The Ramsey Show - Don’t Let Your Failures Hold You Back From Your Future

Episode Date: April 5, 2024

💵 Sign-up for EveryDollar today - The simplest way to budget for your life! George Kamel & Jade Warshaw answer your questions and discuss: "I have $400k of student loans; should I wait for forgiveness?" "How do I make enough to take care of my mom?" "How much should I have in an emergency fund?" "Should we buy a safer car?" "How do I get started investing?" Support Our Sponsors: Christian Healthcare Ministries Zander Insurance Yrefy Next Steps 📞 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! 🍎 Enter the Teacher Appreciation Giveaway 📖 I'm Glad For Where I Am 📈 Dave Ramsey's personal playbook on investing and real estate. Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by my good friend, Jade Warshaw. We're taking your calls at 888-825-5225. If you've got that burning question, you find yourself at a crossroads, you're not sure what to do next, you're in a pickle, we're here for you. That's what we do. Whether it's about your money, your life, your relationships, we want to help you take the right next step. So Erin is kicking us off here

in Knoxville, Tennessee. Erin, welcome to the show. Hi, thank you for taking my call. Absolutely. How can we help? Yeah, so I am in a unique situation. I am currently in vet school with about two years left. And through some loan simulators and things like that, I've been able to calculate that I'm going to end school with about $400,000 to $420,000 in student loan debt. So I guess my question is related to how can I set myself up now and in the future for the best financial position to be in? And should I take advantage of situations like the public service loan forgiveness to potentially rely on that for some of this loan debt? Well, I mean, you say you have two years to go. So right now would be the time to start, like stop in your tracks and stop creating more debt because how much do you have at this

point so at this point I'm about two forty thousand dollars in debt um but I have two years remaining in my vet school program and and then your question after that was basically what can I do to have better choices and be on a better financial footing? And the answer to that question is right now, like you've got 240,000 now, you got to turn the faucet off. Like you're just going to, there's no point in letting this get to 400, 425, 450 when you can stop it now. And I think that's the first thing is let's come up with a path to where you can finish these last two years and we're not taking out student loans and going into massive amounts of debt in order to do that is that I mean that's fair right yeah absolutely

so what would that look like um well it would likely look like um probably finding a job while i'm in school okay like that to pay for some of the pay for some of the tuition and fees that come up perfect then i guess i don't really have any other debts outside of my student loans. Uh-huh. And so I'm currently renting an apartment. Let's not take solace in the fact that you don't have any other debt outside of your student loans because your student loans are astronomical. So I don't want you leaning on that like, well, it's only my,

like it's just these student loans because it's a lot. So I don't want you to let your mind go there. Are you single? Go ahead, John or George um are you single go ahead john or george are you single aaron is it just your income i am single yes okay what's your current income i am currently a full-time student and um as far as in school it's kind of tough because it is a professional program to have income on the student loans. Okay. So you're putting all of your life's expenses on these student loans, essentially.

Yes. What will you earn when you get out of school? So coming out of school, it's going to be dependent on location, but about $100,000 to $150,000 starting out. And you understand that if you're going to go the student loan forgiveness route, you would have to work for a nonprofit animal welfare organization or shelter. Yeah. Or like the Department of Agriculture, which means your income is going to be limited.

Yes. You're not going to make as much as if you were in private practice. Yeah, I've looked at some of the average salaries for some of those positions. And again, location dependent, but about 90 to 100,000. Okay, so think about it this way. Let's say you go and you make 90. That's a best case scenario, right out of school. Well, making 90, and now you still have bills to pay, you're only going to be able to put away let's say 30 if you're lucky on your student loans every year which means you're on a track with interest maybe pay this off in 15 or 20 years that plan sucks

and so we're trying to set you on a path to where you're already going to graduate with debt we know that we're trying to limit the damage and stop the bleeding so that you can get out in three or four years instead of that. So if you can go out there in the marketplace and be making $150, well, that changes the numbers. And that's why I'm not a fan of these public student loan forgiveness programs. Number one, very hard to qualify. You have to play their game perfectly. You can't have anything wrong on the application or you're denied. And it's abysmal seeing the rates of forgiveness that are actually happening out there. So it's not a plan you should bank on anyways. But the other side is that you're locked into working for these nonprofit agencies, which limits your income. You might be able to make double in a private practice, but you can't because you're handcuffed to this nonprofit and to this PSLF. So do you see the conundrum here? Yes, I do. And so your best bet is to number one, minimize the damage. Is there a way to transfer and go to a more affordable vet school at this

stage? At this point in my education, unfortunately, no, because I would likely have to backtrack just because some of the programs are so different from each other. Do we know that or is that an assumption? Do we know that for real? Yeah, I've looked into it when I was way earlier on in my academic career. And I had actually a close friend who did transfer from one program to another and had to backtrack by a year. OK, my next question would be, how old are you? I'm 25. OK. There's not I'm just going to be honest, there's there's no scenario where I'm going to say, yeah, just go ahead and take these loans and, you know, deal with it when you deal with it. So for me, even if that means like I got to take a break and stack up some money

so I can pay for the next semester, I'm going to do whatever it takes to make this happen. Because there is a part of this equation where there's something that we want and we want to have it quickly, right? When you think, oh, this is the career I want. I want it in four years. So I'm going to take this degree and I'm going to take student loans to make it happen. But just like so many of the other things that we talk about with finance, it takes time in order to have what it is that you want. And sometimes with education, it's no different, right? You want this fancy vet degree. It's expensive. You can't afford it. So there is something to be said for, okay, how much time realistically is it going to take me to get this and I might not have it by cultural or or normal standards of time does that make sense yes it does and so yeah we think okay

four-year degree maybe five years but this might take you longer to have that. And you have to decide, is it worth me having it the right way, the way that causes the least amount of risk and friction in my life? Or do I want it now the way I want it and I'm going to go into $500,000 of debt in order to get it and then make $30,000 a year debt payments? I mean, the choice is yours. So Aaron, you got some homework in front of you. And like we said, your best path is to limit the bleeding here and then make as much money on the back end and pay this off as quickly as possible. But I would not graduate and then hope that 10 years down the line of working in nonprofits that you get these forgiven. That's a bad plan. This is The Ramsey Show. Hey, when you go against what society thinks is, quote, normal, like avoiding debt, for example, it might seem weird at first, and that is totally okay. We want you to be weird if that means doing

things intentionally, including how you spend your health care dollars. And one way to be intentional is with Christian Healthcare Ministries. CHM isn't health insurance. They're a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of healthcare costs without sacrificing their freedom. Find out more and join at chministries.org slash budget. That's chministries.org slash budget. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. Now, if you've been listening to the show for about 10 minutes, you know about our world-class budgeting app called EveryDollar that helps you manage money

the Ramsey way. It simply works whether you're on iOS, Android, or online. And you can start EveryDollar for free and immediately see where you stand with money. There's a reason we tell people when they call in, have you actually made a budget? Have you actually looked at the reality of your finances and gotten organized and stopped the overspending and save more? So in EveryDollar, there's a new feature in the premium version that will show you a long-term financial roadmap where you can track your net worth, your debt-free date, even your retirement date, your baby step progress, and more. So go download the app on iOS, Android, or just go to everydollar.com. And speaking of EveryDollarJ, we will be doing, you and I, a free budgeting live stream. Indeed. On YouTube, on the Ramsey Show YouTube

channel on April 11th. And we're going to be answering your top questions we get around budgeting. Like, how do I get started? I've never budgeted before. Can I budget and still enjoy my life? That's a great one. How do I deal with changes that are coming up throughout the month? How can couples budget together? How do I get my spouse involved? And also answering your questions live from the chat chat on the phones. So it's going to be a good time. And if you want to stay tuned to that, you can also ask your budgeting questions at ask at ramseysolutions.com. And be sure to tune in on April 11th for that budgeting live stream.

If you hop over to the YouTube channel, you can hit the little button to be reminded. Yeah. Because I will forget in the grand scheme of the internet. There's a lot going on out there. I'll remind you, George. Thank you. I'll be here. All right. Let's get to the phone. Savannah's up next in New Orleans. What's going on, Savannah? Hi, thanks for taking my call. Sure. Yeah. So my question is, I recently read the total money makeover with my husband and we have honestly never budgeted before um have kind of been irresponsible we currently are homeowners and we have about ten thousand dollars in credit card debt um however i do have six thousand dollars in our savings account

um i'm really passionate really want to get this debt paid off however i'm so nervous to use the six thousand in our savings to pay off debt simply off. However, I'm so nervous to use the $6,000 in our savings to pay off debt simply because since we do own our home, we do live in a flood zone. It's very hurricane prone and my deductible on my homeowner's insurance is exactly $6,000. So if a hurricane hits, we need a new roof, our house floods, it's going to cost me $6,000. And that's why I have that in the bank account to begin with. So I guess I'm just wanting to hear your perspective. Should I use that to pay off this debt? Or just kind of, I'm not sure where to go from here. I would, if I were in your shoes,

I would most definitely use this money saved all but $1,000 and throw it towards your debt. Is the credit card debt your only debt? Yeah, our cars are paid off. I do have, of course, my mortgage. But other than that, that's it. Yeah, I would do it. I mean, think about it like this. I know this might seem kind of funny,

but I'm like, listen, it's not hurricane season yet. So you've got some time to pay off this debt and start saving up very quickly. And there's a big part of this where I like that pressure of feeling like if I do this, I've got to move quickly because so many people think that they can just kind of patty cake their way through the baby steps. And this is a great incentive for you to move quickly and move at the speed of intensity that we would suggest for people to move. Do you see what I'm saying? I do. I even have another three thousand dollars saved up

because i started my uh young children on college fund so i kind of had my baby step hey there you go that's so socked away in the kids college fund it's already in the five already invested or is that savings it's not in a it's just it's in a separate savings account okay this is good in a college fund it sounds liquid to me use that I use that as well? Yes, ma'am. That means you have $8,000 you can throw at 10, which means you have two left. So then the question becomes, how quickly could you pay off $2,000 next month? Now that we've started budgeting, I think we probably could get it pretty quickly. We've been irresponsible with our budget before, but we downloaded the app and I love it. And we're really focusing on our budget.

So I do think in maybe like two, three months, we probably could get the other $2,000. What's your household income? It's about $100,000. So let's say, do you know what the take-home pay is every month out of that $100,000? Yeah, we bring home just under $8,000 a month. Oh my goodness, that's incredible. That is. So you're telling me out of $8,000, next month you couldn't find two to throw at the debt?

Yeah, but we have two children. Well, how much is your mortgage? My mortgage is $1,200. Okay, that's not bad. And you've got two children what age? Four and two, and they're both in daycare. Okay so what are you paying $3,000 a month for daycare? I actually have a really great local church daycare so we pay about $1,500 a month for both of them. So where's the rest of this money going? Because those are generally the two biggest expenses. You don't have car notes, you don't have any other debt. Where's the rest

of the money going? To be honest we just started budgeting last month and all of our money was just literally going down the track so then george let me george is right george is right that two thousand dollars is definitely there because yeah because unless you can name off one other major expense that's throwing off our brains right now if it's not the mortgage and it's not daycare and it's not the cars, then everything else is tiddlywinks. Okay. So here's your homework, Savannah, you and your husband, you're going to sit down, you're going to make that every dollar budget, and you're going to list out food, utility, shelter, transportation, insurance, list your minimum payments on the debt, and then see how much money is left over if you just followed that plan. And my guess is you'll go, oh my gosh, if we actually followed this,

we would have $2,400 extra this month. And guess what? You knock out the credit card next month, you just freed up the credit card payment. That now becomes another part of the budget to help you get that emergency fund even faster. Okay. That's it. Okay, no, that definitely makes sense. I think food was our biggest expense.

I was going to say, check that Door that door dash check that uber eats i guarantee you it's somewhere in that category yeah it was it was it was a bad whenever we looked at our budget for last month it was like four thousand dollars much of food listen there it is and there it is you're not alone um like michael jackson said you're definitely not alone in that category, but you can get it on track. Just you're going to have to cut back and you're going to feel it, especially if you're used to just being able to run out, pick up a meal, you know, call it in and have it delivered. That's definitely going to be a behavior change, but totally going to be worth it in order to get this $10,000 credit cards paid off and have a three to six month of real emergency fund sitting there for

you. This is amazing. I feel really good about this. I'm happy because there's so much hope in the situation. Well, at first I thought she was going to say, oh, it's our mortgage. Like our mortgage is 60% of our, you know, something crazy, but listen, DoorDash, it's... That'll get you. Yeah. And she was investing in the kid's college fund, which is a good thing. But the problem, Jade, is a lot of people are doing a lot of good things at once and then they become bad things. That's right. Or out of order. Yeah. I'm trying to pay off debt, but I also want to invest, but I also want to save up for this thing. And I also need to cover this thing. And there's a method to the madness that is called

the baby steps. That's right. So $1,000 is your starter goal. That's baby step one. Get that baby emergency fund. Most people get it in 30 days or less. She already had it. Yeah, great. So you leapfrog to two. Pay off all consumer debt outside of that $1,000. Any savings you have goes toward it. We're pausing investing, even if it's for the match, because that frees up some serious money that you can use to accelerate your baby steps. And most people are done with that in two years or less.

18 to 24 months for baby step two on average. Very good. And then baby step three takes another three months, six months. Some people it takes 12 months to get that fully funded emergency fund of three to six months of expenses. And I always say it's basic expenses because a lot of people, it takes them forever to save that up because they're saving up all their bells and whistles budget, right? And I'm like, no, this is the money that it takes to keep things.

This is the crap hit the fan. What do we need to cover? That's right. This is not all the extra that it takes to keep things. This is the crap hit the fan. What do we need to cover? That's right. This is not all the extra luxuries. That's right. And then baby step four is my personal favorite, right? Four, five and six. You're doing them simultaneously.

But I love that initial baby step four of saving 15% of your gross, really, income every month. Yeah. And so that's my favorite. And of course, you're doing that at the same time as baby step five. Saving for the kids college. But even then you do them in order. So you got to put your own mask on first. I was just on a flight and the flight attendant, we had our baby. Good word. And she said, she went over to my wife Whitney and said, remember to put your mask on first. And I was like, what a great reminder for life and finances. Yes. Like I love that you want to

take care of the kids and help them go to college debt-free. But if it means you're going to be broke in retirement with debt and nothing saved in the nest egg, that kid's going to want to take care of the kids and help them go to college debt-free, but if it means you're going to be broke in retirement with debt and nothing saved in the nest egg, that kid's going to have to take care of you. That's facts. Mom and dad are going to be moving back into the house, and that becomes a real burden later on when you're not prepared. So that's the baby steps, and Jade and I both followed them. They work. They still work in 2024. They worked back in 1992 when Dave started this show, and they'll work 30 years from now. It's gods and grandmas' ways of handling money. That's what we do here. The principles don't change. The methods may change over time, but it works. You get out of debt, you have an emergency

fund, you invest for the future, you're going to be okay. This is The Ramsey Show. I've been doing this show for over 30 years, and some of the saddest calls I've taken are from situations that are completely preventable. Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible, are people that call in and their spouse has passed away suddenly, and they don't have life insurance. When you have to think through how am I going to pay my bills in the middle of all that grief, it's terrible. So life insurance is the one thing, especially as a mom with three little kids that I'm so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much

because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here. You got to say it out loud and you got to say, I'm going to say, I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of stinking pizza to get a free quote, call 800-356-4282. That's 800-356-4282 or go to zander.com. Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw this hour. The number to call is 888-825-5225. You call us up.

We'll talk about your life and your money. Jacob is up next in Los Angeles, California. What's going on, Jacob? Hi. Thank you for taking my call. Sure. How can we help um so i kind of need some i guess some direction in terms of what to do next in my life financially um my parents recently went through a

divorce and so i kind of had to take over um as like the main contributor to the household financially i'm currently living with my mother and my younger sibling. Um, so I'm kind of paying for mortgage, uh, you know, all the insurances. Why,

why is that? Why is mom not working? Oh no, no, she is. She is. So, um,

because, uh, you know, cost of living in California is insane. I, the way we set it up is I pay for, you know, cost of living in California is insane. The way we set it up is I pay for, I say, I want to estimate like 60 to 70 percent of my take-home pay. And then the rest is made up by my younger sibling and my mother. How old are you?

I'm 28 right now. Okay. So when you say 60 to 70 percent of your income, tell us dollar wise how much how much money is this costing you every month um i would say maybe around 28 to 3 000 okay so you're spending 3 000 bucks kind of paying the the the things that make the house go around and tell me again explain to me again why mom is not contributing. No, no, she is. But how much is she contributing if you're contributing that much? Right now she's contributing maybe like $1,500. And explain to me why that is. Well, she doesn't really make much.

So because I make the most in the household right now. So I wanted to, you know, obviously. So did she ask you to take on the brunt of this, or was this something you sort of stepped up and went, Mom, here's what I'm going to do? Yeah, no, I definitely stepped up. I mean, it isn't fair for me to force her to try and find a job out of nowhere. The scary part is it's not fair for you to prop up a lifestyle that's not sustainable for them.

Because let's say you go and get married next year, you move out, you're not still paying all of their bills. And how old's your sister? My sister is 25. I guess to give a little bit more information. So in terms of the unsustainable lifestyle, it more or less is the reason she got a job is because if me and my sister were to contribute, you know, 100% of our take-home pay, we would be able to afford, you know, all the groceries and, you know, everything else to make the, to live. But because she, as a, you know, wonderful mother that she is, she's like, oh, I don't want you or both of you to you know not have any savings for the future so she said I'm going to get a job to do it but because objection wait a minute let me let me jump in here okay a couple quick quick questions you guys live in Los Angeles but it doesn't sound like it's for the reason of a career like nobody's like listen I started my

my firm here and now this is where I'm at it sounds like you guys are kind of making ends meet to use your terminology why are you still living in such an unsustainable to quote you in an inexpensive area um well my dad's business was here so we all moved here and my mom does help with that um even through the divorce you know it wasn't an ugly divorce you know now it was one of the situations where you know they got married you know out of you know necessity because they needed to help each other but that money's not filtering into your lifestyle now because they're now divorced and the two children are grown. So my question stands, it sounds like if this is an unsustainable situation for your mom, and I'm saying your mom

because the two kids are grown, like you're grown. It sounds like she's got to decide where can she live that's not Los Angeles, California and afford her lifestyle because here's my second part of this. You're 28, your sister's 25. Typically, the reason that somebody would say, somebody your age would say, hey, I'm living at home is typically because they've got student loans, they've got bills, and it's cheaper for them to live at home than it is for them to

maybe do something on their own. And in your case, that's not really the case because you're paying for your mom's life. And I understand that there's you know it's been something traumatic here with the divorce but it still doesn't place that ball in your court do you see what I'm saying and so I think all three of you have to go what does my life look like where can I live where I can afford to be an independent person because do you have debt no I have no debt you have no debt there's nothing that stops you from saying hey I'm gonna go a further radius out from you know Los Angeles California wherever that is and I'm gonna figure out where I can live to do a job that I can make more money doing and support my lifestyle what

are you earning now and what is your job now I'm a I'm an analyst for a film studio and I earn gross is around $80,000. Okay, so that's great. To me, $80,000, you're doing good. There's got to be a life that you can have on $80,000. Is that fair enough? Yeah. Okay. There, Jacob, on my screen here, it says,

how do I make enough to take care of my mom? Is that the ultimate question? Are you wanting to make more so she can stop working? Yeah. She's working right now to help contribute, but obviously, you know, she's kind of getting up there. I don't know how to put that delicately, but because she... How old is she? She's turning 60, but she does have some like health issues. So what is her plan for retirement because right now you just you're just gonna stunt your growth as an independent person to just well i gotta take

care of mom for the rest of my life i'm gonna live at home what if she lives to be 90 now you're 58 and still propping up her life because she didn't prepare yeah that's because that's the kind of situation i'm in like she does kind of have a very loose retirement plan. I don't think it's as structured as I would like, personally. What is it? Lay it out for me. So she said that her plan is to, well, we'll still live in this house or this condo that we have. Will?

Did you say Will? Like all of you will still be living together for her retirement no my sister is um planning to move out and so they'll just be me and my mother but this is not good this is not good this is not good yeah and i know it just is not good but um but yeah once she is old enough to get social security she said she plans on finding like one of those um like i guess like apartments or whatever that is like income based or like low income, something like that and kind of live there. But I guess another piece of information is my parents do have a second property that's paid off and that's they're getting like rental income. But because of the divorce, they were debating whether or not selling it or just

splitting the rental income. Do you know what it's worth? If they were to sell it, what would they take to have to split? I think collectively, if they sold it, they'd get maybe around a million. Okay. So she'd get $500,000 and then have to take out fees and whatnot, right? Yeah. Is she getting rental income right now from this property? Yeah, right now. It's already been paid off for years, and they've been kind of collecting it. How much is she making from that? Now that it's split, she'll make around $1,000. And then what is she making from her job?

Right now, she's in elderly care, so I guess it's based off how many people she takes care of. She's only taking care of one person, So she earns around $1,500 net. But she says she is planning on, you know, assisting another person that would bring her income to maybe three. Listen, I don't mean any harm. You got to separate yourself from the situation. This is going to pull you under, dude.

You're going the opposite direction by saying, I'm going to work more so mom doesn't have to work. Because that becomes enabling. And you're going to have to keep that up for the rest of your life because mom's not going to up and get a job 10 years from now if you decide to move out right and right now you're paying like to your point you're paying 60 to 70 percent of the household expenses she has no reason and in her mind the plan is your sister can go on along but you're going to live with me until I'm done. And that really puts you in a bad position. If I were your mom, I would be talking to ex-husband.

I'd say, we need to sell this property because I need this $500,000 and I need it in my nest egg so it can grow for me for the next 10 years. And she still has to work for the next 10 years. That's right. Oh, my goodness. So, Jacob, we're basically telling you to do everything opposite the way you're headed right now. And it's because we care for you. We care for your mom. We want her to have a great life. And currently her loose retirement plan is going to end up stunting your growth for the next decade or two or three. And so we need to end this codependence right now.

Otherwise, it's going to hurt both of you in the long run. So sorry to hear that, man. This is The Ramsey Show. You know, it doesn't take a degree in statistics to realize this one stinks. 93% of undergraduate private student loans are co-signed. So when you're delinquent and drowning, mom or papa or uncle Joe is stuck in that financial stress along with you. But there is a way out. Why refi? Why refi offers a custom refinancing option with a fixed rate loan based on your ability to pay. And the average interest rate why refi offers is 3.9%, which can significantly reduce your monthly payment and decrease your total cost.

Contact Y-Refi at 844-2-RAMSI or go to Y-Refi.com slash Ramsey. That's 844-2-RAMSI or the letter Y, then R-E-F-Y dot com slash Ramsey. Y-Refi is not licensed by the California Department of Financial Protection and Innovation. Y-Refi is not authorized by the New York State Department of Financial Services to service any New York loans. Funding may not be available in all states. Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw. The number to call is 888-825-5225. This is your friendly reminder as things warm up, people are traveling, it's springtime,

to come visit us at the Ramsey Solutions headquarters just south of Nashville, Tennessee. We were just out there greeting people from all over the country, sometimes the world. That's right. And we love to have you guys. So come by, you get free coffee, free baked goods, a lot of happy faces out there. We come out every twice an hour and we'll take pictures, we'll sign a book if you want to do that. And it's a great time getting to meet people and hear a snippet of their story. It's a fun pit stop if you're coming through Tennessee. Love it.

Amanda's up next in Honolulu, Hawaii. Amanda, what is going on? Aloha. Aloha. Thank you so much for taking my call. Sure. How can we help? My husband and I just got out of Babys Step 2, so we're debt-free.

And we're looking into the next step, which is the three- to six-month expenses saved up. My husband's in the military, so he gets a housing allowance, but we don't see it since we live in privatized military housing. I'm wondering if I should be including that number in our three to six month expenses or just go based off what comes out every month. How much longer will you be in this scenario where you have that stipend? His contract ends in 2027. So you could look at it a couple of ways. I definitely would want the emergency fund to be based on your life. But if you know that that's going to be changing here very quickly, then I would base it on what you know your life is about to be.

In this case, you've got three years. And so you might consider saying, okay, we're going to do six months or three months as is. And then just know when that time comes and you no longer get that benefit that you're going to have to up, you know, you're going to have to up your emergency fund based on what your new mortgage or rent payment is. Okay. What are your current expenses? They're between $1,200 and $1,500 a month. Okay.

So let's say we went on the high end of six months, $1,500. So we're talking about $9,000 for a fully funded emergency fund. Yes. And so I would just aim for that six months. And as your life changes, that may become three or four months of your new emergency fund, which still gives you a good buffer. So I like that sort of you're kind of playing both sides there, and it puts you in a good spot, especially as you think about deductibles for all your insurances. I'd rather have you closer

to the $10,000 mark regardless. Absolutely. And can I ask a follow-up question real quick? Sure. So we're on, we live in Oahu hawaii right now all our family is in the mainland should i be putting like flight expenses into that emergency fund or a separate savings account just in case some family emergency happens that would be i would call that separate savings because emergency fund is for emergencies so if something out of the blue took place and you had to deal with it, you've got the emergency fund. But if you know, hey, my family, they live a plane ride away

and I'm going to have to see them from time to time, I would have that a separate account. That's basically just a sinking fund to know, okay, how often do we plan on visiting them? This is three times a year. It's going to be 500 bucks a pop. Well, that's going to be 1500 bucks we should have set aside.

Okay. So you can build that in. I's going to be $500 a pop. Well, that's going to be $1,500 we should have set aside. Okay. So you can build that in. I'm going to put $100 a month away for the next 15 months, and we'll get there. And worst case, you can still dip into that emergency fund if there is a true family emergency. Absolutely. Awesome. Well, thanks for the call, and tell your husband thank you for his service. That's huge.

I mean, people moving around all over the country. Now there's worse places to be than Hawaii. Absolutely. If you're going to go somewhere. It's a good discussion on that three to six months of expenses. I think that people don't know should they have three months or should they have six months. And so we always filter it through things like if you're married, are both spouses working? Are they stable jobs? I mean, what job really is? But you know what I'm saying? Like, it's different if you have two jobs.

That's like a teacher and a postal service worker. Right. Pretty stable versus commission something where it's a, you know, startup. Right. Some of that tech world where there's layoffs all the time. Right. If I was single, though, and I had one of those, quote, stable jobs, I'd still do six months. Oh, yeah. Of course, you want to consider um the health of your family the health of yourself like the likelihood health conditions that's right you gotta worry about that yeah so there's some

things that you can filter through to figure out what really is most suitable for you and then there might be a situation like this is the way sam and i are i'm like we both have stable jobs there's two of us working we We don't have health concerns. I just like having six months of it. I just want as much as possible. So there's that. And then there's a whole idea what you said, George, which maybe you have just a low cost lifestyle.

You always want to make sure that your emergency fund is at least enough to cover your home insurance deductible. On your health insurance, your home insurance deductible, the car insurance deductible, all that can add up. So it's good to think about that. Good questions. Thank you. All right. Tracy is up next in Sioux Falls. What's going on, Tracy? Hey, guys. How you doing? Doing great. How can we help? Yeah. So here's our situation. It's a real estate question. About a year ago, we sold our home under a contract for deed and purchased a different home. Well, two months into the contract for deed, it fell apart.

They defaulted and we ended up having to dissolve that. So we went to plan B and we quickly got a renter and the renter's been doing a great job and we kind of bought that house at the right time for the right price in the sense that the renter is actually paying us about $1,100 more than what our mortgage is on that home. But we're coming up on a year and at the end of their one year lease, we'll have an opportunity if we want to, to sell that home and put that equity towards our current house. Just wondering if you guys could weigh in for me, if that would be a wise choice. The little caveat here is that my husband is actually a pastor. And so with the higher mortgage that we have right now, we have been able to kind of capitalize on a higher mortgage payment, and it's actually reduced

our insurance premiums because we pay for those through the marketplace. So just kind of wondering what your thoughts are now that we're at a point where we could sell or we could just continue on with the renter. Okay, what's left on your current primary home mortgage? So on the house that we live in right now, we have a mortgage of $340,000. Okay. And on the rental? I'm sorry. No, no, no. I'm going to back up here. So on the house we're living in, that is $440,000. Sorry, you broke up with us. Speak directly on the phone, see if that helps. Okay. On the house that we're living in right now, we have a mortgage of $440,000. Okay. And on the rental home, we have a mortgage of $65,000.

Okay. What other debt do you have? Zero. Okay. And you guys have a fully funded emergency fund? We do, yep. Do you have one for the rental home as well? We did.

We upped emergency fund after we kind of chatted with our financial advisor. We upped that so we're at like a $30,000. We have it funded for the two if we needed it. Cool. And what's the rental worth if you sold it after the year was up? Right now it's about $420,000. Cool. And what's the rental worth if you sold it after the year was up? Right now it's about $420,000. Okay. So you'd probably net around, I don't know, $320,000 out of the deal? Yeah. If you sold it? Right around $350,000 is what we figured because we actually have somebody who's interested in purchasing it, so we wouldn't need to pay for real estate fees or anything like that.

Okay. So what would this do? Just help pay down your current mortgage? Is that the goal here? Yeah, exactly. So when we bought our home a year ago, we're at like a 6.1% interest rate. So kind of like our nature is that it makes us feel a little bit itchy to have a high balance on our mortgage with a kind of high interest rate.

But our long term goal has always been to have a rental property kind of in our portfolio. But it just sort of feels like a question of timing. Like, is it prudent for us to keep this right now? I think you're asking yourself the right question. If I were in your shoes, it would be really important for me to live in a paid off residence before I had a rental property, especially a rental property that would be paid off soon. I mean, you only have $65,000 to go, if I heard you correctly. And so if I were you, I'd sell it. I'd take the $350,000. I'd put it on your mortgage and that leaves you with less than a hundred thousand to pay off. And how quickly could you pay off a $90,000 mortgage with you guys' income is the question. That's how I'd be formulating this thing. And my thought is you'd be debt-free,

mortgage included, very quickly. So thanks for the call, Tracy. Hope that helps. And the other option is you aggressively pay down the rental that frees up that payment, and now we start attacking the mortgage, and you hang on to the rental. I'm okay with both of those plans, but if you want to be debt-free sooner, sell the rental. I don't think you'll regret it. That puts this hour of The Ramsey Show in the books. We'll be back with you 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 Jade Warshaw this hour. Open phones at 888-825-5225. Don't be scared. Give us a call. And if you're younger, your phone does make phone calls, I found out. What?

There's a button that says phone. Hit that and then dial 888-825-5225. You can talk to us. Interesting. So you have to dial a number. Yes. All y'all sending me the DMs with like nine paragraphs, I'm telling you, call the show.

This is the best way to get your financial questions answered. That's what we're here to do. Nikki was brave enough to call in and she made it. What's going on, Nikki? She's in Denver. How's it going? It's going good. How about you guys? Doing great. How can we help? Okay. So my husband got a workers' comp settlement for an injury and it's about $100,000. And so we took, they just automatically put us in biweekly payments. So we're getting about $1,300 for it every two weeks for the next three years.

We currently have a school loan and a car loan left in debt. And so our question is, should we take the full payout of the settlement, which would cost us 4% of the $100,000, or should keep doing the bi-weekly payments because we could pay everything off and have our emergency fund if we took the full payout now versus like the bi-weekly. So I'm kind of curious your guys' opinion. It costs you 4% to take the full $100,000? You're talking you'll take a four grand hit in order to get 90, you'll get 96 essentially. Correct. I'm doing that we would lose a little bit yeah i feel like not only financially but also emotionally mentally

you know you're going to be in a very different spot yeah plus yeah for many reasons because you'd also get used to having this pad in your budget that's not real per se and then when it's gone it's like oh that's a total lifestyle shift. And if you can take that money, that $96,000, what can it clear? Tell us all the debt and stuff. So we have a $30,000 car loan that's at a 6% interest rate, a school loan that's $46,000. So a total of $76,000. If we budgeted, we could have those paid off both in about a year with the settlement. And then we'd still have about two years left getting that biweekly. But if you paid it off now, you'd pay off the car, the student loan, and you'd have $20,000 to put towards Baby Step 3.

Correct. Do you have an emergency fund? No, we've been kind of stuck on Baby Step two for several years now so this is kind of like our jump of like we could get past all of it and then we would just have our mortgage left after that yeah what's the mortgage um mortgage we have 300 left on that we've been paying a little extra to it so we have 2 000 a month that we pay towards that. I love that. If I woke up in your shoes because of the situation you're in, I would 100% use that money. The $4,000 to me is very negligible in this whole equation. I'd pay off the debt. I'd put the rest aside and whatever else you might need to call it three to six months of expenses. And then I'd start baby step four,

investing 15%. That's what we're doing. And then I'd start baby step four, investing 15%. Perfect, because that's what we're doing. And the other piece of this, you have 20 grand at the end of this that you put in a high-yield savings account. That'll make, right now, 5%. That's $1,000 in a year. That's great. That you would make.

Perfect. And so that, on top of the interest savings from not having to pay interest on these payments and freeing up those payments, which have you done the math on what that adds up to? What do those payments amount to each month for the student loan and car loan? Just $900. We've been paying a little extra to the car. Just $900? If someone gave me an extra $900, I'd be doing backflips. Yes. So think about it that way. You're getting a forever...

I don't want a car payment. You're getting a forever $900 raise just by getting rid of these payments. That's right. Right. So that on top of the high yield. No, I think that totally makes sense. Okay. We've convinced her.

We're done. Our job here is done. I want to caution you, Nikki. One thing. I hear there's just been a couple of little things that you've said that I'm like, listen, you're not doing the baby steps in order. You're kind of still doing your thing. I heard you say that you're already investing.

I heard you say that you're already putting extra towards the mortgage. Do the plan the way the plan's written and you're going to get further faster because right now you're just trying to put money on all these things that are really important things and they are important to do. But you go further faster when you know what the priority is in the moment and you do that thing and then you go to the next one. So just just a caution with that. Make sure now that you're officially in baby step four, make sure that you're investing 15%, no more, no less. Make sure that if you have kids, you're also putting a little towards kids college, you and your husband can figure out how much that is. And then after that,

you're putting extra towards the mortgage. So don't kind of say, well, we're doing the mortgage, so we're going to do less investing or we're going to do more investing. So we don't have to do the mortgage. Just make sure you're doing them in order. And if you have questions about that, we can also talk about that as well. Okay, perfect. I know my husband has a, it's a mandatory 12% match. So we automatically have that regardless of whether we want to or not.

Great. So that's been going for the last. Well, make sure you add your 3%. Make sure you're still investing up to 15%. And the reason we say that you might think, well, Jade, there's the match. But if he loses that job and doesn't have the match anymore, you guys are not in the rhythm of investing 15% of your money. So we want to make sure that you're still doing yours and everything else is gravy on a biscuit. And if you guys have too much in your nest egg later on, you can call back and yell at us about how you have too much money.

I have too much wealth. It's a good problem to have. No, I think that is perfect. We put in the paperwork to do the buyout. So hopefully all of this will be done soon. But I appreciate your guys' advice and taking the time. Yeah. I hope your husband's doing well too. Yeah. Final question. How's your husband doing? It's a pretty serious injury. He is doing good. Yeah. He had two discs replaced

in his neck. He's a firefighter. So, but yeah, it ended up being a very lucky scenario and it was awesome that his work took care of him. So he's in a good spot and doing well. Awesome. Well, wishing you guys the best on this financial journey. That's a good problem to have. Yeah. An extra 100 grand just came about and we just knocked out all of our debt and that's our emergency fund and we're ready to invest. So I'm going to leap just emotionally, mentally to leapfrog and not have this year of sort of just deep sacrifice. Yeah. And to be at that spot. I'm doing it. I think it's good.

There is the piece of that, though, where you have to do an extra layer of work to make sure your behavior has actually shifts. You know, and that's why I kind of called her out on, hey, you know, you guys are having this windfall. Obviously, it was at a cost to her husband's health, but don't let that convince you that everything's like hunky dory because there is some mental work and behavioral work. And I mean, obviously, sticking to the plan work that still has to be done that she doesn't had. She did not have the benefit of walking through a process to get there. Yes.

When you build those habits and discipline, you have that deep sacrifice. It changes you. Your physiology changes the way you look at money changes versus, hey, we just got a lump sum. Let's pay off the debt and let's keep living on more than we make. Right. That's also a bad plan. Yeah.

It's interesting. There's that gradual change that happens mentally. And for her, it's going to be lickety split. Yeah. She can do it, though. I have nothing but confidence in them. They seem like very smart folks. Got a good head on the shoulders. Yeah. She can do it though. I like, I have nothing but confidence in them. They seem like very smart folks. Yeah. Oh my goodness. Well, Hey, the baby steps work y'all. You got to do them in order, but they work. Don't do ish and then call and say, Hey,

your plan doesn't work. Well, you didn't do it. You got to go all in on the plan and it works every time you work it. It's called the Ramsey baby steps. If you want more info, go to Ramsey solutions.com hit the get started button and we will help you out more of the Ramsey show rights. If you want more info, go to ramseysolutions.com, hit the Get Started button, and we will help you out. More of The Ramsey Show right around the corner. We'll be right back. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. We've got some fun events coming up. It's about to be game on. We've got three events where you can experience Ramsey teachings live and in person with thousands of other people just like you. The big dog is Total Money Makeover Weekend. It's happening May 10th and 11th right here at the headquarters up the hill at our new event center.

And it's two days. We're going to motivate you, fire you up, help you live the life you always wanted. So join us in Nashville. Leave the money stress at the door. All the Ramsey personalities are going to be there, including Jade, Dave Ramsey, Dr. John Deloney, Ken Coleman, Rachel Cruz, the whole gang. It's going to be fun. The big dog. That's what it is. And then just about 10 days later, we have a virtual event. It's Dave Ramsey's Investing Essentials for two nights. It'll be about two hours each night. I'll be joining Dave. He's going to unleash his personal playbook on investing, on real estate investing. We're going to help you unpack some of the basics about investing, deep dive on 401ks and mutual funds and some other investing options

you may not know about to help you invest and build wealth with confidence. So you can join us for that one as well, wherever you are. Here's your challenge, George. Uh-oh. What is it is it first you said big dog then you said unleash we've got it we've got a pet theme going so let's get it with money and marriage you think of this one money and marriage getaway happening this fall so you got time to plan for that one uh and don't don't be barking up the wrong tree if you miss out on the tickets for this one okay they're gonna they're going quick money and marriage has become its own brand and event and people love this. It was an

incredible event last year. Jade and I both spoke. I don't know if they'll invite us back this year. I hope they do. But this is a weekend away with your spouse to focus on your marriage as it relates to your money, of course, with great teaching from Dr. John and Rachel, real life answers to your hard questions. They don't shy away. No, they don't. And the scary stuff. They're going to get up in your business to help you win in your money and marriage. You walk away with tools you need to build that deeper connection and win with money together. So if you want to attend any of those events in person, the virtual one, go to ramsaysolutions.com, learn more, get your tickets today, start putting this in the budget, the

travel, the transportation, get a ticket for a friend or a spouse that tells you, you know what? I believe in you. I believe in our marriage. I want you to win with building wealth. And that's a great gift to give right there. RamseySolutions.com slash events. All right, let's get to the phones. Manuel joins us in Grand Rapids. What's going on, my friend? How we doing? Good. How are you? Good. I just have a couple of questions.

My first one is I am a father of two and a husband, and my wife has been a stay-at-home mom for about a year and six months now. And I'm just trying to figure out what's the best way to bring that conversation up of going back to work because we're a family of four on $43,000. Yikes. How old are the kids? One in six months, but we have a lot of family and friends in our church and in our family that would watch them for little to none. Uh-huh. So you're making $43,000 and what type of work do you do? I do environmental work. So I took this job because I got laid off from my last job with a guy that I go to church with. And it was just like a spur in the moment. And I can't afford to miss like any work. So I was just- What'd you make at your last job? What'd you make at your last job?

56. Okay. So you know that you have the potential to earn more, but right now it's just, I got to take anything until I get the job, right? If I understand. Yes. Okay. Now your wife, what was she doing before she started staying home with the kids?

She was a cosmetologist. And what was she earning every month? I think like 15 to $2,000 a month. So she's earning... Because it was hourly and commission. Okay, so she's earning $2,000 a month. So how much debt do you guys have? I brung in the debt of a truck of...

It was $31,000, but I've got it down to $27,000. Okay, what else? That's all the debt that we have. That's it. That's it. Oh, this is solvable. What's the truck payment? Uh, five 30 a month. So if you had an extra five 30 a month, would things be better? Would she be able to continue staying home?

Um, I don't, things are just like super tight. Like I pay five 30 for a truck and then my interest or not my interest, my insurance is $418. But if you got rid of both of those things, let's say you sold the truck. Now you got basically $1,000 freed up every month. Uh-huh. Would that fix your financial situation? And let's say you got your income up a little bit too. I'm just wondering are there other paths here.

I would rather you sell the truck than your wife have to go back to work if she's truly wanting to stay home. She really is wanting to stay home but I've just I've brung up the conversation just because of how tight it is right now. The question is here's my question from her perspective. Did you guys speak about what the plan would be once she had the babies? Was it like hey we're gonna have these babies I'm gonna stay home and you were like I'm good with that so is the plan changing or did this kind of happen by default she had the babies and realized she likes being home and now she stayed home and you're kind of like hey we never discussed this which scenario is it we we we discussed it but it wasn't like a for like her the stay-at-home mom for like a forever time. Okay.

It was just like a timeline. And then, I mean, 11 months later, we had our daughter. Okay. It was like we had been together for two years. We'd been married a year, but we were together for two years. And then we had our son. And then three months later, she got pregnant again with our daughter. So they're 11 months apart

and it's just like and are you guys on a budget right now are you working a budget or is this just kind of chaos right now i would say we have a written budget but we don't really stick to it so it's kind of just like chaos what i would say i want you guys to get on every dollar and if you don't already have it, Christian will pick up and make sure you guys have it. Or at least go to EveryDollar.com slash Jade and get, I want you on the premium version because I want you to have all of this in your arsenal here. I want you guys to sit down and do the budget tonight. I want you to go over it together. And I want you to go over two versions, one version, which is as it is today.

And for both of you to see, here's what it's going to take if you want to stay home and it work here's what it's going to take and then the other one is here's what it would look like if you worked x amount of hours because I do think there could be a happy median in between her staying at home and working it doesn't necessarily mean that she's got to go back to a 40 hour a weeka-week situation, but you guys have to run the numbers and each of you see it and see what your options are because I feel like there's three options. Stay at home, do some kind of part-time situation,

or she goes back full-time. And the numbers are going to tell you guys what works best for you. We've talked about that, and we've had a couple of people tell us, like, yeah, we'll watch them like three or four times three or four times a week and then she just works because we only have one car at the moment the truck so it's just the truck's the only car oh okay what's the truck

worth yeah she sold it 17 000 why is it only worth 17 did you roll negative equity into this yes oh i had a i had a i had a kia before this and we had we were having another kid and we were just like so certain on getting a bigger car and um so i was literally like four payments off from paying the key off so i sold it for like three or four thousand000 more than what I owed it. So then I paid off what I owed, and then all the money that I got back from that, I poured into the truck. Well, not necessarily a pour. You dripped it into the truck and took most of it on loan.

Let's be honest. Yeah. You bought way too much truck, Manuel. Way too much. Oh, I know. I regret it every day. And I would rather see you sacrifice to get rid of this truck instead of sacrifice to harm your wife's well-being and her dream.

And so that might mean you go side hustle your way for the next few months, scrape together $10,000, sell the truck to get rid of the loan, and then you scrape together another $5,000 and get a beater car that gets you around for now. Well, yeah, I thought about that. And then I also was talking to my wife when we were doing numbers last night was if i like door dash for nine months every day after work i'll be able to pay off my truck in six to nine months depending on how aggressive i want to do this so that's like we're just throwing out options I'd also look at getting a different full-time job where you're making 56 or more again. I don't want you to get too comfortable here.

Just side hustling. If you can get your core income up and then side hustle, this speeds up the whole process. Start looking around your house and seeing what you can sell. Look at everything. Suddenly everything has value. Something's going on Facebook Marketplace. It's going on Oleo. It's going everywhere.

So get this thing cleaned up quickly. I would make some deep sacrifices and revisit this conversation six months from now and see if it's still the right move for her to go back to work. But I wouldn't just do it today. Not with a six-month-old. That puts this segment in the books. We'll be back right around the corner. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The number to call is 888-825-5225. Headed to San Francisco up next to talk to Nathan.

What's going on, Nathan? Hey, guys. Thanks for taking my call. So I really am seeking some financial advice. I'm originally from the Nashville area and I've been living and working out here in San Francisco for about eight years. And my wife and I, we kind of know that even if we could afford a house in San Francisco or the Bay Area, there's no point in us spending a million dollars on a two bedroom house. It's

just not, you know, we come from somewhere else and we see what that money can get you in other parts of the world. So we're thinking about buying a house in Nashville while we continue to live here and work and try to pay it off or rent it out. And right now we make about 160,000 before taxes. Our monthly bills is probably about $2,600. I have $30,000 in student debt still, and my wife is going to graduate from university in May, and we've been able to save and pay $25,000 a year, so she'll graduate with no debt. Way to go.

Yeah, thank you. So we're just trying to figure out, like, we kind of know San Francisco is not our final destination. We know that we'll end up moving. And the other part that sort of complicates this is my wife is from Germany originally. So we flirt with the idea of moving to Europe. But I, as an American, like I really want to have a place to call home. And we have $20,000 saved up right now. And the plan is once she graduates in May, we'll start using any extra money to go ahead and pay off my student loans, the remaining $30,000. And within the next maybe two, three years, I think we could save up, you know, like $80,000 to $90,000 to use as a down payment for, you know, maybe like a $400,000 house in Nashville. And, you know, I've got friends in the area. I've got family. I will try to rent it to one of them and just see if they could pay the mortgage or I'd get some property company to try and help take care of that for us as well. I just don't know if that's...

So you'd buy the house and go to Germany for a while or you'd buy the house and stay in San Francisco for a while? Stay in San Francisco. Yeah, I have a pension on my work and the longer I stay, the better it is. Okay. I think that you guys have some choices to make here. I would not, to broadly answer your first question, I would not buy a house in Nashville rented out for years until you're ready to move I wouldn't do that for many reasons one is which one in which I would wouldn't own a rental someplace where I didn't live to I wouldn't want somebody living in my house for four to six years and then me coming home to sloppy seconds and it's my first my first house ever and then two I just think that I you're not ready to buy a house yet.

And so you guys have to decide what life you want. And if you truly want a life in Nashville, I would be figuring out what does that mean for us to make this happen after May, like after she graduates? How quickly could we move our life? What kind of work do you do? Yeah, well, I work as a technician in a hospital owned by the University of California, and she's going to graduate with an international business degree. Can you both do your work in other states? It sounds like it.

We could, but the compromise would be that if I were to go work at Vanderbilt, I would probably make $25 to $30 less an hour. Okay, but you're also living in a different market. And so the reason that you earn more in California is because it's a more expensive state. So there is some balance there with the wages. We also have no income tax here in Tennessee, as you know. I know. And also low cost of living.

So I think it might be a wash is all I'm saying. Yeah, you know, that's true. The thing that I, we're super fortunate. You know, I, to the house that we're in now, I actually put my own listing on Craigslist and said, hey, this is who we are. This is how much we'll pay. So we have a two bedroom here in San Francisco and we paid $1,900 and that includes utilities, which is like unheard of. I mean, that's excellent. Like how are you only having $2,600 a month total in expenses in San Francisco? That's crazy. That's excellent, but that's not where you want to be.

And it's a rental. I know, I know. So everything you've described is just like golden handcuffs. Like, well, I got to stay for the pension and I got to stay for the rent, but I don't want to live here. That's what I heard. Yeah, essentially. Essentially. I can't justify it in my own mind to like, you know, what would a half a million dollar house get you in tennessee versus honestly right now it wouldn't

get you much i don't know if you've been in nashville lately man but it is it tough cookies around here for a four hundred thousand dollar house but it's going to get you more than it would in san francisco yeah and that's the thing too is like i think like okay i've got this california money and i'm still living on a really reasonable cost of living month to month. And so is it smarter to me to use this California money and invest it while the market is lower than what it will be in potentially five to 10 years when we move back home? I think the baby steps still apply here. And that means, you know what, the 20K savings we're going to take down to one. We're going to throw 19 at the student loans. We're going to get rid of these student loans faster.

When she graduates, she'll help beef up the emergency fund, and then we'll start saving up for that down payment, whether that's in California or Germany or Nashville. Just start stacking up cash. Got it. And then when you're ready to make the move, you just move, and you don't let that career, that job, that rent price dictate the rest of your life. That's my worry.

Yeah, definitely don't let your pension be the dictator here. Because, I mean, you're not that old. How old are you? 31. Oh, yeah. You got plenty of time and life to invest and create your own pension through Nest Egg. Yeah, there's so, you know, there's so much noise from the outside.

Like you hear people talk and they say, okay, well, you're not going to have social security by the time you graduate. But you, you, you have a job and you make plenty, plenty good money.

Your wife does too. And the quicker you do these baby steps, like George laid out, the quicker you'll be investing 15% of your income every single month. And that's going to stack up. You're a young guy. You've got a lot of time on your side. And I would not be concerned about that.

And to your point, a lot of it is noise. So many people talk and they're not doing diddly. Or they hate their job and they're like, well, I got to have my pension. I'm like, that's not who you want to be. Yeah. George and I know the stats. We know the stats. And a lot of people are not walking the walk.

They're just yapping. So don't let that phase you. Yeah, definitely. All right, well, thanks, you guys. I appreciate that. Yeah, man, absolutely. Best of luck coming back home here in Nashville. Love it.

Stephanie's up next in Milwaukee. What is going on, Stephanie? Hey, guys. Thank you for having me on. Sure. So my husband and I are wanting to get a new car for safety reasons. And I just kind of wanted to talk to you guys to see if it sounds rational or we're just trying to buy a new car because we want it. Tell us about it. I like this.

So we live in Wisconsin where it gets really snowy. So half a year, it's kind of difficult driving around if you don't have four-wheel drive when it's all icy and snowy i feel that um and then we also have a one-year-old daughter so stacy has become you know more of a concern especially driving her around in that type of weather um we have been sharing a car for about three years um so we do have one nice reliable car um but and we both worked from home but now my husband is working outside of the home. So the other car that we have is kind of an older car that I don't feel super comfortable in. And that's the car I would need to use to take the baby around.

When you say older, I want to know details. So it's a 2000 Toyota van, but it does only have 75,000 miles on it. Okay. And it just doesn't have four-wheel drive. That's the only thing? Yeah. And just with it being, you know, 25 years old, it just, there's a lot of rust on it. And it just, it feels kind of unsafe, like something could break at any point.

Okay. So tell us now the financial snapshot. Tell us, you've got the nicer car. Is that one paid off? It is not. It is a 2021 Toyota RAV4, 45,000 miles, 15,000 still owed on the loan. Okay. 15,000 on that one. And then of course, this older van is paid off, please believe. How much money do you have? Well, we do have a good income, but we do have some debt we're trying to pay off

and we do have a bit in an emergency fund too. Okay, what's the income and what's the debt? Total debt. Income is about $200,000 a year between the two of us. How much total debt do you have? Real quick. Oh, about $100,000. Most is student loan. Okay. Oh my goodness. And you have money saved oh about a hundred thousand most is student loan okay oh

my goodness and you have money saved you said how much saved uh twenty five thousand emergency fund okay it's not really an emergency fund that should have gone towards the debt if you were to sell the car if it really is in bad shape and you could sell it and maybe get a couple thousand for it and put another couple thousand for it i'm fine with you spending five thousand dollars to upgrade this car but i wouldn't spend any more than that i keep it i think mama drives the rav4 he sells the van and gets him a little beater car to get around it yeah that's what i would do mom always gets the nicer car that's the rule in our house welcome back to the ramsey show i'm'm George Camel, joined by Jade Warshaw. Open phones at 888-825-5225. Well, Jade, it is Financial Literacy Month,

and one of the ways we're celebrating that is taking questions from students at high schools that are teaching our Foundations in Personal Finance curriculum. And today's question comes from a student in Carrollton High School. What do they have to say? Yeah, he says, how do I find motivation to budget when I can't find it? That's a good and today's question comes from a student in Carrollton High School. What do they have to say? Yeah, he says, how do I find motivation to budget when I can't find it? That's a good question. It's like car keys. I just don't know where I put that motivation. I don't know where I left it. I love that he's thinking about this. In high school, I- I didn't have motivation at 16 to budget. Not to budget. I mean, do homework, practice volleyball, not budgeting

was not in my thoughts there. But I love that he's thinking this way. You know, if you can get in your mind very early on the three things that you can really do with money, which is give it, save it, spend it. And if you can do that in the proper ratio at that age, I think that you're ahead of the game. Like if you can say, okay, I'm working at McDonald's or I'm working at Kroger, I'm bringing home my minimum wage and I'm going to give some of it. For me, that was in the form of tithe. So I was giving my 10% tithe and then I'm saving some of it because listen, I want a car. Like I want to have a ride when the time comes and I know college is coming up. So if I can save a big percentage of that, and then of course, keeping aside some of it to spend and have fun with, you know, when you work hard, you do want to see some of the fruit of your

labor. So honestly, Carlton, if you can do that, you are ahead of the game, my friend. Yeah. The way I look at this is showering. How do I find the motivation to shower? You don't, you just get up and you shower. It's just part of being an adult, right? He's not an adult yet. Well, you know, but he probably has, you know, there's just part of being an adult, right? But he's not an adult yet. Well, you know, but he probably has, you know, there's some people in the picture. Maybe he wants to go on a date, ask someone to prom. Well, then he definitely needs to shower up. Yeah. And so that's how I see budgeting. It's just a habit and discipline you want to build. It's not this thing like, I got to find the motivation today. You go, what are my goals and what do I need to

do to get there? And the budget becomes a part of that. So if you don't have income and you don't have expenses, then a budget isn't going to do much for you because it's hypothetical. But if you're working and you've got some income, you have some savings goals, hey, I got to save up for the summer camp or that first car. Well, then the budget becomes very important. And it just becomes a scoreboard of how we're doing and if we're on track. So that's a better way to look at it versus this, I need the motivation, Jade. Yeah, that's true. It's really the means to the end to get the life we want, whether that's a vehicle or a class ring or, you know. And when I was working at 16, 17,

I was a knucklehead. I was spending every paycheck at my retail jobs, had nothing to show for it. And I wish someone had showed me the investment calculator of, Hey, I just put 20 bucks away today at 16. What will that be when I'm 66? Then I'm going, okay, there's my motivation. Yeah, no, I had no, I, I wouldn't even known the words that were coming out of your mouth when I was in high school. I was like, let's go to hot topic, man. Let's do this thing. Hot topic. Let Let's hit the movies. Hot Topic. Thank you for that. You're welcome. I like the combination of Hot Topic plus the Hot Pocket. It was good. It's very high school. Meant for those that understand.

Jade speaks in parables. I love that. Let's get to the phone lines. Adam is in Ann Arbor, Michigan. What's going on, Adam? How can we help? Hey, George. Hello, Jade. Thank you for taking my call. I appreciate it. Sure. Alright, real quick. The question is a straightforward one, but not Hello, Jay. Thank you for taking my call. I appreciate it. Sure. All right, real quick. The question is a straightforward one, but not a simple one. Do you think I should

sell my house in order to pay off the majority of my debt? Okay, let's hear more. It's a big question. So give us your financial picture. How much do you make? What's your total debt load? Are you married? I make $68,000 a year. Take-home pay would be about $68,000 a year. Take-home pay would be about $4,000 a month. Single, don't make enough money for anything else. Debt is $90,000. What kind of debt is that? Two debt consolidation loans, a car note, and a small credit card.

How much is the car? The car is $27,000. And what do you, what's it worth? Uh, if I look at Kelly Blue Book, best guess, $20,000. Okay, so $7,000 upside down. Okay, and what's left on the mortgage and what do you owe? best guess 20,000. Okay. So 7,000 upside down. Okay. And what's left on the mortgage and what do you owe? Mortgage is 148.

148. And what is it worth? Looking at the offer of comparables, also I got into Opendoor. I think I could reasonably get two 40 for it. When did you buy it? 2021. Okay.

Um, how long have you been working the baby steps? Um, about three months. And what's causing you to say, I, I can't pay off this debt. I got to sell my house.

Looking at the budget, looking at the income versus expenses and realizing that they're not quite, that they're not balancing out like they should. So tell me what percentage, tell me what you're paying every month for your mortgage. I want to see where the percentage lies. This year, $1,100 per month. Okay, so that's fine. I don't think this is on fire, Adam. I think you can pay this debt off within about two years if you can get that income up with a side hustle. And that's kind of the parameter. If this would take you 10 years to pay off and selling the house would help clear that much faster, I'd say this may be worth selling. But the monthly payment is about 25% of your take-home pay. That's a green flag

to me. You've got 90K. If you can put 45 toward it per year, it's done in two years. And you've got a good rate on your mortgage. That's going to be hard to go back on. Yeah, that's the hesitation, yes, to be sure. I would pause on selling this and I would aim to pay this off in two years. And then that becomes the gap to fill with income and getting your expenses down to create enough margin to do that. $45,000 a year, that's a lot. It is a lot, but that means we have our $68,000 income. We're going to go find $25,000 worth of side hustles. That's two grand a month in side hustle. Can we

find that? Yes. I'll help you out. The answer is yes. Let me remind you, Adam, you're single. Now's the time, my friend. Yes, Adam. All right. So I need to find a... What do you do full-time for work? We'll help you. Logistics manager. Okay. So you're in logistics, you're working 40 hours a week? Yes. Any opportunity for overtime? No. Can you do any consulting with that? I don't have any experience with that, so that would take...

I would not have any clients for that, so I'm going to say no. Well, I mean, you're in logistics, you have experience with that. You don't have experience doing consulting for logistics, but I'm just saying, are there any opportunities using your current skill set? And beyond that, you have a driver's license. We can always look to DoorDash, Uber, retail jobs, serving, whatever it is, to go make $20 an hour.

You're talking about a big sacrifice by selling your house so i'm shocked that you're willing to sell the house to make that huge sacrifice but going oh side hustle hey i'm i'm a chime in here i think that you were hoping that there was an easier way out here and now george and i are telling you your opportunity looks a lot like work and now it it's like, ah, and it's, you know, you can wander into debt, but you can't wander out. So there is this part where you're going to have to get very intentional. It's going to make a lifestyle change. You're going to feel it over a long term with the sell of the house. It's like you feel it right away. And then you move into your rental or whatever. And you're like, okay, my life is pretty much the same. But what we're talking about is

two years of real sacrifice. And you're going to be better for it in the end. But I don't want you to be afraid of work. I don't want you to be afraid to say, yeah, for the next two years, I got to make $2,000 extra a month. And I don't want you to be afraid of the number $2,000. Because when you really look at it, I mean, if you took your extra time a couple of nights a week, you took your Saturdays and Sundays and you said at the very least, okay, I'm going to do Amazon delivery. I'm going to do Instacart or whatever, you know, kind of those, those go-to side hustles are, you're going to find the $2,000. You're a single guy. You don't, you know what I'm saying? Unless you have pets to get home to you've got a lot of time on

your hands and that's a blessing my friend uh it seems like a lot for uh it's 20 hours that's listen it's your life it's your life if you don't want to do it nobody's gonna you know put you in a headlock to do it but you called us saying that you want to get out of debt and so we're going to tell you what it takes to get there. The house truly isn't your problem. I wouldn't have done in that order, but that's not the problem. The problem is we went $90,000 into debt, making 68. Now you can sell the car and get a beater car. That's another option to help speed this up. And Adam, let me tell you, head to this website, georgecamelwithak.com slash side hustle quiz. That will help you figure out the right side hustle for you based on your time and your skill set. And America, I hope that helps you. georgecamel.com slash side hustle

quiz. That puts this hour of the Ramsey Show in the books. Thank you to Jade Warshaw, my co-host, all the folks in the booth keeping the show afloat, 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 i'm george camel joined by jade warshaw this is your show so give us a call at 888-825-5225 and we'll dig into your life and your money in front of america but don't be scared don't be scared we're kind we'll dig into your life and your money in front of America. But don't be scared. Don't be scared. We're kind.

We'll treat you well. And Mike is up first this hour in Lynchburg, Virginia. What's happening, Mike? Hey, George. How you doing? Hey, Jade. Hey, what's up? Better than we deserve, my friend.

How can we help? Awesome. Good to hear. Before I get started, George, I've got to say, just so you know, I feel like I've got to come clean next to Dave, obviously. I think you're my favorite Ramsey host. Yes. I love your YouTube channel.

Listen, five bucks on Venmo, America. That's what you'll get. Thank you for that kind endorsement, Mike. Absolutely. Thank you. So I just have a quick question. I'm 17 years old. I work full-time, and my company offers a 3% match IRA, simple IRA, 3% match. And I've been contributing to that for a while. Right now I'm only at 3%, but I am working my way up hopefully very soon to that 15% Dave recommends. And basically,

the financial advisor and the financial company that my company goes through, it's all provided. And so I was just talking to him the other day on the phone, and we're getting my investment set up and everything. And I wasn't exactly sure what to tell him because I knew basically the Ramsey principles on investing, but I'm not an expert on it by any means. So what he told me when I explained how I'd like to, I told him basically I wouldn't have to do it right now, but what I wanted to get to eventually was the 25% and all the four categories, you know, gross, gross and income, aggressive and international. And so what he told me is that basically he agreed with all that for the most part. He thought the income was pretty much unnecessary at my stage. And the three stocks

he recommended I put it in to start was Vanguard's VTI, Charles Schwab's SCHA, and Vanguard's VXUS, which he said would break down in my categories the way I was explaining it, basically as 60% in growth, 20% in really aggressive growth, and 20% in international. So I just wonder what y'all's thoughts are on that and how I should go forward. Yeah, well, first of all, you're one of the sharpest 17-year-olds I've talked to in a while. I thought this was like a 45-year-old man calling in based on your maturity and wisdom and communication skills. So way to go.

What are you making at this job? So it's a commission based. So I'm not exactly sure. This is my first year working on a new commission. This will be my first full year, but I estimate by the time the year's over, I'll be making about 35. Okay. And are you still in school or did you just kind of skip to the workforce? What's your plan there? I graduated. So I was actually homeschooled. I graduated just after I turned 16 and then I've been working full-time since September of 2022. Wow. And what kind of work is this? This is house washing. House washing. Exterior soft and power washing. Cool. All right. And we're talking about investments here. You've got 3% going in. And you said the financial advisor advised these kinds of funds?

Yes, sir. Okay. And who is this through? It is through Raymond James, I think, is the financial firm. Okay. Cool. Well, I mean, truthfully, you're going to find a lot of the same funds. So the funds that Dave recommends, the mutual funds versus some of these index funds

that the financial advisor is telling you about, they make up, when you actually look at what's inside of them, it's a lot of the same companies. So at the end of the day, it may not make that big of a difference when you talk about the growth in income versus the growth versus aggressive growth. So I wouldn't worry too much about that. The key here is that you're diversified and that you're not in single stocks. And what he's talking about is essentially a total market index fund, like you'd find in the S&P 500, which is largely what I have in my mutual funds. And so there's not a huge difference. Now, the difference is the mutual funds that are actively managed have fund managers that are hand selecting some stocks and different balances of those stocks in order to create a hopefully higher returns. Gotcha. that are chosen are not going to be the difference maker for you. It is your savings rate and your income. So I would be focused on that versus losing sleep over what funds you're in. I want

to see you get up to that 15% if you're debt-free with an emergency fund. Are you at that stage? Yes, sir. Yes, that's very helpful. Actually, on that note, I had a very similar question that went right along with it, if I can ask that. Okay. Yeah, basically, yeah, I've got the starter emergency fund, never had any debt. I've got, you know, I'm driving an old beater, 92 Ford Ranger. Wow. Before you were born, my friend. Sorry? That's before you were born. That's impressive. Yeah, it's like double my age. But so yeah, I'm done with the emergency fund. So basically, I've gotten through baby steps 3A. So my question is now,

should I be focusing more, do you think, on baby steps 3B, you know, saving up for the down payment, or more on baby step 4, which is working up to 15% in investments, which comes first, in your opinion. Well, you're 17. You're living at home? Yes. This is just Jade talking. I probably would not purchase a home until I've spent time living on my own in a rental type of situation. Whether it's you're renting a house from someone or you're renting an apartment, I just think

it's good to get your feet wet before you jump all the way into the pool. Oh yeah, for sure. Yeah, I definitely agree with that. I was just wondering, you know, if I get started now, I've been putting down a little bit each month just for a while, like just in a cash envelope saving for a while just to start building it up. And I figured, you know, maybe five years down the road after I've been renting for three years or whatever, I might have a nice down payment saved up, but it's going to be a little bit harder to do that if I'm trying to get the investing all the way up to 15% at the same time. I think, I mean, you have the ability, again, you're in, technically you're in baby step 3B or baby step 4. So you can do both of them simultaneously. You can, you can pause baby

step 4 for a while and save up for a down payment. You have that option. But what I think is most advantageous for you to focus on right now is your career path. That would be, I feel like you're very focused on money, which I think that's great. I love that you're thinking towards the future and trying to make good choices. So don't get me wrong there. But I would be focusing a lot of time on okay what's my career path what do you see yourself doing Mike in the next even 10 years from now um well I love the job I'm at currently and

there's recently some opportunities to where there may be more room for growth than I had initially anticipated so I'm not exactly sure I'll be long how long I'll be at this but I am also saving up because I would like to get the Ramsey financial coach training. OK. At the very least, get to do on the side and then maybe eventually full time. So what I want for you is I want for you to be able to talk about your your career future in the same depth and detail that you were talking about how your investments are diversified. You were able to tell us exactly what the name of the funds were, which I think is great. You were able to tell us the percentage, Raymond James, all of that. I want

you to be able to tell me that about your career path. So that's your homework. That's my assignment for you. Get that income up because 15% of 30 is cool. That's 4,500 bucks, but 15% of 90, let's triple that. Now we're talking. And so focus on the income. And I believe you have the habits and discipline in place that when the income goes up, you're just going to build exponential wealth. And we are cheering you on. Hang on the line. I'm going to send you our friend Ken Coleman, his Get Clear Career Assessment and hook you up with his new book coming out called Find the Work You're Wired to Do. So hang on the line. Christian will pick up. We'll gift you that to help you on the career side. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw.

The number to call is 888-825-5225. As you're listening or watching, would you do us a quick favor? It's totally free to you. Only takes a moment. Share the show. Here's how you do that. Simple ways you can engage. You can hit the subscribe button, hit the follow button wherever you're watching. Leave us a kind review. Share it with a friend. Word of mouth. Click the share button. All of that helps. Not give do here is spread the hope. America needs healing right now, Jade. And we hope to be a small part of that by helping people have hope with their finances, with their life, with their relationships, with their careers. It's a dark time out there

and we hope to be a tiny beacon of light out there. That's what we try to do. And you guys are a big part of that. You are the marketing plan. Thank you for all you do to help spread the word. Sarah is out there in Eugene, Oregon. What's going on, Sarah? Hi, George and Jade. I would love to get your advice on what job or school next steps would give me the best ROI and financial position, or maybe that's not even the best question for me to be asking. Maybe it's something else that I should be asking first.

Where's Ken Coleman when you need him? I know. So what's your conundrum here? What was driving this call today? For the first time in my life, I feel like I've got a whole bunch of options. For the last two and a half years, I've always worked in some type of clerical administrative, but for the last two years, I've been working as a court clerk and loving being in the whole legal system and like being the connection point between, um, justice and our small little communities and like restoring the, uh, the hope in our judicial system working.

I love that. You found work that matters to you. Right. I'm considering going to law school. I'm 46 and I'm feeling the pressure of if I were to school next fall, I would be passing the bar at 50 years old. But maybe it gives me a way to do even more of what I love to do, helping people within our legal system. Or maybe I should just be focusing on moving up into more management positions within the court system instead of dumping $90,000 to $155,000 into another degree. Well, let's talk about it further. I have two questions that drummed up from what you said. The first question I had was, what is it about being a lawyer that makes you like, that's what I need to do? What part of the job is it? And then if you were to say, no, it's me working up further in management in the court system without getting that degree,

what part of that idea makes you go, yes, that's the thing I need to do? Yeah, well, I love being in the courtroom. Being a court clerk, right now, I'm making sure that all the details happen the way they're supposed to, but make more money potentially and get more time to individually talk with people rather than right now I'm more just like a background stage manager. Okay. So what would it cost you? Have you done some research? What would it cost you to pursue this? Let's just play it out a little bit. And just background, my current net worth is $380,000. Most of that's tied up in my home equity. And so these numbers as I'm sharing them with you, I was a little, I was thinking I'd make a lot more money and get to do more of what I love. And then when I ran out the numbers, you know, over the course of 20 years, I was coming out with an end result within $200,000 either way. So yeah, but there, there are two equations here. Like we'll, we'll hear the

numbers, but everything can't be about dollars. Like there's also gotta be some part of it. That's like, yeah, I'm doing work. I love. So let's hear, do you have debt right now? Only my mortgage. Okay, so just the mortgage. And how much do you owe on the mortgage? $115,000. Okay. How much do you currently earn?

What's your current income? Growth, it's $51,000. So I'm netting $40,000. Okay. And are you currently investing 15%? I'm almost there. I will have my full emergency fund saved by this December, and everything's working fine so that I can switch that right over into investing 15% and having a little bit more to still. Do you have anything in investments right now? I do. I lost my husband seven years ago, so there's still about $60,000 sitting in trust stocks on top of, I've got 83,000 in retirement specific accounts.

Okay. Okay. So the numbers I would want to know about, Sarah, are December comes, you get your emergency fund saved, you start saving 15%. That's when you see how much margin you actually have to put towards possibly cash flowing, you know, a state school or something that you can do night school. I know my brother went to law school. He did night school and came out on the other side. He's a judge now. Yeah. So I know it's possible in Oregon. I would be the only way to do night school is I'd have to do it online. And so I've been looking at a lot of different schools,

my whole idea, because I don't want to, of course, go into debt to do this. The only way I see to do that would be to sell the house. And then I don't want you doing that. I don't think I would do that. Really? The only reason, because at the end of the day, here's the parameters that I and George chime in the parameters that I'd want to make sure. OK, you're 46. I want to make sure that you're still retiring with a paid for home and you've come so far. I would hate for you to have to start over again with a higher cost because real estate has gone up significantly. I'd hate for you to have to start over with a higher interest rate, with a bigger loan and further to plow through. You've made a lot of headway there. So in that way,

I wouldn't want you to have to go backwards. I'd be looking for a way that you can maybe earn now more. So maybe you start the path that you had said as a secondary choice, which is, hey, I'm gonna work my way up this clerical court situation and see how far I can go. Not only will you possibly

earn more money, but you're also going to get a feel and a taste for that work. And you might find out, you know what, I love this. This scratches the itch. I don't have to do the law school thing. Or you might get further up the ladder and go, okay, I'm making more money. It's not scratching the itch. But since I'm making more money, now I can afford to cash flow my night school or my online school. Well, so on working up within my current court system, the way to work up and earn more money is to go into management, which pulls me out of the courtroom. Have you looked into all the options in that field?

I mean, is there a paralegal position that might fit the bill here? Yeah, that could be another possibility that I haven't looked into yet. Okay. So I would just explore all the options and write them all down. Here's all my options. Here's what the salaries are. And then here's the path to get there as far as education goes. Then it becomes, okay, what are all the paths to education? Which one can I cash flow? And then which one can I do the soonest? And you might decide, you know what, I'm okay being a paralegal. It'll get my income up to 60 or 70. I'm going to pay off the house. I'll get to retire without the headache of going through law school and being years from now. And that might be a path.

So I think you're in the exploration phase still, and I don't want you making any big financial moves other than following these baby steps. Get the emergency fund, begin investing 15%, then decide what the right education is, what the right career path is. And we'll help you with that. I'm going to give you Ken Coleman's new book that's not out yet,

but we'll give you the Get Clear Assessment as well as his new book coming out called Find the Work You Love to Do, as well as Paycheck to Purpose. That's awesome. We're going to gift you that to help you on this journey. We want to see you win in this area. And I can't, your passion for this tells me that you're going to be doing something.

Yeah. And whether it's being a lawyer or whatever it is, we just want you to do it with peace and without payments. And that might mean we delay the dream. But that's also going to give you the most peace down the road as you retire with dignity doing what you love to do. So thank you for the call. Love to hear that. More of The Ramsey Show coming right up. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. If you want more from us for some reason, be sure to check out Jade's new book called Money's Not a Math

Problem. I've got a new one called Breaking Free from Broke. Both of them will help you win with money, help you change your mindset and paradigm around money, and help you build wealth with less stress. That's the whole goal. Indeed. So be sure to check those out at ramsaysolutions.com. Jade, this is a big deal.

I finally got my tax return done this past weekend. Same. It was weighing on me emotionally. I didn't realize it. It was like living rent-free in my head return done this past weekend. Same. It was weighing on me emotionally. I didn't realize it. It was like living rent free in my head until I got it done. Yes. Felt good. I know that's right. I did mine a couple of months ago. So I did it instantly. Aren't you the teacher's pet? Listen, my mother-in-law, she don't play. She wants those numbers. Well, you get extra credit. I love it. Well, taxes are confusing. People are stressed out about it this time of year. So to help you get a better handle on them, I want to unpack a question from one of our

listeners. Here's what they had to say. I want to avoid overpaying taxes each month. What do I need to change with my paycheck? This is a good one. I've been answering this question like I feel like once a day because we tell people all the time, like, don't give your money to the government. Don't give them the interest-free loan and get excited when you get a refund. I'm like, that's not a bonus. Exactly. So now the big question is, okay, guys, we hear what you're saying. We don't want to get a refund. How do we change it? And that's essentially what this question is. So you could approach it one of two ways. Number one, if nothing has changed in your tax situation from last year, or maybe this year, you've already

gotten your refund back and you're like, this needs to change for next year. You can look at that refund amount that you received and you can divide it by 12. And that's essentially what you're overpaying. Or if you want to see what it is per paycheck and you get paid biweekly divided by 24, and you'll see, okay, this is the amount that I could have back in my paycheck and that's how much less you want taken out of your check so now you've found the amount you found kind of like the golden egg and it's like okay this is what I need to change um so kind of keep that in your back pocket or if your tax situation has changed and you can't compare it to last year you can't compare it to this year then you could use uh software to just do a fake return which is essentially the same if you went to irs.gov. But let's just be honest,

don't nobody want to go to irs.gov to find out what they're and do that fake return. It just boggles the mind. I'd rather use Ramsey Smart Tax and just go in there and do a fake return. And so then you can figure out again what your withholding would be. All you're doing is estimating your withholding at the right rate. and so now that you know what that number is you can go to hr and fill out a new w-4 form and it's worth noting that it's not like it used to be george it used to be claiming dependence and all this stuff yeah it's not like that anymore you can literally just fill in the amount say i want 200 deducted from every paycheck that's right that's right and so that's the way to do that That's to make sure you're not overpaying for your taxes anymore. And that's how you get

the money back in your pocket, which is, let's be honest, where it belongs. It's your money. That's true. And to be fair, the IRS on their website, they have a pretty good withholding calculator that can help you figure this out. You don't have to do fake taxes. And the other side, as an example, let's say you get a $2,400 refund and you have 24 paychecks in a year, biweekly, like you said. Well, that means you need get a $2,400 refund and you have 24 paychecks in a year, bi-weekly, like you said. Well, that means you need to put $100 back each paycheck. That's right. In order to get back closer to zero. That's the goal. You don't want to owe too much. It's the Goldilocks here. Yeah. So that's a simple way to look at it. And then W-4, you just get with HR.

And for some people who have a regular income like you and I, what I did was I asked HR, okay, can I force a percentage? Because once I figured out what percentage of my income needed to be paid out, it was easier that way. And I didn't have to worry about, hey, it's not $200 this month, it's 500. So that's another helpful tool to check with your HR on. So if you want more tax help, head to ramseysolutions.com slash tax. There you're going to find Ramsey Smart Tax, the software Jade's talking about. Low upfront pricing, no nonsense, no hidden fees. And we'll help you connect with a tax bro

who's Ramsey trusted, who can do it all for you, if that's your speed. So again, that's ramseysolutions.com slash tax. We are here to help you file with confidence and get it out of your life. Listen, one more tip that you could throw in there. If you haven't gotten your taxes done yet, I would just sneak that into my tax person

and say, hey, listen, by the way, I don't want to get a refund. We've already done the one for this year, but for next year, can you just tell me? Can you help me figure this out? And just kind of slide on in like you're sliding into DMs. And they're happy to crunch the numbers. They can do it a lot faster than you can.

Love it. All right, let's move on to the phones. Mason's in New Orleans. What's happening, Mason? How y'all doing today? Doing great. How can Jade and I help? Yeah, so my question is, I'm getting married in October this year. My fiance is going to come into the marriage with about $20,000 in student loans when she gets done with school. So my question is, should I hold back on my investments, like starting now to start saving more liquid cash? Because eventually in four to five years, we're going to want to build or buy a house. So I'm just trying to see the best way to

attack this because I feel like right now I'm currently investing $1,000 a month, and I'm only able to save $500 to $1,000 a month cash. So I'm just saying, you know, should I stop investing so heavily, or what do you all think I should do? So you have no debt, and you have a fully funded emergency fund? Yes. So I have my truck is paid off. I have a car that's paid off. I have about my truck is paid off. I have a car that's paid off. I have about, I have it right here, $9,298 of liquid cash right now.

Great. Okay. So would that be about three months of expenses for you? Yeah. My expenses, automatic withdrawals are only, this is including the investing, $1,695 a month. What? That's crazy. That's including rent, utilities, everything.

No, so that's just also- What do you think expenses are, man? Yeah, so, well, no, my grandparents blessed us for a year to where we only have to pay the utilities. So we do have rent free for a year. So where are you living? Yeah. Yeah. So they have a rental property and they offered it just to help us out with their rent free. You buried the lead.

So you've got, you're living rent free right now. So life is going pretty well. Okay. Okay. But I'm trying to be, that's why I've, that's why I was talking to other people. That's why I'm investing heavily. Just trying to be, if I were to have rent, you know, that's why I've, that's why I was talking to other people. That's why I'm investing heavily, just trying to be, if I were to have rent, you know, that's why I'm just doing that thousand dollars a month investing. Well, you know, you are going to have rent in a year or however many months is left in this deal. My question is, uh, and going back to your initial question with your fiance, so you guys are actually getting married in May or she's graduating in May? No, we're getting married in October. She's not going to graduate to a year and a half from now.

Okay, where did I get May from? Okay, so my thought is I'd go along and work these baby steps as your plan. But maybe when you guys do get married, you mentioned that you have a car and a truck. Does she have a car or vehicle as well? Yeah, her car is paid for as well.

Okay, so that's three vehicles. When she graduates and you guys get married and all this happens and you come together, is there one of these vehicles that you can sell to get rid of the student loan and then be totally debt-free? No. So my truck, I have my own business, so I need my truck for my business. And we live about 35 minutes away from where we just moved from. So I bought that car as a commuter car to save on gas. And I need that. And she can't drive it. It's a standard.

It's so old. But her car is only worth about $7,000 to $10,000 anyways. So I don't really see any point if it's paid for to really get rid of it, you know? Okay. Who's paying for the wedding? Her parents are. Oh, that's nice. So you don't have to

fork over any money for that. No, sir. And you've already got the ring. Yes, sir. Okay. So here's what I would do if I was in your shoes, honestly, I would keep investing that 15% and any money left over, I would just sock away into savings. My guess is that will get you pretty close to where when you get married, you can use the majority of your savings to knock out her student loan debt and then rebuild that emergency fund. And I still would consider getting rid of one of these vehicles. There's two of you. You don't need three vehicles, one of them sitting in the driveway just going down in value.

But that's the thing. You need them for work? My truck gets 10 miles to the gallon. So I live 35 minutes away from where I work. So, I mean, it was every three days it was $80 I was having to fill up. So you just leave your truck at work is what you're saying and drive your car. Yeah, I leave it at work and I take my car home. Got it.

I see. Okay. Well, I think you'll be close. Invest 15%. If you guys get married and the debt's still not going to be knocked out, you can pause investing for a short period in order to speed that up. But my guess is you get real close to having that $20,000 in liquid cash. And then just knock it out. Then knock it out once you're married. But never before then. Do not combine anything before. I know that.

Okay. Just making sure. We got to call things out like that on the show. Because I know you sound like an amazing guy and she's a lucky gal. You're a lucky guy. We're going to gift you Financial Peace University as a little wedding gift on us. How's that sound? Thank you. I appreciate it. Thank you all so much for your time. Absolutely. Hang on the line. Christian will pick up, and we will get that Financial Peace University membership sent over to you, as well as every dollar premium.

Help you guys budget together as a newlywed couple. Isn't love so sweet, Jade? Love is grand. I love love. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Our scripture of the day comes from Isaiah 43, 18 and 19.

Forget the former things. Do not dwell on the past. See, I am doing a new thing. Now it springs up. Do you not perceive it? I am making a way in the wilderness and streams in the wasteland. In other news, Mick Jagger once said, The past is a great place.

I don't want to erase it or regret it, but I don't want to be its prisoner either. That's great. That's good. I don't know if I coined this. I probably heard it somewhere, but I like this quote. Failure is a comma, not a coma. You know, you don't want the past to define you or hold you back or paralyze you. It's just a comma. We're moving on, Jade. All right. I'm with it. Pontificate on that. That's my word. There it is. All right. Let's

go to Shane in Huntsville, Alabama. What's happening, Shane? Hey, thank you for taking my call. Sure. How can we help? Okay. I'm 53 and I've only got 48,000 in my retirement and my 401k. I was putting 13% in and I moved it down to 5% because we got an FPU and they're going to be in a month and we're still trying to hash things out, but I've got like 30 000 in debt with the credit cards and other loans and my wife's got 170 000 in stupid loans and should i change my 401k down to nothing so we get everything paid off because 170 000 is gonna take a while to pay off it, but I would definitely not cash out your 401k to do that. I don't want to cash it out.

I just don't. Should I stop putting anything in it? Stop contributing. Stop contributing, yes. What's your household income? Last year I made $87,000, but my overtime fluctuates so much. So I'm going to say probably $70,000. Okay.

What does she make? My wife makes about $85,000. So what do you guys bring home every month? I bring home about, let's see, $2,500. She brings home about $3,000, $4,000. About $4,000 is what she brings home. Okay, so you guys are bringing home. Say that again?

I'm sorry. Hers is more steady of income than mine is because she's pretty much like salary. But she's a nurse. They kind of... But you're looking at about $6,000 a month. I'm confused because if you take home $6,500, that's $78,000.

But you told me your household income is $155,000. Well, yeah. I take home $7,500. Well, right. So how much do you take home a month? I take home about $2,500. My check's about $1,200. That's what I'm confused about.

Every two weeks, yeah. That makes no sense that you take home $30,000, yet you make $70,000. Are you sure? What are we missing? No, my yearly is about $70,000. Now, you did mention stopping retirement. How much was coming out of your retirement? I was taking 13% out, and I moved it down to 5% because that's what my company matches. It's 5%. Okay, that's still not the difference.

Something's still not adding up, but that's neither here nor there. Yes, you should stop investing. Total debt is... That's not... My take on... That's not gross. I understand, but I'm saying after taxes and even health care, premium deductions or whatever, and 5% investing, you shouldn't be taking home 30, making 70.

In Alabama, you're not paying 60% in taxes. Yeah. Yeah. Well, it's different than what it was. No, but it's not. We worked so much overtime last year. I don't remember what it was. The last four years, we worked so much overtime.

I don't know what a regular straight pay is. Here's the key. Well, here's the key. Well, let's go off the numbers you gave us of the gross income. You guys have $200,000 of consumer debt, not including a mortgage. Right. And you make $155,000. George, I don't think we should go off of $155,000 because I don't think they make that. I think we should go off the $6,000 a month.

Okay. So going off your take-home pay, my goal for you guys is to pay this off. Three years would be great. So if you do that math, $200,000 divided by three years, that's $66,000 a year, which means you need to be putting $5,500 a month, which might mean we need to get the income up and do some side hustles, do some overtime. Because this cannot take 10 years, because you got to get back to investing because you guys have nothing in retirement. And I don't want you working at 75 if you don't have to be tell us about your vehicles well that's one of the things i plan on selling my truck i don't have it in the debt because i plan on selling it because i still owe like 28 000 on it what's it worth it's probably

worth about 25 26 so i wouldn't lose that much in it okay what about your wife but that's not included in what you just told us so that's right that's not included her car is not included but her car is 40 000 oh my goodness her car ain't worth 28 000 why uh just she traded she trades cars and she traded negative equity a lot of negative equity in it so okay so there's a lot to be learned from this just looking at the numbers um and i don't say any of this to be negative i say it because there's a lot of um we're just we're not paying attention to anything we we have one car we don't want to drive it anymore. Who cares if it's got what we owe on it?

We're rolling it into the next one. I worked. I made this much one year. I'm not really sure what I make this year. I'm not really, there's a lot of, you guys aren't doing your due diligence. You work too hard to not know how much you make

and you work too hard to have chaos. Yeah. And so I want you guys to get a hold of that and go we've got we've got to stop because until you get that together it doesn't matter what you do does that make sense how's your wife feel about all this well we're in the fpu this is our first full month and it was last month and we're kind of still but what our budget is we're in the FPU. This is our first full month, and it was last month. And we're kind of still, the way our budget is, we're kind of still figuring out what we need to do. Okay, but she's fully committed the same way you are?

Yeah, she is. But I don't think she wants to get rid of her car. Well, then she's not fully committed, and that's what I'm talking about. Like, you guys are not going to be able to do this unless you are fully laser beam, 100% all in, both of you. And so that's got to be the prayer every night that you guys pray together is, hey, help us to just get all in on this. Help us to realize the gravity of this situation so we can do what it takes. That's what I would be praying every single day and every single night.

Think of it this way. You're 53. Let's say you go all in like we're telling you to, and three years from now, you pay off this debt. You're now 56. Then for the next 10 years, you invest heavily. You do catch-up contributions. You invest 15%. You get the house paid off. Well, now at 66, we can actually retire with dignity instead of looking up and the debt's still sitting there, and we still haven't invested anything i've always the way i've always looked at it i'm probably gonna work till the day your funeral not not if you follow our way that's a sad outlook i don't know if i can follow that way i'm it's just it's just my job is so it's hard for me to take another job a second job because the way my job

overtime is this has nothing to do with your job you guys made a lot of stupid decisions over a long period of time oh i know i've made a lot of stupid decisions so you guys are hard-working people you actually make good money especially for alabama and so the problem is every time you got a raise you made more money we just spent it and we saw a shiny new car and we wanted it and we didn't have the money we put it on the credit card tell us about your house it's probably worth about 181 185 maybe and we have like 97 on it okay and tell me what the mortgage payment is just checking 740 something maybe i think it's 740 something. All right. So there's no problem there. This is just like we said, you guys buckling down and somebody, if not both of you is picking up extra work, whether it's overtime. And when you're picking up that overtime, be clear. What is this

going to mean for our next check? Like know what these dollars are so that you guys can crunch and figure out what the best strategy is for you bringing in extra income. And that starts with you really understanding what is your base salary? What does it look like when you pick up these extra hours? And really getting your head around what the actual numbers are. Because before, you were bringing in less than half of what you said you were bringing in, which is crazy. So we got to get that clear. My last three years, we've worked so much overtime.

I already don't know. And then the last, well, the first three months of this year, we've worked pretty normal hours and we haven't had a whole lot of overtime. Well, I guess I have a shock to my system. So yeah, yeah. Well, if your overtime amount, if without overtime, you're only bringing in 30,000,

we might need to talk about a career shift. Either way, there's some deep sacrifice here. You're not going to be able to just roll tide your way into retirement, unfortunately. You got to make a plan. You got to invest. You got to get rid of this debt. And none of this is going to be easy. And y'all been living La Vida Loca the last who knows how many years. It's time to be an adult because we want to see you retire with dignity. This is The Ramsey Show. Hey, folks, Dave here. You want to hear even more life-changing content from Ramsey? Download the Ramsey Network app so you can catch all your favorite shows all in one place,

like The Ramsey Show, Smart Money Happy Hour, and The Dr. John Deloney Show. You'll get real talk about life, relationships, money, and your career. Plus, the app lets you browse by topic, like debt, business, or selling your home. Get the content you want whenever and wherever you want to listen. Download the Ramsey Network app today.