The Ramsey Show - Debt Is a Trap That Will Hold You Back From Building Wealth

Episode Date: December 3, 2024

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Live from the headquarters of Ramsey Solutions, it's the Ramsey Show where we help people build wealth do work that they love and create actual amazing relationships Number one best-selling author Rachel Cruz Ramsey personality co-host of the smart money happy hour is my co-host today my daughter open phones at triple-8 8 to 5 5 2 to 5 Carol is with us Carol is in New York City. Hi Carol, welcome to the Ramsey Show. Hello, thank you so much for taking my call. It's a thrill to talk to y'all.

You too, what's up? I have a husband who's retiring within the next 12 months and we'd like to finish paying off the mortgage on the house. Good. Yes, but per your advice and our financial advisor is advising us not to because the mortgage is at under 3% and our investments are doing well above that. However, that doesn't matter to us. We want to plow ahead and get this done and our next question to him is how can we best divest of our investments and pull the money out make the cash available to do this and his next tier of advice is to pull from our bonds that are earning at tax-free rates as opposed to pulling from our mutual funds that we'll have to pay capital

gains taxes on what do you suggest we do? You probably got no gain on your bonds. Their probably value is down even though the coupon rates stayed the same, but as interest rates rise, bond values go down. And so my guess is that you bought them during a lower interest rate environment, so they're probably not even worth what you paid for them today, is that right? I'm not sure. That's a good question. I don't think you're going to have any gain to amount to anything.

So I like his advice on that basis. And what is your total nest egg? $4 million. And how much is the mortgage? 800,000. Okay. Good. And you guys are how old? 69 and 67. Cool. And how much have you got in these bonds? That I don't know. That's a good question. Is about 800 is enough to do this? I think so, yes. By the way he was talking about it.

I was not that specific with him Okay Is he the one that puts you guys in the bonds Carol to begin with or was that something you had? Yes No, he he's been we've been with him for our entire working career. Okay Okay, yes, I I agree with his advice that. I would use the bonds first to answer your question. Okay, this guy, you need to be aware of a couple things here with this guy. I'm not quite ready to fire him, but I'm close. Right.

Okay. I hear close. Right. Okay. I hear you. Number one because he, his job is not to take his glasses on the end of his nose and speak down to you little people who have four million dollars and you shouldn't be paying off your mortgage. Listen to the wise financial advisor because, crap his job is to say okay what are your goals and how can I help you accomplish them? Yes. So I don't like his approach to this and it's very typical in the financial advising world this level of arrogance. It's just below the it's not it's not overt arrogance but it's a subversive

arrogance. But this advice is very prominent. Yeah it's a standard it's not it's not overt arrogance but it's a subversive arrogance. But this advice is very prominent among financial advisors. That's the second problem I've got with him is he'd used two he did two very standard things in the financial world that I completely disagree with. One is he told you not to pay off your mortgage and the second is he put you in bonds. And so these bonds you know you have a fourth of your money tied up in something that's substantially underperforming because of this guy. Right. Gotcha. Okay. And that's these bonds. So I'm, and because here's the thing, again, the simple thing to remember about bonds is this. In the

financial advising world, we have been taught, and everyone for some reason decided to agree with it rather than actually making their own decisions, but the people like me and him that are trained in this stuff, we've been taught that as you get older, we use what's called the asset allocation methodology or theory, and that as you get older, you should be in less and less and less risk and so that by the time your age you should largely be in bonds and money markets and have very little inequities okay the problem is that everybody just accepted this as if it's a fact it's not a fact it's a theory it's an idea and

it's and I disagree with it I'm 64 I have zero in bonds and almost the same amount in money markets I got a little bit in money markets just because I like some cash But but I'm not sitting in that haven't moved everything away from equities because as you get older you should limit risk Because that's horse crap if I live to 94 and I'm 64 and I've been in an entrance in an instrument making 8% instead of instrument making 12 or 14 the amount of money I've lost during that 30 years is millions so it's bad advice this has that allocation methodology it's bad advice and so he put you in these bonds the second thing

you need to know about bonds is that they they are not legitimately safer than stocks or mutual funds okay because when you track the volatility of bond values versus the volatility of bond of mutual funds stock values they're very similar. It's not safer. It's really not. And the reason is the third thing, and then I'll let you go, okay, is this thing. But I mean, it's teaching for everybody out there. It's everybody out there.

So, bonds, the thing you remember about bonds is there's a set interest rate on the bond. So, when interest rates rise in order to achieve that same, let's say you got a 4% rate and interest rates are seven. But, and so people are expecting seven, but your bond is only paying four. So the value of your bond goes down as interest rates rise,

it goes up as interest rates fall. Bond prices are exactly inverse to the prevailing interest rate market. So in a rise in a record low in the last 100 years we had a unprecedented 3% interest rate environment for a decade, right? Mm-hmm. And in the middle of the lowest interest rate environment in known history, this guy puts you in bonds. And where's it going to go from the lowest interest rate environment in history?

Up! As interest rates go up, your bond values go down. And so I'm afraid you may have actually lost money on these bonds when you get into them. But I'm hoping you at least broke even. That's what I'm hoping. So interest rates folks, at bond prices, the value of a bond goes down as interest rates rise. So you never would buy bonds in a rising interest rate environment. You would buy them in a falling interest rate environment if you were going to buy bonds at all. And that's because of the yield on the bond has to approximate the prevailing rate and yet the coupon rate is fixed.

Yeah. And I think one of the most important things we've learned with the financial advisor is exactly what you said at the top of this is that here are my goals and if they're not respecting or hearing that they're gonna they're gonna do the inverse of that. Where else have I got to figure out that you're giving me bad numbers? That's right. You know? Yeah. So I'm not ready to fire this guy but I really dislike bonds for him from him and I dislike his mortgage advice and it and I dislike that he's kind of telling you what to do instead of asking you what you want to do. This is the Ramsey Show. I've been doing this show for over 30 years and some of the saddest calls I have taken are from situations that are completely preventable. Yeah and what's so hard is I feel like one of those,

especially the ones that I'm like, oh, it's terrible. People that call in and their spouse has passed away suddenly and they don't have life insurance. When you have to think through how am I gonna pay my bills in the middle. How am I gonna eat next week? Yeah, in the middle of all that grief, like it's just, it is, it's terrible. And so life insurance is the one thing,

especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive. Xander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Xander shops among a gazillion different companies. It doesn't cost much.

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So I remember the year you were born Rachel I was standing in line at Kroger in at the corner of Bell Road and Murfreesboro Road over there in Priest Lake where we used to live back in the day. Those of you in the Nashville market will know that intersection. I think that Kroger is probably gone now. It was 30 plus years ago, right? So, and I'm standing in line and I'm buying basic groceries, not with your mom and a baby or two in tow, and we weren't really spending like a ton of money and we weren't buying anything frivolous. It was just meat and potatoes, just to feed the family, right? We were broke. And I remember as I'm back in

those days you would write a check, not use your debit card, as I'm writing the check I'm wondering if by buying these groceries if there's gonna be enough money left in the account to pay the electricity bill. And I didn't know, but I bought the groceries anyway, of course. And then just kinda on a hope and a prayer, get home and everything works out, and I can pay the light bill, right? The reason I remember that specific experience is,

I think it's the last time that ever happened. Because I started doing, right after that, Sharon and I, your mom and I started doing a written budget before the month begins and we knew we had a certain amount of money to spend on groceries and that by spending that money we weren't worried about everything else because we knew it fit in the overall, that that was a Line item and the electricity was a line item So we knew we didn't spend the electricity money on groceries or vice versa Yep, we didn't worry because it was all laid out We had a plan and the amount of peace that we got

Having the month laid out as long as we stayed within those guidelines. We knew it was the whole thing is gonna work. Mm-hmm Instead of going from anxiety to anxiety to anxiety. Every time you're paying a bill, there's a freak out. A question always in the back of is this okay? Am I okay? Is this okay? And even later on when we started having some money, buying something, a luxurious item, is this okay?

And you've got to go, well, is it okay? And does it fit in this written out plan where every dollar has been given an assignment? Folks, if you want to have that change of experience in your life, where you go from when I'm doing something as basic as grocery shopping and that being anxiety, an anxiety event, going from that to peace, the only step that does that is a written plan, a detailed plan and that's called a budget. Before the month begins you're giving every dollar an assignment, you and your spouse agree to it and then you stick to it and that way the electricity gets paid and the the groceries get bought and the kids can have shoes and no one died.

Yeah. You know, you know, it's just like, yeah, it's a thing. Most people though have that experience standing in the grocery line. Crap, I don't know when I finish this if we're okay. Oh yeah, well and there's a thought to that a lot of people have that think okay If I know and I plan out and I do a budget and I see a number in a specific line I don't like groceries Then I can't just go and spend whatever I want and that doesn't that that I hear the opposite to of like oh That's just that sounds so constricting and like, that sounds so controlling

and I don't know if I want that. And then you start to realize there is an underlying level of anxiety, whether you address it or not, when you still have a question mark in your head of thinking, okay, as I'm taking stuff and putting it in my cart and I'm going to check out and I see that total, the feeling of, oh, I thought that was gonna be restrictive when I know, oh, this is how much I have to spend each week.

It actually becomes such freedom. Well, you actually enjoy and have a level of peace with it. So on both ends, right? The level of anxiety of do we have enough? But then also people are saying, oh my God, I don't wanna live on a budget because that just means I can't have any fun and that feels so restrictive.

Well, you don't realize on that end too, there's a level of anxiety because you don't know what's going on. You're creating anxiety with that immature look on life. That's right. Because it's immature to go I can just spend like I'm in Congress. Yeah. And that's just a that's a childish view because obviously we all know we can't do that. It's not I mean grownups know the money runs out somewhere. And so, you know, and even like we had to go so far

as we went to, we went hardcore more than we recommend today on the envelope system. Like we had envelopes for everything. Like envelope for groceries and envelope for restaurants. And your mother would not buy herself clothing because she's a classic southern belle martyr and she's like well I'll just be Scarlett O'Hara I'll make something out of the drapes and the kids can have new clothes and it's like no that's not necessary we have the money to everything so what would happen

is we would have clothing budget and she would spend it all on the kids wouldn't buy herself anything. So I had to finally separate in the budget in the early days. Sharon's clothes was a separate category and she was not allowed to spend that on anything but Sharon's clothes. Amazing what that did. You're allowed to give her guilt free spending. Yes. It is such permission that, okay, we're okay. We can do this. Not only permission, it was, it became like a command. You have to buy yourself something.

I mean, it's not, you know, I mean, really, because it's just got weird. It got weird. Right. Right. Right. Right. Right. So the thing, you know, and so we, we had envelopes for everything and the first time we had a babysitter at home with you and Denise and we're going out to dinner, one of the rare times we got to do that as we're starting our climb out of being broke, and we got halfway to the stinking restaurant, 10 minutes away, and realized we did not have our restaurant envelope. Now we had the car repair envelope and most people would just go on and use the car repair money and when you get back home switch the money out. I probably would have done that. I would do that today probably.

But we were so intent on something has to change. We have to stick to something for the first time in our lives. We cannot keep doing the same stupid crap and expect to be anything but broke. We turned around, went back home and got the food envelope. I specifically remember doing that. It's impressive, yeah. Blew the babysitter's mind because these people come back home 10 minutes after they left. Oh God!

You know. So, but, or I guess her boyfriend probably ran out the back door. I don't know. Whatever. But, you know, the, right? But anyway, but I mean, so we got the, I'm kidding. I'm sure Angie wouldn't have done that. But, you remember Angie? Yeah. Anyway, she was a great babysitter. But the, anyway, the, yeah, so this idea that I can, with my spouse, write down what we're going to do, and I have guilt-free permission to spend on a category because our plan is accomplished and it includes this spending item. Yes.

Yep. That is so freaking powerful. People, it changes everything. And John Maxwell used to say a budget is people telling their money what to do instead of wondering where it went. So download the Every Dollar app and start budgeting. It's free. You can do that in the app store or Google play. It's a very simple plan and it has all kinds of extra paycheck planning. You can plan out not only the month ahead of time, you can plan out each paycheck ahead of time. Yeah.

The premium version is so worth it you all because the trans you connect it to your bank account. So your transactions drop in, so you drag and drop them. So, you know, some people still use the cash envelope system, but most people, this is like the 2024, 2025 way of doing like- Version of it, yeah. Yeah, but you're- And you don't have to go back home.

But you're sitting there and watching it, and you're able to drag and drop these transactions to know per category what's left. And to your point, all the other features, the paycheck planning, because some people, you know, if you are paycheck to paycheck cycle It is so difficult to break that because you're using that paycheck to funds your life up to the 15th And if too much is getting taken out at the beginning of the month, you're gonna be bouncing checks more

I mean, it just it gets it gets really complicated So the paycheck planning helps even within that to get on a great cycle when it comes to your paychecks and to stay on top Of it. It's so helpful. So, so helpful. Guys, you gotta start doing this. It changes everything. You'll breathe different. Your shoulders will drop.

The tension will leave. Download the Every Dollar app. It's free in the App Store or Google Play and get yourself started, boys and girls. This is the Ramsey Show. You want to leave happy memories for your loved ones when you pass away? Not a mess. This is the Ramsey Show. KnockBox is a complete home organization system and estate planning tool that helps you organize all of your accounts, personal history, wills, estate planning documents, and all other info in one place. Inside each kit are 15 categories

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No salesman will call From the Ramsey Network app we get our question from Cory Dave You recently took a call where the person had 35 credit cards How do the banks even allow someone to get that many cards? the banks even allow someone to get that many cards? It's actually a good question, Cory. Cory, that's sweet that you are naive enough to think that the banks even think. That's sweet that you would think common sense would enter into this transaction. That's so sweet, Cory.

No it doesn't. And you know, this is the same kind of mentality, Cory, that you've got that people say, well, I must be able to handle the payment or they wouldn't have given it to me. No, they'll give it to you. The same, yeah. Whatever the payment is, they'll approve you for the loan way beyond. 18-year-old, $200,000 in loans for college, Sure, sure. Right? Yeah. They just hand it to you. So Corey, the most aggressively, here's an interesting fact. Let's just take it even

a step back further. We now at this moment in 2024 in America, the United States live in the most marketed to, sold to, culture in the history of the world. In the history of the human race, you will receive more marketing impressions on your ears and eyes and brain in this coming calendar year than any set of humans ever has in history. That's pretty interesting when you think about it. And when you are sold that much stuff, people buy that much stuff. And among the most marketed to group of people in the history of the human race, the most aggressively marketed product in the most aggressively marketed time in history is debt. Debt is a product. They sell it. They sell home equity loans. They

sell student loans. They sell car loans. They sell private loans. They sell title loans. They sell any kind of home loans. Any kind of loan you can dream up. Put a word in front of the word loan and it happens. Dog loans, cat loans, there are loans for everything. I was trying to buy a t-shirt for God sakes and they offered me payments on it with Klarna the other day. I m like it s a t-shirt. Why would yeah three easy payments of a dollar 26? I mean come on You know it's like what? $5 t-shirt I'm kidding. I don't remember that It's at the end of every transaction 20 easy payments of a dollar

Whatever it is. Yeah, and they're always easy payments. No one says hard payments, right? Yeah, and yet when you make And they're always easy payments. No one says hard payments, right? And yet when you make them, they're always hard. They're not easy. So, and among the most aggressively marketed debt products, the most aggressively marketed debt product, debt being the most aggressively marketed product, in the most aggressively marketed to group of people

in the history of the human race is credit cards, Corey. American distress. group of people in the history of the human race is credit cards, Corey. American Distress, Visa, MasterCard, they're your new master, and DiscoverBondage. Together spend, those four names spend more American Express, I said that one, yeah, American Distress. Together they will spend a billion dollars on marketing. It's more than beer, it's more than Chevy pickup trucks going through mud puddles, more than all your car advertising put together, more than any other category of advertising what's in your wallet? Says the failed actor.

The actor who can't get a part now. What's in your wallet? Or the great actress cause they're paying billions or millions of dollars to her too. So, cause they have it. Gotta admit I'm a Jennifer fan. There was a, that's what I was thinking of Jennifer Gardner. She's actually great, but Maverick, her dad would not be proud.

I know. And I'm trying to look up cause it was sent to me by multiple people. Now I can't find it. So anyway, the credit card is the most aggressively marketed product out there. And so in the midst of that, they are issuing credit cards en masse to people who can't pay them, don't need them, including dead people, dogs. We used to collect bizarre credit card stories

and I had a guy, send me one from Virginia, he as a joke, which was fraudulent and he shouldn't have done this, but as a joke he applied for a credit card in the name of Buck naked okay they issued the card to buck but got him a card another guy sent me from New Orleans a credit card an actual card he sent me the card and a letter it was issued to frou frou who was his poodle who had died and that was unsolicited. They picked it up off the AKC registration and meant to send it to the owner of the dog

instead issued the card en masse to the dogs. Literally it's gone to the dogs and so mean, this is the credit card world. So please, God, don't think you're special if somebody gave you a credit card. I mean, when I was in college, I thought, well, if they give me, if I can get an American Express, then by God, I'm successful. And if I get a gold piece of plastic

versus a silver piece of plastic, then I'm really someone. Because of the color of my plastic. And you get to pay more fees to get those Good color of my plastic dictates the quality of my personal identity. Yeah, so Cory, that's what you're dealing with. Yeah Yeah, we get we we've had people with 200 credit cards there are people that are that believe that credit cards are excellent and they have their own YouTube channel and all this stuff on how you can live off of the points and how you can be the card man or whatever and all this stuff, right?

So it's a thing because it's so prevalent that any moron can get more credit cards than they can pay. So that's how, Cory, because you're making the sweet and naive assumption that the bank actually cares about you and would look at you and say, you can't afford this, so we're not going to do harm to you. No, none of that is true. They will do harm to you in a heartbeat if they get the opportunity. And just to remember that they're here to make money off of you and they know how to

do it. Like that's their job. That's their job. And there was a recent clip that went crazy, but the- The one you were just trying to find and couldn't? Yes, and I found it. The president of, or whoever it was, of MasterCard and Visa, it was the two. They have 80% of the market share and they're in front of Congress testifying.

Because of antitrust. Yeah. Well, and they can't, they won't lower fees for small businesses, like they give deals to big corporations like Walmart. And they have to verbalize and say what they're making, their profit margin. It makes you sick. It makes you realize, literally off the backs of Americans,

this is what they're making. Like it is, they make, I know we know that they make billions and billions and billions, but as you sit there and and watch these two people you're like, oh my god And they're not even you know from any level of integrity Trying to help small businesses even though we're against credit cards like even that right? I mean everything is about making money It's all they're in it for and so they know how to do it really well and they market it to you and Bring you into this cycle and this

Mindset of it that is very It's crazy. And so just remember if you're issued a new credit card, you're no better than Frufru or Buck. Moral of the story. Look up the Congress clip. The dead poodle or the naked guy that doesn't exist. There you go. One of the two. I mean, you're no better than either. This is the Ramsey Show. than either. This is the Ramsey Show. Hey I'm excited to talk about a new sponsor, Berna. You all probably know I'm a gun guy but I'm big on safety so I'm also a Berna guy. Berna is the un-gun, a

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And you can train with a Berna right in your backyard. Plus our listeners can get the Ramsey Berna Bundle for 10% off, which includes a Berna pistol, CO2 cartridges, and ammo. And other Berna products like safety alarms, defense sprays, and body armor are also 10% off for Ramsey fans. See why Berna hascom slash Dave to learn more that's BYRNA.com slash Dave. Rachel Cruz, Ramsey personality, number one best-selling author, my daughter is my co-host today. Open phones at 888-825-5225, Jake in Savannah, Georgia. Hi Jake, how are you? Good, how about yourself? Five five two two five Jake in Savannah, Georgia. Hi Jake. How are you? Good, how about yourself better than I deserve? What's up? I

Was just calling um regarding how I can stay Focused on getting out of debt and not incurring more Okay, how much debt do you guys have or do you have? I have about twenty thousand and my fiance has about 20,000. Okay. Why are you getting out of debt? I just want a better life and we have a kid on the way and I'm tired of living paycheck to paycheck. Okay. Um, so the, the, the thing that we find is that the bigger and more pure the reason for getting out of debt, the why, why I'm getting out of debt, the more intense and sacrificial and disciplined you will be. It sounds like you have a really good why and if you came to truly believe deep down

in your soul that the only way you're going to become wealthy and provide an incredible life experience for your brand new bride and baby is to get out of debt, then the discipline starts to become easy. It's almost as if I said if you don't pay off $20,000 in two years, your child will not be alive. If you said that, you would find $20,000. Now I'm not obviously that's crazy. That's not gonna happen, right? but but I'm saying you know if you had to buy a Thing to keep your child alive and you needed $20,000 to buy that thing and you only were allowed to pay cash You'd find $20,000 agreed Yes, sir, cuz your why would be so huge your reason

Discipline wouldn't even. I'm having trouble being disciplined to save the life of my child. No, that would not be something that would come out of your mouth. And so the more deeply you understand and believe that by getting this $40,000 paid off between the two of you and the two of you getting married and creating a double income and creating a situation where you dive in and stay out of debt and build wealth the more you believe that that is the path for your family to have an incredible next 50 years the more disciplined you'll be but if you just kind of go well being out there be kind of nice and I think we'd probably be

ought to be better off but it'd be kind of nice well that's like a three on a scale of one to ten and I'm talking about a ten. You see the difference? Yeah I do. Do you feel that Jake? Where do you feel like you are on the scale? I feel like I'm definitely on the high end of the scale probably a seven or an eight. How about your fiance? I'd like to be at a ten. Her situation's a little different. She doesn't see eye to eye with me on the getting out of debt thing. Okay. Have you guys talked about that?

We have, and I've kind of tried to explain to her like, hey, us getting out of debt means less payments. It means more money to take towards our kid and ourselves and our life together. And she, her side of the coin is she's like, well, she has the mentality of, well, you can't have the nice car unless you have a payment and you can't have the nice house unless you have a payment. You ought to see my house and my car. Yeah. It's just better than what she dreamed of and no payments. Yeah. Yeah, I

tried to explain that to her and I'm fighting to fix my own debt as much as I can and we do basically everything together. Yeah, you're going to have trouble Jake. You're gonna have trouble being disciplined as long as the other side of your brain called your wife is tearing you down. So the two of you getting aligned on this is your all's biggest issue. You cannot singularly carry this household on your back to wealth while she simultaneously isn't in agreement. You guys have got to get on the same page.

It's a problem in your marriage going forward. It's one of the top, it's always in the top five list, sometimes the top three, sometimes it's number one, depending on which list you look at of reasons for fights and disagreement in marriage. It's a really big topic, so I would. And I would talk to her too about, you know, the why behind it for you. And even on a deeper emotional level too,, Jake, not just, oh, yeah, so we don't have payments and we can build wealth. But there's a level of a value system at which you look at life

that needs to be so aligned together to enjoy your marriage and your life together. Crystal's in Tampa. Hi, Crystal. Welcome to the Ramsey show. Hey, David, Rachel, thank you so much for taking my call. Sure. What's up? OK, so I've been listening to you guys for about six weeks, really diving in. I actually, I look forward to the show every day like at two o'clock. Thank you. I've been talking to my husband about all the things and kind of keeping him in the loop.

I'm the main one that does the finances and it's been that way for years but we're on baby step two and so I have you know our snowball list. We don't have like a lot of line items it's just a big amount unfortunately in total but obviously listening to your all's advice and I know it's gonna take some time and a lot of hard work. But my main question is, I have not taken into account the $5,000 worth of medical bills that we have sadly racked up. And so with my list, my snowball list, how do I incorporate or incorporate the payments for the medical bills with

like my loans and my credit card that we are currently working on or do I keep how did you prioritize your snowball list you listed it how smallest to largest so we're small to largest what balance we have our payment balance just what? Noting out this fall. Balance or payment? Balance, correct. Sorry, balance. Okay. So you have balances on the medical bills, right? I do have balances on them, yes. Just redo your list. Okay, so that's what I was curious on.

Should I just? Yep. Because there's multiple lists of or multiple different bills of medical. Should I just add them into that list? Or then it'd be one single list okay no and you know and the problem the bad thing about the medical bills and the good thing about the medical bills some of them are tiny like you got a $78 from diagnostic just because you drove near a hospital yes right you know I'm talking about yeah we don't know what the flip that is but

they sent us a $78 bill for it and And it's like, you got all these little mosquitoes flying around. They're not even big bills, they're just bothersome. And so that's the bad news. The good news is you're gonna plow through, like one through number 10 really fast. And you're gonna get this sense of, I just did something.

Feels good, it does feel good. I've paid off most of the little ones. Of the medical? The bigger ones that, yeah, yeah, most of the little ones. So it's the bigger ones that- What's your smallest medical bill right now? Probably $190 right now. Still small.

That's my smallest one. Yeah, it's still small for sure. How much total, Crystal, is your debt snowball? I'm just curious what your journey is. How much you're paying off? So right now without the medical bills, because currently it's a separate list, I've got about 80,000. So 85,000. Exactly. And your household income is what? So I think we make really good money. We, we about 230 in year. Oh great. You're going to be done in a year. I know we've just made a lot of,

what is it you say? Mistakes with zeros on the end. We've made a lot of those. Yeah. You paid a lot of stupid tax. Yeah. But I mean, if you live, if you live on a hundred grand, you're debt free in a year, right? Yeah. That's the goal. That's pretty cool. Good. husband is all on board. Good good well yeah the more he's involved the more helpful he is. I don't want him writing checks because you're the nerd you're the good one to write the checks but I do want him emotionally standing there not just saying honey you're doing a good job I want him saying honey we

got this. He is he is absolutely yes I agree Thank you. I appreciate it. That's good. You're here. I'm proud of you way to go crystal Oh, thank you Thank you very very that's very well done. So she gonna knock this out so fast. Yes It's so fun when you have been going along and you don't know what to do and you suddenly discover fire and you do it and like oh This is done in a year. Look at that. That's fire.

That's awesome. I can cook stuff with that. Its knowledge is powerful. It really, really is very cool. That puts us out of the Ramsay show in the books. Remember the good old days of the internet before it was a privacy nightmare filled with spammers, scammers, hackers and fraudsters? Simpler times. Now I don't have a time machine but I do have the next best thing Delete Me. Think of Delete Me as your online bodyguard helping to protect you

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for 20% off. That's joinedelete.com slash Ramsey. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show where we help people build wealth, do work that they love and create actual amazing relationships. I'm Dave Ramsey, your host, Rachel Cruz. Ramsey personality number one bestselling author is my co-host.

You jump in, we'll talk about your life and your money. The phone number is 888-825-5225. Sarah is in Boston. Hi Sarah, how are you? Good, it's so nice to talk to you Dave and Rachel. Good to talk with you, how can we help? Yeah, my dream is to achieve financial freedom and continue to build wealth, but I feel like my spending habits are getting in the way of that. A little bit of background, I'm 25, I'm

making over 150,000 a year. Wow, good for you! Yeah, I have no debt, I'm making over a hundred fifty thousand a year. Wow good for you. Yeah I have no debt and putting myself through school but I find myself spending unnecessarily on things I don't need and I'm just wondering if I can get some advice on how to rein in my spending and you know start building wealth and achieve my financial freedom goal that I'm shooting for. What do you do and what are you studying? I am studying engineering and I am in pretty much an entry-level engineering position and I love what I do. I'm able to work from home and I have a lot of great benefits but you know I

feel like there's more that can be done. Okay. So what are you wanting? Yeah well when you say there's more because because I mean, you're putting yourself through school debt free, correct? You have no other debt. So is it investing you're looking at? Is it just your spending habits that you feel like you're making a lot, but there's not a lot to show at the end of the month? What's, what's your biggest pain point? Yeah, I feel like I, um, I have, I don't have boundaries when it comes to spending.

I feel like I could be using my money for better things like investing for the long term, but I find myself spending a lot of time online shopping or going out and I don't have a lot at the end of each month to put in my investment accounts like I'd like to. Okay. Are you on a specific budget, like a pretty detailed budget? No, really. I just kind of spend. As you want, yeah.

I mean, honestly for you, Sarah, that and an investing goal are the two things that will, I think, completely change your life. I mean, if you have a budget, because you're doing well financially, right? You're not going deep into debt, you're not trying to pay off debt. You really are able to use the cash that is coming in

from your income and you're going to be able to spend some. I mean, you're at this point that you will be able to enjoy some of it, but you're not able to really enjoy it because you're questioning every purchase. And so being able to put a line item and deciding a dollar amount ahead of time to say, okay, yeah, I can go shopping, but I'm just gonna put this amount

and that automatically is gonna give you a guardrail to enjoy it and still, you know, because you're at the point again, I will reiterate, you don't have debt, you have a great income, so you can enjoy part of it, but you wanna do it with some level of control and purpose. And then knowing on the other end that you do have an investment goal,

and I would tell you 15% of your income should be going into retirement and knowing you're doing that as well is going to give you a lot of peace and freedom. But that monthly budget I think is going to be a really great tool for you to help because I'm the same way. I'm a spender. I enjoy spending, shopping, all the things. And I do it now with such more peace knowing, okay, yeah, there's a specific dollar amount per month that I have the ability to spend and

I'm going to cut it off after that. And so that, that takes a level of discipline, but it also allows you to enjoy life and enjoy your money so much more. So as an engineer, you're learning or have learned to project plan. Uh, what Covey used to say, beginning with the end in mind, and with your money what's happening is you're getting to the end with no plan and it's not satisfying because it didn't go where you wanted it to go. And so it'd be like building a bridge and making it up as you go. Well you don't do that. We lay out a plan, we do drawings, we run the math to make sure the structure will hold.

And then we build the bridge. We don't just kind of start moving dirt and hope it all works out. And that's kind of what you're doing with your money. So let me ask you this. Let me see if I'm getting this picture correct, okay? You're 25, you're single, you're in Boston, and you work from home and you go to school correct

yes the school online yes so your work is online and your school is online and you said I spend money shopping online and I go out which would make you thank God a normal human being because otherwise you're trapped at home online and instead you actually go out for human connection good okay so you should allocate some money screen for like 12 hours yeah you should you should allocate some money for what's called a social life yes because otherwise your brain is going to melt. Okay, that's good humans Or it's not good that man or woman be alone. We should be out seeing other humans Okay, so I want you to do that now the problem is

you need a I'm gonna recommend a non internet a I'm gonna recommend a non-internet hobby to be done on downtime and analog downtime because your downtime now is Instagram Facebook and Amazon Prime and there is a direct there's research out there that says the more time you spend

on social media the more time you spend on social media, the more money you spend. The social media is the world's worst Jones's next door. You see everyone else's highlight reel and they've splash suggested products, mix it into your Instagram feed, mix it into your Facebook page and uh, and whatever else you're consuming. TikTok is even worse and so instead of when I've got ten minutes I'm gonna doom scroll, your spending is always gonna be there if you do that. Just

unplug from take do a social media fast and say I'm only going to do social media 30 minutes a day between 5 p.m. and 530 that's all or 5 and 515 would be okay with me all right that's all and your spending will go down and you cannot go on Amazon ever again unless it is to specifically purchase a certain thing that you thought of as a part of your budget. You cannot go on there and scroll because Amazon is the world's best marketer. They will sell you crap. You following me? Is this does it sound right? No, this definitely sounds right. I definitely need a hobby outside of the screen. Yeah, you know, because it had to be with the way you're living your life, because your life is in front of the screen and you go,

okay, I got 10 minutes. I'm going to take a little break. I'm going to have some brain junk food and I'm going to doom scroll for a minute, just because my brain's hurting from class. Right? That would be, that's what I would do. And I'm gonna doom scroll for a minute Just cuz my brain's hurting from class Right that would be that's what I would do and I'm 64 I'm not susceptible to it like you 25 year olds cuz you grew up with this crap I didn't but I still I have to watch myself if I get bored. I end up buying something if I'm not careful That sound familiar Yeah, that's definitely me. Okay, and I am putting money away for retirement

I'm just wondering but you start with the I want you to give Amazon. Where should I put it? Yeah, give every dollar an assignment before the month begins on your budget on your every dollar budget Put your every dollar budget down and you cannot go to Amazon unless it's to buy something you budgeted for. And the other money to save, she asked, besides just retirement, you know, open up a high yield savings and have a savings goal to say, yeah, I need a fully funded emergency fund of six months. And beyond that, have things you're saving up for to at least have the motivation to put that money away.

And do spend some money on social engagement. You need it. It's good for you. This is The Ramsey Show. Hey you guys, I'm not a fan of the big banks and you probably already know which ones I mean. But I do like credit unions because they're nonprofit organizations that focus on their members. And I'm proud to endorse Fairwinds Credit Union because they share the Ramsey mission of helping people get out of debt and live

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combined checking and savings account bundle they created just for Ramsey fans to help you take control of your finances. That's fair wins. F-A-I-R-W-I-N-D-S dot org slash Ramsey. It's Cyber Monday week and if you're looking for Christmas gifts that actually make a difference, we've got them. Get best-selling books like Breaking Free from Broke, Baby Step Millionaires and more for just $12 or audiobooks for just $8. Now's your chance to give something that'll help your friends and family build wealth, transform their relationships and find work they love. Visit ramsysolutions.com slash store today. ramsysolutions.com slash store. Rachel Cruz, Ramsey Personality is my co-host today. The Ramsey Show Question of the Day is

brought to you by Y-Refi. We trust Y-Refi because they help people who have defaulted Why refi because they help people who have defaulted private student loans. If you have a defaulted private student loan, they'll refinance it with a low fixed interest rate. Couldn't get anywhere else. Chris had a student loan and he cut his payment by over 40 percent with a why refi. Try it out. Why refi dot com slash Ramsey. That's the letter Y R E f y dot com slash Ramsey might not be in all states today's question comes from Lucy in Nebraska my husband's daughter and son-in-law wants us to get a mortgage on a house for them

our house is paid for and we have no bills but we're on a fixed income they want to keep their house they have now and rent it out to pay the mortgage that they want us to get. He's a cop and she's a firefighter. We cannot afford a mortgage, but my husband is considering it and I'm not in agreement with this plan. What do I do?

Brr. Man, Lucy. Yeah, I mean, I would agree with you. I wouldn't be in agreement with this plan either. And with you and your husband, yeah, I mean, I think continuing to sit down and understand and unpack why you're not in agreement and it's not pointing fingers at him saying, well, you, you, you, this is talking about you and what, and your desires, your fears,

which you are worried about in this. And just the simple math of even though, yeah, you said you guys, your house is paid for and you have no bills, but you're on a fixed income. I don't know if you're working towards retirement or what that looks like, but realistically running these numbers out, even for a decade, right? The next 10 years and what the reality is

for your situation. Cause I do think some parents, the heartstrings get tugged so deeply that sometimes you lose the reality of your situation. Because I do think some parents, the heartstrings get tugged so deeply that sometimes you lose the reality of your situation. And that's maybe what your husband's doing since it's his daughter. But I would be looking at not just the emotional side, but also the number side with him a lot.

And keep that conversation going. Sometimes it helps to reframe the proposal and use words that explain what this actually is. Honey, your daughter and son-in-law who have two good jobs want us to borrow money so they can have a rental property. That's exactly what it is. When you say it that way it sounds dumber than crap. Because it is dumber than crap. That's why it sounds that way. Instead of like, oh we're helping them get a home. No you're not. They have a home. They want a rental property. And they read this in some stupid thing on the internet to go to their retired parents to get a mortgage why can't they get a mortgage they both have a job oh

wait they haven't been paying their bills on time and their credit is bad oh hello yeah this is this just screams stupidity really loud like with a capital S T U P I D say the cheer with me everyone give me an S give me a T seriously oh no don't do this absolutely and here's what happens at our house we start with trying to reason and talk things through and when one of us just absolutely is not going to do it the heat just gets turned up and so our rule is um that if we're both not on board we can't do it and uh you're not on board and you're not going to get on board please don't get on board please get through the fog of this.

Yeah, and it's not what do his kids need? They sell the house and they get their own mortgage. And not only is it not good for you guys, Lucy, but this is a disaster waiting for them. Like this could set them up to fail in a major way too. So it's it's on both ends. Not great. Even though he feels like he's helping. It's actually putting them in a pretty dire situation, having to float a mortgage through a rental property. Not good, not smart. Yeah, you're buying them a rental property. No, absolutely not. Heard this on TikTok.

Deb is in Oklahoma City. Hi Deb, how are you? Hi guys, so great to talk to you. You too, what's up? So my husband and I are on Baby Step 7. We have just over a million dollars in our net worth and we have run into a scenario where we think that we have found our dream house and it would have us go back into into debt for it we would take out a small mortgage to basically we'd sell our

house for roughly 450 and then turn around and have a mortgage again for about 250 you don't have the 250 hundred and fifty? No, not all liquid. What's liquid mean? It's all in retirement? Not liquid, not all. No, I mean, yeah, we have about half a million in retirement. We have 45 cash and we have a fifteen thousand dollar emergency fund and then a little bit other money in some investments. How much? I believe that's probably about 50 or 60. And you don't own any other property?

No. How much do you guys make a year, Deb? 200 before and not including his bonus that is kind of fluctuates every year so 200 is Like for sure. Mm-hmm I mean you you can do that. It's not gonna bankrupt you Yeah, there's no possible way you could get me to go back into debt after I finally got out Yeah, there's no possible way you could get me to go back into debt after I finally got out

I mean, that doesn't sound like a dream. That sounds like a nightmare to me, but um I mean, it's just a stupid house. There's no way i'm going into debt for it but um I mean if you want to do that you can do that. Yeah at a reasonable time, you know Because a mortgage is the one type of debt we do talk about if you're out yeah but if it's a small amount and you liquidate the 50 from the retirement the other 45 you know that's half of it and if you guys commit to say we're gonna pay it off in 24 months or whatever you know what I mean like if there's a you can do that just save up the money and buy something that's what he thought you were gonna well I mean you never heard me call up and tell somebody in baby step seven to

go back in debt. Yeah, no, no. And I think probably we've, we deep down, we know that that we probably would have buyer's remorse. Yeah. I threw up a little in my mouth and it's not even my house. It's not even my house. It's not even my house. Oh gross. It's just gross. No, I mean if you want to do it honey, I'm not gonna be mad at you. We'll still be friends, but I, I, it, it, no, we do not tell people to go into debt in Baby Step 7 to buy some, to buy a luxury upgrade. And if you want to do that, if you want to do that, you're not going to go bankrupt. It's not a sin.

You're not going to hell. We'll still be friends. And you'll just be my friend with a mortgage and you know, uh, you know, but we have known people that this is like not for a car or anything, but we don't, we don't tell people to do it for real estate and baby step seven. I just don't. I mean, because the goal is to get out so that you don't have to go back and, and voluntarily going back to jail after I've been set free. I don't want to go. I'm, I, I'm free. I don't, I like my freedom. I don't,

I love my interest rate on my mortgage zero. Um, you know, I, I, so Deb, I mean, I'm making, I'm poking fun, but the truth is, the borrower is slave to the lender. The truth is, the fastest way to wealth is to avoid debt. Period. The truth is, there's more peace associated with that. The truth is, you guys have worked so hard to become debt free that you will have some buyers or more.

She will feel this regret, this taste on the back of your tongue that when you go, man I just feel like I feel like I did something wrong because you did. So I mean it's not you know that that's what it's gonna feel like but is it bankruptable? No. Is it gonna keep you from building wealth completely? No. It just slows down everything and there's the emotional and psychological. That's the I think that's the biggest Wagon it's less about the math and Deb situation it is because I'm like reasonably all the things but that's what we talked about Is that personal finance it is it is more than just the math you is that element of like? We're going back in you can buy a house just like that one in 36 months and pay cash for it

That's what I would do. This is the Ramsey show. Mortgage rates have dropped. So if you're thinking about buying a home in the next year, contact your local Churchill mortgage team right now. If you wait, more people will be in the market competing for the same homes and potentially driving up prices. Churchill will help you do the math to be sure your budget is correct, making your home a blessing and helping you build lasting wealth.

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So if you're ready to take the next steps toward your home goals, go to ramsysolutions.com slash real estate. That's ramsysolutions.com slash real estate. That's ramsysolutions.com slash real estate. Rachel Cruz, Ramsey personality is my cohost today. Open phones, a triple eight, eight to five, five to two, five. Jacqueline is in Minneapolis. Hi Jacqueline. Welcome to the Ramsey show. Hello. Thank you. Hey, what's up?

So I just have a question on, I'm not familiar with the baby steps first of all. We have mounting credit card debt and a mortgage and one loan on a car. And I do have some retirement para that could be cashed in, but that sounds like a terrible idea. And I just want help and guidance knowing what is the not easiest cause I know this isn't going to be easy, but the most efficient way to pay off this credit card debt. Yeah.

That's a great question, Jacqueline. How much, how much debt is a total? Um, credit card, I would guess 55 to 65,000. Okay. Is that over multiple cards? Correct. How many would you say? Three cards. Three cards. Okay. What other debt is there?

The car, how much is it? Car is 26,000 on my, my husband's. Mine is paid off. What's your household income? My husband retired last year. He I would say 120. Currently it is 120? Correct. Okay good good okay. So what'd you spend the credit card money on do you think? My son has congenital chronic tumors and we had to pay for those and so we had to put the credit card debt on things for living expenses from just because it got too much so that it's not like frivolous spending or

anything like that but it was you know things we needed. How old is he? My husband or my son or my husband? Your son? Eight. How's he doing now? It ebbs and flows. He just he has a lot of surgeries and the state I live in, Blue Cross Blue Shield and the Children's Hospital couldn't come to an agreement and or who got paid what and so my my son was in hospital and we were on the hook for the bill while he was in the hospital. Have you gotten that straightened out? We're working with the Attorney General right now on it. Good. So you've escalated this. I'm proud of you. I'm so sorry you guys have been through this. There's nothing scarier

than dealing with a child with medical stuff. Man man that's a big deal. So basically you had fifty to sixty thousand dollars of medical bills with your son that you paid for and then used the credit cards to buy the things you would have used that money for. okay and but the prognosis going forward on your son's situation is that hopefully insurance will be picking up whatever he has to deal with going forward right correct okay so we've stopped when my husband we've stopped the problem in terms of the phone call that's caused the credit cards yes how old how old your husband

Jacqueline because you said he's retired and is yes he's he's 56 and so when he retired I had to pick up the family health insurance so I advised him to get a job with my company because if it's a dual spouse, um, if both spouses work for the company that I work for, the insurance is free. And so that saved us about $1,400 a month. Oh, wow. But obviously he doesn't, he was in law enforcement. So obviously he doesn't really want to be working, but such as life. Um, so I'm happy that he was willing to go back to

work. Well if you're driving a $26,000 car you can't afford it's kind of one of the things you have to do. Right, exactly. Yeah that's good. Alright so the answer to your question is how do we efficiently get through this and the reason we're asking all these questions is we're trying to figure out if, you know, where the spending came from so that it's stopped because you're gonna have to reverse, you not only have to stop the trend, but you have to reverse it.

Now, so in other words, now we gotta find 80,000 bucks to pay off a car and some credit cards, and we make 120, right right and so if I take eighty thousand bucks and I say I'm gonna do forty a year out at 120 that means I got to live on 80 minus taxes right mm-hmm so you need to be paying off three to four thousand dollars a month in debt and you'll be debt free in two years now how do we do that? Well you're going to sacrifice some other things. There's no going out to eat, there's no

vacations and we're gonna take lifestyle to ashes. Nothing. You get nothing. You got to be on beans and rice, rice and beans and both of you got to work every hour you can work and still take care of your baby and get this knocked out as fast as possible and that sounds like three to four thousand dollars a month towards this which gets it done in two years. And would trim six months out of it too Jacqueline as if you guys sold the car and you got a crappy car for a season. I have the opportunity to, um, get a different job. I went back to school two years ago and I got a paralegal degree.

Um, and I want to use that. And so I do have the opportunity in the next four months or so to more than double my income. Wow. Yeah. So, I mean, that's excellent. Um, you know, it comes with the sacrifices of, you know, family time and whatnot. So if I do get that job, it would make most sense to me to live on my current, on our

current income and put the extra money, you know, the difference in the income. Oh, I would look below your current income. Okay. So live below the current income Live on nothing the faster you pay this off the faster it goes away the faster you get your life back and Jacqueline Do you want to be a paralegal long-term? Like do you want to do this for the next okay? You do okay? Just making sure yeah I wouldn't do it for a year just to make more money and then feel like you have to go back to your old job

Right, so I want to make sure you're that and then feel like you have to go back to your old job right so I want to make sure you're that career shift was what you wanted in the first place too so a written game plan list these debts smallest to largest it sounds like there are four debts three credit cards and one car so what is the smallest debt a credit card which one that one I believe it's $12,000. Okay we're gonna pay minimum payments on everything else and I want you to pay that off in three months. Okay. And that means no life. I'm okay with that. It's for a short period of time. Yeah, and stress is gonna, you know, stress is causing a whole different set of stress. So I'm willing to do whatever it takes

to do this and I know my husband is on board. Yeah. There's some side jobs that I can also do to pay this off. I just Well, and you know, here's the thing. And you guys funding retirement to Jacqueline because I would pause that yes Yep, I would pause retirement temporarily Yep for two years for two years to get this clear or one year till you get it clear depending on how big the job is That you get you get that big job. You might be done really fast Or both of both of you pick up some extra income. You might be done really fast. I don't care

Let's just let's put it on a schedule where we get it done quickly and knock out the 12. The 12's gone, you don't have that payment anymore. You take that payment that's freed up and everything else we can squeeze out of the budget and we put it on the next one down and the next one down, the next one down. So you list your debts, smallest to largest, minimum payments on everything but the little one

and you attack the little one with a vengeance. Okay. And listen, you are a great mom and dad you've done a wonderful you took care of your baby and now you're standing up like two grown-up adults and saying what have I got to do to clean up the mess now that I've took care of my? I love you guys. You're amazing. We want you to go through financial peace university our class And I want to put you in the premium version of every dollar our budgeting app I'm gonna pay for all of it just to say I'm proud of you And I like having people like you and our audience that are good human beings that take care of their family and take responsibility Even for messes that are beyond their control. Way to go. You're amazing. You got this. You

can do it. It's Cyber Monday week and if you're looking for Christmas gifts that actually make a difference, we've got them. Get best-selling books like Breaking Free from Broke, Baby Step Millionaires and more for just $12 or audiobooks for just $8. Now's your chance to give something that'll help your friends and family build wealth, transform their relationships and find work they love. Visit ramsysolutions.com slash store today. ramsysolutions dot com slash store

Rachel Cruz Ramsey personality is my co-host today open phones at triple eight eight two five five two two five Erica is in Philadelphia hi Erica welcome to the Ramsey show Hi how are you? Better than I deserve. What's up? Um, I wanted to get advice on upside down car loan that I'm in. I owe 20,864 on it. It's the 2020 Chevy Malibu. I've been trying to get rid of it for a while now, but they're saying the value is down and now it's worth $7,000.

And I guess I do have a little bit of damages on it, but they were saying like, basically the car, it's just so many of the cars and they're being used as rentals that the value of it isn't that great, pretty much. Wait a minute, what's a little bit of damage, Erika? Well, it's just the back cover mirrors are off and there's like a couple scratches on it,

but it's really nothing that bad. Okay, and when you're saying they are telling us telling me they the dealer but yeah the dealership have you just Kelly Blue Book did it all I did it's price of now I think between like eight and nine man that dropped a lot you must have had a negative you must have been upside down another car you rolled it into this one no I was this is a new loan. I had a co-signer with great credit because my credit was trash at the time. How long ago did you buy the car? Was it a 2022?

And what's your interest rate? 11.89. Okay, you may be looking at the wrong number. I think you've got a subprime loan because they're screwing you on the interest and I think 21,000 is not the actual payoff. I think it's the total of your remaining payments. Well yeah no so when I looked at the loan it said we we got the car for 27,000 and some change I can't remember the exact number but right now the payoff is $20,000 $864.

That's the payoff not the total of remaining payments Exactly, but I've made 13 that almost $14,000 payments So I had called him and I was like why where's the money going and it's all going to interest pretty much Well, yeah, it's 11% $2,000 a year So I want a new car I want to know what to do like should I pay it off and keep it at this point and then just start a new like be on a new lease and not Get a new car How many miles did you put on this car? It is ninety five thousand and a hundred and twenty five right now

It was ninety five when you bought it. No, it was like forty six. Oh you but you've run it up to 125,000 miles. No, it's at 95,000 now. Oh. So like 50. There's something wrong with these numbers okay because Chevy Malibu has not dropped 70% in value during that period of time okay. So are you look when you pulled up Kelly Blue Book did you look at trade-in or private sale? Trade-in I believe. Yeah I think you did. Okay so maybe you could sell the car private sale for let's call it 12,000. Okay. Okay. And then you would have to cover the difference and so you'd still need

$9,000 to do that. Do you have any money at all? I'm sure you don't Not that no, how much do you have? 2000 and savings and then a thousand in the check. Okay. What do you make 50,000 a year. All right. Yeah, you do need to get out of this, but that you know, basically if you went to the credit union and you borrowed $9,000, $10,000 to get a thousand dollar car and cover the difference to sell the thing for 12 to an individual, that would get you out of it and but you still have payments on nine thousand dollars instead of twenty thousand dollars the thing I might do instead is I might just go make an extra twenty thousand next year by and paid off in one year by working all

the time like a maniac like six jobs and then get this off of you. She goes, Oh man. Well, I mean, listen, I don't, it depends on how you don't have to do that Erica, but you're trapped and the way you get out of a trap is it hurts. Yep. Yep. Do you have any other debt Erica or is it just this? School loans. How much are those? Close to 200,000. I think it's 189,000, I know.

What's the degree in? Masters, well I'm in school now for my masters in marriage and family therapy. Is the 180 include that masters? Is that the total once you get out or will there be more? It might be exactly at 2000 when I get out. I'm in my last year. 200,000? Mm-hmm. Okay. And what are you doing now for a job? I'm a case manager at a rehab. Okay. Okay. Yeah, your kids, it's going to be a, it'll be a, it's going to be a long road,

long road, but, but can I just say though, the number one, we, we hear people with these numbers and they get out. It takes, it does take years, but this is going to be a total change of lifestyle for, for the next probably five years. Yeah. And you got to quit just every time you want to do something going freaking borrowing to do it. That's true. It's killing you. I mean you're a quarter of a million dollars in debt. You got to stop. I mean, you're like an alcoholic. You got to stop. Well, it's all this. It's all student loans. I mean,

in that case it's a 20, it a 11, 12% loan on a car that she impulse and then scratched it after she went out to happy hour. Stop it! No! Stop, stop, stop, stop, stop living like this. You're a case manager, you see people doing stuff. Stop it.

You've got to say no more debt. Next time I want a car the answer is no. I don't need a car so bad I got an 11.8% interest rate. What that tells me is I know enough about the car business. They not only screwed you on the loan, they screwed you on the car when they sold it to you because you paid premium for both. They saw you coming a mile away. They said here comes Erica. We're going to take her. That's exactly what they saw. You got had, kid. Same thing they did when they told you $200,000

was a good deal to get a master's to be marriage and family therapy. That's a complete screw job, too. You paid double what you should have paid for that degree. And you got to say, no more borrowing. My life is not better when I borrow to make my life better it doesn't do it you got to stop it kiddo so if I'm you I'm gonna go get that degree finish that thing up pass your

dadgum bars get out there get your dadgum income up to 100k live on nothing and raise your right hand and swear I am never borrowing again because it has not brought me blessings and yes you have to work all the time and raise your right hand and swear I am never borrowing again because it has not brought me blessings. And yes, you have to work all the time. Ugh. That's the way it is. That's how you get out.

You've got to pay a price to clean up your dad gum mess. That's the way this works. No other way around it, kiddo. You've got to do this. You've got to lean into it. This is what they teach you in the field you are studying. You can't keep doing the same thing over and over again. Expect a different result. That's the definition of insanity. That's counseling 101.

Well, and I think you made a good point earlier that, and this is good for people, especially young people that are entering into adulthood of buying new cars, maybe getting advanced degrees, getting jobs, like this whole thing is don't take the one offer out there, the one car and go and take exactly what they say, the one school you look at and get accepted to and you just take, right? There's a life of options out there. And I don't think people do that, right?

They get into a situation and they just, okay, this is great, this is what they're offering and I'm just gonna sign my name and do it. And so thinking through this stuff, getting multiple options. When your mind tells you there's only one way to do it, your mind is lying to you. And Erica, that could be your situation, right?

You go and come into this car loan, you get accepted to a school, you know, you accept it. It's just this one option path that a lot of people take that ends up usually not with a great deal, like you were saying, getting screwed in the car whole thing, and the degree you're not you're not ROI and things you're not looking at other options and and have five or six different things in front of you to say what's the better deal so guys forward thinking all

education is not good some education is overpriced crap. Just to go to school. You gotta go to school. No you don't. Being stupid when you're doing your education is a bad plan. I'm not saying Erica was completely, but she got taken. It's bad. I'm sad for her. What a horrible situation she's in. I'm angry for her. This is the Ramsey Show. Hey, you're still here? What are you doing? You do know that the rest of today's show is playing right now over on the Ramsey Network app, right?

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