to be the caregiver of your parents. But they don't, yeah, you'd have to be on Medicaid and, you know, they'd have to spend down all their assets.

Starting point is 01:50:00 Okay. You know, they'd have a lien on my. The condo would be gone. So how much is the condo worth if you were to sell it? Yeah, the market value right now is, um, I should say only, but it's about 130. 130. 130.

Starting point is 01:50:15 Okay. Okay. So. One bedroom, kind of. Yeah. So technically, if it was paid off and that was the asset that you girls had this, that you and your sister had a split, then to buy her out, you would have to pay $65,000. Yeah. To pay her out.

Starting point is 01:50:33 Yep. But you're saying you have $33,000 that you could do just to pay it off right now. I could pay the mortgage. So my mom wouldn't be paying interest, you know, on that. Because I am using, she gets a monthly pension. So a small pension, about $2,500 a month. And I use part of that to pay the mortgage job. Yeah, because at the end, when the, like, if you didn't pay it off and she passed,

Starting point is 01:50:58 the estate has to settle up. You'd have to continue the payments on your own. I'd be paying it anyway. Yeah, exactly. Sell it. That's the same. Exactly. If you get it in writing that you're going to get your money you put into it,

Starting point is 01:51:08 plus your share, then I think that's fair. Yeah, you just may have to still continue to buy her. There may still be a difference. But I wonder if you can add up from an hour's perspective of the caregiving and just see if your sister would negotiate with you like some of it off just for what you would have done. Well, even at that, like if she was in a nursing home, that's why I figured if she was in a nursing home, just a mediocre nursing home nowadays is like $9,000 a month. and it's 350 a day.

Starting point is 01:51:41 So, um, uh, that's what you're saving by you being the caregiver. Yeah, that's what is that? That's, six figures a year easily. And I've had it five years. So I figured I've earned, I've earned the kind of that. That's my point of view. But I just want to do, have you mentioned that to, have you said that to your sister at all? Have you'll have that conversation?

Starting point is 01:52:00 She did. Yeah, she said, yes, you can have it. But saying it and that's what I'm saying. Oh, I'm sorry. So she's good with it, but you need to get it in writing. Oh, gosh. You're like, well, it's a handshake agreement right now. We need this in writing.

Starting point is 01:52:13 Right, exactly. Yeah, so just say, hey, I'm working with my estate planner. We just want to formalize some of these things and get it in writing so that were clear. There's no confusion. And you guys have a good relationship right now? It's better. When she wasn't helping out, it wasn't so good. Okay.

Starting point is 01:52:29 There was enough pause there that I went, oh, okay. Just a slight pause. But, yeah, you want to salvage what's left of the relationship, at least. and it can go south when, you know, family passes, you're grieving, and now you're like, well, you said, and now she's looking at the numbers going, well, I could, I love to have 60 grand in my pocket. Yeah, I never said that. Yeah, right.

Starting point is 01:52:48 Exactly. Because she, she doesn't, she never listened to me. I've been telling her about your program. I'm debt-free. Awesome. But they're, they're, and, you know, not dire strengths, but, you know. But they're struggling more than you are. That's how I got her to help me.

Starting point is 01:53:04 I offer them money. That's how she's helping because I pay her. Well, I think what you're doing is very fair. You sound like a real noble, sweet person. I mean, the fact that you've, you know, given your life to care for your family at this point is incredible. They're so lucky to have you in their life. And that's a much better life than being in a nursing home, by the way. The quality of care that you're giving them is priceless. So I appreciate the call. And I wish you the best, you know, formalizing all of this. For sure. Yeah, I was going to say, if you called to get permission to, if it's formalizing okay, yes, it should be a requirement. And so I would...

Starting point is 01:53:37 And should I pay off, should I pay off the mortgage now? Once it's formalized, I think it's wise to go, if you got the money sitting around, burning a hole in your pocket, and you don't want to deal with the mortgage and the interest, it'll definitely give you some peace of mind. But make sure it's formalized first. And then you can decide if you keep the condo on. Okay, all right.

Starting point is 01:53:53 Thank you so much. Absolutely. Thank you for the call, Diane. I love that we're talking about this now. What a jewel of a human. Foof, yeah, and two parents with dementia. I cannot imagine. That's so hard.

Starting point is 01:54:04 So hard. Oh, wow. That's a lot of work. And the other thing to think about here is power of attorney, which it can be very difficult once they have lost the cognitive ability to make decisions. So depending on the diagnosis, you know, I would be talking to the doctor and the state planning attorney to figure out can we get financial power of attorney to move the money around, make financial decisions on their behalf.

Starting point is 01:54:24 That's an important piece of the puzzle too. But I appreciate the call. This is the hard stuff you deal with. And the baby steps don't make any of this easier. It just takes away the stress of money problems. on top of all of this. So I'm so glad that you followed the plan, Diane, you're debt-free. You have options because you set yourself up for that kind of life, for that kind of flexibility, for that kind of generosity. Because if you were broke, you wouldn't have many options. You wouldn't

Starting point is 01:54:48 be able to take care of your family the way you are. You wouldn't be able to pay off the condo. So I appreciate you being a living example of what life looks like when you follow this plan. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey trusted agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey trusted agent near you at Ramsey Solutions.com slash agent. That's Ramsey Solutions.com slash a...

Starting point is 01:55:50 Our scripture of the day, 2 Corinthians 416, therefore we do not lose heart, though outwardly we are wasting away, yet inwardly we are being renewed day by day. Thomas Edison said many of life's failures are people who did not realize how close they were to success when they gave up. There we go. Thanks for the light bulb, my guy. We got a lot of lights in here. Thanks to you. Never give up. All right. Michael's in Louisville up next. What's going on, Michael? Hey, how are you doing, sir? We're doing great. We're just having a good time. So my question is, I just recently came across a financial reset myself and came across

Starting point is 01:56:43 a decent sum of money and I'm looking to see moving forward, what is the best way to be a good godly steward of what I've got. Oh, that's a great question. How much money has come upon you, Michael? Well, believe it or not, I just sold a baseball card for over 300. $100,000. Come again now. What card was this? Tell us the deets. How do we get into the business? Literally, I'm telling you, went into the card shop, finances have been tight, and I had spent a lot of money. I've been selling a lot of baseball cards to help pay this winter. And so I thought I owed it to myself to go buy some more. And so I bought a box that had two cards in it and pulled a one-of-one of a tonic refractor.

Starting point is 01:57:30 I would just sold an auction for $324,000. Oh, my gosh. That is wild. That is crazy. So is this like an auction that will handle this all for you and they take a fee? Yes, so they've already taken it. It's already sold. I've already gotten a large cash advance, and the rest of it comes within the next week through a wire transfer.

Starting point is 01:57:50 Wow. All right. What's your net worth currently without this card? Without this card? I mean, so I've never been Dave Ran. and the financial, financially free. I struggle with credit cards early on and kind of never was able to get out of that hole.

Starting point is 01:58:06 I've got investment properties, just a few, the wife and I. And so we have, we're in really good shape on those. And thanks to this baseball card, completely debt-free with the exception of mortgages. Oh, great, because you don't have credit card debt anymore. I just paid it off. But you have your primary home as a mortgage? Well, he had it before the baseball card.

Starting point is 01:58:27 How much did you have before the baseball card? I'm just curious. It's embarrassing. Probably like 40 some thousand. Okay. Because that part of you has not changed. Okay. The guy that got $40,000 in credit card debt, he's still there.

Starting point is 01:58:42 He's still in you, okay? And you just were able to wipe it off with a lucky... That same part of your brain, that impulsivity that caused you to go on a credit card debt, is the same one that got you that card. It just happened to work out this time. Right. So I'm just saying we got to be cautious, okay? Because...

Starting point is 01:58:57 Okay. Meaning, I'm glad you paid it off. But do you know what I'm saying? You had no emotional sweat equity, if you will, by paying off $40,000 a credit card debt. It didn't take you a year with extra jobs and you had to really sacrifice. It was just in one fell swoop. It was gone. So nothing in you has really changed.

Starting point is 01:59:14 So it's just a red flag. It's a marker. Just easy to go back in. Yep. Just a marker of, hey, I got to be aware that that is my propensity is to go into debt. So we got to remember that. But just to say this, I have death. changes. It's giving me a new perspective on life.

Starting point is 01:59:33 I knew, it's given my wife and I, financial breath. The stress is completely gone. Understand those impulses may be there, but I'm very much aware of the breaking this is and that things need to change moving forward. Good. Okay, I'm so glad. So glad you said that. Yes. So what's left on the mortgages? So with investment properties, we have about 230 that's owed and then, I'm sorry, 320 that's out on investment properties and 100 some on personal mortgage. Okay. And do you guys have savings already?

Starting point is 02:00:10 We've got a little bit. Not much. Okay. And what's the amount that's sitting there from the card right now? We solve over 200,000 coming. Okay, great. So you can fully fund an emergency fund of three to six months of expenses and still have, what, 160 grand? $175,000?

Starting point is 02:00:30 Yes. And that would pay off your primary mortgage, correct? Okay. Well, first of all, I got to give, I mean, I know that I need to give something back to the Lord here. Sure. We weren't done with the list. I was just walking through the things you could be doing. We're going to give someone and enjoy something for sure.

Starting point is 02:00:48 I just want to see what was left over after you pay down the mortgage and set aside the emergency fund. I got you, I understand. Would there be a good chunk left over after that? No, there was another secondary, like a home-making line of credit that I paid off as well. So I'm looking at, as it says, with mortgages and about a little over $200,000. Okay, that's just your primary plus the HELOC, not the investment properties. The primary is about $180, the HELOC is paid off, and then I have investment properties. Okay, the HELC is paid off.

Starting point is 02:01:24 So we don't even mean – it's out of the picture now. Great. Yes. Okay. So what I'm thinking is we set aside an emergency fund. If we have enough to pay off the mortgage completely, let's do that. And then the rest, let's give some and enjoy some. That sounds good. Any different thoughts on that, Rachel? No, I... Freeze up a mortgage payment, so I love that idea.

Starting point is 02:01:46 Yes, for sure. Yes, one of my mortgages has like 8.5%, which is higher than everything else. It's $55,000 for one of the properties. I thought about getting rid of that one just because of the lower boundaries. How many investment properties do you have? have? I have four. Okay. And they all have mortgages on them? Yes, but they're all, I mean, there's plenty of equity in all of them, but the highest interest rate is one that's $55,000. I'm just curious. If you sold all four investment properties, I'm just curious, and paid off all the mortgages, how much equity, how much cash would all be sitting on? If we sold everything, sold all the

Starting point is 02:02:27 investment properties, and paid off my mortgage? No, no, no, no, no, didn't pay off yours. Paid off the mortgages on those properties. So what would you net out? Oh, with the money from the card, there's not enough money from the card to pay everything on. No, no, no, no, no, Michael. You have four properties. Here, we have time.

Starting point is 02:02:44 We got, we got three minutes, okay. Let's do the math. How much, uh, how much is one of the properties? How much do you, how much is it worth and how much do you owe on property number one? Ninety-four is what's owed. Okay. And 120 is what it's worth. One-20, okay.

Starting point is 02:02:59 property two? 55 is owed, 120 is what it's worth. 120, okay, property three. 80 is what's owed, 160 is what it's worth. 150? 160. 60, all right, so we got... The last one?

Starting point is 02:03:17 Yep, property... 80 is owed, 180 is what it's worth. Okay. Got it. Okay, so we got... I got like 280, George, was my math right? I'll double-check your math on that. chicken scratching on this paper.

Starting point is 02:03:31 271. Final answer, Bob. 271. Oh, it was pretty quick. I'm rounded. I was a rounder. So that's, you know, that's before any kind of closing costs and realtor fees. But let's call it 250-ish. 250, just for the heck of it. Equity that's in some of these. Okay.

Starting point is 02:03:46 I'm just trying to pay. I'm trying to get different scenarios because when you come into a pile of money, there's a lot of different. And because you guys have so many things happening in your life. And you're asking us. the word steward is on the screen which i've you brought god into it you brought god in so we're we're going to talk about that we'll go there um my pastor and i've talked about like a possible foundation with a little bit of money or you know help paying for submission

Starting point is 02:04:14 well here's the thing generosity comes from overflow and right now you know if you look at proverbs the borrower slave to the lender yes so right now we're not in freedom yet uh biblical worldview um with our money every time debt is mentioned in scripture michael it's in a negative of fashion. It is not a sin, so you're not going to, like, go to hell because you have a helic. Like, none of that, okay? It's not a sin. Oh, the word hell is in Helac. I just want to put that out there. That's true. The letters are there. You know, you don't have to confess anything. Like, it's not a sin, but every time it is mentioned, it is negative. It's a curse on your family. You are a slave to the lender. It is not good. Like, nowhere in debt in scripture

Starting point is 02:04:51 is debt good, okay? So, Michael, I'm going to be a little hard on you. But you have been playing around the edges and the fringes of this debt world. Heelocks and credit cards and four mortgages. I mean, it is like you have become, you have loved debt like you do. You use debt as a tool and it's gotten you in a really bad spot. And now, this is going to be so sacrilegious. I was going to say, like a. Get out of hell free card. Get out of hell free card. Came upon you. So if we're going to go all in with the biblical perspective, let's go all in. and let's just pay everything off, let's sell everything, let's start with no debt. And if you did that, you would have probably almost 300,000 back in your pocket after you sell everything and pay off the primary home with the proceeds of the car.

Starting point is 02:05:38 $300,000 in the black, Michael. You got this, man. Hey, that puts the sour in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

The Ramsey Show - A Life Built on Debt Is a Life Built on Risk

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