The Ramsey Show - Don’t Believe the Lies, Anyone Can Build Wealth

Episode Date: May 3, 2024

💵 Sign-up for EveryDollar today - The simplest way to budget for your life! Rachel Cruze & George Kamel answer your questions and discuss: "Should I pursue a life of homesteading?" "How do I deal with a HELOC during the Baby Steps," "I'm worried my side hustle will get me fired..." "How do I talk to my husband about our finances?" "Is it okay to rent instead of buy?" Support Our Sponsors: Churchill Mortgage Zander Insurance Yrefy Next Steps 💵 How to Start Investing in 2024: A Beginner’s Guide 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! 🏦 Take Your 3-Minute Money Assessment - Get a personalized money plan! 🏠 Find a Ramsey Trusted Real Estate Agent 📈 For help with investing, get connected with a SmartVestor Pro.  💰 Enter the $3,000 Ramsey Cash Giveaway today! Enter daily to increase your chances of winning weekly $500 prizes or the $3,000 grand prize.  📚Get 20% off bestsellers! Whether you’re ready to kick debt to the curb, want to live a less-anxious life, or looking for growth in your job—there’s hope. 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

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, Ramsey personality, joined by best-selling author and all-around good person, Rachel Cruz. And we are here to take your calls, America, at 888-825-5225. And George, I'm going to jump in as we start the show. Because it's a very special day. It is George's birthday.

Thank you. The crowd goes wild in the lobby George's birthday. George, happy birthday. Thank you. The crowd goes wild in the lobby. Happy birthday, George. Thank you. And thank you for this gift, Rachel. You used to leave $100 bills on the desk. That's so kind of you. It's all prop money and everyone thinks it's real. It's all for you, George. I got that all for you. Hundreds of dollars. The money may be fake, but the friendship is real.

I appreciate that. That's right. But seriously, happy birthday. Thank you. And on a Friday. That's a great birthday. There's nowhere else I'd rather be other than at home on vacation. Okay, there's a lot of places I would rather be, but this is pretty good. I know. Well, happy birthday. Thank you. Well, I'm excited to take your calls. Make them good, people. Jennifer kicks us off in Washington, D.C. How's it going, Jennifer?

Great. How are you doing? Thank you so much for taking my call. Sure. How can we help today? So I have, I'm a single mom. I just got divorced. And I'm working two jobs. It's okay. It's actually a good thing. I'm working two jobs trying to get out of debt. This debt was created during the marriage. And it's all credit of debt. This debt was created during the marriage. And it's all credit card debt. And my children are really young,

so I'm leaving them a lot. And that's hard. They're very responsible, though. So I'm trying to figure out the best solution. My wheels are constantly turning. I'm just trying to pay off that as quick as I can. Interest rates are very high. I just feel like I'm making minimal payments and it's becoming a lot. I don't know how else to stretch myself anymore. I'm really at a loss. Are you't know how else to stretch myself anymore. I'm really at a loss. Are you able to pay all of your bills, like your four walls, food, shelter, utilities, transportation, cover everything, and have some extra to throw at the credit cards?

Not really. Okay. I'm barely making it. I juggle. So I juggle. One month I might not be able to pay the electric bill in full. So I take a hit there and then next month I can. What do you do for work, Jennifer?

I'm a department supervisor for Lowe's. I just got my first job after marriage. It was a very abusive relationship. So you're new to the workforce here, stepping out. I'm proud of you. That's great. What are you making? Thank you.

I bring home, I just started bringing home around $3,000 a month, and then I work a second job as well. I make gelato on the side because it's very close to my home. I can be quick to church. I can be quick to my children's school. I can be quick to church. I can be quick to my children's school. I can be quick to home. So I keep myself like in a... Yeah. How much more do you make with the side job? I make between one say 20 hours a month. It depends on when they need me to come in and make gelato.

Jennifer, when you look at all of your expenses and you're looking at even just housing, are you in the same place you were where you guys were married? I'm just wondering if you're, from a percentage standpoint, if your mortgage or your rent is eating up a lot. I see you're in Washington, D.C., and I just know that's a very, you know, it's an expensive area. So I'm curious that part of your budget. Yes, absolutely.

This area is extremely high. I can't move currently right now because that would take a lot of orchestrating on my part to leave. I would also create probably medical legal bills because my ex just, I've entertained the idea he will not have it. So you have to stay in the area due to the agreement? Do you own a home or are you renting? Renting.

What's your rent every month? $28.50. He currently pays that. Okay, he pays that. I was going to say I can see why things are tight here. All right, so how long is he going to pay that rent for, for the foreseeable future? He has been threatening to not pay it this coming year.

Does he have the legal right to do that? Yes, because I was kind of afraid, so I didn't cite him in court at all i was moving with even putting chairs up against my doors just oh my goodness i was really afraid are you safe now yeah yeah i think it was mental more than anything i'm feeling now that i'm further away i'm gaining strength you know and I'm not seeing him as such a threat, but we still keep, uh, you know, so Jennifer, um, yeah, I feel what I would tell you after listening to your story and how fresh all this is. Um, I would, yes,

we want you to pay it on debt. Because how much credit card debt is it? It's $38,000. Okay. And I pay it constantly. Yes. So what I want you, I want you to have a level of security in where you're at. And doing that is making sure your four walls are covered. So when you said we don't pay the, I'm not able to pay the electric bill some of the months.

Those months, Visa doesn't get paid. Like taking care of your necessities, food, shelter, utilities, and transportation is vital, Jennifer. Like making sure that those things are covered, that your lights aren't going to be shut off. I mean, these are basic needs and those things get paid before the credit card. And what I would do is I would call the credit card companies. Is it in one card or multiple? It's multiple. Yeah, but it's the total of it. I would call each of them, and I would just tell them your situation and say,

here's what's happened in the last six months, three months, a year. I'm not going to have the money to pay for this. And so what kind of plan can you put me on? I want to pay you back. That's my goal. But this is not going to get paid right now. And I would do as much communication on the front end because, again, making sure that those necessities are covered, those four walls, I think is crucial to your situation. And then Jennifer, I do think it's so fresh, all of this. It's gonna take you time. This isn't gonna be something

that's gonna be obviously like an overnight thing. You might not be able to be gazelle intense like you wanna be. That's right, that's right. You might just be crawling for an hour. Yes. And that's okay. And that's okay. And being with your kids, healing, like all of that is okay, Jennifer, for

a time. Like, so give yourself the permission to breathe, right? I mean, you've gone through a horrific, horrific situation. And so healing from that, don't feel like you have to take on the world and do everything. And so maybe the money plan is on pause but i don't want you getting behind on your bills and bills meaning the the rents or it's not rent because he's paying for it but actual life expenses that's right that's right making sure that those are covered and then if there is extra sure absolutely we're going to be throwing it at the smallest debt um but i think giving yourself room to breathe and to say, this has happened. It's going to take me a minute. Don't feel like you have to be the hero in the situation right now because it may just be you healing.

Yeah. And you mentioned church. I would make sure that your church community knows what's going on and have them wrap their arms around you. See if family can help out. It's okay. You're strong, but it's okay to ask for help too. So hang on the line. I'm going to gift you Financial Peace University and every dollar so we can walk you through this mess.

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1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Welcome back to the Ramsey Show. I'm George Campbell joined by Rachel Cruz. Good news for those of you that like to have money. The Ramsey Cash Giveaway is here, and you could win one of our $500 weekly prizes or the grand prize of $3,000. You get this exact...

No, you actually get real money. This is prop money. Real money. We'll give you real money. Okay, so George, question. thousand bucks okay if you had to give a thousand save a thousand spend a thousand where would it all go oh that's a great question there you go okay to give a thousand i think it would if i really just generosity to an you know a non-profit a church mission yeah yeah what would it be you know i'm a big fan of charity water and the way they do business and their mission so i'd probably do a one-time lump sum

to charity water okay where would you save it or invest it i would invest it into mia's 529 oh what a dad dad of the year you know we got to set her up for success because we're doing fine now it's and we want to make sure she's set up well. That's great. And then spending $1,000? Yeah, where would you spend $1,000? Honestly, my dream would be just like a shopping spree at Costco. I would buy four things and $1,000 would be gone. It would be dead. No one can tell me what to buy.

No, that's right. And you get to go do whatever you want. That's my dream. Okay, that's good. It's a sad dream, but it's mine. How about you? Do you have that? I wish your dreams were greater, George George but we're going to take them.

We're going to take them. A thousand bucks it's not going to change your life to spend that much money. Yeah. You know? Fair.

Yeah. I would give to there's multiple organizations around foster care in Tennessee. Oh yes. So I would be giving to those to be helping families

in foster care. Be able to like give like diapers, strollers, like whatever families need. Yep. That's what I would be giving to those to be helping families in foster care be able to like give like diapers strollers like whatever families need yep uh that's where I would give uh Tennessee Kids Belong it's a great organization um I would save it I'd probably put in the high yield savings account because we're building a pool I don't know if you heard yes so I think that's technically saving yeah uh because it'll be down the road soon enough, but we're saving still. Maybe it'll buy some of those like in the water chairs.

Those are cool. I don't know. Yeah, yeah, yeah. But that'll be down the road. So that and then spending, I would do half clothes, half like two great date nights out. Oh, that's very,

I think Winston would appreciate that. Yeah, I'm such a giver. I should have said a thousand. I would give it all to Whitney to buy, I don't know, a purse or skims or whatever the kids are wearing these days. But y'all, $3,000 goes a long way.

That's legit. It goes a long way. So if you want $3,000, how do you get it, George? Well, all you have to do is go to RamseySolutions.com slash giveaway, and you can enter every single day to increase your chances of winning. It takes about 15 seconds to do this.

So this is a great hourly payout if it works out for you. And for a limited time, when you're there, you're going to see a lot of bestsellers that are 20% off, like Dr. John Deloney's Building an Onanxious Life, which is on sale for the very first time, his Questions for Humans Conversations cards, Baby Steps Millionaires, and more. So these make great gifts, especially for a grad in your life.

And you can shop that sale at ramseysolutions.com slash store. All right, let's go to the phones. Caleb joins us in Indianapolis. What's going on, Caleb? Hi, George and Rachel. I'm wondering if you guys think homesteading is at all financially viable and if that's something my wife and i should pursue you call just the right people home we just did an episode on this caleb i know more about homesteading than i legally should smart

money happy hour other podcasts we did a whole topic on homesteading because it's become a thing and so for those of you that don't know what homesteading is because there's some people that that don't know it's it's i think the fullest degree of the definition is that you self-sustain your life on your property so living self-sufficiently yep so it's it's and then you're able to sell things on your property to others. So whether it's food. Crops, cattle. Cattle, meats. Yep, all of that. Milk, eggs. It becomes part of the self-sustaining model.

Beans, greens, potatoes, tomatoes, you name it. So what we've learned, Caleb, is that obviously it's a more expensive way at the beginning, right? Getting into it to be able to get to this point of full homesteading. It can be expensive. Do we have the numbers on it, George? I do have the numbers. I pulled it up from our Smart Money Happy Hour outline here. Caleb, what is the nature of your question here? You're saying financially viable, and can I afford to do this because of the startup costs?

Yeah, well, I would definitely be curious as to what the the startup costs are but even um if you guys think it is actually because sometimes it's hard to cut through the like crap on the internet of like rose-colored glasses for everything and i don't know if this is one of them well and depending what corner of the internet they'll either say homesteading is the only way to live or never homestead and so yeah i think it's a very personal choice it's definitely a lifestyle that it's it's a hard one to commit to uh i don't know that i've seen a lot of people go like we've been homesteading for 40 years but i think as people get tired of the chaos of this world in city limits they go what if we could do our own thing and have a more peaceful life so i think it's beautiful as i learned about it i was like this makes sense it's a beautiful way of living if you can swing it. And then we

found out about the startup costs and we're going, all right, you need to buy land. Do you have land? We do not know right now. My wife and I are in an apartment, but we've both been saving prior to being married. And so we have, we have money to a little bit of money for a down payment on land. But I know that homeowners loans don't necessarily apply to land, right? Yes. And so you're going to need not only the land, but then somewhere to live. And that might mean you build, you get an RV, a tiny home for now. You need somewhere to live even after that land down payment.

And so that's where it gets expensive. That's the biggest cost of homesteading is land and somewhere to live. On top of that, you might need a vehicle that, you know, I don't know if like the Kia Forte is gonna work on the land. I don't know what your needs are if you're actually running this thing as a homestead.

Possibly a generator if you're living off the grid. There's land development if you need septic, water, all of those things, and then tools and building materials. And so that all can add up and it's hard to put a number on it because we don't know your area and the timing of it and what the costs are and how big you're trying to go, how lean you're trying to be. So I think if you have a sizable down payment and you kind of count all the costs up and go, yeah, this is reasonable based on our income, do you guys have remote

work? What would you be doing for work in the meantime? Well, right now I'm a full-time student, and I'm pursuing my master's in divinity and theology, and then my wife is a full-time tattoo artist. Yeah, how much does she make a year? This is her first year doing it full-time, and right now she's taking home about right around $5,000 every month. Awesome. And then with your divinity degree, are you wanting to be a pastor? Do you want to be a professor? What's the goal with that?

Yeah, either pastor. My dream job is to be like a C.S. Lewis and be a professor of that, right? Welcome to the club, man. Yeah. My dream job would be to be a C.S. Lewis. I don't think being C.S. Lewis is a job. But you want to be a theological writer. The bar is high, Caleb. I think that's great.

You want to be a brilliant theological writer. George just wants to go to Costco to go shopping. So you're in a better mind space, Caleb. I didn't know being C.S. Lewis was an option, Rachel. Okay, I love this, Caleb. That's what you get to spend your thousand on is being C.S. Lewis. If only.

Yeah, so Caleb, here's the deal. Here's my take. Can I just cut through it all? Please cut through it, Rachel. Because I do think, because I see it on Instagram all the time, and half the time I'm like, should we just sell everything and move? I mean, right like I think we all get to that place yeah but what

you're watching if they're really doing it is like really hard work I mean you're up at 4 a.m. I mean you're a farmer is basically what it becomes I'm like if you're doing it full-time like it is it is difficult and you're usually because you have land you're far away from anything it's going to be a 30 minute drive to the closest grocery store i'm like you take out convenience of your life for the most part again for this is for the person that can actually like do it right um yeah the convenience isn't there the startup costs are high and it's like physically exhaust i mean it's hard work and you gotta know what you're doing you're gonna have a steep learning curve. Oh my gosh.

I'm like, there's just a lot that goes into it. And like anything on social media, including money stuff, including investing and all of it,

it's just like, oh yeah, it's not a big deal. It looks a lot sexier and easier than it is. Yeah, we just do that. Where I'm like, go get some city chickens

and like four box gardens and like start there. You know what I mean? And if you're enjoying that, then- Head to the Amish part of town, go on a camping trip. Then make another step, make another step, but start small. And I think some people are like, we want to just go all in. And from a financial standpoint, it's just expensive to do that.

So if you baby step your way in and you still enjoy it, then that could be a lifestyle. But then you could get four years into it and be like, oh, my gosh, we have kids. We have this. They want to do soccer practice. Like, we're not in a place to do all this. Especially if your career is our tattoo artist and church pastor. That's a tough one to live out in the middle of nowhere and do. So a lot to think about.

Don't want to dissuade you. But I would say it's a not now right now. Thanks for the call. These days, it's not if your identity gets stolen, it's when. And the only ID theft protection plan I have ever recommended is from Zander Insurance. It helps real people with real life situations. Like the call we got on the show recently where a woman's abusive ex opened a credit card in her name and racked up over $8,000 in debt. Then the bank sued her, even though the charges weren't hers. What a mess.

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The number to call is 888-825-5225. You call up, and we'll help you take the right next step for your life and your money. Clark is up next in Salt Lake City. What's happening, Clark? Hey, George. Happy birthday., Clark? Hey, George. Happy birthday. Thank you so much, sir. How are you doing?

Doing well. I'm just figuring out how to get out of this mess that I made. Tell us about it. All right. So in total, I have about $53,000 in debt, and about $38,000 of that is in a HELOC. I got $10,000 or $9,000 on a new roof, $4,000 on a credit card, and about $1,500 in medical debt. I just finished up Baby Step 1, and I'm looking to tackle all of this. But I guess my concern is that with my HELOC, it was a 100% loan-to-value, so the interest rate is a lot higher. It's actually sitting at about 14%.

And I, yeah, I'm feeling that every month. Is that variable? Because generally these are variable. Well, actually, I'm not sure. I actually think it might be a variable. Because HELOCs are generally variable. The home equity loan is generally going to have a fixed rate. And so that's something to watch out for as well with these awful traps. Yeah. It can go up from here is what I'm saying. I guess, like, does the baby steps still apply with how much I have in the HELOC?

Does it make sense for me to attack that one first so that I can get rid of the most amount of interest payment per month? Or I guess, like, what would you do in this situation? Well, when it comes to the debt snowball, it's never been about interest. It's about knocking out debts fast, motivation, progress, momentum, and actually getting to the finish line. So when it comes to HELOCs, our one parameter when it comes to the debt snowball is if the HELOC is greater than half of your annual income, we can push it to baby step six when we're paying off the mortgage. And if it's less than half our annual income, it can fall into that debt snowball wherever it would fall. So what is your income? I think after taxes, it's about $65,000 a year. Yeah, I'm an engineer. Okay. And so before taxes, I assume it's like $80,000 something.

It's actually about $70,000. I think it's $73,000. Okay. Yeah. So you're right on the cusp there. I think this could go either way because of its high interest. I think you can just put it in the debt snowball and attack it aggressively, but you're going to need to up the income. Do you have a spouse that's working outside the home? No, she stays at home with our four kids. Okay. Yeah, I mean, you could look, Clark, into refinancing. I mean, do you have a good rate on your mortgage, I'm assuming, interest rate? Yeah, I have a 3%. Yeah. I was going to say, you know, looking at that, possibly refinancing and just rolling this into that.

Yeah, just for the interest. I mean, even a personal loan would probably have better rates than you've got on this HELOC, but I don't know if you're going to be able to pull that off. What about, so I'm close to the 80% value loan to, sorry, balance to loan ratio. Would it be advisable to go in and say, hey, I want to switch out the type of line of credit to get a lower interest rate? I'm not sure what they'll be able to do for you. I mean, if they can negotiate and go, hey, I need a lower rate, this thing's killing me, I want to pay it off,

but this interest is making it really hard, I don't know what they're going to say, depending on the company and, you know. Yeah, where you got it. Yeah, you could definitely ask Clark those questions. They're not going to raise it because you asked. Right, right. Okay. But no, I would still stick still stick though with the methodology of

just paying off you'd pay off the medical debt the 1500 first and i would just i mean i would go down the line honestly still with that even though this is a huge loan with a really high interest rates um i think getting those other things out of the way is going to help free up some of the income of those minimum payments that you would have been paying once the smaller debts are paid off to keep aggressively tacking it but But again, I mean, I would run some numbers and just say, okay, for, you know, again, I don't want you to lose the great interest rate because how much do you owe on your house? Just about 300. You owe 300. Okay. No, I wouldn't do that. Okay. So yeah, I would just be you guys just tackling it i mean slowly but

surely you're gonna be paying it off but i think upping your income clark is going to be really big for this season and i would map out too i think what's helpful um during this process is to say okay what if i what if i made an extra 1500 a month or 2000 a month or you know like some number that would require some sacrifice you're going to feel it but how much faster it might cut it in half yeah would we get out of this? Right. So I think having a plan around some of this, it can be so overwhelming when it's all in your head,

but start mapping out some plans and with your wife and you know, if there's anything she could even do, I don't have to bring in anything extra. I mean, even some, you know, stay at home moms, even like from the grocery standpoint,

I'm like, some of them are like, Hey, I can find an extra 300 bucks a month if we go like really tight on the grocery budget, right? I mean, like there's just, there's different things that even she could be looking at to see, hey, what can we, what can we trim to be able to throw some extra cash? Yeah, the magic word is margin here.

So you can only find that two ways is making more and spending less. And I would try to do both aggressively to see what kind of margin you can create. Alrighty. But man, this is a, what'd you use the HELOC for? Curious. Um, so I got frustrated with all the student loan crap and I was like, I don't want to deal with that. And I was debating about buying an investment property. I was just trying to do all the things all at once. And then I was like, I'll just wrap it all up and pay it off in that way. So. So you paid off your student loans by moving it to a higher interest debt. Yeah. Probably one of the dumbest decisions I've made.

And so, hey, we've all done with zeros on the end. It's only really stupid if you do it twice. And so you've learned your lesson here. It's a stupid tax. Clark won't do this again. Yeah. And unfortunately, you realize that moving debt around doesn't actually solve it. And sometimes it makes it worse, like in this case. It's one of the reasons I hate HELOCs with a burning, undying passion.

And they're marketed as these wonderful tools to set you up for freedom and help you do all these things. And it's just not true. It's just another rose with thorns by another name. So, Clark, I wish I could snap my fingers and give you a magic trick to get out of this. But this is just going to be a lot of hustle and grind and getting the income up and sacrifice for the whole family for the foreseeable future for probably the next two, two and a half, three years. Okay. family for the foreseeable future for probably next two two and a half three years okay all right well thank you thank thanks for the motivation the and the help out yeah that's what we do around here rachel we just i feel like a doctor who just gave the diagnosis i know i'm like bye clark you got you got gout have a good weekend best of

luck with that you know but it is hard well and it and it sucks too because so much of personal finance it's so personal and so much of it it's for the most part it's us choosing it right like we're the like when there are bad money decisions or choices it's because we made them and so i think part of it is swallowing that pill of like oh crap i did this to myself like i did this you know um and kind of like that feeling of what probably clark has a little bit but clark we're cheering you on and here's the thing too clark we see people weekly on the debt-free stage doing their debt-free screams and so much of them during their debt payoff they say we started at 55 000 we started at 73 000 it went up to 110 000 whether they got a raise at work something happened in life they took on extra work. But that income, for the most part, always gets raised.

It's rarely been like, well, I got a $2,000 raise over those two years. That's right. They increased it double. Yeah. I mean, like some people, they find even a whole other job for it. So anyways, it's still doable. So don't lose hope, Clark. I mean, we see it.

But it does. It takes some work. but map it out. I have a timeline. I always feel like that's helpful because you're like, here's when we'll get out. Even if it's three years, at least we know here's a date we're shooting for. We have a goal and we just got to make it to that goal.

And we know how fast time flies. You know, people, I mean, like a year, a year ago, you're like, wait, what? It's been a year. The year is going to pass either way. So where do you want to be a year from now? That's right, exactly. But in that moment, You're like, wait, what? It's been a year? The year is going to pass either way. Yeah. So where do you want to be a year from now? That's right. Exactly.

But in that moment, you're like, oh my gosh, a year of sacrifice. You know, it feels like yesterday. It was 2014. I know. It's just like yesterday. You know, last year you felt 20. You felt 34, George. And today?

Exhausted. 35. You ever just wake up with like a back issue and a crick in your neck just from sleeping? I know. I hear your 40s. It gets worse. We don't know. Neither do us now, but we hear that.

Looking out to a 40-year-old right now. Well, that is how it goes. Do you hope Randall calls this hour? If Randall calls, I will lose my mind. If you all know about Randall calling the show last week. Randall's a birthday appearance. I don't know. We'll see.

Only time will tell. Can't make promises. Vivian may have an inside. Inside. We'll see. One of the reasons to stick around on The Ramsey Show. We'll be right back. You know, it doesn't take a degree in statistics to realize this one stinks.

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all states. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. Today's question comes from Greg in Alabama. What does Greg have to say, Rachel? Yes, he asks, I am getting a 15-year mortgage and want to pay it off as quickly as possible. What's the best way to do that? Should I make an extra payment of as much as I can afford once a month, or is it better to pay a lump sum once a year? Ooh. That's a great question. First of all, Greg, I love that you went with a 15-year mortgage,

a very difficult choice in today's mortgage environment, but it's the right choice because you're gonna save so much on interest. You generally get a lower rate than a 30-year. You're paying it off in worst case, 15 years, which is beautiful. And he wants to pay it off quickly, which we found, Rachel, in our millionaire study, the average millionaire paid off their home in 10.2 years.

The average baby stepper following the Ramsey plan pays off their house in seven years. Seven years, I know. So it's incredible. And the way they do it, if you're asking here, should I make an extra payment as much as I can afford once a year? There's all these, you know, TikTok strategies that are stupid out there. And the simplest way is when you have the money, pay it toward the principal. And for us, when we did this, it was every single month we set a specific goal and we wanted to stay consistent. And if we could even up that goal every month, it was even better. So it might be right now, extra 500 bucks is what

we can do. It might go up to, we're going to double the mortgage payment every month for the year. You might even get the triple depending on what your mortgage is. And so set a goal that's, you know, we talk about baby steps. When you get out of one through three, you go from intense to intentional. Yes. So it doesn't have to be gazelle intense, but I like having an actual payoff date goal. And if we do that, we need to pay this much off. Very similar to baby step two. Yeah. Well, it's almost like pay yourself a car payment right like an 800 car payment what you would have paid if you were still living in debt and just you know like i think having even that some type of picture yes in it but yeah it going to the principal and doing i wouldn't do it in a lump sum uh we have found that it can be tempting if you have a lump sum of money if you're like i'm gonna

save this up over the year and then you think oh, oh, well, the beach kind of sounds nice. What if we just took a little bit of that that we would have put toward the mortgage and used it? Or we need to upgrade this or we want to do that. And there's a bunch of cash there. It's a forced savings plan. It's a forced savings plan. It's a great way of putting it. So I like the strategy.

And again, just like baby step two, you've got to find ways to have more margin. So if you're only able to throw $100 bucks, we got to figure out how to make more by spending less or getting a side job, increasing our core income, all of that. But man, it feels good. Once you see that principle go down, look at everyone listening out there, go look at your amortization schedule. That's the nerdy word for the long list of, if you make this payment, here's how much it'll be.

And use our mortgage payoff calculator at ramsaysolutions.com and just see how much interest you'll save alone. And when we did that, it was encouraging because I found we're going to save $100,000 in interest alone just by not giving it to the bank and paying this down sooner. And once you start to flip-flop the principal versus interest, you start to see it shift where you're now paying more in principal than interest. You feel like you can do anything. So good luck, Greg it shift. Where you're now paying more in principal than interest, you feel like you can do anything. So good luck, Greg. Call us when you're debt-free.

We'll celebrate with you. Autumn is on the line in Charlotte, North Carolina up next. Autumn, welcome to The Ramsey Show. Hey, guys. Thanks for taking my call. Absolutely. How can we help? So, yeah, my husband and I are starting a side hustle to like pay off

debt and grow wealth and stuff um and we kind of we're not sure what to do with the std we have it's the last debt we've got besides our home and um right now we're paying $2,000 a month on it and, um, and we have enough savings where we could pay it off, but we don't really want to dip into that. We want to kind of, um, hold on to that. So, um, cause we're not really sure, you know, what the future holds and stuff. Um, what do you mean the future? Well, we make really good money right now, and we don't want to jeopardize that with the side hustle, but we also want to do the side hustle to make more money, and, you know, and especially, you know, going to real estate,

you know, buying and selling properties and things like that. So what are the kind of boundaries with the side hustle? What would cause you, what would cause it to affect your jobs? I just don't think they would appreciate, you know, just I feel like they might worry about it taking away from, you know, our job and stuff like that, which we wouldn't do. And are you at work present for the amount of time required? Are you getting your work done? Is there a non-compete that you signed?

Right. Yeah, there would be no issue with that, you know, or anything like that. Have you spoken to your leaders at work about this and saying hey we're trying to get out of debt here's what we're doing i know now we thought it would be best to keep it on the down low because you think what are you doing what are you doing what do you do for work autumn and what's the side hustle um it's a food service um administration and um and the side hustle would be a real estate broker. Those feel very

drastically different. Have you done the side hustle? Have you guys been doing real estate? Not yet. Oh, so it's just a dream. We've done the classes. Okay. Well, we've done all the classes and everything like that. Do you have your license? Did you get your license? Right, yeah. Okay. You do have your license that. Do you have your license? Did you get your license? Right, yeah.

Okay. You do have your license. And do you have your broker's license? And what are you planning on doing with it? Selling real estate. Just as an independent agent within your own brokerage? With a firm. Okay.

Well, number one, real estate is hard to do part-time as like a side hustle because of the amount of time it takes, the random schedule and hours. The good news is you can try to schedule around your, you know, is this like an eight to five type job you have right now? Right, yeah. Okay. I mean, I think as long as it's not affecting your actual work and productivity, there's nothing wrong with this. You're saying you're making great money you said that earlier

is that through your main job obviously right right yes okay um but you don't want to do that long term you don't enjoy this work um partly it would be great to be able to do both you know um because we you know once upon a time we talked about buying a second property where we like to vacation and um you know financing and whatnot and um decided not to do that you know after listening to you guys but um so we'd like to pay off a mortgage and then you know purchase other real estate and whatnot, either to flip or to rent. So you're excited about the idea of working in the real estate world at some point. Yeah.

What's left on the SUV, loan-wise? $38,000. $38,000? Yeah. How much do you have in savings? About $29,000. Oh, you said you had enough to pay off the car today. Well, yeah, in one account we have that, and then another one we've got about $18,000. So, I mean, we could pull from a couple different accounts. Well, I'm going to encourage you, regardless of

the side hustles, I would pay off the car today. You guys don't have, you know, super unstable jobs where you're about to lose your jobs tomorrow. I would go ahead and pay off the car today, quit paying interest, free up the car payment. That's going to put you in a much better position and allow you to not have to work the side hustle. Yeah, how much do you guys make a year, Autumn? It's about, it's a potential about $295 growth. Potential? That's with a potential bonus and whatnot.

Nets, we bring home about $160, $165-ish without bonus. Well, here's the key. Making $165 with no car payment, you're going to be able to save up that savings really quickly because that would put you in baby step three, where you save up three to six months of expenses. So I wouldn't go through all this hassle of trying to sell a house to pay down the car faster. You have the money, just be done with it and move on with your life. Save up money really quick. How much is your car payment? $2,000. It's like $700, but we're putting $2,000 on it. So if you put $2,000 instead, you know, you free up the car payment

and put that money instead toward a savings account, you're going to be back there in no time. Sure. And you can probably do even better. I think if you guys were really on a tighter budget, and I feel like there's probably

some money leaks happening right now, you could get rid of that. You could get that savings really fast. Yeah, and I would suggest, too, yeah, pay it off so you don't feel like the side hustle has to be to pay off debt. That kind of frees you up there. And then if you guys want to transition into a real estate career later on, you can start taking those baby steps to do that.

But I wouldn't let the motivation of the SUV be the driver of getting into real estate either. Pay it off. That puts this hour of The Ramsey Show in the books. Thanks to my co-host, Rachel Cruz, all the folks in the booth keeping the show afloat, and you, America. Thanks for listening in. We'll be back before you know it. 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 my co-host Rachel Cruz, who's also the co-host of Smart Money Happy Hour. So be sure to check that show out if you enjoy this one. You might even enjoy it more. Who knows? Who knows? We have a lot of fun on that show. Big question mark, but it is fun. And our recent episode was all about how birthdays and parties and gifts have gotten out of control in today's world. That's right. So it's a fun one. Are you setting me up for a birthday? I'm not doing anything.

Happy birthday to George, though. Thank you. Because it is his birthday today. George, happy birthday. I thought it was apropos. After a small money happy hour release yesterday, the birthday today. We're on the show. There's so much.

So much happening. The stars have aligned. So much is happening. So great. Give us a call, 888-825-5225, and we will give you our best advice. And remember, it's free. So take it all with a grain of salt. Olivia kicks us off in LA. What is happening, Olivia? Hi, thank you so much for taking my call or my question. And my question is to give a little backstory. My husband and I, we got married very young with little knowledge or actually no knowledge of how to handle finances. And we've kind of stumbled through life, through's kind of complicated because when we do discuss it, we get into arguments of, you know, well, you bought this and you did this. So I've kind of had a hard time communicating with him.

And it's gotten to the point now that I think it's more peaceful if I just try to do things on my own the best that I can. And we both work. So I'm wondering if that's possible and what you would recommend to do. Yeah, it's difficult. And a lot of couples find themselves, Olivia, in your exact situation because it is a touchy subject. And especially, you know, you just said like we got married young and we're just kind of getting through these big parts of life. And what we find, Olivia, very often is that it's not usually a money problem. More than likely, there's a marriage issue going on. And I wonder how you guys communicate about money. Do you communicate about other things in life in the same kind of pattern or tone?

Right. I would agree with that. And I've also suggested that we seek marriage counseling. Yeah. And he's kind of just like, well, he doesn't say, yeah, let's do it. He's just like, huh, and then changes the subject. So at this point, I'm like, well, you know, if marriage counseling is not important

or you're not recognizing that we need it, how are we going to move forward? Yeah. Yeah, and I think that's where a lot of people find the fork in the road of just this idea of, oh, my gosh, is this kind of the reality of where we're at in our relationship and in our marriage? And when one spouse is wanting to work on it and do it well, and the other spouse seems

to just be apathetic to it, it's very hurtful, right? It's very hurtful. It feels like a level of rejection of, you know, you're probably asking yourself, am I not worth, you know, putting the work in and actually having effort towards this um have you shared that with them like what rachel just said the kind of the gravity and depth of this of how you feel about it not in those exact words but i have had conversations where i feel that i could get more input and i just don't see the effort. And it turns into, well, you're always unpleasable. You know, anything I do doesn't satisfy you. Yeah.

And I've come to think that maybe I have extremely high expectations. No, it's his immaturity. It's that, but also— He doesn't want to change. The way you're confronting him, though, Olivia, it is pointing fingers. I want more input from you to him, and I want you to stop saying what you're confronting him, though, Olivia, it is pointing fingers. I want more input from you to him. And I want you to stop saying what you want from him. And I want to start talking out of Olivia.

What is Olivia feeling? And what does Olivia want? Hey, I feel very hurt. I feel isolated. I don't feel like we have a partnership. I don't feel like we have a marriage. I feel like I'm doing this on my own. I don't feel like we have a partnership. I don't feel like we have a marriage. I feel like I'm doing this on my own. I don't feel like you care about me.

And I'm in a place that I want this to be better. I want this to be better. And this is where I'm at. Would you consider, you know, X, Y, and Z going to marriage therapy? Would you consider sitting down and doing a budget? Because I think what ends up happening, not that you're meaning to, Olivia,

but I think it can be so easy, even in a nice tone, to point the finger of this is what you're doing wrong. So he automatically is going to be defensive and say, well, this is what you're doing wrong. And it's this back and forth game that you guys have been playing versus just owning your own perspective and what you're thinking and feeling about you and less about him, if that makes sense.

But that could be a starting place. But I think that's one of the best things that you can do with your spouse. And it's very vulnerable and it's very scary. But when you do just say, here's what I'm fearful of, here's what I'm feeling, here's what's causing me to lose sleep at night. I mean, there's so much, when your marriage is in a level of like, man, this is just not fun. This isn't good. This isn't what I thought marriage was going to be. And not even that, because sometimes we can have unrealistic expectations in general. And I think asking him very point blank, hey, I want to set up an appointment in two weeks with this marriage counselor. Will you meet me at the office at two o'clock? You know what I mean? And like, be pretty, pretty bold with it. Because I think once you guys get at the office at two o'clock? You know what I mean? And like be pretty bold with it

because I think once you guys get on the same page, I think you're just missing each other. And I think that happens a lot, George, with couples. Especially when they've had a pattern of doing things a certain way. That's right. It becomes even harder to change. How long have you guys been married, Olivia?

It's going to be 20 years in January. Oh my goodness. You know what my therapist calls it? Because we go, I mean, Winston and I, we do marriage counseling. We do individual therapy. We do, I mean, like I'm all into understanding yourself and work because I think it's so helpful to give the tools. But she always said it.

She called it your dance. And Winston and I have our dance. We have our thing that you kind of just end up going back into when you're not even aware. And you look up and you're like, oh, my gosh, we're back in that same dang pattern. And when you can get to the point, Olivia, where you can kind of laugh at it, that's where Winston and I are. I'm like, oh my God. You're so self-aware.

You can see it happening. And you can pause and use new tools that you've learned because we're all trying to, you know, in some ways, manage our way through life, right? And so there's things that you've learned to protect yourself. I mean, there's a lot there. There's a lot there, Olivia. The way you grew up, the mistakes you've made. And then once you guys start those healthy patterns on your marriage, then suddenly

when you're like, babe, the money is stressing me out, he's able to be like, okay, I hear you. Because you're using a different way of, you know, different language, different tone, different approaching, all different ways of life. But again but again Olivia just like so many people I really I would encourage you guys it's a marriage thing at this point but to give you a quick you know you called into a money show so and I'm not a therapist you're not a therapist we will not claim no no we won't claim that but I would say to start off and just say hey don't point blame at him but say hey can you help me with next month's budget? And Olivia, we'll give you guys

Financial Peace University and every dollar premium for a year and do a mock budget on every dollar. And then just say, hey, I would just love your input. I would love for you to look over this with me because I want to make sure that, you know, that my brain's not the only one in this. I want your input. I want to know your thoughts.

Yeah, when he hears your input matters, it's a different conversation. That's right. Yep. Instead of, you know, pushing the blame. And hopefully that's a good jumpstart on the money conversation. But again, I think the marriage piece, it's big. I mean, working on that. Getting a spouse on board is one of the hardest things you'll do in a marriage, but it is worth the work. And that might mean, hey, we're going to listen to Smart Money Happy Hour. This is a fun podcast. Then, hey, what if we took Financial Peace University? That may then lead into counseling down the line

as he sort of warms up to this idea and realizes he's not the villain here. We're trying to grow together in this marriage instead of apart. This isn't a conflict where we're at each other. We're aiming at the same thing together. And those are the kind of things that will help. So hang on the line. We'll gift you those gifts. And I hope he uses them. And I hope there's some amazing transformation on the other side. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz.

Open phones at 888-825-5225. I'm buying my co-host some time. I see Chow's down on a cookie from the Baker Street Cafe. I'm sorry. We have like warm cookies. She can't pass that up. And Melissa just gave me one at the break. It's so great.

That's the kind of service you get around here. And it's a friendly reminder to come visit us. I'm looking at a lot of beautiful, friendly faces from around the country, sometimes around the world. And the show is free to come watch on the glass. If that really gets you excited, this is your Disneyland, come by and see us. around the world and the show is free to come watch on the glass if that's your if that's you know really gets you excited this is your disneyland come by and see us nashville has is a destination city anyways it's such a fun city if you visit nashville and we have so many

people that come for like a long weekend and we're one of the stops or you stop by because you're traveling through yes south or north and nashville is a great pit stop so come see us you'll get free coffee and free cookies which i I'm indulging in right now. She didn't pay for that. Not on the show. And you're not going to pay either. We won't allow it. So good.

So let's get to the phones. Adrienne is up next in Asheville, North Carolina. What's going on, Adrienne? Hi. Thanks for taking my call. Sure. So I heard you say in the last segment that if you do the stuff twice, that you're really stupid, and I am. No, no.

What did you do twice? Well, I was in debt. My husband and I claimed bankruptcy in the end of 2020, and now I'm back in debt. And I have a house in Florida. I live in North Carolina now and rent. And I want to know if I should sell the house there to pay off my debt. Yeah, I'd probably sell your house regardless

because being a long distance landlord is really difficult. But Adrienne, tell me what caused you to go back into debt. Well, we decided to move up here when I finished nursing school. My husband said, you know, we could use a fresh start. You can literally get a job anywhere once you're a nurse, but move. So we moved. And then within a couple months of living here, my mom got really sick

and passed away. I'm sorry. And, um, not knowing anybody in the area, like I just kind of coped by spending money on like everything and anything, um, you know, $200 pair of shoes, $100 lunch out, like you name it. And then some other things happened over the past couple of years. And so I'm just ready to get out of debt. Now, I know you said it's tough to be a landlord long distance. I actually have a really great tenant in there, and it's been working out wonderfully. But your life's not working out wonderfully. No, you're right. How much debt are you in? So in total, including the mortgage down there, about $225,000 to $230,000.

What's not the mortgage? What's just your consumer debt? So the mortgage is about $67,000, so about $160,000. And is $160,000 mostly credit cards, or what's in that? No, so about $97,000 of it is student loans. 160 mostly credit cards or what's in that? No. So about 97 of it is student loans. Okay. About 9,000 is a car payment. And then the rest is like credit cards and personal loans.

Okay. Okay. And how much is the house in Florida? How much could you sell it for? I think about $200 is what we could probably get for it. Okay. You could walk away with a little over $100? Mm-hmm.

Which would knock down a good chunk of this consumer debt. It doesn't get you completely debt-free, but, man, it would change your life. Yeah. Yeah. chunk of this consumer debt it doesn't get you completely debt-free but man it would change your life yeah yeah i mean so adrian i mean i yeah i would do that regardless of where you were financially i think it's going to be really wise for you to do it because of where you are financially but also recognizing that you know so much of personal finance, it's behavior, right? And it's us that is, we talked about this in an early segment. We make the choices on what's going on with our money. And so understanding, Adrienne, that things within you, recognizing those things and healing and putting better money habits in place, better boundaries for yourself.

I mean, all of these things are important because if you don't fix Adrian, in a sense, you're going to be right back here five years from now, right? So we want to stop the pattern of what's causing you to do all of this. And maybe it was because of grief and where you were in loneliness in a new city. But I also would just be very aware that this, you know, this is going to be a gift to you, this margin to be able to swipe out so much debt. But it also is not going to cause,

could potentially not cause the habit transformation that needs to really happen. So just being aware of that. Is your spouse on board with this plan? that needs to really happen. So just being aware of that. Is your spouse on board with this plan? My spouse kind of leaves things up to me. Oh. Your spouse what?

They kind of leave things up to you? So if you said, hey, I'm going to sell the house, they're like, okay, whatever you want to do. Yeah, basically. I know that's crazy. Do they have any debt um i mean that debt's like ours combined okay i do i want them to care more than just going whatever you want to do i want some buy-in here and so i think you need to lay out everything together all the debts all of the income create the budget and go hey here's where we're at here's the state of the union

for our house and part of the plan is selling this house. And the byproduct of that is we're going to be able to clear all of the student loan debt in one fell swoop, maybe the car loan. And then we're going to start attacking these credit cards and personal loans. We make 150. We're going to attack the 60 within eight months. That's the level of detail you guys need to have together. What is your household income? I would say about $160,000. Okay.

I was almost spot on. That's amazing. I just had a feeling. And both of you are working full time. Yeah. So think about that. You clear all of your student loan debt sell this property you're making 160 how quickly could you pay off another 60 freeing up all those payments it's going to happen like that

we're talking less than a year quickly and so set an aggressive goal and both of you're working toward it you're both marking down the debt-free chart this needs to be a group effort i don't want you taking this on your own just because they trust you marking down the debt-free chart. This needs to be a group effort. I don't want you taking this on your own just because they trust you. Okay. It's going to be easier and more fun and help you grow in your marriage and the communication

and help you avoid ever getting into this again because both of you felt the sacrifice. Both of you saw the progress and you can't unsee it. And that's going to help you transform so this never happens again. Okay. and you can't unsee it. And that's going to help you transform so this never happens again. Sorry, I can't hear you, Adrienne. Speak directly on your phone. Oh, I'm sorry. Can you hear me?

Yes. Okay. We also have a daughter who is graduating in a couple of weeks and is wanting to go to college in the fall. Okay. Have you talked to her about a plan to do that without debt? Not really. Okay. Well... I'm not sure how to approach a plan for that. Step one, you can go watch Borrowed Future for free on our YouTube channel,

and that will be a great conversation starter. We'll lay out all the facts. We'll lay out all the stories, the inspiring ones, the heartbreaking ones. And I guarantee she'll have questions at the end of that and say, oh, gosh, mom, I don't want that to be me. What can we do about this? Then you guys can formulate a plan together. And Adrian, I think and I think it's a very honest conversation, too, of what debt has

done in your life. It's created stress. It's created a wedge possibly within your marriage. I mean, this is like, it's not produced good fruit in your life, right? It has been harmful. It has not been helpful. And to guide your 18 year old

and showing her and talking to her that it's just not an option. You are not going to sign and co-sign a loan For student loans You're not going to do that to your daughter You're not going to put her and start her off On a foundation of which you're trying to get yourself out of So like the intensity too

Of the situation needs to be very much Communicated to her And I know she wants to go to college She may not have the money to go to college And that's okay, maybe she takes a gap year Maybe she goes to community college Maybe she applies for scholarships and grants Maybe she looks for an in- college and that's okay. Maybe she takes a gap year. Maybe she goes to community college. Maybe she applies for scholarships and grants. Maybe she looks for an in-state school that's less expensive than going to, you know, off to college in another state.

Like you can start having these conversations with her, but you're in a real, you know, moment though, Adrian, of your own story, your own relationship to debt. And she needs to know about that. Like that's a gift to her. And you're not going to stray her down that path as a mom. You love her too much to do that. That's the conversation I would have. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz.

Open phones at 888-825-5225. Well, Rachel, we got a lot of questions about investing, the social media world, young people, all they want to hear is about how to build wealth and it can be overwhelming. It's great. Great conversation to have. But there's so much noise out there. It can be overwhelming. You can get sort of paralyzed, a paralysis analysis. And a lot of people end up doing nothing because they're scared of doing something but doing it incorrectly. And so I want to set them free today with some teaching on this, on kind of the primer for building wealth. And research has shown that a lack of confidence in making these decisions, it's a primary reason why people don't invest. So we just need to bring them some literacy

and some hope that it's way easier than they think. So here's what we're going to call it, keep it simple stupid. You ever heard of that, The KISS method? That's what they call it back in my day. So investing is a long game. You're not trying to time the market and buy single stocks. You don't need to be a prodigy. And every time, everyone is a first time investor the first time they invest. That's right. So it's okay. But before there is a prerequisite, if you know the Ramsey plan, you've got to be in the right spot in the Ramsey baby steps. So we've got baby step one, start our emergency fund. Baby step two, paying off all the consumer debt. Baby step three, fully funded emergency fund. Then comes baby step four. Investing. Yep. Make sure you knock those first three out. Otherwise, it's going to be much harder to invest.

You're going to add a lot of risk and stress into your life. But once you're there. Well, and even those who are investing now and still have consumer debt, when you're paying off debt, we would even say to pause investing too. So truly those first three steps are just like one at a time. You're doing nothing else but those. But then you get to baby step four

and you get to start investing. It's when you start building for the future instead of paying for the past. Yep, that's right. So this is where it gets exciting. Yeah. So the first thing to really think through is what are your goals? What are you wanting to invest for? Are you investing for retirement knowing I'm not going to see this till I'm 60

years old and I'm putting money away because I'm going to, you know, I want to retire at 60 and be able to cash everything out and be great or not cash everything out, but, you know, live off those investments. Is it that you want to maybe open up an index fund or a mutual fund and put some money in month to month because you're looking out in the future and you're like, yeah, we'll probably be putting a down payment on a house maybe in four to five years. I don't know, but I want to be able to get to that money without penalty. So, you know, I'm doing that. Is it kids college? Are you investing for kids college in a 529? So again, mapping out why you're investing and kind of what those goals

are will help really take a really broad subject and narrow it down for you to know what lane you're wanting to invest in. And that why will keep you focused and eye on the prize instead of sort of getting a little starry eyed or pulling your money out when you go, oh, no, this is for this purpose. Yeah, because just so you'll know, we define investing as five years or later, right? Or longer. That's investing for us. Savings is more short-term. You're saving for something in the next month,

two, three, four years. But when you're talking five years or more, that's where you're like, okay, we can start thinking about this investing idea. That's because there's less risk for you to lose money in the short-term versus long-term. We know you're going to make it if you do it the right way. So the next step, once you've decided on your investing goals, you got to figure out how much you're going to invest.

And your goals will determine this, but we recommend a baby step four, putting away 15% of your gross household income into tax advantaged retirement accounts. So simply put, this would be, I've got a Roth 401k at work. I'm going to put 15% of my income. My spouse will put 15% of their income. Together, that's 15% of household income. That's a question we get a lot. Wait, do I do seven and a half and she does? Nope. Because 15% of yours and 15% of hers becomes 15% of ours, of the total. So that makes it real simple. I love that 15%. Don't overthink it. You don't need to do more at this point. You don't need to do any less. Keep it there and don't stop. Yes. And then also understand your investing vehicles. So you were just saying

that, George. So when you're thinking about retirement, you guys do some research and figure out, okay, at my workplace, do they offer a 401k or a 403b? These are great investing vehicles to be in. Or is there even a Roth option within it? Because Roth means that it's after-tax dollars and the growth is tax-free when you take it out, which is huge. So if you ever see Roth, jump on that train. That's a good one. Or maybe you're doing a Roth IRA, which is another great place to put your money. A really simple investment, honestly. And anyone can do that with earned income. So that's a good clarifying point. You're like, my employer doesn't have an

IRA. That's outside of your employer. That's right. So 401k, 403b, those are employer retirement plans. The IRA, anyone can do if they have earned income. It's up to, I think, $7,000 this year in 2024 that you can put in. So they limit it. But again, that's another one. And so, you guys, you can sit down with somebody, a SmartVestor Pro or someone to open up, you know, especially like something like a Roth or mutual funds or other things. But, you know, you can also go to Vanguard and say, okay, you know, looking into options. I mean, like there's ways to do this.

But just know when you open up an account, which, you know, looking into options. I mean, like there's, there's ways to do this, but just know when you, when you open up an account, which again, if you sit down with a professional, which we recommend, they're going to help you with this. You actually have to invest the money because that's a mistake people make. They open up these accounts and they may put money in the account, but then they don't go and take that and actually invest it. You need to buy funds with it. That's right. There's an extra step there. So just remember that. It's just like a shell.'ve bought you've put you have a shell but now you need to put some stuff in there to allow it to grow so that's where it comes into choosing different types of investments we've all heard of stocks and bonds our favorite of these is mutual funds

or even index funds the word fund is the key here a fund is going to hold a giant basket of those stocks which helps you diversify and it doesn't put all of your eggs in one basket and we may be beating a dead horse as they would say george but again we're getting very simple here with this just so but we want you guys to know this yeah george does he loves horses don't ever sell the horse alive or dead i wouldn't touch one oh my gosh uh is is within these accounts your 401k at work, a Roth IRA, you're investing in mutual funds within that account. So just to be clear on that. Yes. And so the next step would be picking an investment strategy. And we've mentioned that good growth stock mutual funds, that's the way to go to invest for long-term consistent growth. You're spreading that out among a lot of different

companies. And even then we recommend four different types of funds. And so we'll tell you more about that. I'll give you a great resource to check out. But the key here is diversification. That is why we do this. That's right. And then next, that'll be opening the account, kind of what we were saying earlier. So you're going to go and talk to your employer at work. And then you're going to do, remember this formula roth no wait match hold on oh no i just messed it up i messed it up george roth nope match start with thank you my gosh match beats roth beats traditional we got there oh lord have five words on my soul match beats roth beats traditional so

remember that formula because that's going to help guide you to say, okay, what should I do first? So again, go up to your match and your 401k. If there is one. If there is one. And so say it's 4%. Well, you have 15% you got to invest in. So you can put that.

So that means you have 9% of your income left to invest. That's when you're going to go over to a Roth IRA fund up to that. 11%. If you max that out. Yes. Good Lord. It's okay. The cookie is messing with her it's i mean i told her i get an americano i get a chocolate chip cookie and i go downhill um that's right 11 left go back go to your roth and if you max it out and you have more percentages left go back to your 401k but the beautiful thing would be a a Roth 401k. That's what we have at Ramsey. And so for a long time, that's what I was doing. It's just Roth 401k,

all 15%. We've got good mutual fund options. That's the key. Hey, should I do all 15% of the 401k? Yeah, if you've got good options and low fees and it's a Roth, go for it. So it's simple. Match beats Roth beats traditional. And again, this is regardless of the employer match, you were doing 15%. You don't do less because your employer has a match or they give you free money. Even if they give you a free 4%, you still do 15%. Yeah, that's right. So the next step, the final step here is working with a pro to start investing, to keep learning. Rachel and I both have a smart investor pro in our corner, as we call them. And the key here is

you want someone in your corner who can educate you, who has the heart of a teacher, who can maybe help you avoid jumping off the ledge when the market's crazy, help you understand the trends that are happening and give you a full plan, not just with choosing a fund, but what about estate planning and tax strategy and kids college and making sure you have a holistic plan? Yeah, because in our world today, I mean, there's some stuff, I mean, Vanguard's a great example that you can do on your own, right? I mean, very much so. But even if you do that, you guys, having somebody in your corner, and this is what one said I do, we meet every January with ours to look at everything. They're looking at your entire financial life. And so I think that's so, so important that you're not doing this on your own, because if you're making big decisions,

to have somebody that's, yeah, from the tax standpoint, I mean, all of it, just they're seeing your entire financial picture, I think is really, really important. Get that third party in there. So if you want to learn more, we've got a great article that we'll put in the show notes in the description that explains it all. It's called How to Start Investing, and it's on the Ramsey Solutions site. So go to the show notes, click the link in the description, and it's all free. We just want to help you guys build wealth with peace and confidence. I'm going to go drink more coffee, George. She needs it.

This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. This hour, open phones at 888-825-5225. In a previous segment, Rachel and I gave you a little deep dive on investing, but there's only so much we can cover in about seven minutes. And so lucky for you guys, we've got a brand new event coming up that's like four hours of just investing content. It's called Dave Ramsey's Investing Essentials. And at this event, Dave Ramsey and myself, we're going to deep dive into investing.

For the first time ever, he's going to share his personal playbook on investing, including how he buys real estate, which is something Dave is known for. He's got an insane real estate portfolio, and there's a smart way to do it. He's going to lay it all out like never before. So this is a two-night virtual event happening May 21st and 22nd. And because it's online, you can watch from the comfort of your home wherever you are in the country. And investing is something that you guys ask us about all the time. You want us to dig deeper. You want us to nerd out a little bit. And that is where this is going to happen. So we're going to cover the basics, of course, the normal baby step four stuff. But we're also going to talk about how to maximize your investments, your 401ks,

your mutual funds, investing outside of retirement, how to invest once you're in baby step seven and beyond, Dave's personal strategy for real estate, and which investing trends to follow and which ones you should avoid. Tickets start at, I think, 200 bucks right now. So go to ramsaysolutions.com slash events, get your tickets today and join us for this virtual event. I am so pumped for it. Let's get to the phones. Marie joins us in Bend, Oregon. Coming up, what's happening, Marie? Hi, thank you. Sure. How can Rachel and I help?

So one thing I really love about your philosophy about money is just the openness, especially when it comes to, it seems like, your family, just being able to have those open conversations and everyone knows what's going on with everything. My main question is really just how to have those open conversations. I know that there are things in my name that I just have no idea what they are. And I mean, that's not a terrible thing there, but I also just feel kind of in the dark.

I think some of my family members who set up things don't want, you don't just kind of want to wait to it till a certain time period. But I also just like, I guess you just want to figure out how to navigate that. And also just being able to be open in general. And are you talking more like with your nuclear family, like your husband and kids, or like your parents and siblings? Mostly my parents and grandparents, but yeah. It's definitely with

everyone. Yeah, so when you say your name is on things, and that means more from like an inheritance standpoint that you'll be receiving, it's not like your name is on the deed of houses out there and you don't know. It's not something like that. I think it's not like your name is on the deed of houses out there and you don't know it's not something like that i think it's mostly just trust and whatnot okay yeah be a beneficiary on there are you guys are you coming from wealth do you know like i mean have you guys

done really well your family i thought i did very well yes okay and you just have no clue how much they have you have no clue if there will be or if what amount of money would be passed down to you I mean like that those are the questions you're you're asking yeah and I think it's I think you know when whenever we talk about money or family it just it's not as like it's just not well planned out I guess I mean again I'm grateful for you know what my grandfather did but I also just there's not as much of the like I just feel like left in the dark and where I can't do smart things. Like I had my, my child and I, I want to be able to set her up well and be open about things. And I guess I, I'm just looking forward to being able to set things differently

up for her. And now I'm just trying to figure out if I can maybe figure out some boundaries or have discussions with my own family. I don't know. How old are you? I am 28. Okay. And how old are your parents? My dad is 60.

My mom is almost 50. And your grandparents, they're still living? Yeah. Okay. And is grandparents are still living? Yeah. Okay. And is that where most of the wealth came from was your grandparents and your parents and then? Okay. I'm just trying to get a family tree a little bit of what you're thinking. Are you married, Marie?

Yeah. I'm not. You're not. Okay. And how old is your daughter? She is four. Okay. Great, great. Yeah, I mean, I think at the end of the day,

they're going to have to be the ones, your grandparents, if they're the ones that hold most of this, that it's their decision on how they choose to do it. I think you could, depending on the relationship, have some level of a conversation of like, hey, here's what I've seen and I just want to be able to to plan well and just to know how to prepare if you know or when when something happens to you guys and kind of what the plan is and it's not from a gold diggers perspective in a sense or like uh hey i'm gonna

just wait around till something's passed to me because i don't want that for you either marie i mean i want you to have the dignity to stand on your own two feet regardless of what um you'll receive one day um but i do think you know it's like i mean i don't know i mean i think that that's a fair of like hey i'm just i'm i'm kind of just curious and i would love to sit down i don't know if there's a way to do this you know with all the the cousins and the other siblings and everything and let's just kind of have a family estate meeting and kind of just get a lay of the land of what's going on because it does feel in the dark and and you know and I think one of the worst things that families can do is that you know what you know the grandparents pass and you guys it's like in the movies all end up in some like old

english looking mansion and like a live in a library you know and then the the will is read out and the first time you hear anything is in that moment you know um which i know kind of could happen i guess but it's a little dramatic but um and i think just that i think just your desire to just um have the knowledge you know for yourself so that it's not at this point of like after they're gone, suddenly it's a surprise. You know, I think that's a fair thing to say, but I think it's up to them, obviously, at the end of the day. It's still going to be slightly awkward. There's not a normal dinnertime conversation. And so it's OK to lead with, hey, I know this might be awkward and I'm just trying to open this conversation. If you lead with some grace and humility instead of like entitlement and you're sort of aggressive about it, they may or may not tell you.

And I'd also live my life knowing that it may or may not happen because life, a lot of life will happen in between then. So like Rachel said, I would prepare for a life where you get zero inheritance and prepare so that if you do get inheritance, you know how to manage it well. And regardless of it happens and how much it is, whether it's a dollar or $10 million, but it's fine to be curious about it. But again, there's no, what kind of sparked this for you, Marie? Was there a moment that was like, hey, I'm actually wondering about this? I guess largely just inspired by, you know know setting things up for my own daughter and then also just seeing the way that other people are able to operate where it's more open i just really

like that it's just like um i guess i'm wondering how does it affect your financial life in the meantime i i mean, I definitely, I mean, I'm fine where I am. So I'm not like trying to ask them for money or anything. It's just like sort of like scratching the itch in your brain. It's like, I'm just curious, what's going to happen here?

Yeah, I've just kept on going, I think I'm just an overthinker. I've kept on going back and forth. I'm like, should I say anything? Does it really matter or do you have good relationship with your parents do they have a good relationship with your grandparents like how how's the family dynamic it's definitely just it's there's just not really a whole lot of boundaries it seems like so it just feels feels harder for me to navigate boundaries of money well money and just other things in general like they overstep they're too involved or are they like that kind of thing um in some ways yeah and then in other ways it's um uh i don't know how to explain it really no no you're

fine i just wondered like yeah if you were just like like hey mom and dad i'm curious how much are grandpa and grandma worth like what what's gonna happen you know when when they pass away i don't know like if you just very awkward conversation it would be and my question would be i'm just curious why would they be judging? Would they not even know the numbers? Would they like what's what causes that to be awkward? I mean, it was just always such a secret. And it was like it. Yeah, we just always lived like we had nothing. But then there was actually I think they my parents actually had a lot. Then we just didn't, you know, as kids know about me, we were taught to stress about money. Yeah. And it's just strange. Okay. Yeah. I mean, I don't, yeah, again, to George's point, I don't know from the day-to-day aspect, I think it's something good for you to start saying, hey, I'm going to do something different with my daughter moving forward. And I'm going to have this to be a topic that's open, but we can't force people for it to be an open conversation.

And to start with, I don't want to assume anything. I'm not here to be entitled. I just want to know. And that's it. It's just a place of curiosity, not expectation. That puts this hour of the show in the books. Thanks to my co-host, Rachel Cruz, all the folks in the booth, and you, America. We'll be back before you know it.

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. 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 Ramsey Personality, George Campbell, author of Breaking Free from Broke, joined by best-selling author Rachel Cruz, latest author of I'm Glad for Where I Am. Yes, the new kids book. Thanks, George. You know what? I'm glad glad for where i am in the studio with the birthday guy it's george camel's birthday happy birthday george thank you i heard that you were going to sing for me on air oh you know me not the voice of an angel don't hide it under a bushel rachel america needs

to hear let your light shine i wish i wish i could but my birthday was just yeah uh two weeks ago i guess and um i was asked on air, I think by Ken Coleman, if I'm the youngest Ramsey personality. And I was like, I think I am. And then I realized, no, no, no, George is younger than me. And you'll never be younger than me. That's how time works. It marches on.

It marches on. We keep moving forward. Well, you look younger. You're vibrant, energetic. You're doing fine. So are you, George. Thank you. The youth is there. I could use a tan, but you look younger. You're vibrant, energetic. You're doing fine. So are you, George. Thank you. The youth is there.

I could use a tan, but other than that. You are. You're doing good. Thank you. It doesn't seem real genuine when you laugh through it, but I appreciate that. The number to call is 888-825-5225. Call us and save the sinking ship. Leo is about to do that in Pittsburgh.

Leo, welcome to the show. How can Rachel and I help? Hi, Rachel and George. Thank you very much for taking my call. Sure. What's going on? So a little background for you guys. My wife and I are 27 years old.

We don't have any debt outside of our mortgage, but we have a pretty large savings and a decent chunk of money that we add to it every month. And I've been wanting to get more aggressive with paying off our mortgage. And it's something that my wife is a little worried about doing. I think she likes the security of having the extra money in our savings account. So we've been kind of butting heads on what to do and how to approach that. And I was just hoping to maybe get some advice from you guys so that I could better communicate

a plan to her. Yeah. Does she know that we do, and what we would recommend to you is that you keep an emergency fund, even up to six months of expenses in the bank. So it's not draining it all the way down. And does that still make her feel uncomfortable? Yeah. And I think like the big thing that she struggles with is her birth mother passed away when she was just a little baby. And she kind of lives in a way where she doesn't want to necessarily feel like she's constrained or living every single day to pay off our mortgage because you just never know what could happen. And I can understand to that extent, but I'm still trying to help prepare our family for, you know, a great future and financial success. And we have a two-year-old daughter and a daughter on the way. So it's something that, like, I know in the back of my head, like, what the best move is,

but I'm just trying to help lead her to that. Well, talk us through the actual numbers. What's your household income right now? So we're right around about $190 a year. Amazing. That's with both of you working outside the home? Yes. My wife works part-time, and I'm full-time.

Wonderful. How much do you guys have in savings? So we have $30,000 for our emergency fund, and then probably about another $110 sitting in a high-yield savings account. Wow. Way to go. That's great. And how much is left on the mortgage? $350,000 on the mortgage.

Okay. And is the $30,000, would that be considered three months or six months or somewhere in between? What's the number for how many months that would float you guys for? It would be six months for us. Okay. Okay. And that's full expenses, all the little luxuries, or is that bare bones if we had to go down to the skeleton here to cover the bills?

Yeah, that would be keeping up with our current lifestyle. Nothing would change during that time. Great. And she's comfortable with the $30,000, but she wants the extra $110,000 as a just-in-case life happens. Yeah, pretty much. It's just, I don't know. I think that she almost thinks that if i'm

throwing something at the mortgage it's just like disappearing and going away and in reality it's really not but i guess it's just a it's an emotional thing for her it's sort of locked away yeah and leah do you guys enjoy life do you guys go on trips and you know and yeah go to concerts i mean like are you able to you're not the kind that's like oh my gosh honey we got to put everything towards the mortgage because there's that intensity that people feel and if she's like whoa chill can we please just breathe and have fun with life like I didn't know like what the balance was for you guys yeah there's definitely a balance involved and yeah um I think that I could be more intense than she can with a lot of things,

but outside of that, I've been trying to reaffirm to her that our monthly budget would not change and we would not necessarily start skipping out on doing things that we enjoy that we typically would want to do. I would just, you know, I was just kind of leaving her in a way of anything extra that we had each month would go directly towards the mortgage instead of just, you know, getting thrown into a savings account where it's basically doing nothing for us. Right. For sure. Yeah. How much is your interest on your mortgage? Um, it is five and a half percent. Okay. Um, yeah, I mean, I could see, I don't know, George, like I, I mean, because she's got a baby on the way. She went through something pretty traumatic in her life, right? That's, you know, has put a perspective in her mind that is different security, that would mean owing nobody anything to where if I lost my job, we don't have to worry about a mortgage payment.

So it actually lower how much you would need in the emergency fund. It would limit how much risk you have in your life. So I think if that's her angle that I think paying off the mortgage still would make sense. And I think showing her some of the math can help. She may not be math motivated to show her, you know, the interest and what you're paying an interest. And if we paid this down, here's what the balance would be. Here's how much would be going toward the house every month instead of lenders. Yeah. And maybe you kind of baby step your way into this, Leo. And maybe you're like, hey, let's just take, let's get our mortgage to 290 tonight. Like what if we could just like throw 60 at it now? We keep 50 in the high yield. We keep 30 in our emergency funds.

And let's just see how we feel. And then let's talk again in three months. Start on the shallow end of the pool. Yeah, I mean, seriously, yeah. Because, I mean, it is kind of a whiplash to, and now if you're both on the same page, and you're both like, heck yeah, we're going to throw all this at the mortgage,

and it's going to be amazing. That's one thing. But if there is that one spouse that is holding back, then that's when I would say, why don't you just kind of baby step your way into it and just say, let's just have fun and go down to 290. And in the future, as you guys set a goal for when you're going to pay off this mortgage, let's say it's five years from now, that will help to go, hey, we're already budgeting in our budget that $2,000 extra is going to go toward the mortgage. And that way it's not this giant pile of money that's like a scary thing to let go of. Instead, it's just a normal part of your, you're just flexing that

muscle. It's a rhythm of your budget, just like giving or anything else would be. So I think that will help for the future instead of just stacking it up and then going, what do we do with it? Instead, make a plan, pre-decide to make a plan to pay it off early. So maybe the math will help. Maybe showing her that angle of, hey, I want us to have true security. I'm on your team. And the way I see that happening is us getting rid of this mortgage in our early 30s till you have total freedom to where if you want to stay home, you stay home. If something happens, we're going to be okay. We don't have bills. But in the meantime, when's the baby due? October of this year. Okay.

You can have extra money there covered for October, until October, and go, listen, we want to have the max out-of-pocket for insurance. We're going to have a sinking fund for home maintenance. But at the end of the day, there's really no emergency that's going to tank you guys if you have the right insurance in place and you have your emergency fund. And you're still enjoying life, too. Yeah. Walk her through the worst-case scenarios and show her how you'd handle it. That'll give her some peace and confidence. Thanks for the call. This is The Ramsey Show. This is The Ramsey Show. I'm George Campbell joined by Rachel Cruz. As you're listening or watching, do us a quick favor. The show is free

and it's also free to hit the share button, to hit the follow button, to subscribe, to leave a kind review, and maybe share this show or clip with a friend who may not know us or may benefit from hearing some of these money principles and some of these calls. You never know how it could affect them and how it could affect their future. And we want to spread hope. So thank you all of you who have shared the show. You're our best marketing that we have. No billboard could do better. You guys, word of mouth, that's how we spread this message. Rachel, there was a recent article that gave me some hope because there's a lot of news that doesn't give me hope. And this one is from Business Insider. Here's the headline. Let's get your take millennials are suddenly rich saw wealth double after the pandemic wow is that i'm assuming

housing it's based on statistics and i assume that they don't go into it here but here's what the article says after years of killing off brands languishing with student loans and splurging on avocado toast instead of buying houses millennials might finally be emerging on top. Oh, look at us, George. I sent some sarcasm in there. But okay, a new report from the Center for American Progress, a left-leaning think tank, okay, looked at how wealth changed for different age cohorts from 2019 to 2023.

They analyzed data from the Fed, and they found good news that the wealth grew at a historic clip from the end of 2019 to end of 2023. So a four year span, the average wealth of households under 40 grew by 49 percent. Oh, my gosh. That's pretty wild. That is wild. And wealth gains were higher for just millennials who were 23 to 38 in 2019.

Their wealth doubled from the end of 2019 to 2023. And so they go on to say, to be sure, a cohort entering their prime earning years is expected to see a big wealth gain as its members buy houses, begin to invest in earnest. Most surprising finding is that the gains came during and after the pandemic recession, a type of contraction that historically has meant far worse economic outcomes for youngers caught up in its wake. Okay. Well, it doesn't say it in here, but I would have to assume that those who are homeowners, that's who. Okay. Well, it doesn't say it in here, but I would have to assume. That those who are homeowners, that's who saw this. I mean, because what your home is worth today, we obviously all know because the housing

market is still crazy. But I mean, for some people, it doubled, right? So saw wealth double. I mean, I would say that's a big part. And we see stats a lot with millennials and Gen Z, for that matter, with lower credit card debt even like we see sometimes you know studies come out around that or avoiding personal loans I mean there's certain things that age groups maybe have seen from their parents and what they've done and they're choosing something

else maybe they're investing more because the market was good at certain points right we've had some good years so if you were in the market, if you were in the housing market with home ownership, you're going to see your wealth grow. Your net worth is going to grow, which is probably the best scoreboard for finances versus a credit score or something else. So I like this and I want to call out that this isn't just about millennials

because we know there's broke boomers, there's wealthy boomers. There's broke Gen Zers, there's Gen Zers doing better than us. Yes. And so there's nothing saying that there's a generational curse. There's broke Gen Zers. There's Gen Zers doing better than us. Yes. And so there's nothing saying that there's a generational curse on any of these people,

but it's all about the habits that you form. And the earlier you form them, the more wealth you're going to build. That's how this works. In the millennial age group, we were interesting, you know, depending on, I mean, I know it's a span of years,

but, you know, when we graduated college, I mean, we were entering the workforce during the recession of, you know, that 07, 08, 09. I mean, that feel, you know, that we graduated college and we were entering the workforce during the recession of, you know, that 07, 08, 09. I mean, that feel, you know, that was so bad. That's when we entered the workforce was at that point. And if you were in a position to say, you know, even though everything was so low, we're going to start investing. You buy low.

I mean, you look back, you know, 10, 15 years and it's amazing what can happen. Yeah, those that were in a financial position to do that, they didn't have all this debt holding them back. That's right. That's right. And I thought about it for a while. What caused that? Like you're like, wait, during and after a pandemic, that's where all this wealth happened. Think about it. Everyone's stuck at home. So their spending went down. Their savings went up. Everyone sort of did that. Yes. They looked in the financial mirror, went, had an oh crap moment. Maybe I should put this free money away. The government's giving stimulus checks. The student loans are on pause. You have a harder time spending money because you can't really go out to eat and go on vacations during the pandemic.

I think all of that, on top of record low interest rates, caused a lot of people to kind of expedite their financial journey in a beautiful way. Now, there's a lot of people who didn't do anything smart during that time, and they're still where they were. Yeah. But there's a bunch of people that are in this group that did the right things. They actually knocked out their student loans while the payment was paused. Yes, yes, that's right. They weren't actually saving money.

They were putting all their money on principal, which was amazing. They avoided going into debt. And so all of that, I think, has caused a lot of this. And I hope every generation benefited from some of those factors. And it's not too late. Even in 2024, this is still possible. And it's good news, y'all. I feel like always the headlines, it's like, it's a negative savings rate or the worst

credit card debt we've seen in history. Or this generation is going to be broke forever. Yeah, I feel like we just, we hear the doom and gloom so much. So you guys. I'm done with it. Some are doing well. Done with doom, done with gloom. On your birthday.

That's right. That feels right, George. Not on this show. Not on this show. All right, let's get to the phones. Jeff is in Spokane. What's happening, Jeff? Hi, guys.

How are you doing? Hey, we're doing well. How can we help? Good, good, good. Thanks for having me on. So my question is about building credit for my son. He's 21 years old and he graduates college tomorrow, actually. So that's great.

Oh, wow. So fun. Yeah. He's leaving college debt-free. He doesn't have any student loans. Hey, Jeff, are you on speakerphone by chance? You're echoing a little bit. Is this better?

Yes. Thank you so much. Yep. Okay. Sure, sure, sure, sure. Okay. He's leaving college debt-free, doesn't have any credit cards, and he has a reliable car that's fully paid for,

and he won't be needing a car anytime soon. Wonderful. So he's good there. Yeah, yeah, yeah. He's already accepted a job in Nashville at a hospital, and he'll be relocating in July. Wonderful. Yeah, yeah.

The issue we're having is the apartment complexes that he's looked at, that he's all considering, they want a positive credit history, along with an offer letter showing that he's agreed upon salary. He doesn't have any credit history because he doesn't have any credit cards. So I'm hoping you guys have some tips on building positive credit quickly or any other suggestions on how to secure housing without a credit history absolutely we do yeah yeah we're not the place to talk about positive credit history jeff but we can tell you oh i understand that i understand that yes but we can tell you that it is still possible to rent an apartment uh without a credit score

so it is so so the places that he may have looked may not, right? So depending on the complex, they will have different rules and regulations. But actually one of us who used to be a Ramsey personality, Anthony O'Neill, do you remember this? He called. Oh, yeah. How many did he call? He called like 12 apartment complexes around.

And I've done this twice since then. Okay. Okay. I'm glad Anthony did it. So I wanted to see for myself. Okay. What'd you find, to see for myself. Okay. What'd you find, George? And let me tell you, Jeff, a lot of good news.

I did this on the Fine Print, my podcast. I did this on my YouTube channel recently. I put the transcript of these conversations in my book, Breaking Free from Broke. And so here's the good news. The big takeaway is that you do need to be employed. So does he have the offer letter? Yes, he does. Great.

He'll need to pass a background check. Is he a criminal? Not even close, no. Great. Does he have enough to potentially cover a slightly higher deposit that he would get back when he moves out? Yes, he already has a signing bonus.

Wonderful. Those are literally all the factors that matter. And I tell you this as a person who has rented multiple apartments without a credit score, that truly they say did you call that said no how many said yes do you remember i only think one and that was in new york city but it was more about them requiring like five or six times the income because i think anthony called nashville once now i will be honest jeff i think this was a few years ago yeah but i think he called 12 to 15 and i think locally.

Yes. And I want to say it was like eight of them said, sure. And he was denied. Sometimes truthfully, the person on the phone, they don't even know. They don't have control. They don't know the back end software and system and all of that. But Jeff, what they're looking for is a bad credit score. So when they say, well, we have to run a credit check. What they're looking for is delinquencies. People who didn't pay their bills who have a bad credit score having no credit score all they're going to say is yeah you might we might require the first month up front or instead of a five hundred dollar deposit it's going to be a thousand dollar deposit yeah and i would talk to the manager of the apartment complex because if you just call the front desk they're going to just probably just give you the script that they were told and i've also called just straight up landlords so people that just you know they own a house

they're doing a rental. I called them and they say, well, are you employed? Will you pass a background check? Yep. And they went, oh, okay. Doesn't matter. So I think it's all in our heads. It's not as doom and gloom as you probably think.

Yeah. Don't go sign him up for a credit card because he needs to build credit. He's going to be just fine. In fact, he's doing so much better than his peers. And a lot of that is thanks to you. You raised a great kid. Yes, sir. All right.

Congratulations. Appreciate y All right. Congratulations. Appreciate y'all. Yeah. I'm going to send you a copy of my book, Breaking Free from Broke, that'll outline a lot of this. A grad gift. A little grad gift for him. He's already done a great job, so this will just be a reminder that he's on the right

path. So hang on the line, and we'll send it to him. It's called Breaking Free from Broke, and I know he'll enjoy it. It's fun, witty, and very Gen Z millennial. And very George. And very George. And very George. We appreciate that about you, George. For better and for worse. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. As you've been listening to the show, you've probably heard us mention EveryDollar.

That is our world-class budgeting app. It's the best way to make the most of your money, creating and sticking to a monthly budget. EveryDollar helps you do that. You can plan spending, track your expenses, use sinking funds, save for your goals, and it's an easy-to-use app that fits into your busy lifestyle. Both spouses can be logged into the same budget, and it really is just an intentional spending plan.

You keep a pulse on what's actually happening with your money, and it helps people win, regardless of where they're at in their financial journey. So you can download EveryDollar for free in the App Store or on Google Play today. Be sure to check that out. Especially as we begin a new month. My wife and I, we did our budget. It was May 1st and we were a little late because we already started the month. We saved it before the month begins. Yes. But you know, we have a baby. He's a little crazy. Yeah, a little crazy.

And it was wonderful. We both just talked through it. Hey, what's coming up this month? What do you have? How much, you know, blow money are you going to need this month? Oh, yeah, she needs to buy some new dresses. Yada, yada. And I know you posted that May is an expensive month.

It's a lot happening. It is an expensive month. Life blossoms in May. I mean, I don't know what it is. And I think it's, I don't know, age of kids. But I mean, it's everything. There's so many fees and gifts that you give in May, you know, into the school year. I mean, there's all of that.

People are Venmo, can you Venmo this or Venmo that, you know, for this person or that person. And there's a lot. Summer camps, you know, sometimes some of the deposits are due in May. Yeah, it's a very expensive month and time wise oh george there's a lot of money there's a lot two finite resources so you better make the most of the money at least with every dollar and then then that lowers the stress because you're like here's what we planned you know a teacher's gifts i have that in the line item this month and i went today actually and did some shopping online for them, which was so fun because I do love giving them gifts.

And I'm like, great. I know how much I have to spend on each teacher. And it makes the process more enjoyable. I don't know. I love it all. Well, instead of being this last minute thing we didn't budget for, we don't have the money for it. When you budget for it, it just gives you the freedom and permission. That's right.

I love that. And if you're not doing a budget, what are you doing? You're going to put it on a credit card because you didn't think about it. And one more reason to not have a card and one more reason to do a budget. Love it. Brianna's in Chicago up next. What's going on, Brianna? Hi.

Thanks for taking my call, George and Rachel. Happy birthday, George. Oh, thank you. Happy belated birthday, Rachel. Oh, thanks. She really cares. And mine was back a few weeks ago. So my question, I've been using the baby steps for a long time and I have no real estate

and I just haven't been in a position to be able to buy anything. So I feel like I'm not really using the baby steps, but I'm trying to do everything else. So I guess my question is what, what should I do? Um, I'm happy to share. Well, when you say you're not using the baby steps, you're doing all of the steps, you're just skipping 3B, which is safer home down payment. Yeah. Yeah. Well, I, I know, but I, I have a lot of cash and I have, I, I have retirement funds and I have a self-managed brokerage account and emergency fund and no debt. And I'm 47. So I'm getting older and older and older. And then

I, you know, I, I know like, you know, Dave Ramsey says that, um, real estate's an inflation hedge. And he's like, it's absolutely one right now. And you're in the Chicago area? Yeah. So I'm not, yes, I'm not in a place where I can buy a place easily. I mean, the only thing I know to do is just try to stack up cash and watch everything get more expensive and watch my cash get less valuable. Well, we'll try to help you set a more concrete goal instead of just hope and pile up cash. So how much money do you have that is in non-retirement? Like count up the brokerage and count up everything that's not your emergency fund.

How much could you liquidate? $190. Okay. And you're saying $190 is not enough to put down on a property for you to live in? Because it feels like enough for me, even if it was a condo or townhome in your area. Well, I'm in a weird position too because I've worked very hard. I have a pension and I'm starting a new career and I have no kids, no spouse. I froze my eggs. So what does this have to do with your home ownership journey?

I'm working very hard. I don't know where I'm going to be in the next couple of years. I mean, I kind of know. Has your career been in this area? Is it an in-office job? No, it's a very... I mean, didn't you write the book about doing what you love or something? Ken Coleman.

That's Ken Coleman. From Paycheck to Purpose. Yeah, so I'm living purpose now. And so I've worked my butt off to be able to live purposefully. Okay, but you're saying, hey, I don't know where I'll end up. I might move in the foreseeable future. Are we talking two years, three years, or is this like seven years? It's very industry, whatever the industry wants is where I'll go.

So I'm saying probably I'll be, I'll probably be in this area for the next couple of years. But I don't know about three to five to seven. I'm not really sure. Okay. Well, if it's at least three years, I think it's a wise thing to buy. And you don't have to go get a giant single family home just because. You can get a condo or townhome and that'll still be a great hedge. It'll still appreciate in value. And I think it's a wise thing to do to have a fixed expense instead of paying rent every month. Especially, you've done such a great job all across the board.

Yeah. And rent's going to continue to go up as well. So you can either choose to pay yourself, you know, in a way you're, you know, to build equity or you're paying someone else. And again, renting for a season is a really smart idea if you don't have the money. But you're in a great position to have the money and to build some equity and all of that. And I know, you know, even we have some friends, a couple of families that we know that have moved from Chicago and it's, and almost they're saying it's not even as much as the house price anymore. It's the taxes, how expensive property taxes there. It's wild. So yeah, you do want to be wise with it and know, but yeah, I mean, I would be putting something into an asset like that, Brianna. I mean,

I think it's a great place to put your money. And so the parameters, Brianna, to help you kind of just go, okay, I'm ready or I'm not ready, is can I do this on a 15-year fixed rate mortgage where it's 25% of my take-home pay? Which means after taxes, but before other deductions like 15% investing, your healthcare premium. So if you do that math, you know, how much do you make a year gross? Oh, well, it's weird to say gross because it's, I mean, I could just say I bring home eight, eight a month. So that's after you invest and pay healthcare. Well, that's net with that before investing.

Before, cause you're not, you don't have an employer investment plan. Well, I already have about 700 in retirement. Okay. Let's go with the eight number and then go, okay, we want 25% of that going toward mortgage. That means you want to spend about $2,000, and that includes principal, interest, taxes, insurance. So now you have an actual ballpark of what kind of home you can afford. And that might be, okay, I can afford a $400,000 townhome in this area based on putting $190 down and taking the rest out in a mortgage. And that's what this payment would end up being.

And then you go, all right, let's shop. I'm going to get in touch with a Ramsey-trusted real estate agent and start shopping the market and find something in my budget. Okay. But I don't want you to sit on the sidelines for years because you don't have enough to pay cash and the market's a moving target. Buy it when you're ready under those parameters. Okay. And if that means, you know, I'm going to move a little further out. I'm going to do a condo instead of single family. It's okay to adjust expectations and, you know, it's not settling. You're just going, here's the reality of what I can afford. Right. So I hope that helps with just putting some bones on it. It feels like

it's been a lot of emotion, and here's what I think I should be doing, and I'm not doing enough. Well, I was in the great housing crisis of 2008, and I was a victim of that. You've seen some things. That's when I found Dave Ramsey. And so, I mean, it took me four years to sell a condo at half the price.

So I went through that. Totally, totally. I'm very, very traumatized about buying a place yeah totally and right and rightfully so you've been burned by it right but all the indicators that we can see is that it's just going to continue to slowly go up what's your rent right sorry what's your rent right now oh it's um 28 okay so you're already paying 28 Oh, it's 28. Okay. So you're already paying $2,800. So it's not like, you know, switching over to a mortgage with your income and finding something even cheaper with a mortgage, I think is very reasonable. Okay. And it's also not going to go up next year.

Stick to a 15-year fixed rate conventional. Okay. So I hope that helps and gives you some hope. I'm going to send you a copy of Dave's new quick read called Real Estate the Ramsey Way. I hope it gives you some confidence and peace as you enter this home ownership process. And I'll also gift you my new homebuyers course that's inside of Ramsey Plus. I'll gift you a Ramsey Plus membership to go watch that as well. So hang on the line. Kelly will pick up. We'll gift you both of those. Hope it helps you along the journey. This is The Ramsey Show. Welcome back to The Ramsey Show, our scripture of the day, Luke 14, 28. Suppose one of you wants to build a tower. Won't you first sit down and estimate the cost to see if you have enough money to complete it? Love that one. Look at that. Luke talking about budgeting.

Look at that. To know if you have the money. Before you start something. Ahead of his time, that Luke. He was a doctor, right? Yeah, I think that's what they said. Very process numbers focused. I like that guy.

Not a disciple. Oh, is this your fun fact? Right? Not a disciple. I'm just all the guys. Matthew, Mark, Luke. Yeah, John. Yeah.

All right. There's a biblical fact for you. Take me back to Awana Mark, Luke. Yeah, John. Yeah. All right. There's a biblical fact. Take me back to Awana. I got some learning to do, Rachel. All right. The quote of the day comes from Graham Norton. A good rule to remember for life is that when it comes to plastic surgery and sushi, never be attracted by a bargain. I've always told Rachel that.

And, you know, she's a big fan of both. And it's hard. You get tempted by the price i'm kidding she hates sushi she hates sushi oh my gosh i'm having fun it's my birthday am i allowed to make a joke unbelievable my american right expense it's my first amendment right rachel give me a facelift and a spicy tuna you know what call day. Here's a hundred bucks. Go get you something nice. All right. Let's get to the phones. Todd is in Baltimore. God, how is it going? Todd, solve us from this crotchety old man. Man.

Todd can't help. Todd, can you help us? Can we help you at least? Can you help us, Todd? I hope you can. So my 20-year-old son is under contract to purchase a house for $45,000, and the house is probably worth about twice that much, which is why he's trying to buy it. But anyway, he's a part-time student, part-time working. He probably only brings in about a thousand a month. I'm thinking I'd have to co-sign on the mortgage, but I'm wondering if I even need

to do that because my thought is, what if I take money out of my line of credit? We go to settlement with cash. We avoid the whole mortgage process and the costs with that. And then he gets his deed or whatever. And then he just turns around and gets his own line of credit and then he he gets his deed or whatever and then he just turns around and gets his own line of credit and then pays me back this sounds like two broke people just moving money around if you both need a line of credit this might not be a good move he may not be in a position to buy a house even if it is a forty five thousand dollars which yeah i'm curious why are they selling at half price oh it's a it's a friend of ours and they're trying to help him get on his feet yeah he's broke he's a college student part-time student right right so they're willing

to basically gift him $45,000. Yeah. What kind of home is this, by the way? We'd be doing a juggling. Is this? Yeah, we'd be doing a juggling act for two years until he can get himself a job that is a more steady income so he can actually be paying things. And then he's going to get into this house

and things are going to start breaking. They're going to have to replace things. Yeah, I'm guessing this house is not like a wonderful house in perfect condition. No, it's ready to go. Where do you guys live? I'm just curious for an $80,000 house. I mean, I've heard of like 180,000. Is this a manufactured home?

You know what I mean? But I'm like... No, this is a row home in southwest Baltimore. Hmm. no no this is a row home in southwest baltimore i'm just shocked that there is any quality real estate at that price in the northeast it worries me that there could be something why are they selling this that's kind of one of the questions i have oh well it's a friend of mine who she's got several homes um a handful of homes and so she was going to just put it on the market and sell it yeah Todd I would say my son so even though it's a deal he can't afford it yeah he can't afford it now Todd if you had 45,000 and you were like you know what yeah I'm gonna I'm gonna buy this and I'm gonna let my son rent it it from me. But then you're a lender and a landlord to your own son. That's awkward.

No, not a lender. I'm just saying if Todd said, hey, there's a house. Oh, if he had the cash. Yeah, if he had the money and said, oh, yeah, $45,000, I'll buy the house. Son, for two years, you can rent it. Maybe I'll turn around and sell it to you when you're in a position or maybe not, you know, whatever. But you both don't have $45,000, do you, in cash position or maybe not you know whatever like but you both don't have 45 000

do you in cash no yeah so you can't afford the house do you have any debt todd personally no the only debt i have is the line of credit on my house that you know i forgot a little bit on down on it what's the balance on that? So it's an $80,000. Yeah, let me see. The available credit right now is $42,000. And how much have you used of that? Is this like a home equity loan, or are you saying a HELOC,

a home equity line of credit? Yeah, it's a home equity line of credit. So the credit limit is $80,000, and my available credit is around $42,000 right now. So that's the only debt. So how much do you owe, $42,000? No, I owe about $37,000. Okay.

Yeah, I would pay the C-Lock off and then get rid of it. It is not a blessing to you. And going backwards further by taking out more of the available credit, it's just like a credit card attached to your house. It's putting your home at risk. It's going to put you in a bad financial spot. So I think we pass on this. We say thank you to the friends. If they want to rent it to him, let's do that for a while until he can afford to buy it.

Yeah, with an option to buy. A purchase agreement. Yeah, with a purchase agreement. I mean, they could totally do that. It sounds like they don't need this money anyways if they're willing to forfeit $45,000. So rent it to him for $500 a month until he gets on his feet and then one day he'll be and if he wants to buy it or he lives in it for two years and he's like this is a crappy house honestly at 20 i didn't know what the heck i wanted in life yeah so the chances of him wanting to be a long-term homeowner in the spot i i don't think is going to be the case he's figuring out

his life his brain is still developing truly i think is going to be the case. He's figuring out his life. His brain is still developing. Truly. I think your brain's fully developed at 24. It's a lot to take on at 20 years old as a part-time student, to take on the task of home ownership. And so for those reasons, I'm out on this. You sound like Shark Tank. That was my goal. And for those reasons, I'm out. That's called a reference, Rachel, when you reference something else that exists right but todd does that help you at all yeah yeah well well okay he now he he signed a contract with the person already i mean it's a friend yeah yeah he yeah i would see if the friend is is kind enough if they're real a friend to just cut it up and go listen this was a mistake you are so kind, but we need to back out of this.

It's not going to be financially viable right now. It's an okay thing to say. Yeah. But I would not just go through this and put yourself in a financial hole where you become the lender and the landlord. Because if something goes wrong, it's on you. And at the end of the day,'re gonna expect him to buy it and

what if he doesn't want to he turns 22 and then you're stuck with it and still the debt and everything and you're gonna have to sell it and it's just yeah friends have feelings about you buying it instead of him i don't know this whole thing basically it just makes my stomach turn in a weird way but that's our take yep it's your life your life. You live it. Should we take one, Rachel? It's dicey. Go real quick. All right. John and Waco, can you get right to it? We're up against the clock. Hey, how's it going?

Good. What's the question today? Good question. I have a pretty large car note, and I'm a traveling employee with a company based out of Wisconsin. Just kind of focused on, you know, setting my life up fresh out of college. Should I be throwing all my money at this car loan, or should I be putting more towards savings?

You know, it's kind of special circumstances where I'm at. Why is it special? I move around every couple years. I'm still trying to, you know, have a home base in Wisconsin, but I still need to support myself on the road. Okay. So what's left on the car loan? $60,000. Holy crap. What do you make? $170 a year. That gives me a little bit more peace. Okay. Why did you have to buy a $60,000 car for work that you're going to just thrash? One of some reliable to take across the country and tow stuff around.

I guarantee you my 09 Honda Civic would have outrun that vehicle. That thing will last 30 years and it cost me six grand. So I don't buy that. The problem with you using this for business, you're going to depreciate that vehicle so fast. You're literally throwing away hundreds of dollars out the window every day as you drive it.

Understood. So I would either sell it and get something cheaper or pay this off as aggressively as possible. Do you have a thousand bucks in the bank? What's that?

I'm sorry. Do you have a thousand bucks in the bank? Oh, yeah. Okay. Outside of that, I'm attacking this vehicle. Is that all you're dead?

Yeah, that's all I'm dead. I have no student loans, no personal loans, no credit card. Good for you. That's great. I would sell it. John, you don't need a $60,000 car. You don't need a $60,000 car. I'd sell it.

You'll be lucky to sell it for $40,000 at this point, depending on how many miles you put on it. So that's the worst part about buying these brand new cars and then wearing them down instantly. So I hope that helps. A lot of joy on your birthday, George. That's how we do it right here. Thank you, Rachel. Thanks to the booth. Thanks to all of you, America.

It's been a great birthday, Rachel. 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.

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