The Ramsey Show - Don’t Be Middle Class Fancy (aka Broke)

Episode Date: February 5, 2024

💵 Sign up for EveryDollar today - Create a free Budget! George Kamel & Jade Warshaw answer your questions and discuss: "Should I finance a $46k car when I make $42k a year?" Tacky or Hacky: are these legit ways to save money at restaurants? "How should I use my tax return?" "Should I ask my family to buy me a house?" Do these 3 things to set yourself up for retirement. 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! Support Our Sponsors: The Chosen Zander Insurance BetterHelp USCCA Neighborly Next Steps 👍 Help us make the show better! Please fill out this quick survey! 🎟️It's game on! Get your ticket for Total Money Makeover Weekend.  📄Need help with your taxes? See who we trust. File Your Taxes The Ramsey Way Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by the one and only Jade Warshaw, and we're taking your calls at 888-825-5225. I know y'all are DMing us all your questions, and I say, call the Ramsey Show. Okay, I can't sit here all day in the DMs. This is where we answer the world's questions. So call us up, and we will help you.

Zachary has chosen to do so to kick us off. He's in Madison, Wisconsin. What's going on, Zachary? Hey, how's it going? Good. How are you? Good, good. I was just calling to get some input. I'm currently a travel nurse, and we don't have a retirement plan for travel nurses, and my wife, she doesn't have a retirement plan, and we don't have any debt right now. We have about 200,000 in savings. Um, and we don't have much of retirement and we were looking to buy a house, but we didn't know whether to just put all of our monies that we have in savings into our retirements or to try and buy a house. Right now we have a Roth IRA.

I have about $50,000 in that, and then she has like maybe $20,000 in hers. Okay. How old are you two? 29, and she's 28. Great. Well, the good news is you guys got plenty of time to build wealth, and the fact that you have this amazing foundation, no debt, and 200 grand tells me that you're onto something here. So your luck is not lost. And those Roth IRAs are retirement plans. So you do have those options at the very least right now while you're doing

this travel nursing. I imagine you're going to eventually be in a more stable situation with work. Yeah, hopefully this year. And so then you'd have retirement plans, right? Yeah, for me, not for her. She works for a South African company, so she doesn't get any benefits. So you may have different options in the future. For now, maxing out those Roth IRAs is a great move. I'm guessing you have a six figure income. What's the household income? Um, about 160,000 between both of us now, the rates are going down for travel nurses. So. Yeah. Well, that's still going to be plenty of money that you could be investing. And the way we look at home ownership versus investing, you're kind of in this baby step three B. So you want to be, you could be investing, you could just put all this into a house.

I would recommend a mix of both. Have you looked in your area? Do you kind of have your eye on what you might want and do you know what it costs? Well, I'm looking for like $350,000. My wife keeps sending me ones for like $500,000. Well, I mean... Trying to talk her out of the sky at the end of the day you know the the guidelines that we teach is you want to go in looking for a

15-year fixed rate conventional mortgage and you don't want the payment to be any more than 25 percent of your take-home pay so that's kind of what your aim is. And, you know, if you were looking, if you were looking to put $150,000 down on a $350,000 house, I'm sure you'd be just fine. Because I do want you to keep, you said you had $200,000 saved. I do want to make sure you're saving out three to six months of expenses and that you're not thinking, hey, I'll just dump this whole $200,000 into a mortgage because, you know, houses come with upkeep. What was that? I said houses come with upkeep and ACs go out and the roof gets busted and water leaks in the kitchen.

And so you want to make sure you go in with three to six months of expenses into that just as an emergency fund there. And do you recommend moving over any of our, like, save money? So the retirement doesn't include, it's not included in that $200,000, so it's all liquid in the $200,000. Do you recommend setting any of that aside to put into, like, a longer-term retirement? I mean, you could max out your Roth IRAs. That's $7,000 for each of you, so that's $14,000 right there.

You could, but you don't have to. I mean, you guys are 29. If you said to yourself, listen, I'm going to, like I said, I'm going to keep out $40,000 of this for three to six months of emergency. And from this point on, I'm investing 15%. You could do that. How long did it take you to save the $200,000? I'm curious.

Because kind of as a rule of thumb, we also say say if it's going to take you more than two or three years to save up a down payment, you should probably start investing something. So how long did it take you to save this $200,000? About four years, just because of the travel nursing money. And I'm kind of with George. I'm in George's camp. I would definitely set aside. I think there's just a nice mix here. If you took 40 for your emergency fund, put 14K, max out the Roths, and the rest can become your down payment, that leaves you with 146 to put down. And then you can start crunching these numbers to go, hey, we can afford a $400,000 house right now, or we can wait another six months and bump up to 450 if we keep saving.

And so you guys are in a position where you have those kinds of options, but I would at least start the search and you can get connected with a Ramsey trusted real estate agent who sells a whole bunch of houses and they know what they're doing in this weird wild market, even in your area in Wisconsin, and they can help you get your homework going to see what you can actually afford and even start getting some game plan of what you're going to do and what you're going to buy. Yeah. I appreciate it. Do you have the $200,000 in high-yield savings right now? I have $98,000 in high-yield savings and $35,000 in a mutual fund

and then another $34,000 in Robinhood. Oh, boy. Get it out of Robinhood. Yes. You're about to get hoodwinked by Robinhood, Robinhood. Oh, boy. Get it out of Robinhood. Yes. You're about to get hoodwinked by Robinhood, my man. Oh, man. That app makes it so easy. Those apps are made to take your money, not make it.

So be careful. I would move it all to high-yield savings, including your emergency fund, and you could be making 4% to 5% guaranteed without making a stupid decision. Indeed. Because of an app notification. Which ain't bad, especially if you're not ready to pull the trigger on anything in the next several months like listen you may as well put it somewhere where you can get a little return on it every hundred grand that sits there for a year you made five thousand so okay pretty good couch money right there my friend yeah okay all right I'll start looking into it. Thank you, guys.

You got it. I appreciate it. You bet. Happy to snap you out of the paralysis analysis. That can happen. I mean, what a problem to have. $200,000 sitting there. We want to buy a house.

We know we should be investing. But hey, no debt to pay off. Listen, that's a good place to be in. Gives you different options. A much better situation to be in as opposed to, I'm in debt. I'm $200,000 in debt. My house is too expensive. I don't have anything saved in retirement, which we hear that every other call. I got a DM, speaking of which on Instagram, this guy was like, hey, here's our situation. We have these goals. We have no debt except the mortgage. And I said, what's the mortgage? He said, it's a million dollars. And they made 160, which is a great income. But he said 60% of their take-home

pay was going toward the mortgage. That's known as house poor. Exactly. And so that's what happens when people make these decisions before they should, because they got a little starry-eyed while zillowing. Yes. And they went, well, woe is me. The housing market's crazy. Let's just buy our dream home now. Yeah. And the dream home becomes a nightmare. Don't do that. That's... while zillowing yes and they went well woe is me the housing market's crazy let's just buy our dream home now yeah and the dream home becomes a nightmare don't do that that's i can't breathe thinking about a million dollar mortgage with 160 000 income for sure 60 of your money out the door that's called living to work that's middle class fancy right there that's living to work not working to live 100 looks good to the outside world but you can't even breathe inside of that box.

That's costing you way too much to live in. I wouldn't leave my house. I'm like, I pay too much of my money to ever leave. Yeah. No, I'd be up and out of that. Move with patience, my friends. Out of debt with the emergency fund. Then get a solid down payment.

Do this so that it's a blessing, not a burden. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour, and we're taking your calls at 888-825-5225. Chris is up next in Cincinnati. Chris, welcome to The Ramsey Show. Hey, thank you. Thank you for taking my call. Absolutely. How can Jade and I help? So my wife and I are expecting our first baby in July.

Woo-hoo! Yeah, super excited. And we've been paying off debt very consistently, putting back a lot of money. We are looking to get rid of the motorcycle that I currently own, which I am upside down on. And in our order of debt, it would be second to the house. So I was wondering if I should, since we were trying to get rid of it, if I should skip the credit card and truck payment and move straight to that and chip away at it, or if I should just continue to follow the order? I would follow the order. I mean, the point of listing the debts from smallest to largest is not, it's more psychological than it is me getting my hands on more money in one moment. Um,

because you want to feel those wins. My question for you is this motorcycle, what do you owe on it? And what is it worth? Um, so I blame myself for this, but it, it is worth 17,000 and I owe about 31.

Ooh, Lordy. My goodness gracious. Okay. What's the payment on it? Just curious. $694. Oh, my lord.

Okay. What's the truck worth? The truck is worth $30,000. And what do you owe on that? About $30,000. Let's get rid of that truck. This poses an interesting conundrum here. You got another car?

We have a Jeep Wrangler that is paid off. We're getting rid of the truck. What's the truck payment? The truck payment is $575. Golly G. Willikers. Like, this is crazy. And what's left is the credit cards.

Is that it? Yeah, we just paid off one credit card, and we only have one left, which has about $4,300 on it. Okay. Okay. So that's your smallest debt. That's going to knock out instantly. Yeah. Do you have any savings?

We have about $10, good here's george let's see if we're on the same page you've got a jeep um or do you both you and your wife work outside the home uh yes okay i think this is possible because especially when you don't have kids yet and your wife's probably going to be going on maternity leave if if not already soon here um i would sell this truck for thirty thousand dollars and you've got 10k i would throw that towards if you wanted to just pick up a cash car if you needed it you could but you don't necessarily have to because i have a sneaking suspicion mom is going to have a baby she's going to be at home for a little while they can probably make the one car thing work for a while he could knock out this 4300 credit card and have some money to put towards the upside downness of this motorcycle for when he does sell it

yeah with the baby on the way here's i'm really trying to think what i would do in your shoes oh you do have the baby i would if you sell the truck, I like what Jade's saying is we're going to use the 10K and maybe take six of that and get a used car for now. Okay. For you to get around in. You leave her with the Jeep

until baby's here and then stack up cash until baby and mom are home safe. Once that happens, you may have enough to get rid of this upside down motorcycle.

Okay. Once baby and mom are home safe and you've got a bunch of money stacked in savings. Right. So that's probably what I would do in that order. And if you could find an even cheaper car, I'd love you to knock out the credit cards and then just stack up money until mom and baby are home. Listen, George is being nice because I would tell you to go with one car. I'm just,

I would never tell you to do something I never did. And when I was pregnant, we had one car cause we sold the other one. So I'm just saying it's an option to you. It just depends on how quickly you want to go. And you know, can she drop you at work and, you know,

do that whole rigmarole carpool, whatever you got to do to get by for a little while. Mm-hmm. Right. So you've got some options. Yeah, you've got options. But keeping the toys with wheels, that's not one of them. No, that ain't it.

What's your household income? I think in 23, it was just over 100 grand. Love it. All together between the both of us. And is she going to continue working outside the home after baby's here? Not like right away, obviously, but I think that her plan is to eventually return.

She's a nurse in a nursing home. And I believe her game plan is to go back to work. Okay, cool. Are you guys doing any investing right now uh no no i i wasn't sure if we should you shouldn't not yet you're right i just want to make sure you weren't because if you were you pause that and that would free up some money as well okay yeah man i think this this truck is going to free you up of that $575,000. You can then start throwing into savings. Yeah.

And think how quickly you could. I mean, the $10,000 aside, because there is a world where you just keep that $10,000 sitting there until the baby is born. You don't do anything. And that's probably the best choice here. But even with that $575,000 cleared up, think how quickly, you know, once baby is born and once everything's you know back up and running think how quickly you could pay out this credit card close the gap on that motorcycle there's just it's so much money you know that even just if they did this today six months without that payment it's 3500 bucks exactly and so that's at least as much as you could save just

by getting rid of the payment that's making no other sacrifices right okay um so it would be smart then to once that is all out of the way what you guys just talked about um to chip away at the bike and tell it's down to what it's worth and just sell it and break even as far as yeah yeah and the other option you could do is go out and take a smaller loan against the difference with a credit union to get out from under this sooner. Yeah.

Leaving you with a 13, 14K loan because you don't even need the motorcycle. You don't need it for transportation. So you don't need to go get another one. So at least you'll be $14,000 in debt instead of $31,000 in debt. Right. That's going to make your snowball

a lot bigger payment-wise, too. So I would go down to your local credit union, see if they would give you the amount for the upside-down portion. But just to clarify, the key to press go on all this, when you put the keys in the ignition, is when the baby comes home safe. That's when we're turning the keys to start doing real things, right? Right, yeah. Okay.

Sweet. I love it. Yeah, congrats. You know, I want to give you guys a little baby moon gift, if you will. I'm going to gift you guys Financial Peace University and every dollar to give you guys a little bit of hope, a little pep in your step as you make this journey, grueling journey of not only getting rid of this debt, but also third trimester. That's a real one. That's a real one. Man, tempers flare, George. There's a lot of emotion that final trimester. Most of them were geared toward me. Any man. Yeah. Not just you,

George. It wasn't just you. I will say, I enjoyed the nesting phase because I like organizing. So I was like, finally, game on. You're like, I can do this. Let's do this thing. Listen, I feel sorry for just about any man in the third trimester. It's real. You know what I did enjoy was she got real into sugar in that third trimester. And so it was like ice cream and Oreos again. Don't eat hers because then it's atomic status.

I learned that. I need to get my own pint. Get your own pint. Husbands, this is the real advice. Like you're here for the financial advice, but you stay for the third trimester advice. Yes, do not dip your spoon into her ice cream. That is... Lesson learned. But that is a good financial piece that people don't think about.

We call it stork and storm mode. That's right. Only time to pause the baby steps, pause the debt snowball, is if you're in a major storm. I'm not talking about a flat tire. I'm talking about a major medical event, a job loss where you got to go, hey, we got to pause and save up. And babies fall into that category because when things go right, it's wonderful. But it's when the medical bills start to stack up and you were in the hospital for more weeks than

you thought. And, you know, you didn't think about insurance not paying out 100 percent. That's right. And what your deductible and out-of-pocket max is. And so all of that adds up. Yeah, because in his case, I mean, $10,000 saved sounds like a lot of money. But if your deductible is $5,000, you know you're going to hit it when you have a baby. So it's worth talking about, you know, making sure you've at least, at the very least, got that deductible in cash ready to go. Because you're going to be handing out some cash when you have a baby.

Before you hit that max. you go, thank God. Yes. It's on the insurance company now. That's important. More of your calls coming up. 888-825-5225. This is the Ramsey Show. One of the questions I get all the time is, which life insurance company should I use

for my term life policy? A valid question since there are hundreds of companies out there with rates all over the place and riders and add-ons that are simply a waste of money. You need to get this done and make the right decision. That's why the only company I use and have recommended for over 25 years is Zander Insurance. Zander is a broker who shops the top term life companies for you and finds the best rates available from the only plans I recommend. They also save you time. Whether you want to work online, over the phone, or via text, their team will cater to your needs and help you make the right decision.

This is an absolute necessity, and Zander has made the process easy and convenient. Call them at 800-356-4282 or visit zander.com for instant online quotes. Welcome back to the Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Our question of the day is brought to you by Neighborly, your hub for home services. Go to neighborly.com slash Ramsey and download their winter maintenance checklist. It's free and it's full of tips to get your home through the colder months with no issues. Again, you can check it out at neighborly.com slash Ramsey. All right, today's question comes from Lucas

in Kentucky. He says, I'm 18 years old and earn $42,000 a year. I got into an accident this week and totaled my Camaro. I'm expecting the insurance settlement will be about $10,000 and I still owe $6,300. The problem is I want a new car. Don't we all? I'm into muscle cars. Aren't we all? And found a 2023 Mustang for about $46,000 I bet you did yeah I know it's a lot but I can get a loan at seven percent interest in 84 months with payments of $650 a month my parents said it's too much thank you parents for what I'm making and for being so young I'd like a second opinion from you listen we'll give you a second opinion a third fourth and fifth because i'm sure the booth guys probably uh agree with us jade might give you more than an opinion it might be a whooping by the end of this one i want this is not a good situation i would there's nothing i would love more than to to put a whooping on lucas but he's 18 and you know he needs a little did they stop teaching basic math in school did we just like

skip to the pythagorean theorem and calculus because in many cases yes like making 42 000 and you're gonna buy a depreciating asset that's worth 46 000 he doesn't see it that way though he sees it as i'm making 42k i live at home i have no bills i've you know the world is my oyster and i can easily make a 650 payment that payment. That's what he sees. And so I get it, but he asked for an opinion. He's like, the problem is I want a new car. We all want a new car. And we all love muscle cars. Nobody looks at a Camaro and goes, I hate that. I prefer my cars flabby without muscle. That's right. If you're offered, if you win the prices right and you're offered a 2023 Camaro,

everybody's going to be happy with that. Here's the confusing part, though. He says, I know it's a lot, but I can get a loan at 7% interest for 84 months and the payments will be $650. As though this is some kind of opportunity for stupid. I actually did the math for him, Jade. What is it? He'd be paying, get this, over $12,000

in interest alone. He didn't think about that. So this $46,000 car, you're really buying a $58,000 car. Oh my word. Making 42. And by the way, once you pay it off, it ain't worth close to 58. It's probably worth 25. That's a good fact. Because new cars on average lose 60% of their value in the first five years. That's right. That's right. Goodness. And he's going to sign on to an 84-month... You know what's funny? These car dealerships are so smart, Jade.

They talk about loans like they're babies. It's like, how old's your baby? She's 84 months old. Just say it's a seven-year car loan, because that makes you think twice. Yeah. In terms of months, we're like, I don't know, 84 months? Yeah, I think... A month is only 30 days

jade this will fly by i think he thought he's parlaying this settlement into a great opportunity he's like listen i'm getting 10 000 i only owe 6300 it sounds like after he applies the it it sounds well the way i read it was he's getting 10 000 he owes 63 so he'll come away with you know 400 or what 3700 yeah that he can use as a down payment on this car is what i'm thinking he's getting $10,000, he owes $63,000, so he'll come away with $400,000 or $4,000 or whatever that he can use as a down payment on this car is what I'm thinking. I don't think it's that he'll owe $6,300 after the fact. But even still, no matter how you slice this, it's stupid. It's stupid. And I get so many people think oh i got in an accident i'll just replace it with a brand new car and you know for what i've been through i should be able to get

what i want you know and that's not it if you've got thirty seven hundred dollars or four thousand bucks just buy a car in cash and slowly trade up think of this as an opportunity to not go into debt again um because i'm guessing the camaro that you had before, clearly you had payments on it because, you know, there you have it. He owes money. So let's look at this, Lucas, as an opportunity to kind of break that debt cycle and see what life is like without a car payment. Think about all the things you could do. My guess, like I said before, is you're living at home. Think how quickly you could save for the car that you want, making $42,000 a year.

At 18, that's amazing. Instead of trying to level jump. I wish I was making $42,000 a year at 18 instead of trying to level jump. I wish I was making 42 at 18. Yeah. This kid's very smart in a lot of ways. He is very smart in a lot of ways, but you have to be ultimately smart that you don't kind of go, oh, you know, get too big for your britches and think, listen, I'm doing good for myself. I can just jump into debt because debt is, it's interesting. When I was that age age I remember thinking people who had car let me be real I thought people who leased cars were like ballin wanna be a baller that's what I thought I'm like if you're leasing a car if you've got a credit card and you've got like a like a $15,000 limit

I thought that that's what you were supposed to aspire to and i learned the hard way that all that is is a facade and what's behind it is stress anxiety payments and i guarantee to get ahead i guarantee their instagram bio says entrepreneur and i'm like okay you're unemployed and you live with your parents bro like let's not pretend right like that you own owning a vending machine is you being an entrepreneur okay i mean goodness gracious y'all you sound like you're talking about somebody specific some days i wonder like am i a boomer that accidentally was put into a millennial body a little bit but that's okay i'm right there with you days anyways lucas don't do this please don't do this you make 42k a year save up You make 42K a year, save up and pay cash,

get you a little hoopty until you can upgrade in cash. Yeah. That's what I did. Uphill both ways. That's what I did. Good job, George. Good job. It wasn't long ago I was driving a $6,000 old Civic bumper half hanging off,

and I was proud of that thing. That's good. You paid cash for it. I had goals. I love it. So there you go. There's your question answered, Lucas, if that really is your name. All right, moving on to the phone lines. Bethany is in Salt Lake City. Bethany,

how are you doing today? Good. How are you? Doing great. How can we help? So we just very recently found out that I'm pregnant. Woo-hoo! And thank you. We're definitely planners. So, so far what we've been doing is we've been trying to put all of our savings into various thinking funds, but mostly focusing on a deposit for a house. But now that I'm pregnant, I'm wondering if should we totally pause on the house

and only focus on building like a baby thinking funds and the health, like our health bills funds, or should I equally doing all of them? I'm just not quite sure what to do. The baby is definitely priority in my book. And that may delay the dream of home ownership. It may not. We just have to wait and see. But are you guys debt free with an emergency fund right now? Where are you at financially? Yeah, so we're debt free. We're a single income household. My husband works. We have about four months saved on the emergency fund and about 25 grand in our home. Cool. So those are separate funds? Yeah. Okay. I just continue to save up and that all becomes savings in general. And then once baby and you

are home safe, we can unpause the dream and see where we're at with our savings account. And if you've got, I'd want six months. With a single-income family, I'd bump that emergency fund to six months. Then whatever's left over becomes your down payment fund. So we should take money out of the home. Like, I figure, I mean, I'm not far along now, so I figure we'll try and do what we can. But if we get closer, should we take money out of the home fund

to put in those other places? To make sure you have a six-month emergency fund? Yeah. Yeah, it's just a matter of labeling it differently, right? Okay. Because the money's the money. You got 50 grand total, whether it's 25 and 25 or 30 and 20. You know, the goal here is to have six months. I would put that in a separate high-yield savings and then have a different high-yield savings account or bucket for the home down payment.

Okay. Does that make sense? Yeah, it does. Good. Well, congrats on the baby. What's the due date? It's going to be end of September. Nice.

Fun. Love it. Exciting times. We're very excited. Yeah, hope that helps and hope you guys become homeowners one day as well. That's two really fun pieces of adulting. For sure. Having the kid, getting the house. But here's the thing, Jade. A pieces of adulting for sure having the kid get in

the house but here's the thing jade a lot of people go we have the baby now we need the room we need it i'm like because babies take up so much space it's a tiny little bassinet in the corner they're fine my child my first born son who will remain nameless on here he um we had his whole bedroom done his crib and everything he never even was in that room nobody told me that baby lives next to your bed for the first few months yeah at least six months this joker didn't even go in his bed until six or seven months so this idea that your two bedroom isn't enough because you had a baby and now we need to upgrade to the five bedroom house it's crazy yeah it's. It's crazy. It is crazy. But it's exciting. And I think you just feel like, oh, I want to get the baby. New stage. Yeah. Yeah. That was a big phase for us. We got the board

and batten in the room. Got to paint it a little blush pink. It's very exciting for me. She's never even been up in there. She doesn't even know colors yet. Let's be real. Might as well be agreeable gray to her. There you go. There's your Sherwin-Williams reference for the day. More of the Ramsey Show coming right up. Don't go anywhere. This show is sponsored by BetterHelp. This is the season for Halloween.

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to get 10% off your first month. That's betterhelp.com slash DELONI. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. You call us, we'll talk about your money, your life, whatever is going on. Celeste joins us in Guadalajara, Mexico. About time, Celeste. How are you doing over there? Hi. Hi. Nice to meet you guys. So I'm a grad student right now. I'm visiting my folks. And my question actually is about them. So they're asking for advice on whether they should take out a loan for a car, a used car, or whether they should

dip into their savings. Why would they, Why do you think that they would prefer having payments over using the cash they have? So I guess I'll say it in pesos, but they have about 400,000 pesos saved up. And then a used car, a six, seven-year-old car would be about 250,000 pesos. The reason I say this is because they're debating is because this is pretty much their only savings account. I mean, my father is the only one who works. My mother does not. They own two cars. One of the cars is pretty much on its last legs. And my mom is looking for a job and trying to find a way to reliably get to work. They would not, it's been about five years. It took them five years to accumulate what they have in savings. You know, to have an emergency fund, they would have to dip into what they have currently. Why did it take five years? Do they have any other debt?

They don't have any other debt. So they own three properties. They're all paid off. Both of the cars are paid off. And I don't think my father wants to sell any of them. So I think his idea would be to use the money that they have now and not take out a loan. I think he's pretty resistant on it now. And why are they asking you about it? I'm just a concerned bystander. Okay, so did they bring it up? Did they say, hey, Celeste, we're wondering, do you think this is a good idea?

Or did you say, hey, I overheard you guys talking about this. I wouldn't do it. Yeah, that's the second one. Okay, so they didn't ask for your opinion. You're just concerned for their financial well-being as a great daughter. Yes. Okay. Well, I just did the conversion here from Peso. So they have about $23,000 plus USD. Yes.

And they're looking to spend about $14,000 of that USD. Yes. Okay. And they would leave them with $7,000. I mean, that's still, they can then rebuild their emergency fund with the payment they would have been making on the car. They just use that to replenish the emergency fund. Yeah.

And just on a, theoretically speaking, I consider, I would consider, and again, we're having this conversation with you, not your parents. So you're probably right there with us. But if I'm looking at risk i'm thinking okay going into debt is creating a bigger risk than depleting my savings by half to avoid debt and i almost feel like they've got the equation swapped and they're thinking depleting my savings is a bigger risk than going into debt and that would be completely wrong because usually your debt the debts in your life are what create the emergency feeling, not lack of savings.

If something goes down, it's like, oh, I got to pay the debt off. I need the savings. Yes. So you don't have debt. You lower your risk. And so you're asking us how do you talk to your parents about this? You could tell them, listen, I care about you guys. I know you're not.

You don't need my opinion, but I care about you guys so much that I'm begging you not to take out this loan because it's going to put your future at risk. And you can show them some math. Some people need the math. Some people need the emotion. Maybe it's a mix of both where you say, listen, this is what this car is really going to cost you with interest. Here's what you could do with that free to payment. And worst case, he can sell one of the properties if something huge goes down. But my bigger concern is why it took him five years to save up an emergency fund. Is the income low?

Well, he's got these three properties too. Yeah. Well, one they recently inherited from my grandmother's passing. So they're renting that one out. My mother doesn't work currently. And my father makes about 50 with the rent from that property. Um, and his job, he makes about 50,000 a month in pesos. Okay. Okay. So that's about three grand almost. Yes. Okay. So that's, that's the part I'm looking at here is, okay, that's how many months of his income is it going to take to buy this car.

And when you do that math, it's a little more, it puts into perspective. And you go, all right, it's $14,000 divided by three. That's almost five months of him working to get this car, which is not bad. And it tells me in five more months, he can replenish that money. If he doesn't have a payment, it's going to free them up. And if their expenses are low and these rentals are cash flowing hey right yeah i mean but that would be minus like whatever monthly expenses sure do they have a lot of expenses um not currently both my brother and i are out of

the house so it's mostly just them right now. You said your mom's looking for work. She is. Yeah. Good. So how are you doing financially? Because what I'm looking at is I'm thinking, I'm thinking about my younger sibling, because I'm trying to liken it to what you're at. You're the kid trying to tell their parents what to do. So I'm thinking, okay, my younger brother, he's seven years younger than me. What would make me take his advice of him saying, hey, I heard you were about to go buy a car, Jade. Here's what I think you should do, right? I'm trying to flip that on its head and think,

okay, what would I want? I'd want him to be doing better than me financially and I can see it. I'd want to be able to look at him and go, he seems like he's got it together. Like he's always talking about paying cash. I've never seen him talk about debt. Matter of fact, I don't think he has any debt. Like I'd want to be able to visibly observe certain qualities that make me go, this is somebody who has their financial life together. So my question is, how are you doing? Right. Totally makes sense. I'm actually

a graduate student right now in the States. So I'm taking care of myself. My brother's in college. He's also, you know, putting his way through school. So, I mean, I currently don't have any debt other than seven grand in student loans that is on pause right now since I'm still in school. So that's kind of where I'm at. Okay. You know, you can attempt this. I don't know what your relationship is with your parents, but all you can do is float it out there. I think, like George said, you've got to say it in a way. if you're not saying it in a way that's like, here's what I'm doing, or here's what I've learned, then the chances of it sinking in is going to be little to none. And I think the best way that you can relate it to is probably your own debt and the mistake you feel around that. Like if you say, listen, I took out the $7,000 student loan and

I'm now realizing it would have been better for me to pay cash and here's why. And I took out the $7,000 student loan, and I'm now realizing it would have been better for me to pay cash, and here's why. And I don't want you to make that same mistake with this car payment because I know how I feel. And you guys, you know, that's the only way that you're going to be able to shift this in their mind as opposed to just saying, hey, you should really use the money you have saved. Right. Okay. That makes sense. Are you a Spanish speaker? Yes, I am. You should check out and have them check out our friend Andres Gutierrez. He's like Spanish Dave.

He used to be one of our personalities here, and he does a great job explaining these concepts to that community, and he has his own show on YouTube and radio and his own version of Financial Peace. So be sure to check that out. I think maybe he'll connect with them better than I can for sure. That's a good point. And that could be a good resource for them.

Absolutely. Thank you for the call. Thank you, guys. Bye. George, that was a deep cut. My man Andres. I was just thinking about him. I was like, man, they're talking pesos.

I'm doing calculations here. We got to send him to Andres. I feel like that's the only word I know. So you know howave does the scissors with the credit cards he andres has a machete so he's got a giant machete that he uses to cut up cards he's got a wooden block and it's it's so entertaining and he's a solid dude doing great things out there in the san antonio area you're telling me he puts the credit card on a cinder block it goes on this wooden thing and the credit card sits in there and then he'll just swipe him with machetes. That's dramatic.

It's very intense. That's very intense. But you need intensity to convince people to get out of debt. They thought we were intense. My goodness. There you go. That's about as cultured as I'll get this hour, Jade. That puts this hour of The Ramsey Show in the books.

Thank you to my co-host, Jade Warshaw. All the dudes in the booth. We got them all today. Austin, Ben, James, Zach, Nathan, Andrew, they're all hanging out. And thank you, America. We'll be back with you before you know it. This has been The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Jade Warshaw, and this is your show, America. So call us up at 888-825-5225. We will do our best to give you advice, and it's worth what you paid for it. Remember that if you don't like it.

And don't call in if you already know what we're going to say and you don't want to take it, don't waste the airtime. But if you need that confirmation to push you over the fence, because you know what you need to do, we're happy to give you a little pep in your step. Some people need to be a little firm. They need to be handled firmly. There we go. And that's what Jade's here for. She's the muscle. I'm just the eye candy that gets us through it all. Michael is up first in Wilmington, North Carolina. Michael, welcome to the show. Hey, thanks, y'all. Thanks for having me. I've been listening to y'all for a few years now. I'm just looking for some advice. My wife and I bought a house together in 2022, and she recently decided that she wanted to divorce and that she's

going to be moving out next week. I'm sorry. Um, I appreciate it. Me too. Um, and so I know a bunch of my friends and family have said that, um, you know, the only way to be able to take the loan over would be to refinance. And I found out through our mortgage company that they do have assumption of the loan process. And I was just curious which way might be best for me to go. That way I could get the mortgage and everything solely in my name. Yeah, well, that's great that your lender has those options. A lot of them, the only way to do it is refinance. But again, it's always worth asking your lender to see if they can do a loan modification or the loan assumption. And it sounds like, have you looked into the terms of that? It

sounds like it'll be the cheaper route for you to do a loan assumption if you can afford it and take on that risk on your own. Sure. They literally just sent over the email today. I'm at work, so I kind of went through it a little bit. And just even the numbers from that, you know, like you said, it can be kind of pricey. And so I wasn't quite sure what the refinance is. We haven't touched any of the equity in it or anything. So that's part of the reason why I was hoping that, you know, before I found out about their assumption details, might've been able to refinance and maybe use that equity for the stuff to refinance it. But when... What is she owed in this deal?

What? Have you guys gone through the process? Well, that's what i wanted to ask are there lawyers is she going to get a piece of this home and the equity um i i don't know um i'm not it's not like i'm trying to um it's not like i'm trying to do all this um like behind her back or or shady i'm just trying to try and i I guess, figure out the best option for me because I want to stay in the house. My father has just been put on hospice and he lives with me. Well, I'm trying to keep the house. I just want to know if you got like, did you guys say, hey, we're just going to figure this out ourselves? Or are there any lawyers involved that are saying

and kind of mediating this for you and saying, okay, here's the deal. Here's what it's going to be. I just don't want you to get ahead of yourself and this not be the terms of the actual divorce. If you go through all this and then it turns out you have to sell the house or do a cash out refinance to pay her portion anyways. And so now you've got two refinances. So that we're just trying to make sure you know what the next steps are before you make a big financial move like this. Sure, sure. No, we have not gone through anything just yet as far as lawyers or any type of agreement. I've been trying to work with her as far as some type of agreement.

How long were you married? The end of February will be two years. Okay. So depending on the, I mean, the judge is who's going to decide what's fair and equitable here. And so there may be a situation where he goes, listen, you guys weren't married enough to split this half and half. Here's what she gets. Here's what you get. You get to keep the house. Who knows how it's going to shake down. But I would absolutely work with an attorney, even if it's one in just mediation between you two to get all

this down on paper before we make a decision on what's next. Yeah, I definitely don't pull the trigger on any of this yet. Okay. Yeah, no, I appreciate it. I just wasn't sure if regardless of however certain ways went about it, there was a better way to handle it if I was able to assume or if refinancing was the better option. How much equity do you have in the house? I'm, I'm not sure, honestly. Normally I was the one just out working and putting the money in the account and I let her handle paying it. Have you guys separated bank accounts yet? Not. Well, we have one joint account, and we had one for the house,

and then we each had our own individual. Okay. I would separate finances to keep things clean right now. Okay. And it sounds like you're going to be paying the mortgage on your own. Yes, well, I have been. And how much is the mortgage compared to your take-home pay? The mortgage is $1,750 a month, and I bring home give or take for a month.

Wow, that's tight, tight, tight like a tiger. So it's almost half your income going towards this and if here's the thing if if let's say she gets a portion of the equity and you have to do a cash out refinance yeah well that's going to make your mortgage payment go up and so i don't know that you're going to be able to stay in this house based on how much equity you have and what this new mortgage will be i mean you already kind of't, even if that weren't a factor. Yeah, sure. Well, I like I said, I've been the one who's been paying for the house ever since we moved in. I work a full time and I try and pick up some side jobs here and there, too. But that was with her income, too, right? Was she contributing financially?

No, not not to not to the house. So you guys were just really scraping by then with this? Well, what I tried to do was I tried to be the one that went out and worked to cover the bills so that way she could stay home and focus on the baby and focus on school and not have to work. You guys have one kid together? Yep. Yeah, we just had a son seven months ago. I'm sorry.

So when you go out and work, you said you kind of close that gap. When you go out and do other jobs, what type of jobs are you doing and what are you bringing home in addition to your $4,000 a month? Well, it's not consistent, but I go out and I do mechanical services on the side. So I could bring in anywhere from, I don't know, an extra grand to extra three grand a month. Here's where I'm at. Listening to what you're saying and kind of what it's been and what you're bringing in

and the consistency or inconsistency of it all all with what George is saying, as it is, I think that your mortgage was already too high, assuming she wasn't contributing much financially there. And then like George said, if you do this cash out refi, it is going to cause your monthly payment to go up. I don't think that you can handle that. You know, you're going to sit and you're going to talk with the lawyer and you guys are going to figure this out. But if it were me, I'd probably try to walk away from this a clean break and get into something that you can afford monthly. That's 25% of your take home and is not contingent. One thing you don't want to do, and this is not just for you, but anybody, you don't want to have to side hustle to pay your mortgage.

If you're side hustling to make sure that you can afford your mortgage payment, something's wrong and you're out of balance. It's not sustainable. Yeah, side hustling is to do extra things like pay off debt and save for things, not to make sure you can clear your mortgage. Hang on the line. We're going to send you a link to our divorce checklist from our friend Dr. John Deloney on the Ramsey blog. This is The Ramsey Show. This is The Ramsey Show. I'm George Camel, joined by Jade Warshaw.

Friendly reminder, because we just went out during the break to the lobby and met some wonderful people from all over the country. You can come visit us and watch the show live. If that's your form of entertainment, is to watch people through glass, sit at a desk, and do a show that you could listen to on podcast, we'd love to have you. And people travel from all over just to hang out with us. We got two birthdays in the crowd today, Jade. This is how they wanted to celebrate. And George gives out hugs to every single person.

I joke that if you hug me, I'll break. I'm that weak and sensitive. So be careful. I go down easy. Well, Jade, we both love food. We do. And we both talk about money. And so we thought, what if we did a fun little segment on this show called Tacky or Hacky? Yes. And this is where I throw out something that people do, maybe that we've done, and you got to give your take if it's tacky or if it's kind of a money hack. I'm ready. So this is restaurant edition today. Restaurant edition. You ready for this?

Okay, and you guys at home, if you're listening wherever and you're with someone or you want to talk to yourself, you let us know. Is this tacky or hacky? Taking extra stuff from restaurants for your house. Napkins, condiments, plastic utensils.

What do you think? I'm going to mostly go with tacky. I think there's a line here all right uh mine is were they given to me yes or am i just grabbing a whole handful of condiments for the road right i was at chipotle yesterday i'm not taking we i only needed one fork i'm not taking five because they have they have the nice plastic forks i will say chipotle's utensil game on point it's sturdy right and i didn't take i will say sometimes i take a few extra napkins for the car not for my home yeah but i'm willing to admit that that's a tacky i i don't like chipotle's napkins gonna be honest like the brown cardboardy napkins

the brown we can do better even for a car situation. So I'm going to go mostly tacky, and it's hacky if it was given to you or if you're taking a reasonable amount. Now, I will save the chopsticks from- I do that too. Because they usually give you maybe one extra one, and it's nice to keep it in the drawer just in case one time you order and they forget. That's fair. That's hacky.

We've got that. All right, next up, ordering your drink with no ice, I'm assuming in order to get more liquid. I'm going that's hacky we've got that all right next up ordering your drink with no ice i'm assuming in order to get more liquid i'm gonna go hacky on that one hacky been there done that that's not tacky at all and it avoids it from just getting super watered down if it takes you a while to drink it now this depends on the kind of drink i mean some people i feel like with a fountain drink you need some ice in there it's just strange without it and you can always refill it you know what i? So it depends on the beverage. Well, let's add an outlier here because people go to extremes.

I might know someone in my family who would save a cup and bring it in the next day. Bring it back for a free refill? And get a free refill. That to me is tacky. That's beyond the moral line for me me personally so are you calling my family members tacky i'm not gonna report them i'm just saying if i did that my wife would be like really oh most definitely there'd be some eye rolls yeah that's extended family by the way not sam warshaw okay next up kids meals for older kids slash teenagers i'm going i'm going hacky i'm gonna go hacky because i mean smaller portion cheaper price

probably the correct portion what about if the menu says like 12 and 12 and below oh it doesn't matter even if the menu says 12 or below i like here's the thing i still to this day i'll go to chick-fil-a and i'll order a kid's meal and not one time have they been like sir is there children in the vehicle with you does it but i don't think it says that on their menu but if you go to Chick-fil-A and I'll order a kid's meal. And not one time have they been like, sir, is there children in the vehicle with you? Does it? But I don't think it says that on their menu. But if you go to a restaurant, it'll say on the kid's menu, like 12 and below. Now, the fancier the restaurant, the less likely I am to do this. You know what I mean?

Yeah. But if I don't need, I mean, some of these portions, Jade, you've seen them. Gargantuan. I'm like, yo, we're eating for three over here. You know, I got a little physique. I don't need that much. Wow. Okay. I think it's hacky in most situations but again if they say hey kids only i go all right no no big deal i'm not going to put up a stink about it what about okay again sorry i'm going rogue a little bit james because it's making me think of like trifling things i've seen

people do who shall remain nameless all right you go to the Mexican restaurant. They bring chips to the table that are usually free. It comes with a meal. Yeah. And you're really done with the chips, but you're like, I'll order another basket and I'll take those home. Oh, the to go chips scenario.

All right. I'll go hacky on that one. Is that hacky? I think I would say tacky on that. I don't, I wouldn't do it just to take it to go. I would say tacky on that. I wouldn't do it just to take it to go. I would get the chips and be like, all right, I'm really done with the chips here. My entree's here.

And these chips are going to go to waste. You know they're going to throw them out. Yeah. One would hope. So you're saying it's the motivation behind it. If you didn't know there was going to be leftovers, you take them. But you don't order it knowing you're not going to eat them. They don't recycle the chips off the table, do they? Yes, they do.

Yes. I got trust issues now. I used to work on a cruise ship. Let me throw this out here. I used to work on a cruise ship. You know, you go out at any restaurant, they give you a basket of bread. Yeah. And you know, you rifle through it to pick the piece of bread you want. They will 100% save that bread and put it in somebody else's basket. You're welcome. Now, it's gross, I know. Is that just cruise ship? I'm going to go with that's an everyday life, George.

I feel like the restaurants that I frequent, they wouldn't do that. They're too classy. And there's OSHA violations. There's too many issues that could go wrong. Sam and I went to a restaurant a couple of weeks ago and it was fairly nice. And when they brought out the bread basket,

I could tell it had a lot of crumbs in it there was a piece that looked like it had been broken off of the lavash i was like uh i'm not getting a good vibe about this bread basket well to be fair i told you guys don't go to applebee's after 10 p.m and you did it anyway you did it well played george camel okay let's keep going on this all right next up splitting meals hacky or tacky? Okay, I do this, so I think it's hacky. It's hacky. I don't think it's tacky. Here's where it gets hacky and tacky. Don't tell them you're going to split it because some restaurants- They'll charge you for a split plate. So don't tell them. Just eat it off each other's plate. Yeah. Well, I like to get an entree.

My wife will get an entree and then we'll kind of eat half and switch or something. Yes. Hacky. And some restaurants, I mean, like we'll get fajitas at one of these local mexican places it's tons of food in a fajita for one yeah and my wife and i split that and we have a great time so i don't think there's anything wrong with that i'm not doing anything immoral okay but what about this uh alcoholic beverage if you will splitting one of those. I mean, that's strange. Because cocktails are expensive at a restaurant. Yeah. I wouldn't split a, I'm trying to think of, you know, I wouldn't split a soda.

Maybe a glass. Well, sodas have free refills though, so you could split one. Yeah, but then the server, that's tacky. That's tacky, splitting a soda so you get free refills and then you each can have your fill of. Because you're trying to avoid paying another three bucks for your soda. But I think a cocktail is fine because those are wildly expensive. There's no free refills on cocktails. And some people might not want to handle a full drink.

Okay. So that one's fair if it's alcoholic. If it's not, I think it's a little tacky. A little tacky. All right. Next up, ordering an appetizer or dessert only. Hacky! Yeah, I don't know what's wrong with that money now here's the

thing the real hack is skip the apps and dessert and get the entree here's what i do well here's where the motivation part of it comes in like what was your motivation going in so when you're getting out of debt right and you're like i'm not going to spend a lot of money and your friends are going out but you're like i'm not going to go out and spend money i'll just go for the company there's always a friend that feels bad and is like, you know, I got yours. I'll get yours. So if you say yes and you're like, I'm just going to get the soup

or I'll just get the side salad. Or I'll get a water. And then you're dipping your little grubby hands into those fries that we got. Oh, hey, that's tacky. There's another move. I think if you're just honestly like, I'm going out. This is all I want. Definitely hacky. But if you have a motivation. I'm going out, this is all I want. Definitely hacky.

But if you have a motivation. You know what's tacky though? And I've been in this situation is people go, well, let's just split it all evenly. It'll be easier. And then I'm like, whoa, I didn't get the appetizer or the three cocktails. I got water and one entree. I'm like, hold up. You're not splitting this evenly.

I know. That's right. It's tacky to be the person who says, let's just split it evenly when you got the most that's because it's always the michael jordans and the lebrons that say that and i'm over here the sixth man i may not make what they make i'm mugsy bogues out here okay the sixth man does not make what the point guard the starting point guard makes and so when you're out to dinner with your friends you got to play you got to think about that before you say hey let's just all split it and you go and order the filet mignon, George, like you did. I'm just kidding. That's fair. Okay. Last one, getting soda at the soda fountain

when you didn't order a soda. So you get the cup for water. That's legit stealing. That's tacky. That's tacky. But you know what I have done is the right next to the water, there's a soda button. There's no syrup. It's just soda water. All right. I'll do that with a cup of water. It's tacky. But you know what I have done is right next to the water, there's a soda button. There's no syrup. It's just soda water. All right. I'll do that with a cup of water. It's still water. Listen.

No syrup. I didn't cost the company any money with their paying for syrup. For the OGs, you already know. You order water and lemons. And go ahead and put your own sugar in there. I make my own little LaCroix. Like Chipotle, get the soda water. I squeeze a lime in there.

You got a lime LaCroix for free. Okay. There's your Chipotle hack. Listen, I think that it's tacky, but... Thank you, Jade. This has been Tacky or Hacky Restaurant Edition. Hope you guys enjoyed that and budget for it, whether it is tacky or hacky.

You're listening to The Ramsey Show. I george camel joined by jade warshaw the phone number to call is 888-825-5225 david is up next in burlington vermont david welcome to the show hey guys thank you so much for having me sure how can we help today so i have a small problem it seems like compared to some of the other callers. But I run a small auto glass business here in Vermont. It is new. It's about seven months old. And I'm looking to get a little bit of money back in taxes, or I'm getting money back, about $2,000 worth. The problem is I do have some credit card debt. I have about $2,800 in credit card debt.

Um, and so I'm assuming what you're going to tell me is to just pay the credit card debt, but I do have an opportunity to invest the money into, um, the business for the calibration systems that I need to do or need to use in the industry. Um, so I just don't know if I should just pay off the debt immediately or if I should invest it into the business. Well, you're right. You may not like our answer, but do you have 800 bucks in savings as well, cash in the bank? I don't. Okay. I've pretty much thrown every bit of money I have into the business at this point. Well, to me, that's the more glaring problem, is that you are on thin ice already, my friend, as far as this business and your cash flow and your personal financial world. And so before you put another dime into this business, we've got to become debt-free and

then cash flow once we're debt-free, once we have an emergency fund, to then grow this business. How long can you get by without the calibration systems? Well, that's the thing. So right now, I'm subbing the calibrations out to other shops. I'm not essentially losing money, but it's money I could be making. Right now, I'm getting by.

The issue isn't getting by, it's just making more profit. Seeing the potential to make more profit. Are you working full-time at this business? I am, yes. Okay. Are you working full-time at this business? I am, yes. Okay. Are you able to take on a side hustle while it gets off the ground

to bring in some more income right now? What is this bringing in for you, net? That's the thing. To be completely honest, I haven't even tracked it. I know I'm making enough to pay the bills, and that's it. Okay.

Is this just you? It is, yes. Okay. Okay this just you? It is, yes. Okay. Okay. Okay. You said seven months old. Are you putting aside, since you're not really taking inventory, are you putting aside for quarterlies and for taxes?

Yes. So the taxes are handled. I actually just had a huge scare with the state. And they thought I owed $26,000. Yikes. I was able to resolve that luckily. But yeah, so right now the tax isn't the issue. Okay, good. Listen, I'm with George.

I would, A, start getting a handle on what you are making because you got to understand if your business is doing well and what it's doing. Because then you might look at the numbers and go, I should be able to pay for this out at the numbers and go i should be able to pay for this out of the business and not my tax return you know but i do think that you should pay off this credit card debt first okay even though the credit card debt is more personal versus the business everything's personal man guess who signed those business documents

david gotcha okay so yeah there's really no such thing as business. It's all in your name and therefore you owe it all. And so I want you to have as little risk as possible, run this business debt-free. I love that you're wanting to cashflow these systems, but you'll get there once we have more financial footing and foundation underneath us. Good. Gotcha. Okay. Thank you so much. Yeah. I would pause on this. Even though you could be making money, any opportunity to do something that puts you at risk is not an opportunity. And whether that's going into debt or investing in the business when you have debt, it's all the same. And you've got to get that emergency fund in place ASAP. But I am glad, you know, you get a refund instead of owing $26,000. That is quite the scare.

And I know it's tax season. A lot of people out there, Jade, are now filing and getting their documents together. I want to let them know we have a great free resource at ramseysolutions.com slash tax. And on that site, you'll see my pretty face along with Dave's extra pretty face. And we'll help you figure out, number one, is it worth filing with a pro or can you do it on your own with tax software? We also have some really great free resources. I use these every year. I go to the site and I download the personal checklist for taxes and it has every single document I could need. I love that. So I go through that and I pull it online,

log into the site and I can knock it out in a real short amount of time. There's also a really great beginner's guide to taxes that is super helpful. How do income taxes work? What do you need to know for the 2024 tax season? How to file? What about deductions and credits? How to choose a tax advisor? Filing an extension? The truth about tax refunds? It's all right there. I can't believe it's free, Jade. And so go to ramsayclusions.com slash tax to get all of those resources. I promise you it's going to give you, it's going to help you burn less brain calories this tax season. That's so true. Have you filed yet? I got my appointment to file and I've got all my documents ready in on my computer in a folder. Everything's labeled perfectly. My wife

is like, how do you know all this? I'm like, I don't know. I'm just a giant. There was a glimmer in your eye just now when you were talking about it. I'm not going to lie. Spending three hours on a Saturday doing that was somehow invigorating. It was like cleaning out a closet. You know what I mean? It just feels good once you're done. Satisfaction. I get that. All right. There we go. We're moving on to Philadelphia. Matt joins us there. What's going on, Matt? Hi, how are you guys doing? Great. How are you? Good.

So I just started listening to the program about six months ago or so, and I have a general question on finances and then another question on potentially getting married. So I'm following the program, not perfectly, but I'm trying. I have down about $3,000 in credit card debt. My biggest debt is actually I have down about $3,000 in credit card debt. My biggest debt is actually, I have to pay back. I'm visually impaired and I have to pay back social security. A substantial amount, about $80,000, but that debt is actually interest-free. So I've been just paying the agreed payment basically and attacking my credit card and my mortgage, which is down to about $73,000.

Kind of in paying them both. I know that's not the exact way to do it. I'm just about to get rid of the credit card debt. But my main question was with all that, I'm still investing through work 6% because they match the 6%. Should I be stopping that completely until the debt is gone? Yeah. You know, you said you listen to what we teach and you're not doing it perfectly. I don't think you're really doing it at all in our way. I think that you have in your mind that you want to pay down your debt.

But the way that we would teach to do this is very different than what you're doing. So I'd like to kind of call out the major differences. But I think you know what they are. What's your income? I guess it's just 64K. Okay. I mean, right now you're paying off your mortgage along with your other debts,

which we would tell you that's further on down the line. Baby step one, you get $1,000 saved first. And then baby step two, you pay off all your consumer debt, everything except the mortgage. So you're really flip-flopping it. Do you have the $1,000 saved, by the way? Yes. How much do you have saved?

Around $4,000. So you can knock out the credit card debt today. I want to call out the fact that you're really not doing our plan at all, even a little bit. My main concern was I have to have some housework done, like a roof on the garage. Okay. I wanted to save a little cash to potentially pay the person to do it in cash rather than... Okay, so it's like a sinking fund. That's my safety net, I guess, at this point.

That's the only reason I haven't done it. How urgent is that roof over the garage? Is it, like, falling apart? It's not falling apart. It's got a slow leak. I mean, if you had to say, what's the timeline on this thing? I need to get it done soon. I was kind of waiting for the winter to get over,

but probably in the next month or two. Okay. So, okay. What's it going to cost? That's a good question. I'm not really sure. I'm thinking somewhere around $1,500 to $2,000. Okay. So, okay. What's it going to cost? That's a good question. I'm not really sure. I'm thinking somewhere around $1,500 to $2,000. Okay. Okay. So you've got a little extra there. Find out exactly what it is because this is money, all this money, when you just kind of keep it around and hoard, it's not to say that you have lots of it, but it's money that could be going to work for you. So if this thing is only going to cost $1,500 or $1,100, you've got another $1,300 here that could be helping you right now.

So let's get a clear estimate on that. I want you to stop investing. I understand that you're getting 6%, but that's a lot of money that could be back in your pocket for you to be paying off these credit cards and really paying off the Social Security. I'm not sure. You probably don't have to go into it, but I'm not sure how that happened. But $80,000 is a lot of money. Regardless of it's interest free, it is a weight on your body.

And I want you to get that paid off. So I want you to stop on the mortgage, wait until baby step six, which is when you're supposed to do that. And right now, I really just want you focused on paying off this debt using the debt snowball.

And that's how you're going to do this. That's how we teach to do it. So if you want to do our plan, that's the way it goes. And freeing up that investment, that's $3,840 a year. That's $320 a month. That'll make you feel some progress instead of doing 17 things at once without making any. So we hope you follow our plan all the way, man. That's the only way it works.

This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. And while you're enjoying this show, if you could do us a tiny but huge favor for us, hit the share button. Hit the follow button. Hit the subscribe button. Leave a review. Leave a kind comment. Send a link to your mom and say, hey, mom, I thought you'd enjoy this show. I know my mom's watching right now. She fills me in.

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So I'll do better, Mom. Smash that subscribe button. Smash it. We're doing great. Thank you. You guys are the marketing plan, and it's free to you. This is a free show for you, and we appreciate you being here. Bill is in Boston up next.

Bill, what's going on? Hi, guys. Thanks so much for taking my call. I'm 51 years old, single. I'm a homeowner with $50,000 left in the mortgage, a value of $750,000 in the house. I have a retirement of $157,000. I started all over 12 years ago when I got divorced. I've got about saving, I've got $10,000 for savings, no credit card debt, no car payment. And I have a Vanguard target retirement of a 2040 fund as well. You said 240? 240, yes. It's a target date fund that goes until $2040. Oh,

$2040. I'm sorry. I misunderstood you. Okay. Okay. All right. What's your question today? Should I be doing anything else? The past few years, I've put about $18,000 into my 401k. I just want to get ready. I'm working hard not to have debt. I don't do much. Do you have anything except the mortgage as far as debt? No, sir. Great. And so if you're following the Ramsey plan, this would put you at,

I know you found us, so let me lay it out for you. Baby step one, $1,000 emergency fund. You're through that. Baby step two, pay off all consumer non-mortgage debt. You're through that. Baby step three is three to six months of expenses. Do you have that with the $10,000 or do you need more than that? My guess is more.

If you added up six months of your expenses to run your house, is that going to be you? Yeah, I don't have six months. Would that be closer to $20, for you? Yeah, it'd be closer to 25, yeah. Okay. So that's a good goal for you in the savings. And then beyond that, once you have that 25 saved, then we can move on to investing 15% of your income into retirement. How much are you investing now percentage-wise? 20.

Okay. So you could dial that back to 15, and then whatever's left over, you can throw at the mortgage and get that knocked out. Yeah, I wasn't sure. I had a feeling you were going to ask me to back it off a lot just to bang out the mortgage. Well, you're 51.

My goal for you, and I think your best path to wealth and being secure in retirement, is to have no mortgage payment, no debt whatsoever, and have that nest egg building. And so that's going to also decrease your biggest fixed expense. What's your mortgage payment? It's not much. It's just $500. Well, well without taxes just mortgage alone is 500 okay plus taxes and insurance so you'll free up 500 bucks once you get rid of the mortgage which will be helpful in retirement okay so and the good news is at over 50 you're going to have some catch-up contributions and so once the mortgage is paid off you can increase investing to 30 40 percent of your income be maxing out everything. Oh, I didn't know that.

So you're able to contribute additional money that I'm not able to at 34 years old. But once you're over 50, you can contribute more to that 401k, more to the IRA. And so that's going to help you to build up that nest egg faster as you race toward retirement. What can you max out at your 401k at 51? Let me see the 2024. They just upped it. Let me check on that for you with my handy dandy laptop here. Here we go.

Okay, I am seeing... Well, George looks for that. What kind... I'm just kind of curious, what set you on this path to start paying off your mortgage and doing all of this? If you're, I see on here that you're kind of new to Ramsey. So what was it just you realizing I want to start over? Uh, I just never liked that. I got divorced. Um, I, uh, I carried a lot of debt after that. And the past, I'd say, four or five years is when I...

It took me about seven years to really finally get out of it. And now I'm able to do the 20% for my 401k. You know, I want a future. I don't want... Well, you've got a taste of the freedom on the other side, getting rid of all that debt, too. Right. And I don't, you know, I mean, I don't do any,

I like to fish, I like to hunt. You know, I know a little bit of money goes to that, but that's just a few thousand dollars a year. That's my thing. Yeah, you don't sound like you're living a crazy frivolous lifestyle here. You're doing a lot of the right things. And I found the contribution limit for 2024,

it's 23,000. And then you get to contribute an additional $7,500 on top of that. That's significant. So that's pretty serious. You're putting over $30K in that 401K as you get in your later years working. What's your income? Depending on overtime, I would say I average about $85. Okay.

And we've got a great investment calculator on our website that's free, Bill. You can jump on there, ramsaysolutions.com, and you can start punching in these numbers and going, all right, I have 157 saved right now. If that just grows and I keep contributing, you know, 500 bucks a month, 1,000 bucks a month, you can see exactly what you'd have over time. And I think that will be an encouragement to you to go, oh, okay, I'm going to be okay. Another 10 years of compound growth and investing with no house payment. You could have a pretty decent little nest egg there. And I imagine you're going to be able to work in your later years. Do you have a goal in mind? I would love to be 65. Okay. But my Social Security, I went down to the office two weeks ago, and it's 67 for me. So if that's it, so be it. But they told me 67 at my age right now is when I would be able to retire.

Well, I just popped in some numbers for you, Bill. You're 51 at 65. If you keep contributing to this 157 with 10% return on average, you'd have 1.3 million sitting in that nest egg. Is that, okay, what is that with, what is, what is it that I'm contributing every year to make that happen? That's at 1875 a month. I just put on a random number in there. That's 22.5. So that's even below the current limit without your catch-up contributions? So at 22.5, now until 65. Now until 65, 22.5, that would be how much? 1.1? 1.3 million, my friend. So start dreaming. A lot can happen in 14 years with a little bit of consistency, and you keep staying on this plan, and you get rid of that mortgage.

But again, you got to do these things in an order because a lot of people, Bill, what they do is they try to do 17 things at once. And the beauty of the baby steps is it's focused. And so while you're going to be investing 15% while paying off the mortgage, as soon as that thing's knocked out, you can weigh up that investment. And you remember you also freed up 500 bucks from that mortgage. Right. Would you suggest that I just stop my 401k for two years, pay off my mortgage, and then get back on it? No. That's two years of compound growth you'd lose. The one thing that I would do, you may want to pause temporarily to get that emergency fund in place. Because getting 20% of your income back to save up that 25K,

that's going to protect you. Because a lot of times what happens, Bill, is people have one of these emergencies later in life, and it might be a $12,000 emergency. You don't have $12,000. So what do you do? You go into debt, moving you backwards, and it halts your wealth building journey. Okay. And that's baby step three to have six months. Exactly. All right. And Bill, I'm going to send you a copy of my new book, Breaking Free from Broke. It'll walk you through all of these baby steps. It'll talk about wealth. It'll talk about investing in mortgages. All of that stuff is in there. And I hope it gives you some confidence for your retirement. But I

feel good just looking at a calculator. Sometimes the numbers is exactly what you need. It is. You know, I think about that statistic. It says 52% of Americans feel that they're not prepared for retirement or that they don't have enough saved. And I sometimes think that that fear and that anxiety could be remedied if people just looked at the actual numbers instead of assuming they don't have it or assuming they can't do it. When you start plugging real numbers into that calculator, it can give you peace and it can help you see what you need to be doing so that you can have the retirement that you want.

So that's a good word. Knowledge is power. And listen, it's not too late for you, America. If you're 51 and you only have 100 grand in retirement, it's not too late. Look at Bill. He's already about a millionaire and he's going to be doing just fine

10, 15 years from now when he retires. That puts this hour of The Ramsey Show in the books. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Jade Warshaw this hour. The number to call is 888-825-5225. Don't wear it out. You call in, and we'll talk about your life and your money. Elizabeth kicks us off in Atlanta, Georgia.

Elizabeth, how can we help today? Hey, thank you guys so much for answering. Absolutely. Well, Austin answered. He just then patched you through to us, so you can thank Austin for that. He's a good man. Thank you, Austin, and thank you for having me on. So I'm currently a college student, and I am getting all of my college paid for by a family member right now,

and I'm renting, again, through that family member. And I'm in school for interior design and I do want to get into real estate after I graduate. So I'm trying to think of a way that I can get set in the right foot after I graduate per se. So I would like to propose the idea of buying a house to this family member and then possibly buying it from them after I graduate. Oh. And I just want to know if that's a good idea. Hold on. They buy it for you? They buy it. I live in it until I graduate. And then once I start making a steady income, buy it from them. That is a tall order, Elizabeth. It is. It is. It is. It is is but with the rent I am paying right now buying a house

would be cheaper in the long run but you're not buying a house hold on I'm sorry I don't mean any harm so you said it's the same family member so the same family member that is allowing like paying your rent now and paying your way to college. You mean to tell me you're going to go to them and say, hey, why don't you also buy a house for me to live in? And then the assumption is that you'll buy it from them because you just get to decide when they're going to sell their house and who they're going to sell it to. Well, this, I mean, this is the proposal. I, I, no. Why not just you get yourself in a position to buy a house why do they have to be involved because straight out of college i won't i don't have but you don't have to be able to buy a house that's how it should be you don't have to be myself up

in the right way yes but you're not the one setting yourself up you're trying to have you're trying to have somebody else prop you up and what what does well for us as adults is when we form and craft our way through life financially listen i'm so happy that somebody going to college debt free right that's great but once you graduate listen buying a house is not just kind of like a willy-nilly thing hey why don't you buy this house for me I'll live in it and then when I'm good and ready you can sell it to me that's um I don't think you understand kind of how how much you're inserting yourself into that person's life and deciding the timeline on their financial investment I and I get that you don't

realize that but what George and I are trying to get at is you don't have to, we all have this checklist in our mind of, I go to school, I get my degree, I get my big girl job, I get my car, I get my house, I get married, I have my kid and it's like we're trying to check these things off the list to tell ourself

that that's what makes us successful and it doesn't have to go that quickly. The fact that you're in school without student loans, that is a major win. The fact that you're in school without student loans, that is a major win. The fact that you are going to graduate without student loans, major win. And the fact that you are going to get a job in your field, that's thing one.

And then you're going to be able to sustain rent and understand what it just feels like to have that responsibility because I don't mean any harm, but you haven't had to assume any financial responsibility yet. So this idea that you're just- I have, I have. With what? I I did I did live by myself for two years with no financial stability

from anybody else and then once I decided to go to school then I was given the opportunity to have my life paid for but I did I did rent a place by myself 100 on my own okay that's good I'm glad you did that i think that you should do that again when you come out now with this this is the job i want i'm in the career field i want pick a place in town where you want to live there is a big part to that having the three to six months saved up and just walking through this and being you elizabeth and standing on your own two feet in no world would i think would I say that it's a good idea to say um who is the family member by the way it's a grandparent no way would I say grandma

grandpa will you buy a house worth x amount of dollars and me be the renter paying full rent and because here's the thing we're I'm just assuming are are you renting at cost or are they charging you a real rent where they're able to make some money on this investment that's that's something I would have to talk about with the grandparent that's a big deal so for you to even make the assumption listen I'll just rent at cost you won't make any money on the renter you know and whatever it appreciates whenever i'm ready i'll buy it because they might be ready they might want to hold the property longer like what if that's the case that they're like listen this the market's not great right now we understand that

you want to buy it but it's not great for us there's so many factors and volatilities there that have the ability to make you know the relationship not the best that it can be. Yeah. How many more years do you have until you graduate? I'm supposed to graduate within two years. Okay. So you graduate with an interior design degree. You said you wanted to go into real estate, as in be a real estate agent?

No, just I want to own property. Okay. So you just want to be a homeowner? That, but I also want to be able to own other properties. Like lots of properties. To rent out. Okay. So you just want to be a homeowner? That, but I also want to be able to own other properties. Like lots of properties. Okay. You want to go full monopoly here. All right. And is the goal to be working full-time in interior design?

Yes. And so you'd start off working for an interior designer, I imagine? And then work your way up to maybe starting your own interior design company one day? That is the hope. What's starting salary? Like when you come out of college, what does an interior designer in your area earn? It really just depends. I don't plan on staying in the area, but it can start anywhere from $50,000 a year to maybe $80,000.

Okay, $50,000 to $80,000. So let's say $65,000. So you come out, so you come out you're making 65 you've got no debt tell me more about your personal financial situation about my financial situation yeah um i have a paid off car i have two thousand dollars of my own separate money i've been doing commissions like little side hustles, and saving that on my own. So I've got $2,000 saved up of my own personal money, and it's working its way up right now. And what's your rent right now? Do you pay rent?

My rent right now, my grandparent does. It's $2,500 a month. Well, you just said the mortgage is cheaper than rent. If I was to get a house that was, or this is all very hypothetical, but if there was to be a house that was bought. Then that is assuming that you're paying it at cost, that you're not going to. That's my worry is there's a lot of assumptions here. And one is that renting is just, I might as well get a mortgage, $2,000 in rent, $2,000 in mortgage. It doesn't work like that because there's property taxes there's insurance there's maintenance there's all the surprise repairs

and you have two thousand dollars to your name i'd be scared out of my mind if i had two grand and i was a homeowner well she's gonna live in the parents house until she's right she's gonna ask the grandparents to work your tail off get a down payment and work on just continuing to stack up cash and when you're ready to be a homeowner, you'll be a homeowner. But I would not try to leapfrog this and shortcut your way there and ruin relationships over it. Your grandma has done enough. This is such a blessing. And I would let that be your setup for your future. And grandma, if you're listening, don't do this deal. Because you might be listening to grandma, granny and grandpappy. Don't do this deal.

It's not a good deal. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. You call us. We'll talk about your life and your money. Jade, we were talking during the break,

and I thought this might be good content to talk about on the show. What's that? I got an email from the Social Security Department with my yearly statement. Okay. So I thought, all right, I'm a young buck, but I'll open this up. Let me see what's inside this bad boy. Uh-huh.

And it was pretty interesting to see how much money the government thinks I will be given when I'm the ripe age of 62 or 70. And I wanted to break this down because we get this question frequently on the show. People are asking, hey, when should I take Social Security? Will it even be there for me? Note on that part, there's actually a spot in the document where they know that people are concerned about this.

So like, hey, we want to give you confidence in your future and retirement. So click this PDF to show how we'll be there for you. Well, here was the rousing confidence booster. We know that at least until 2034, the money will be there. Yeah. And I was like, okay, 2034, that's 10 years from now. So 10 years from now, they're not going to have 100% of the funding to keep Social Security going. And we know this.

And they encourage me by saying, hey, listen, even if nothing changes, we'll still be able to pay 80% of each benefit due. Because that's fair. Because I paid into this thing for my whole life for them to then discount it. keep in mind that the benefit was only at a portion of your exactly so they're giving you 80 of what was already what was only a 40 benefit thank you to begin with so uh that we're at 2.83 trillion in the fund in the trust funds as it stands today and so that's why um i encourage people especially the younger generations, do not rely on this. This is icing on the cake. And I talked about this in my new book, Breaking Free from Broke Jade. Can I tell you what I wrote?

Hit me. Research from the Fed reveals 26% of non-retired Americans have $0 in any kind of retirement account. That's one in four non-retired people. This is not great. And in research from Ramsey Solutions, 48% have less than 10 grand saved in retirement. So that's going to get you about what? Three months into retirement if you're lucky. That's... So then people are going,

well, Jade, at least I'll have Social Security. Well, we just showed you how that's not going to be enough to get by. Here's the real numbers. The average monthly benefit in 2023 from Social Security was around $1,700 a month. Try living on that and you'll see why we call it social insecurity. That's approaching the poverty line. That's $1,700 a month. And by the way, that's the average, Jade. Some people get less than $900 a

month. Wow. And here's the last stat. 52% of workers have never stopped to calculate how much money they'll even need in retirement. So half of them are just YOLOing and fingers crossed, head in the sand. Yet again, let someone else worry about it. Yet again, assuming that the government will be there to handle them financially. Listen, I will tell anybody who will listen, you need to, if you want to be thriving, you want to be thriving during retirement years, not just surviving and scratching by and and then there's the scam i'm going to just call it a scam george where it's like okay if i take social security early at 62 i'm only going to get it this much so i'm going to wait till i'm fully aged

you know where i can get the full benefit but if you wait even longer you get more money this is what we need to talk about yes and this we do need to talk about it because i did the math for you i just talked with the uh i think it was cnbc i was talking to them and i was saying listen if you don't have to like if you're going to work beyond 62 start taking social security you know your boy's gonna take that money out the day it's available and invest it george give him the math okay i crunched the numbers for you because you know i'm a nerd and I needed the numbers. So at age 62, if I took out my benefit and I started getting that every month and I invested that whole portion, let's just say into a taxable brokerage account, not even in retirement account,

and let's assume 10% rate of return. From age 62 to age 80, starting from $0 in this account, I would have $1.45 million. Just from extra money that I took immediately, I would have 1.45 million dollars. Oh, wow. Just from extra money that I took immediately when I could take it, right? Yes. Now, if I wait till 70, of course, people go, well, George, you're going to have, you know, a lot more money coming in from Social Security every month. Right. Yeah, but I also lost out on eight years of compound growth.

So even investing the larger amount for 10 years from age 70 to age 80, at age 80, I now have $921,000 in that account. Listen. So that's a difference. Get this. Because I took Social Security as soon as I could and invested it instead of waiting until 70, it's a difference of over half a million dollars.

Guys. To my net worth and to what I can pass on to my grandchildren. What I want to say, because George, you laid that out perfectly, but I know there's still people who feel this weird sense of fear about even considering that as an option. It's like, well, the government's giving me that money. It's for my retirement. I'm like, number one, the government's not giving you anything. That was your money that you paid in and you're only getting a portion of it back. Let's be clear about that. The government doesn't gift anything. It's just redistributing all of our money yeah you're getting back your money you gave it to them and they invested it poorly at like a 2.2 percent

return and now that's part of the reason here that we're not having enough to fund everything they're giving your money back to you so you can take it and do whatever you want with it and what george is suggesting and what I'm suggesting is invest it. Invest it in something that gets better than a 2.2% return. Because at the end of the day, they were only going to provide 40% of the lifestyle you've been used to living. You can't rely on this. And after 2034, that 40% goes down 80%. That's crazy.

That's critical. This is why it's called social insecurity. Get this camera on me right now. Here's the deal, America. Go fund yourself. I said it. Live on the Ramsey Show. Do not rely on the government

to take care of you with this terrible plan, especially those that are younger because it may not even be around. And if it is, it's going to be pennies compared to what your parents got and their pensions and all these wonderful ways they were able to just not save for retirement.

But it's going to be on us, Jade. And that's why we tell people invest early. That's right. Get out of debt, get the emergency fund, get to investing. Compound interest is your best friend. And if you just do the simple thing, be the tortoise instead of the hare. That's right. Avoid the crypto. And well, my buddy said I need to get an annuity and a whole life insurance policy and i saw this rapper on his tiktok video said this is what the wealthy do just invest in your 401k i promise it's not a scam 80 of the millionaires we studied uh said the 401k was the number one vehicle yeah your retirement employer plan it is so boring and yet it works when you just invest in over time, mutual funds over time. The S&P 500, the overall stock market has returned 10 to 12 percent since its inception.

That's the yeah, it's almost like you boil it down to just these. If you can, in the course of your lifespan, you know, we strike out when we're 18, 20 and most of us are going to work until we're 65, God willing, maybe even 70 if you want to. But if you can do three things, if you can just pay off your debt and live a debt-free lifestyle, and so that you're entering retirement without consumer debt, then if you can do one better and invest monthly, regularly when the time comes, so you've made it a habit of investing. And if you can enter in retirement without a home mortgage, like three goals you have in life. you can do that you are golden and when you do that george you don't need as much of a nest egg if you can enter into retirement without consumer

debt and without mortgage debt suddenly this need to have all this giant money you're like okay i've i've eliminated so much of the payment so much of what's needed that that you needed before that you don't need to have, you know, this. When you decrease your risk, you increase your peace. That's right. It's that simple. And so when you do that, and luckily for my wife and I, we decided to do that early. We thought, what would it be like in our 30s to have no mortgage payment,

to be investing for a future, now bringing our daughter into this world? Yeah. It's just a different way to live. We're not as worried about inflation and what if there's a crash and what if the pandemic... We just get to live our life with peace. That's right. Because we don't have payments.

And that's what I want for everyone out there. And investing consistently, everyone's arguing about net worth and what... Right. Your home equity. I'm going, listen, I'm not touching this money. That's right. We got margin in our day-to-day life

until I'm 62 and tap into social security and those investment accounts. And Lord willing, we won't need much of it. Yeah. What we're saying is a good man leaves an inheritance to his children's children. And you can't do that if social security was your only out. That's it. Like you, you just stopped and said, okay, I'm done making money. I have no assets and social security is there. You can't leave anything to anybody like that. And do not rely on your kids. We take enough calls in the show where relationships are destroyed because parents are relying on the kids. The kids are relying on the parents. They didn't communicate. They didn't invest for retirement. And they're calling us a 65 going, we have nothing saved. What do we do? Get a time

machine. I mean, there's not a lot you can do. You can get out of debt. But folks can break the cycle today. There are people who can start breaking that cycle today. Be one of those people. Wealth gained hastily will dwindle, but whoever gathers little by little will increase it. Be the tortoise. Be a crockpot in a world full of microwaves, my friends. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. And in the lobby on the debt-free stage, we've got Tony and Hypatia. How are you guys doing?

Doing great. Well, I can tell by your Ramsey swag t-shirts, live like no one else, debt-free. You're here to do a debt-free scream. That is are you guys from Hammond Indiana wonderful and how much debt did you pay off three hundred and one thousand dollars wow and not a penny less okay and how long did that take four years and seven months nice wow and what was the range of income during that time? We started at $60,000 and ended at $123,000. Let's go. That'll do.

I like that. What do you guys do for a living? I'm a flight attendant and a recent FCMT graduate. Financial coach graduate. Nice. Went through our financial coach training. Yes. That's cool.

Yes. And I'm an assistant principal wonderful okay so let's talk about this three hundred and one thousand dollars what kind of debt was this oh it was student loans a primarily primarily student wow yeah 180 i was the smart one she's like i have no problem pointing at you for this i have a semester of high quality college education so it's all his master's degrees so a lot of education what else was in the mix 401k loans two phones uh two iphones two cars credit cards all of that wow just the normal typical american lifestyle yeah yes yes Yes. Yes. So just a little potpourri of that, if you will. Yeah. And it kind of started when we actually had our

second oldest son when my wife had him. Then we ended up, I ended up getting a torn Achilles a month after she had him. So we were both off work for, and I was off for at least six months. Wow. And then my wife couldn't, couldn't go back to work because at that time, we, she was taking care of two babies, unfortunately, me and my son. Who was the bigger baby? I would say he was. Okay. Wow. Okay, so four years, seven months ago, I mean, something took a turn. What happened? I was sitting on the couch, just tired, and the Holy Spirit tapped on my shoulder and said, you have a book that can change this.

And as a flight attendant, I used to go in the front and sit with the pilots because they had a lot of money so i used to ask them a lot of questions and one of them told me to get total money makeover and i got it in my early 20s but i didn't need it at the time but it said in my library all that time so i went to the where our books were and i looked and I found the book and I read it in a day and gave it to him and he read it and that's what started. Wow. So Tony she comes to you with this book she just read in a day she's looking like crazy eyed over this plan I'm guessing and what was your response were you like okay honey sounds good? So initially yes I said okay honey it sounds good with no intentions of reading it like like she did um but once I picked it up and actually looked through it and started it's such an easy read

that's right and it just and it was just so understandable and relatable and then just looking listening to the other testimonials it I ended up reading it within not one day, maybe two days. But yeah, I definitely got on board right away. Wow. So, Hypeisha, when you started talking about it, there's clearly emotion there. Is the emotion, oh my gosh, this book changed our life. Is the emotion, I wish I had started sooner. Tell me about what you're feeling in that moment.

I felt like God asked me to do something important for my family. And there was a lot of death happening. My mom and my grandma and seven people died on my mom's mother's side of the family. Oh my goodness. Gosh. And I felt like before I died, I wanted to do something special for my family. Well, at that point, you're like, life is short. What are we doing? We got to get on this thing. I was unsure about what I was going to leave, what legacy I would leave behind.

And so this was something you could control. You can control this. Yes. You guys changed your family tree in four years and seven months. $301,000 paid off. What was the hardest part of of this journey because that's not a short amount of time to sacrifice um i would say cooking cooking every day listen that's a word our budget in the beginning was 50 to eat out so we went to go to corral during lunch hours because we couldn't afford the dinner prices and once a month and so and just um the people that i thought would be here to see it they um passed on before um it happened and um that adversity just really made us um stronger

spiritually and stronger marriage yeah oh. Oh, I bet. Most definitely. And I just wanted to add to that. I think that neither one of us coming from a family tree that had a lot of money and not so much just the money aspect, but the knowledge of it. That's right. And so that was the key takeaway just from, for me or us as a, as a, as a unit, just wanting to get the knowledge so we could prepare our children to have a brighter financial future as well. Absolutely.

What a crew. And I'm sure they're old enough. They saw mom and dad. They're going to remember this journey. Oh, most definitely. The Goodwill runs. We were in thrift stores like crazy. I mean, there was a lot of sacrifice, but it was worth it.

It was well worth it. And I do want to add this. We paid off all of the debt, the cars. We sold cars. We bought $2,000 cars, $3,000 cars during the journey. And then we just had two student loans left. We paid off one student loan for $13,000. And we had a $45,000 student loan and then $123,000 left. And I was watching Anthony

O'Neill and it said, if you have student loans, do this before October 31st. And I did it. And we went from 44 qualified payments for student loan forgiveness to 125. So that whole, all of those, it got forgiven, all of that. And so God not only gave us something to do, but he helped us get there. You guys were faithful every step of the way. He gave us a quantum leap. That's amazing. It was exciting.

Who were your cheerleaders um uh each other most definitely each other our anthem church um our children yes and god yes that'll do you know what and then we had um i do want to shout out umian Harmon, the Harmon family. So they did. They knew about our journey as well. Pete McAdams, a close buddy of mine. They both live here actually in Tennessee as well. So those people I know we spoke to a lot about it, who was right there with us from the very beginning and just told us to kept pressing, keep pressing. And it just it felt good. it feels good it definitely oh i bet it does so what's next you're debt-free how are you celebrating um so we haven't uh oh we're

having a debt-free party yeah we're gonna have a debt-free party i love that we're still working out the particulars on when exactly um because it's still it's such a surreal moment yes um just being able to do something that we've never seen done yeah but then also do it for our children to let them know that their death destiny uh affirmation starts here with this moment and this will be in the new chapter in their life in our lives as a family get the the kids up here. What are the names and ages? We have Talon, 13. We have Anahi, and today is her birthday. She turned 10. Happy birthday!

We have Valerie, he's 9. And then Ali, she's 6. Well, they get to scream with you. They were a part of this process, and they're celebrating mom and dad's freedom, because that's freedom for them, too. That's changing the family tree. Let's do this thing. Y'all ready? We're ready. We've got a living gift box for you, including that's freedom for them, too. That's changing the family tree. Let's do this thing. Y'all ready? We're ready. We've got a living gift box for you, including Baby Steps Millionaires,

Total Money Makeover, and Financial Peace University. So use it or pass it on to someone else to kickstart their journey. You guys are an inspiration. All right, we've got Tony, Hypatia, the whole gang, $301,000 in four years, seven months, making $60,000 all the way to $123,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! Now that's a scream, George. With the matching better-than-I-deserve T-shirts and the live-like-no-one-else T-shirts. Wow. That generational curse is being broken. Listen, you heard it in their voices. That was a death free scream if I ever heard one.

My goodness. Woo. That'll put a pep in my step. I got some shivers on my spine. This is the Ramsey Show. Our scripture of the day, Psalm 37, 23, and 24. The Lord makes firm the steps of the one who delights in him. Though he may stumble, he will not fall, for the Lord upholds him with his hand.

In other news, Slash from Guns N' Roses once said, No one expects the rug to be yanked out from underneath them. Life-changing events usually don't announce themselves who knew that's the kind of wildly varying entertainment you get on this show from proverbs and psalm to slash there we go well jade i don't know if you've been keeping up with the news uh the grammys just happened the big game is coming up this weekend everyone's talking about taylor swift instead of the big game yes but the big news is coming up this weekend. Everyone's talking about Taylor Swift instead of the big game. Yes. But the big news is right here on The Ramsey Show. You ready for this?

Tell me more. We just launched a new Ramsey-trusted national partner that can help you find the right health insurance. Really? I know. Not the news you were expecting. I didn't know. Tell me more. Well, we all know health insurance, it's not the most exciting or fun thing on people's list.

But you know what it is fun? Having the right health insurance when you need it. Facts. I mean, the amount of people going bankrupt in medical bills is frightening. And so, you know, to get a load off your mind, protection for your hard-earned money, not panicking at the first sight of the medical bill, that's my idea of fun, at least partially. And it's why we are so excited to have a new partner called Health Trust Financial. And this isn't really new because here's why.

Our team has worked with Health Trust Financial folks a lot over the years. And a bunch of their independent agents have actually been serving Ramsey fans for more than two decades now. First, they were part of our endorsed local providers program. Then as Ramsey trusted pros. And while a lot of health insurance companies out there care more about premiums than people, Health Trust Financial cares about educating you, saving you money, and shopping different providers to find you the health insurance you need. And they've done such a great job working with our fans that our team decided to expand this relationship and make Health Trust Financial the only health insurance company we recommend here at Ramsey. That's high

praise. Listen, that's big. You got to do right by people for a long time and treat them well and treat our fans well, because trust is all we have here at Ramsey. That's what we're all about. So the fact that you guys have a new company out there you can reach out to for all of your health insurance needs, Health Trust Financial, that's huge. They know their stuff and they want to help you protect your wallet from unexpected medical costs. So if you need help figuring out the best health insurance for you and your family, be sure to check them out at healthtrustfinancial.com. Very cool. Very cool partnership.

All right, let's go to the phones. Chris is up next in Myrtle Beach, South Carolina. Chris, welcome to the show. Hey, how are you guys doing? Doing well. How can we help today? My wife loves your nails, Jade, by the way, the color of your nails. Thank you. It's always Jade and never George. What's wrong with my nails, Chris? I love them. Thank you.

And your watch. Thank you. Appreciate that. How can we help? So we're looking to relocate here mid-year, probably June, July. And I've done some math to where I could probably safely get us out of debt with the equity within our home and be debt-free when we move. But my wife is a little skittish. She wants to be able to buy right away when we relocate. Where are you relocating to?

Pennsylvania. Okay. you relocating to? Pennsylvania. Okay. Is this for work? Just better lifestyle overall. The tourist town really isn't for us. We're touristy income, so to speak. Seasonal positions, that kind of thing, it's tough to get.

What's in Pennsylvania? What drove you guys there? That's where I'm originally from. We moved down here, my parents, before I became of age and didn't have a choice. Moved here. I met my wife. We've got a family here.

But we've been back there to visit over the years. She likes it. Obviously, I liked it when I was up there. I would have stayed, but I didn't have a choice at that time. So is the assumption that if you bought a place, you'd live in the area that you grew up or the area that you know? Correct. Um, even, even if we, you know, the way I want to do it with renting, we would rent somewhere within that, within that vicinity. I got to tell you, I would vote for the rent in the vicinity that you think you want to live because... Times have changed out there.

Times have changed. I imagine since you live there. True that. And so part of this is financial. I mean, how much equity do you guys have in the house? We owe $140,000 and we could sell for roughly $275,000. Okay. So net of fees, you're looking at what, $110,000, $120,000? Based on my calculations with transfer taxes and things like that, about $101,000. Okay. So let's say you walk away with $101,000. How much debt do you have?

About $48,000. That's including a vehicle. Okay. So we clear the debt, and that leaves you with $53,000 total to your name? Let's see here. Unless you have money in savings. I don't, so it would be what you said. That's correct. Okay.

So let's call that your emergency fund plus a little bit of down payment money. So my idea was from the 101 and the debt, we could take about $26,400 rent on average for the space we would need there as of right now is about 2200. That's on the higher end. Take that for a year, 26, 400, pay that up front. And then we wouldn't pay up front. We could then take that 26, four that we would pay up front. And then we could save that over the entirety of the year to make that our down payment on the home that we would

you know to purchase within that year hold on next year are you saying i want to make sure i'm following you are you saying you want to pay your rent up front for six months and then take for a year correct to who we would pay the lease out in full for the full year as opposed to paying it monthly. I wouldn't do that. I would just pay monthly and you have the money sitting in savings already. Because what if something,

what if something happens and you're like, we're renting here, the guy above is above a smoke spot and we can't get out of this. Like what if, what if there's a complication? Are you not concerned that it could be a pain in the butt to get your money back? Um, I hadn't really thought that far into it.

I would. That's part of the reason why. I just think there's too much unnecessary risk in that and no benefit. So I would just pay the normal payment, $2,200 a month. What's your take-home pay as a family? As a family, about $950 a week. Wait, so it's only less than $4,000 a month? Yeah, about $33,000.

I make $49,000 salary a year. Well, here's the problem. Your rent is over 50% of your take-home pay. So you guys can't afford to live in this area. Right. But we would... What's the plan?

We would have that savings from... We would be able to pull our six-month emergency fund... But draining your savings is not a sustainable option, even for a year, because then you're still not in a position to buy a house. $20,000 down is not going to get you very far in today's market. So I think we need to rethink this whole thing. And if your income is not going to double in the next six months to a year, we need to rethink where we're living and what our situation is. I love the idea of you selling this place to get out of your debt and have some money in the bank,

but we're not in a position to go move somewhere where the rent's 2,200 bucks. What about your wife working? How old are the kids? She works full-time in the summertime over the summer months and then part-time in side gigs over the wintertime months when it's not as busy at her job. Did you include that in the $49,000? Did you include that? That's correct.

Oh, you did? I'm sorry, no. That's just my salary salary the 49k okay so what what is her set like what does she bring in regularly if you had to average it out what does she make in a year um in a year we last year we grossed 56 9 900 okay 56 000 okay um we still need to get this income up. So she's making 6,000 bucks a year gross, which is, what I'm getting at is what about her,

because if you tell me, hey, I make 49,000 and then with her money, it's 56,000. I'm like, okay, she made $7,000 in a year gross. That means net y'all didn't bring hardly any in. So what I'm getting at is, is there a way that she can make real steady money to contribute to this that's why i asked how old the kids are because i kind of wanted to see what what that's like

real quick right they're all school age kids yeah 17 13 and okay that's the key to crack this code if you need to get a six-figure salary in order to afford 2200 a month you need a take-home pay of about eight eight grand or at least yeah she needs to work and match what you make. Right, but with the relocation, she would be making right around the same amount as me, so that would put us at right around $80 to $90 a year. I'd crunch these numbers hard, Chris, before you make this move. Right now, I have some hesitation that this is the time, but we need to get the income up, and you need to find a cheaper place to rent,

and you need to get rid of this debt. This is The Ramsey Show. Hey, folks, Dave here. You want to hear even more life-changing content from Ramsey? Download the Ramsey Network app so you can catch all your favorite shows all in one place, like The Ramsey Show, Smart Money Happy Hour, and The Dr. John Deloney Show. You'll get real talk about life, relationships, money, and your career. Plus, the app lets you browse by topic like debt, business, or selling your home. Get the content you want whenever and wherever you want to listen. Download the Ramsey Network app today.