The Ramsey Show - Focus On What You Can Control And Start Crushing Debt

Starting point is 00:00:04 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broken. Common Sense is weird. So we're here to help you transform your life from the Ramsey Network in the Fairwinds Credit Union Studio. This is the Ramsey Show. The phone number is AAA 825-5-225. Alongside George Camel, I'm Ken Coleman.

Starting point is 00:00:31 Excited to have you with us. We get it started off right now with Mary in Dallas, Texas. Mary, how can we help? Hey, thank you for having me. So I've been stuck in kind of like a situation where I'm newly married and I don't believe in date. And I really love what you guys preach. I'm trying to get my husband on board. He has, when we got married, he has like over $3540K in date.

Starting point is 00:01:02 And that's okay. So I was trying to encourage him to get out of date. use my salary to, use my salary to pay his date. But he currently lost his job in last year, and he has no motivation in trying to find a new job. So I'm always trying to, like, my money, all I do is just pay bills, mortgage, and by the time I'm done paying, there is nothing left. So it just feels like I'm never getting ahead. Wow. So sorry, Mary. I mean, I can think of one way to stay motivated, maybe providing for your new wife? Is that not on his radar? Providing for his new wife. You? You said you just got married to this guy. He doesn't have a job. You're struggling to pay bills,

Starting point is 00:01:49 and you say he has no motivation to work. Yeah, he lost his job, so his excuse is like, oh, I can't. Did he get fired? What happened? Is he, is he in a depressive state because of this? Yeah, he got fired, and he's kind of like really more, he's kind of really confident that I'll get a new job, and you only apply, like, one job in a month, and it's been six months now, and really, like, no motivation at all. If he gets out of his 401K to pay some of the bills, like, to pay some of his day. He took a withdrawal from his 401K? To pay bills and cover his debt payments?

Starting point is 00:02:27 Yes, because my salary can't pay all his pay. Oh, my goodness. It can only cover, my salary can only cover mortgage and the house bills, his date. Well, the challenge is, is there's really no answer. We can't give you a step one, step two, step three on this. So really can't. This has to be a very, very serious marriage conversation. Have you confronted him about this to say, hey, I don't think this is sustainable. We can't keep doing this. My salary is not enough to take care of all of this. We're falling behind. I feel like you're not applying for enough jobs. What's his response?

Starting point is 00:03:06 I haven't. His family has encouraged him to even just take any stupid job, like, to just pay bills. But his pride will not let him to take anything. He's just like, until I get something that is comfortable for me. Yeah, but I appreciate that. And you've identified that it is pride. I assume that he's calling it pride as well. No, he does. He still thinks he's always, I don't know. Have you shared how uncomfortable and how afraid you are? Yeah, and he sees me cry when he comes to bills, when he comes to his... What does he do? I'm sorry.

Starting point is 00:03:44 What does he do when he sees you cry? He just says, I'm sorry? I'm sorry, and that's it. Well, you know, again, I... There's nothing that we can say here. I mean, this is a... You have to tell him that if you can't help us, then is there in us? You know, I mean, it's that serious.

Starting point is 00:04:07 This guy is just kind of waving and every day kind of going, well, I'll just do this and hope it works out and there's just no urgency and it puts you in a very tough position. And I don't have some magical answer. George, I don't know what your thoughts are here. This is very, very frustrating for me. Yeah. Well, I do think you need to make it more clear how serious this is. And it sounds like he's disassociating is what we call it when he's just going, well, I'm just kind of sort of numb out. because I don't have the willpower to do anything about it.

Starting point is 00:04:41 Is that what's happening here? Because you got married to this guy because you wanted the companionship, because life is better doing it with someone else, right? Yeah, I see some jobs and send them his way. Everybody's trying to give him leads about jobs, but it's just the motivation for him. What was he doing for work, and what was he making? He was making 130. He was an engineer.

Starting point is 00:05:04 Engineer making 130, and he's been applying for engineering. jobs or he applied for one? He's applied for engineering jobs. And why did he get fired? They said he threatened his boss. He threatened his boss? Okay, so how long have you been married to this guy? Two years.

Starting point is 00:05:26 Yeah, I mean, I think you have to get his attention and go, we got to talk about our marriage. I've already brought up all the money stuff to you and you're not doing anything about it. and you're not in a good place. You were in a bad place. You're in a bad place if you threaten your boss. Can we agree? You're in a bad place. Yeah.

Starting point is 00:05:45 He still doesn't agree that he thinks he was unfair that he was let go. Well, there's a lack of ownership all over the place with this guy. Is that the case throughout your marriage? It's never his fault. It's always someone else's fault. You've got to take care of you right now. I think this is a legit conversation about separation to get his attention. But at this point, if he's willing to go to marriage counseling, you're going to have to figure out how to afford that because you guys are broke.

Starting point is 00:06:12 But I would give that a try and get a therapist in the room with you, too. You've got to try that. But I wouldn't keep letting this guy just put all the pressure on you and show no desire at all to help out. So, you know, at this point, how can you make more money? And you be in control of the finances so this guy can't wreck you? anymore. Yeah, I wouldn't be concerned about his debt. Right now it's about covering the four walls and protecting yourself. So the first thing you cover is going to be your mortgage. You guys own a home or you rent? Yeah, we own a home. Okay, so we're going to cover the mortgage. We're going to put food on the table. We're going to keep the utilities on, cover all of those bills, and cover your transportation needs.

Starting point is 00:06:55 Outside of that, if you can't pay for it, you can't pay for it. If you can't make the minimum debt payment, so be it. I'd rather have the credit card companies mad than your house being taken away from you. Okay. So you come first. Don't cover his bills. We're not covering anything for his lifestyle. In fact, you may want, if this isn't going well and counseling is not an option for him, you may want to create your own separate account so that he doesn't start to drain it in his depressive state. We've never drained the account.

Starting point is 00:07:23 Okay, so it's separate. Your money goes to your account and you're paying all of the bills from that one account. Yeah. Do you have a full picture of his finances? Do you actually know how much debt he has? It's around 45K. And what kind of dad is that? School loans.

Starting point is 00:07:42 He has a personal loan and his car. And none of that is in your name? None of it is in my name. Great. Well, there's the good news. So that's the best news of this entire call is that he can't drag you down. You can take care of the mortgage. I think you need to be thinking about how do I make more income?

Starting point is 00:08:01 How do I create, you know, an emergency. Fund, how do I create more margin so that his destructive behavior, and what he's doing, by the way, is destructive. He's not doing much, but it's destructive. And so you've got to take care of yourself right now, and we're hoping we can get you guys into some therapy and that you guys figure this thing out. But you've got to protect yourself right now, unfortunately. And we're so very sorry to hear that you're going through this.

Starting point is 00:08:59 Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits. You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly, everything changes. Yeah, and that's why you've always said that having term life insurance from Xander is essential, because it protects your family if the worst happens. Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection. But there's another piece that people often overlook, and that's long-term disability insurance.

Starting point is 00:09:39 Yeah, it's important to understand the difference between them. Life insurance steps in when you die. Disability insurance steps in while you're alive but can't work. So it replaces a large part of your income so the bills still get paid while you get back on your feet. Now, if your employer gives you free disability insurance, great. Take it. If it's discounted there at a better price, take it. But if not, Zander can help you find the right plan.

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Starting point is 00:10:26 go to zander.com or call 800-356-4282. Protect yourself, protect your income, protect your family. All right, let's go to Kayla in Miami, Florida. Kayla, how can we help? Hi, how are you? So right now I'm at a crosspoint. My father just told us that he doesn't have enough money for retirement. He's been retired for several years.

Starting point is 00:11:05 he's been retired for about eight years and basically he's been living off like an annuity that he thought would have covered his mortgage. He still has a mortgage, about $300,000 left on it. And right now my family and I are deciding how we're going to approach this. Do we bail him out essentially pay off his mortgage? Or, you know, do we have him sell his house, move to a cheaper area, cost of living,

Starting point is 00:11:35 area. So keep in mind, you know, that $300,000 is what my family and I would use for our retirement once we're at that age. So why? Kind of, what do you mean? The $300,000 is what you would use for retirement? No, like investing that for our future retirement, you know. Like as an inheritance? No, no, no. Like, so we have, my father owes like $300,000 on his mortgage. Yeah.

Starting point is 00:12:06 And we were thinking that, like, that's a debt. We can essentially, like, exactly, help out dad and basically give him, like, 20 grand every year to pay off his mortgage because I don't have $300,000 laying around. And so that was our thought. But at the same time, that's money that we otherwise would be using to investing. Yeah, you guys are going to be in the same spot. Your kids are going to be funding your mortgage.

Starting point is 00:12:31 It'll be a wonderful generational gift. Yes. So this is definitely a bad plan to bail dad out after he did some real poor planning. Now, I'm not saying we need to be cruel. We don't want him on the street, but I also don't want you artificially propping up his life for the next 20 years. Yes. How old is he? He is 71.

Starting point is 00:12:54 And on top of that, his mother, my grandfather, mother, lives with him, and she had no retirement at all. and doesn't qualify for like anything because she immigrated to the country like a couple years ago. So it's kind of like a series of bad decisions. I'm fortunate. My husband and I do extremely well. And it wouldn't be my children's burden. That will be for sure because they're pretty much already taken care of for their life,

Starting point is 00:13:25 for their major events in their life. But I just find like I'm having a moral dilemma with, you know, that's money I've otherwise would have left my children. So I don't know what to do. Have him sell the house. What's it worth? The house is worth like 700. So that was my thought to sell the house.

Starting point is 00:13:45 But then he kind of says, well, then I'm going to go move somewhere really far away. And then I kind of struggle with like, well, then you're leaving your grandkids, you know. Why does he have to move super far away? I feel like sell forward is pretty expensive. Because even if you go like downsize into like a condo or a townhouse, like those HOA fees are still pretty.

Starting point is 00:14:04 behind. So you'd have to move, like, a lot further. Okay, so what would a rental cost that's reasonable? That's somewhat in the vicinity? Um, probably like $2,000 for like a one bedroom, like no frills, more or less. So that's $24,000 a year. And if he has $400,000 in equity and he invests that money, it could spit off 20, 30, 40, $50,000 a year. So that would essentially cover his rent. Okay. I'm trying to figure out a way for him to be independent and not relying on you guys forever. Because how old is your grandma?

Starting point is 00:14:43 She's 93. They seem to live very long. The genetics are good. The financial decisions are bad. Remind me. How old is your dad? My dad is 71. Yeah.

Starting point is 00:14:53 You know, George is giving you great advice on the money stuff. He could weigh in further. I'm just listening to this, and I'm listening to a very good daughter. but I'm also listening to a very good daughter who's worked up in her mind, this burden that you have to carry. And once we solve the one burden, then you immediately gave us another burden. So he said, well, then sell the house. That was one of your options. It's great.

Starting point is 00:15:16 Gets him in better shape. And he can go somewhere else, pay cash. And you're meeting and he was, well, he's going to have to move too far away. And that's too far away from my kids. And I feel like we're creating problems that aren't really problems. It feels like you've got too much of the. this kind of stuck because it's not immoral. You kept mentioning the moral.

Starting point is 00:15:38 There's nothing immoral about the situation at all. So I'm just trying to maybe, I'm trying to free you by giving you some feedback here. I'm for you. You're a great, great lady, great daughter. Phenomenal. Your heart's in the right place. I think your head's in the wrong place. Yeah, exactly.

Starting point is 00:15:56 And then I feel bad about, you know, to my own family, my own husband, who works very hard. I work very hard, you know. Well, that's where your head should be. Yeah, your responsibility is to your own immediate family first. Yeah, that's your household. I agree with you on that. You should be making good decisions for you and your kids. Dad's not your responsibility.

Starting point is 00:16:18 Yeah, and he's not putting it on me. But at the same time, I feel like he sacrificed so much to put us through college to them get us to the point, like, where we're making so well money, only because of him, not my husband, just like for me and my husband. So, like, I think that's where that dilemma comes in, like, to, like, pay forward. It's false.

Starting point is 00:16:39 You can honor him without bankrolling him. Mm-hmm. Give him some good advice. He could downsize and buy something for 400 grand in cash further out. True? It's not going to be as nice, not going to be as fancy, which would solve the problem you're trying to help solve, correct? Yes, yes.

Starting point is 00:16:59 And what is his foreseeable? income for the next 20 years. How much is this annuity spitting off and for how long? Well, the annuity ends in like a year. So he was supposed to use that annuity to pay off the mortgage, and he never did. Instead, he, like, just enjoyed, I think it was just like lifestyle creep. Like, he was just enjoying his retirement. And not in, like, an extravagant way, because that's not how he is.

Starting point is 00:17:24 But, like... But he was irresponsible once again with this annuity. And then what's going to happen? And if you guys are now funding his lifestyle and he gets comfortable. He has no Social Security coming in? He does. So that's what he would rely on. And that's like going to be like that's about like $3,700 a month.

Starting point is 00:17:42 Okay. So that's our number. How do we live off of $3,700 a month? And if you've got no house payment, he can do that. And by the way, I want to remind you what you just told us when this guilt starts to creep in. Oh, my dad's sacrifice for us. Yeah, he did. Not taking any of that away from him.

Starting point is 00:17:57 but he also did not use that annuity how he's supposed to you just said it so you got to have you can't have both of those thoughts in your head at the same time so you got to choose the one that is the most accurate and the most accurate is he squandered his money putting himself in this situation not my dad sacrificed so much for us and we aren't taking care of him that's a that's a false narrative and that shouldn't be in your head anymore when it pops up, you need to immediately replace it with, my dad is a grown man and he was not responsible with his money. And gosh, I feel so sorry for him that he has to sell his house so that he can stabilize in his final season of life. But that's what he's got to do. And that's what I'm going to

Starting point is 00:18:44 recommend to dad. And then I'm going to wash my hands of it. That may sound heartless, but it's not. That's what protects you from overthinking on all this stuff and emotionally getting sucked into something that you're not supposed to be involved in. Now, just like, if you had the money to pay it off, would you pay it off, and then look at it as like a way, like whenever he passes, you'll sell the house and almost like it's an alternative investment. I would not try to justify this as anything other than I am, I'm gifting my dad something that he simply cannot pay because I love him and it's a small part of our financial world.

Starting point is 00:19:27 and it's not going to set us back. And it sounds like you're not at that point right now. What? I'm sorry. At what point? You don't have $300,000 sitting around, right? That's what you said earlier? Not like a hundred.

Starting point is 00:19:41 I mean, they're in assets, but not... Yeah, we're not going to sell off our retirement to cover dad's mortgage. So if I'm in your shoes, what I'm going to do is love him in the way of saying, hey, dad, you're going to need to downsize. We can't afford this. You can't afford this. We're going to help you create a budget for this $3,700 to make sure. that it covers all of your bills and you can enjoy some life.

Starting point is 00:20:00 But it's going to look different. This is your boundaries versus, hey, dad, he's 93, and now he wants $2,800 a month from each of the siblings to cover his lifestyle. I would not go down that path. There may come a day where he has to move in with you and you take care of him just like he's doing with your grandma, but I wouldn't make that day today. I love entrepreneurs. Don't forget, guys, I started my company on a card table myself.

Starting point is 00:20:45 So I know what it's like to have people counting on you, your team, your family, not to mention your customers. And when you're the one signing the paychecks, you can't afford to fly blind. But I'll be honest, early on, one thing that nearly sunk us was wasting time with spreadsheets that didn't add up because business units didn't talk to each other. I finally told my team, just fix it. And they did. We got NetSuite.

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Starting point is 00:22:19 Thank you for answering my call. It's my birthday, so this is the best. Happy birthday, Bonnie. How old are you today? Thank you. Thank you. I'm 30. 30.

Starting point is 00:22:29 Oh, that's a big one. Do you feel like an adult now? Yes. I officially feel old. No, no, no, not old. My gosh, careful. Careful. You're going to offend people that are seasoned like I am.

Starting point is 00:22:41 I know. I know. But congratulations. Oh, okay, got you. Well, now, you are entering a decade where at some point you will just wake up one morning feeling like you had a great night's sleep. And as you begin to move, you feel as though someone was punching you the entire night. And I can't explain that, but that's a reality.

Starting point is 00:22:58 Science can't explain. Science can explain. So I totally understand that already. All right. Well, we're there for you. Okay, how can we help you today? All right. So I am an occupational therapist and my husband is an engineer. And right now we're in about $113,000 debt. And 96,000 of that is student loans. And I have about $13,000 in personal loans. And that comes from a truck that we had paid off and sold. And then we redid our basement because our house flooded a lot. So, but my question today is, is how do I pay off my top student loan when the interest is compounding almost every week? I log into my account, and my loan has been about $79,000 for years now, and I'm at my wits end just trying to pay that one off because it's the largest.

Starting point is 00:23:50 And I do want you to know that I am doing the debt snowball with all of my other debt besides that $79,000. But I get so discouraged. How do you do both at once? you're either attacking the smallest one or you're attacking the one with the most interest. So I have them listed out in order from smallest to greatest. And I'm definitely throwing most of my extra money at the smallest one, but I am throwing more at the highest school loan as well.

Starting point is 00:24:26 So my minimum payment was $314 just to cover the interest for the highest loan. And I decided to throw a couple hundred more dollars towards that one just so I could get ahead. And it's just still growing. So I don't know. I just don't know how to go about it anymore. So I know this sounds crazy, but the $79,000 is made up of about $19. small school loans, it's a federal loan. So they're all between four to six percent. Okay. So none of that is crushing. I know it feels like a lot, and there's a big balance there,

Starting point is 00:25:07 but it's actually great that they're split up because that means you're going to see progress faster than if you're attacking this as one giant loan. So what is the smallest balance? It's not. Just go down to the bottom of the list and tell me the smallest balance. So when I pull up that on my computer, it doesn't have it listed smallest to greatest. Sort by, smallest. I know this is such a confusing. You should be using every dollar, Bonnie. I'll give you every dollar.

Starting point is 00:25:44 It'll sort it for you. I think the spreadsheet is where this one out of whack. I actually have it, and I stick to it every month, but I'm just trying to organize it in my brain to make it sound less confusing. So my medical day is 3,000. to organize anything. It's a junk drawer up there. All right. We've, could you two move forward, please? I'm trying to get to the bottom. I know. Let's just speak philosophically at this point, since we can't figure it out. If a third grader looked at your spreadsheet, they would find the smallest number to be what? It's about 800. Boom. Oh, there we go. What do you guys bring it in

Starting point is 00:26:19 per month? 9,500. Great. Why is this loan not paid off yesterday? Because that's, that's, that's only a snapshot of all of my debt. Like, it's only a little portion. So my, I'm just going to read off what my spreadsheet says here, so it'll be less confusing. So my medical debt is $3390. My basement, I owe $5,000. My next school loan is $6,000. My husband's truck that we sold and we were negative underwater with that, and we owe $7,000 on that. My next school loan is $11,000. And then the big one that I'm specifically talking about right now is 79,000. But that 79,000, you said, is split up. It is. So it's not really 79,000. It's $800, $2,000, $3,000, so on and so forth. Right. So that's how we're actually looking at this. Don't look at it as a $79,000 loan. Split everything up. 19 of those in the

Starting point is 00:27:23 spreadsheet, looking at the smallest balance. That's where your focus goes. So out of the 9,500, how much extra or do you have each month to throw at the smallest debt if you stop this avalanche deal? Probably two grand. Boom. Do you see what just happened there? You actually cleared a debt. So I guess that's why I called in because I've been so confused. So total I have like 25 loans instead of one, two, three, four, five, six.

Starting point is 00:27:50 Yes, 25 loans and we're just going to work our way down the list. That's it. Okay. And if you guys, you're living off of 7,500. That includes your minimum payments, right? Minimum payments plus all of your expenses are $7,500, and you have $2,000 left to throw on top of that smallest debt. So now the game is how do we get more of that margin?

Starting point is 00:28:10 How can we make more? How do we spend less? Are you guys doing any investing whatsoever right now? No, we put that on pause. No match whatsoever. No, I'm trying to look for another job at night when my kids are asleep that I could do from home, which was something else I was going to ask to. No, that's awesome.

Starting point is 00:28:27 I love that you have that level of intent. intensity about this. Do you guys have anything in savings? You have a thousand dollars at least? We do. Yep. Anything above that? Just one thousand. Just a thousand. No. Okay, great. So you're you're so close to doing this plan full on. We just need to switch our brain around this debt avalanche thing. I think that's what's screwing you up. Okay. It's causing you to stall out because you're trying to do three things at once. Just try it my way for one month, Bonnie, and see if you feel better. Because a lot of getting out of debt is emotion. It's behavior. It's the psychology of it. It's not the spreadsheet. That's the enemy here. It's the person in the mirror. And we can solve that with this amazing income. They're bringing in 10 grand a

Starting point is 00:29:07 month. I'm going, I think there's some expenses we can cut out of that 7500. And that's your homework assignment, Bonnie. Where else can we cut? Can we sell some stuff? You know, between cutting and selling, can we make another $5,000 dent? It's a good question. Maybe you can't. Maybe it's only 2000, but that's the mindset where there's a will, there's a way, that still works. Let's go to Gina in Salt Lake City. Gina, how can we help? Hi. Hi, George.

Starting point is 00:29:36 Hi. Hi, how are you? How can we help? I have a question that kind of centers around how to prioritize my husband and I's finances as we near retirement. Okay. Hit us with the question. So we are about six years out from retirement.

Starting point is 00:30:01 And right now we're both doing 401K with our employer. We have a mortgage. And I think that we have enough in our three to six months. Okay. And I'm just wondering, the excess that we have each month, We bring in roughly 6,000 take home, and our expenses are roughly 4,000. Great. That's after investing.

Starting point is 00:30:35 Yes. Great. So you've got 2K left over, and you're wondering what to do with it. Yeah. What's left on the mortgage? What's the balance? What's left on the mortgage balance? It's 91,000.

Starting point is 00:30:51 Love it. Okay. Are you investing 15% of your household income? So I have a 401k that I'm putting 11% in, and then my employer matches 4. Okay, you should be investing 15% and then your employer matches on top of that. So the match is gravy on top and baby step 4. So this is what I would do in your shoes. Make sure that you guys are dialed up to 15% of your gross household income going into these tax advantage retirement accounts.

Starting point is 00:31:20 Anything on top of that, I would be throwing at that mortgage. Let's get this thing knocked out before you enter retirement. then we can really start maxing out things as we head to the finish line. I think you guys are going to be in great shape if you do it that way. Hey guys, George here. Listen, 99 times out of 100 when people say, I don't know where my money goes. It's not a math problem. It's a behavior problem.

Starting point is 00:32:09 They're not budgeting. Then they're shocked when their bank account hits triple zeros. Well, here's the deal. Winning with money is about doing the boring stuff consistently. And that includes banking someplace that helps you stop guessing with your money. Like Fairwin's Credit Union. They're not going to fix your habits. That part's on you, but they do support people who are ready to take control of their money. At Fairwinds, you get a high-yield savings account with a great rate to help grow your emergency fund, a checking account that won't nickel and dime you, and up to 10 free savings accounts so you can organize your money on purpose.

Starting point is 00:32:39 Because when you stay disciplined, your money gets predictable, manageable, and boring in the best way. So if you're ready for a bank that helps you be intentional, open your smart bundle today at fairwins.org slash Ramsey. the Ramsey B-Weir debit card to go along with it. That's fairwinds.org slash Ramsey, insured by the N-C-U-A. The Ramsey Show Question of the Day is sponsored by Y-R-R-R-R-E-F-E-F-E-R-E-R-E-R-E-R-E-R-E-P forward so that you can clean things up and get back to making real progress. Go to Y-R-R-R-E-F-Y-R-R-E-F-Y.com slash Ramsey. That's the letter Y-R-E-F-Y-S-E-E-E-E-F-Y-S slash Ramsey may not be available in all states. Today's question comes from Liam in Washington. He says, I'd appreciate your perspective on a recent news story. When actor James Vanderbeak passed away,

Starting point is 00:33:49 a go-fund me was created for his family. Reports indicate the goal has increased multiple times and now exceeds $2 million, despite him reportedly owning a multi-million dollar home and significant property. Many people are pointing to this as evidence that medical expenses can financially devastate, even high earners. If someone with that level of income and assets needed financial help, what hope is there for the average American? What concrete steps should families take to ensure their loved ones are not left relying on public donations after a death? There's a lot in there one, Ken. And I did see this floating around the internet. I've not studied it, but I did see that there was this go fund me. And it's always interesting to me when the number

Starting point is 00:34:32 keeps increasing. You know, I try not to be skeptical, but I go, so you needed 20 grand, and now you go, well, actually, 50 grand would be nice. Actually, 100 grand would be even better. So I don't know. I'm not here to speculate. I've seen there was speculation. People are wondering what's going on here. And I don't know the state of James Vanderbeek's estate when he passed if he had a bunch of debt. A lot of rich people out there who can pass away and have a bunch of debt to their name. That's not unheard of. Yeah, we simply don't know. And so instead of focusing on which report on social media is correct because that'll drive you nuts. I think that the final question in that email is the one we addressed, you know, and you're basically going,

Starting point is 00:35:11 how do we prepare for something like this? And in this situation, George, the question is, if the medical debt was in his name and he dies, what happens to the medical debt? It's gone. They're not coming after your family for that. So that's the fundamental answer, right? But that only feeds into the conspiracy theory even more, which we're not going to take on. Yeah. Now, in terms of... So why would they even need it? Yeah. My guess is this is the best case scenario. They didn't want to have to sell off any assets of the estate in order to cover any debts that were owed. And so they're probably raising these funds to try to cover those separately so that the estate remained untouched. Right. And so that goes back to your answer, though. It doesn't just wipe away. If there's money in the

Starting point is 00:35:59 estate to cover the medical debt, then they will... The creditors can go after the estate. They can go after it. Yeah. And so therein lies the issue. So, you know, it's a tough situation. There's really no clear-cut answer as to what you do in that situation. But I would not be freaked out if you're the average American. There's a lot of concrete steps you should take to ensure your loved ones are not left relying on public donations. I pray that there's never a go-fund, go-fund me after I pass Ken. I'm hoping to do a good enough job. So what are you going to do? Give them. A quick tip. Number one, the thing you need today is term life insurance if anybody relies on your

Starting point is 00:36:34 income. 10 to 12 times your annual income and a term level policy, 15 to 20 years makes sense for most people. And here's the thing. If you follow the baby steps, you get a 15 year mortgage. Guess what? After 15 or 20 years, you've got a paid four house and you've been investing 15% of your household income for decades. So there's a nest egg and a paid four house. So the goal here is become debt free as soon as possible so that your family has. no headaches. There's no debts to pay off. And so they can just grieve your loss instead of also dealing with the stress of paying bills. And then the other thing you can do is create an estate plan. For most people, Will is the simplest route to go. And Mama Bear Legal Forms is our partner

Starting point is 00:37:15 on this. They're fantastic. You can knock it out online in minutes. And for some people, when they have this level of wealth, a trust makes sense. And I'm sure there was trust involved with his estate. And that can help you sort of control the assets as well. me, our good friends at Zander Insurance, if you're somebody that does not have term life insurance and the advice that George gave, you need to go talk to Zander. You won't believe how affordable, truly inexpensive, good term life insurance is. And our friends at Zander's been partnering with us for decades, they'll help you out. And that's how you rest well at night to go, all right, if I rack up a bunch of expenses and I've got the right term life plan, I'm going to be in pretty

Starting point is 00:37:53 good shape not to leave anybody in the lurch. Yeah, think about that. You've got a will in place, so everybody knows what's going to happen. if and when it happens. And you've got term life in place. Should you pass away within that term policy, there's going to be a payout of a million dollars to help cover your family's expenses for long term as you invest that. And then stay debt-free, have an emergency fund,

Starting point is 00:38:15 build a nest egg for the future. Your errors will inherit the IRA or the 401K helping them cover any bills that need to be paid. But that's the goal, is become debt-free, stay-de-free. It's one of the best reasons to follow the Ramsey plan because it puts you and your family in a corporate. great position for legacy. Really good. Let's go to Dylan in Phoenix, Arizona. Dylan, how can we help?

Starting point is 00:38:35 Hey, what's going on, guys? How are you? Good. How are you today? I'm doing good. So I just had a question for you. I'm 22 years old. I make 10 to 12,000 a month. My monthly bills are about $3,000, and I'm saving for a K&M side-by-side, but they can be $20,000 to $25,000. So my question is, would you recommend paying cash for something like that or financing it if I can afford the payment? I only have like $5,000 save for they can't end. What are you going to use the side-by-side for?

Starting point is 00:39:12 I go to the sand dunes a lot and all my buddies go do off-road riding like every weekend. So it would be used a lot. Okay. Are you newer to the show? What's that? Are you newer to the Ramsey show? You've been listening for a little while? Yeah, I'm pretty new to the show here.

Starting point is 00:39:30 Okay. So one of the values on this show is not owing people any money. And an even bigger value is not going into debt for depreciating asset. And so the goal here, and you can do this very easily at 22 making 10 to 12K a month. That is wild. I'm very happy for you. You're very successful for your age. So here's the deal.

Starting point is 00:39:51 If you can't stomach paying $20,000 out of pocket, it's probably not the right time to purchase the side by side. Because too many people can stomach a $400 payment because they don't want to part with their $20 grand or they don't have it, as most Americans. And so to feel the pain of purchase is actually the best thing in today's America because everything is frictionless.

Starting point is 00:40:12 Every dealership will make sure the payment is low enough for you to feel good about leaving, paying them a ridiculous amount of money with interest. So can I tell you what's smarter? Why don't you find a five grand used side-by-side off Facebook market place. Yeah, so that's kind of what I do. I got my truck off there, so the only debt I have is the home I just purchased.

Starting point is 00:40:35 Cool. So the only reason I was thinking of financing side by side would be I could not have the $20,000 out of pocket and invest that and make money while I'm paying off the end up. Are you doing that right now? Is that $20,000 invested? Yeah, yeah. It's in a high-yield spec account. That's not invested.

Starting point is 00:40:54 So it's making 3% and you're going to take on this side-by-side loan for a brand-new side-by-side at 20 grand at, what, 6% interest? Probably, yeah. This is a bad trade, man. Okay. There's guaranteed return of you staying out of debt. There's a volatile return in the stock market. There's a volatile return, even with these high-yield savings accounts, and you're paying

Starting point is 00:41:18 income tax on the income you make from the savings account. How much cash do you have put away? So I have like 40,000 in savings, but that's not for a Can-Am. That's just kind of for rainy day or, you know, just a savings account. And then I only have 5,000 saved up for the Can-Am so far. Well, then here's the deal. I'm online right now, and I'm seeing a 2021 Yamaha Wolverine X2 R-spec 850. I like just saying that.

Starting point is 00:41:44 I don't even know what I just said. The more numbers and letters, the more they can charge. I'm no side-by-side guy as will come no surprise to anybody who knows me or knows what I look like. But that's $8,995. You only got another month of saving up for that, and you pay cash for it. And you're going to beat the snot out of this thing anyway, right? Yeah. I guarantee you every single side-by-side that is financed in America today is underwater.

Starting point is 00:42:13 They owe more than the thing is worth. And then they call this show saying, hey, man, I did a dumb thing, and I was making $10,000 a month at the time. And so I thought I could afford it. But I lost my job now. And this thing's going to get repoed. These are the calls we get, Dylan. And so let some other dingus prepay that appreciation.

Starting point is 00:42:29 By the way, all your... And you get a deal. And I'll bet you all your buddies have financed these things. And so you just think it's normal. And you want... By the way, I can hear the tone in his voice when I said a 20-21. He was like, yeah. Gross.

Starting point is 00:42:41 Like, this thing is going to be nasty and full of sand and all kinds of crap. What are we doing here? I don't know. Dylan, buy used. This is too much of your world. You're too young to be making a decision this stupid. and you're too successful as well. If debt collectors won't stop calling and you feel like you're drowning,

Starting point is 00:43:08 you don't need another company selling debt relief dreams. You need real world help, and that's why I recommend Guardian litigation group. Guardian's not a call center. They're actual attorneys who can step into the courtroom and fight back when creditors try to sue you. Now look, debt settlement isn't pretty. I still rather have you get out of debt the old-fashioned way. But if you're facing bankruptcy and need a way to stop the bleeding, Guardian gives you a path forward.

Starting point is 00:43:39 And they don't charge a dime up front. Guardian's attorneys have helped over 55,000 people across the country settle more than $600 million in debt. They'll help you stop living in fear every time the phone rings and take back control of your life. Go to Guardianlit.com slash Ramsey. That's Guardian-L-I-T-com slash Ramsey. Attorney advertising. Results may vary and no specific outcomes guaranteed. Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio.

Starting point is 00:44:26 I'm Ken Coleman. George Camel is alongside. We're excited that you're with us. Fabulous studio audience out in the lobby today, George. Yeah, look at them. They're all waving at us. Some people from Venezuela. That's right.

Starting point is 00:44:38 So this is a global. show. I got to call my mom and tell her. You made it. I made it. International. I made it, Mom. I've done you proud. AAA 825-5-225. We're having fun today. We're going to help you out. We're having some fun along the way, if that's okay with you. Christina's up in Salt Lake City. Christina, how can we help? Hello, thanks so much for taking my call. I appreciate that. Sure, what's going on? Yes, hi. So we have four kids, and my husband and I went on our first.

Starting point is 00:45:10 first cruise, just the two of us. And so grandma watched the kids, really liked it. And we went ahead and went to plan another cruise just to take all of us together. So I got two built part-time jobs, so because on one single income of his, the cruising money is just not quite there. And we're just trying to figure out the best way to manage what I'm earning. And I make about between 10 to 12k a year and how to go on a cruise with that money. And the reason I'm asking, my husband wants to, he's like, what about 10% towards charity? What about 15% towards retirement of that?

Starting point is 00:45:49 What about extra mortgage payment? So he keeps kind of a nickeling and dining me like 10% this, 10% that. And I feel like we don't have much left for the cruising fund. So tell me if that's the right thing, what he's telling me to do, or should I just take 100% and blurt of vacation for the family? That's my question. Well, based on the conversations you guys had, it sounds like he just doesn't want to go on this cruise. He does, he does, but he wants like, what about an extra mortgage payment?

Starting point is 00:46:16 Because he's 47 and we own 100. He's a tightwad like me. He's just like, ah, we should be doing other things with that money. Exactly. Okay, got it. I love it. I'll play husband and Ken will play the role of Christina. Oh, great.

Starting point is 00:46:30 Perfect. But my question before we roll play is, why isn't, why aren't you guys doing this with his income, the charity giving and the other things that you rolled through. Why is it have to come out of the 10 to 12,000 that you're making? Exactly. Exactly. That's what I said. But he's like, well, everything helps. Come on, we've only got 184,000 to go in the house. Like, even if you put, you know, like, that only worked during and by the time it's paid off, the kids won't even want to go on a cruise with you. That's the sad truth. Exactly. And all this is 15 going to 10th grade. Oh, this is your last shot. You'll be

Starting point is 00:47:06 lucky if the 15-year-old even wants to go. So here's the deal. You guys are completely debt-free outside of the mortgage? Correct. You have an emergency fund? Because of you guys. We're getting there. He was unemployed like a month and a half, so we realized we didn't have enough,

Starting point is 00:47:22 but we're really close to be finishing with that. Okay. What's the price of the cruise for six of you, including everything? Travel, the cruise, any other expenses? So we're thinking between about 12 grand, I mean, between airfare, the cruise fair, hotels, you know what I'm saying? Like Uber here and there. Now, is this the Ramsey cruise you're talking about?

Starting point is 00:47:43 No, just the Royal Caribbean. Boom. I was kidding. I knew it wasn't, but I thought I'd get a little plug in there. Because, you know, the cruise you're going on isn't going to have George and I on. That's true. No pickleball with Ken. No pickleball.

Starting point is 00:47:58 Yeah. Okay. But two grand a person that sounds reasonable. It does sound reasonable. Here's what I would tell you. The budget will dictate the type of cruise you guys can go on. It's that simple. So if you got 12K, we're going to make sure that all of our expenses are within that 12K budget.

Starting point is 00:48:13 You got $13K? Well, that budget just got up to a little bit. You got $10K? Well, now we're going to have to do some budget shopping, see if there's a different cruise that are still great. Correct. So the thing you don't want to do is go, well, we only have $10K saved, but the crews we really want to do is $15. We'll just put $5 on a credit card. That's what most people do.

Starting point is 00:48:32 So don't be most people. Just a little bit, right? Exactly. So to your husband's point, as long as you guys are investing 15% of the household income, you're giving, we're not going to nickel and dime your side hustles here. If you are working solely to save up for the cruise, let it be for the cruise. Perfect. See, he did not like it.

Starting point is 00:48:52 And I'm like, my little contribution is just not going to make a difference. That's what I'm trying to say. Well, you're working temporarily for a specific purpose. Correct. This is not regular income for the household in perpetuity forever. you're only doing this to save up for the cruise, which I love that intensity. That tells me you really want this thing because you're not robbing Peter to pay Paul. You're going, I will create this cruise money out of thin air because I want this so bad.

Starting point is 00:49:15 Yeah. And the question is, can he also, is there a room in your income from his income to also help contribute to this cruise savings fund? I mean, not really being honest. That's why we haven't done that since the kids were a little bit of just more camping and all that stuff. So what kind of did? What kind of tension is around this conversation? I detect a little bit of tension. Like, you're going to get off this call and be like, I called Ken and George. And they said it was okay. And I don't know if I like that. Am I right or am I wrong? There's a little tension on this. It is. Wow. You guys can listen really well and can tell. He just happens with a paycheck. He doesn't do any bills. I take care of that. So really, he just kind of like, tell me when you have the money, then we can book. That's kind of how it is. Interesting.

Starting point is 00:50:01 So we're even looking either in the summer right now, which the price is a high, or I've been talking to the travel agent, or the next spring. Because this fall, we did find one for $6,400, but he's like, it's my hunting season. I'm like, what I'm going to tell my siblings? I'm like, oh, my goodness. It's what season? Hunting season. You know, they want to do their hunting.

Starting point is 00:50:21 So I'm like, okay. So the siblings will be upset if he misses one hunting trip. Apparently, correct. I mean, a season is more than a week. You're going on a cruise for a week, I imagine. Yes. Oh, let me tell you this. Sorry, being the 10th crater and the 7th crater next year do not want to miss school.

Starting point is 00:50:40 So it has to be either full spring or the summer. I think we got to have a family meeting is what I think. Is that what it is? I think so. We've got to get on the big old giant calendar and go, all right, spitshake. We're doing this week, everyone in agreement. Yeah, because I think we got levels of intensity is what I'm picking up on. I think you really want to go on the cruise with the family more than anybody.

Starting point is 00:51:01 else. I think husband is probably number two, but him saying, well, what if we do this? I think George picked up on that. I don't think he's 100% bought in on this. And then I think the kids are kind of like, so let's have a family meeting and decide, you know, do we really want to do this? And if the answer is yes, or if you're the mom and you're going to throw some, you know, influence around as moms and wives can do, hello, happy wife, happy life. I've been married 28 years. do what Stacy wants us to do. It's okay, I mean you just tell you. Ken can read the room and go,

Starting point is 00:51:35 Stacy wants us to do this, guys, we're doing this. We're going to have a smile on our face. I can see throwing out the, well, I'm going on a hunting trip. That's just a guy kind of testing the waters. I want to see if there's a old. Oh, yeah. That's an excuse. A hundred percent it's an excuse.

Starting point is 00:51:49 So let's have a family meeting and decide, do we all really want to do this and then see where it lies. And then you've got to meet with hubs and go, hey, look, I'm working for this sole purpose. You need to look at what I'm doing is vacation money. If we want to give charitably and give over here, then we got to do that in this pile. And if he disagrees, that's fine. But I just, there's enough tension around this that I think it's showing me that we need to have a greater conversation about what we're doing with money, how and when. Yeah, there's really a, yeah, there's a gap in the values here.

Starting point is 00:52:22 You value experiences with your family. And he's going, hey, there's other financial needs that we need to take care of. Well, let's make a plan for both. I think there's a compromise here. We're going to have the mortgage paid off this year if we keep at this rate, and we're going to go on this trip. I'm saving on the side. So plan the schedule, plan the budget, get everyone aligned, and then just go. Don't overthink it.

Starting point is 00:52:44 Life is short. That 15-year-old, the time is ticking. They're going, oh, cruise with my parents. Lame. This is your last shot. If you're looking for a more budget-friendly way to save on medical costs and stay true to your values, Christian health care ministries is a great option to think about. CHM is not health insurance.

Starting point is 00:53:20 It's a health cost-sharing ministry, a biblical community-based way for Christians to share each other's medical bills. That means no enrollment deadlines, and you can choose any doctor or hospital you want. That kind of freedom is big, especially if you're self-employed between jobs or you just need something that fits your budget better. CHM has been around for decades,

Starting point is 00:53:42 faithfully serving the Christian community. And many members save hundreds of dollars a month compared to traditional health insurance. And that margin gives you breathing room when you're working the baby steps and trying to steward your money well. And right now, CHM's offering new members a 50% credit towards their first month of membership. Get started at CHMinestries.org slash budget and use promo code Ramsey. That's CHministries.org slash budget and promo code Ramsey. All right, Chris is up in Omaha, Nebraska. Chris, how can we all?

Starting point is 00:54:33 Hi, how are you? Good. How are you, Chris? I am doing well. My question for you guys is I'm curious how much I should have in my emergency fund with a family of four, a high commission job, and a wife that's an educator. Love it. Great question. So what is your household income on average? About $250,000 a year. Woo, fantastic income. All right. So the commission is coming through, my friend. Yes.

Starting point is 00:55:05 How long you've been doing this job? Nine years. Okay. And how old are the kids? Two seven-year-olds, two four-year-olds. Fantastic. Are they twins? Yes.

Starting point is 00:55:19 Two sets of twins? That's amazing. Okay. Well, here's the deal with emergency funds. we say three to six months and there's a spectrum there for a reason. Some people, three months is plenty. For some people, six months makes more sense. And for a commission job where it is variable, I would definitely be leaning six months, especially every kid you add is just one more thing that could come up. You're just adding more potential emergencies. So what is six months to run your

Starting point is 00:55:48 household of actual expenses? 25 to 30,000. That's six months worth? A total? Are you asking for month. Yeah, so you're saying per month, you're talking about four to five grand covers all of your bills? Correct. Wow. You guys are living frugally for making 250. That's impressive. Yeah. Are you guys off the grid? No. Everyone healthy in the family? Yes. Okay. Wonderful. Then I would just lean towards six months. If 25 grand does it, that's great. And here's the truth of the matter. If you did have a bunch of emergencies all in one month that were 26 grand, 28 grand, you could cash flow it very easily with your income. Correct? Yes. Great. All right. There you go, Chris. Appreciate the call. We helped at least one person today. I think so. Nick is joining us in New York City. Nick, how can we help? Hello, Nick. He seems

Starting point is 00:56:50 surprised to be on the air. It's Ken and George. It just went blank all of a sudden. That happens to me all the time. Don't worry about it. What's going on? So I have a two. large loans that I was curious, the smartest way to get rid of at least one. I make about $76 a year. And one is $9,300 at a 16% interest, and the other one is going to be almost $15,000 at 9% interest. Okay. Well, is that all of your debts? Total? That's all my debts. Okay. So you got about 24 grand in debt. You're making 76. Are you single? I'm with a girlfriend, a living girlfriend. Are you covering her bills? At the moment. Oh, boy. Well, that's a, that's a rabbit trail that I want to go down badly, but I will not.

Starting point is 00:57:47 I'll just say this. Please do not combine finances or pay off anybody else's debts. We don't have to go down the rabbit trail, although I think it might be fun. But the point is, that's the answer to your question. stop paying for her and that allows you to pay off debt faster. It sounds like you're stressed out about the interest. My guess is you want to tackle the 16% interest first, right? That was my thought. I have about $16,800 saved. You have $16,000?

Starting point is 00:58:18 Oh, awesome. How much are you paying? I'm not leaving the girlfriend alone because it's actually real money. I'm serious. How much are you paying every month for her bills and her stuff? Well, it's basically it's bills that we both use. So, you know, phone, we have two lines on the same phone line, electric and all that stuff.

Starting point is 00:58:43 When she had her job before, she's currently looking for a new one, she was paying half the bills. I was paying the majority of the other bills, so like rent and some other stuff. Oh, boy. Other than that, it's small. It's not much. But my goal is it?

Starting point is 00:59:00 You sound like a politician on a Sunday morning show when you asked a direct question. Is it $500 a month? I get that they're split. A little less. Okay. So currently because it's winter, or we're coming out of winter now, it was about anywhere between 200 to 300 and electric. Okay.

Starting point is 00:59:18 825 in rent and then maybe $200 with the phone and internet. I'll tell you, Nick, I wouldn't be job hunting super. hard if I had Bank of Nick at hand to cover the bills anyways. I'm just saying. But to the question at hand, we teach the debt snowball method because we have found that that's what actually causes people to get out of debt. So the debt snowball method says focus on the smallest balance first, regardless of the interest rate.

Starting point is 00:59:44 Now, it's your lucky day because your smallest balance has the highest interest rate, right? Yeah. So the main question is, why haven't you used part of that $16,000 you have saved to just knock out this debt? That's what I was planning on doing, but I figured, you know what? Let me call one of you guys and see what my options are, because this is the first time I've ever been able to hold savings. My whole life has been one step forward, five steps back. Do you think that's partially due to the debt that you've been taking on?

Starting point is 01:00:14 Wouldn't it be easier to save up money if you've had no payments? Oh, absolutely. Well, there you go. One more reason to knock out the debt. What's the payment on that $9,300 debt? On 9,300 is 4.30 a month. Boom. So now what happens? You clear that debt, and you still have, what, almost seven grand left over? Yeah, about, yeah.

Starting point is 01:00:35 So let's take six of that. Unfortunately, apply to the next one. Now I have a car trouble. So three of that's actually going to my car six. Okay. So we're down to 13 minus the nine. Right? So that leaves us with around four. You could take another three of that and tackle your next debt. So that brings you to a total balance of 12K left over, and we have an extra $430 to throw at that debt. And girlfriend needs to be pulling her weight.

Starting point is 01:01:02 That's another nice raise. She's getting bashful now. She's getting back on. How much you pay for these phone lines? I'm sorry, how much are these phone lines? We're paying $70 for the internet, so that's $140, I believe, for, the phones. Oh, your phones are included with the internet? Is that what's happening? It's a cheaper plan for the phones because we have the internet bundled in, but the internet

Starting point is 01:01:32 itself is $70. Oh, okay. Well, I was going to tell you to switch your phone, I think you're overpaying for your phone plan, is what I was getting at. You could save some money there. So I think there's some savings to be had in your expenses. If you want to switch, we have a great partner with Boost Mobile. You can jump on to BoostMobil.com slash Ramsey, $25 a month. So if you're paying 50 now, well, you just freed up times two. You save 50 bucks a month just like that. So there's a lot of things you can do in your budget. My guess is you haven't been paying super close attention

Starting point is 01:01:59 to what's actually going on with your money. And if you did, you'd go, oh, I can shave here, I can shave here. You'd find another 500 bucks on top of this 430. You're about to free up. Yeah. So now we've got a thousand bucks a month going at this remaining 13K. And what do you do for a living? I do water treatment.

Starting point is 01:02:17 Yeah. You're a pretty handy guy. I picked up, did you do your own work on your own car? Yes. I mean, I'd be looking for... I'd be saving at least 2K in labor, I believe. Yeah, good for you. So a 5K job became a 3K job.

Starting point is 01:02:30 But my point is, is could you do some work on the side, given all that handy skills that you have, just to make more money to just make this thing go faster? You know, so I'm just... I want you to be thinking, how do I do this? George just walked you through a lot of it, but you could also bring in some more income.

Starting point is 01:02:47 I mean, every time we have a debt-free scream on the stage, the income goes up every time. We go, okay, they tell us how much they paid off and how long, and we say, all right, what was your income in that time? And they go, it was this, and then it went up every time. And so know that you can do that as well to fast forward all this. Okay. Do you have a goal in mind of when you're actually going to become debt-free if you follow

Starting point is 01:03:10 this plan? As soon as possible. Don't love that. That's not a date. You sound like a politician again. How about this? You're paying off your debt today, the 90s. 300. We're going to put a little bit remaining on that 15K. We're down to 13K, right? So now it's,

Starting point is 01:03:24 I'm going to pay off $13,000 in six months. And put that on the calendar, market, put it on your bathroom mirror, come hell or high water. We are getting rid of this debt. And that means no matter what it takes, no matter what sacrifices. And that might mean, hey, girlfriend, you're going to need to cover your own bills through some side gigs because I got some debt to pay off. That's a real conversation that should have happened yesterday. Well, she just heard it apparently. Oh, boy. Is she on the line, too? Well, he said that she was listening. She's no friend of mine, no. No. You've worked too hard to get control of your money just to let strangers control your data. Think about it. Just about every time you sign up for a newsletter, grab a coupon code,

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Starting point is 01:05:07 So go to join deleteme.com slash Ramsey to get 20% off their annual plans and take back. control. That's join delete me.com slash Ramsey. All right, welcome back to the Ramsey show. Thrilled to have you with us. AAA 8255-225 is the number to jump in. Hey, if you've ever wanted to see the person who's calling in asking these questions, what would it like to be in the same room with them? You got your chance. We're taking the Ramsey show back on tour. We've got four cities coming up. You get to experience the show live, raw, in the room. And, uh, It's a lot of fun.

Starting point is 01:06:00 We did two last fall. They were great, sold out. These are going to sell out. We're in Charlotte, Denver, Phoenix, and Anaheim coming up this April. We're doing these in really cool venues. There's only 300 seats. And they're very intimate. So we'd love to see you.

Starting point is 01:06:13 Grab your tickets at ramsysolutions.com slash events. That's ramsysolutions.com slash events. Brian is up in Syracuse, New York now. Brian, how can we help? Hey, guys. Good afternoon. Hey, so I've been interviewing. at some companies, and I am anticipating, hopefully, a couple offers to come in in the next

Starting point is 01:06:35 couple weeks here. I have background and experience in the roles I'm interviewing for, but the roles are net new to the businesses that potentially be joining. So my question is, what resources can I use to help determine market value so I can most wisely negotiate my total compensation? Yeah, well, if it were me, I mean, I would be doing research on this, And so you can choose whatever you want to do, whether that's Claude, Chad GPT, GROC, I don't care, you know, Google. But you want to dive in and get as many resources as you can that create a pretty good narrative that's provable on the range and see where you stand first. So I would be doing that first. Okay, we're based on where I think I'm at from a skill standpoint and experience, based on, again, the size of the company, the industry.

Starting point is 01:07:29 itself. There's a lot you can do, and you get a pretty good idea of the range that you think is realistic. So that's where I would start and see where you land on that. And then when you get an offer, any kind of negotiation is based, it needs to be based in reality. Yeah, that's where I was trying to land. You know, like, I can use GPT and that's fine, but I want reliable good data so I can say, hey, here's my experience, here's the conversation we've had. And then based off of this rock-solid data, here is where I've come to this number. Well, again, when you get that information, ask for the sources. You'd be surprised. You know, you can find that. You can find that. And then you'll have a range, and you know what you're looking for. And so when you go in there, be confident,

Starting point is 01:08:12 don't be rude, but be firm and say, hey, I'm currently interviewing for positions in this range. And usually what you want is your bottom end is really the kind of where you want to be. At this stage, though, you should have already discussed with them in the interview process salary expectations. Yes or no? Yeah, I left it a little open. So I didn't say, you know, I need X. I thought that'd be better positioned once they want me. They know that I can really get it done.

Starting point is 01:08:41 Then I have a bit more leverage. I have an idea, but I would say, like, even their range is lower than what I came from. So it's still doable. But, again, you know, I want to maximize. And I'm looking at more than just that dollar. You know, I want to look at the total package as a whole. Have you let them know that? Yeah.

Starting point is 01:08:58 Okay. So they're aware of, hey, we're kind of low for where this guy's at and what he's currently making. How can we make this compensation package as a whole a little bit more exciting? Yeah, exactly right. And these interviews as well just came from, you know, networking, like direct conversations. So I didn't want to necessarily blow it before we got there. and the conversations have been really exceptional.

Starting point is 01:09:24 So again, I want to make sure I have good data, good information. All right. So now we take the data that you're going to go find and you can prove it and you've got some sources. And again, you're never going to get an exact amount. You're always going to get a range. But if we do our research and we've got some real sourcing, which is easy to do in today's world, trust me. I can find out in about five minutes on any one of those AI agents. And so we're going to take that research.

Starting point is 01:09:49 And that just informs us based on where you are right now. You're not going to go take the job for less money. So the starting point is where you are now. That's the basement, correct? Yeah, I mean, honestly, I was part of a big layoff, so I would even take a little bit less just to kind of get back up there and work back up. Okay, but know what your basement is, is my point. So when you go into a respond to an offer, you've got to say, okay, I know what my basement is,

Starting point is 01:10:19 and that's the worst case scenario. And then how does the research inform where I'm at on my basement? And then you'll be fine. And look, here's the thing. All of this is about posture. If you act like a jerk or act like an entitled punk, which you're not going to, but if any of us act that way in our response to an offer, then that's where it could go south on you. But you have to control what you can control.

Starting point is 01:10:45 And if your posture is one of humility, But confidence, based on knowing what you need and knowing where you belong from the research, if we've got a nice mix of humility and confidence to go, gosh, guys, there's a lot about this I like, but realistically, and I don't know what you can do, that's a great negotiation tactic. I don't know if you can do more, but this would be ideal. I mean, that's all you can do, and you let the chips fall where they fall. I like that, an open-ended. Can you do any better?

Starting point is 01:11:16 I'm just curious. and if you leave it like that and the spirit's right, the vibe is right, then it's not offensive. It's not going to hurt your chances of getting the job. He sounds like he's at the tail end of this thing. Let's land the plane, Brian. I like it. Let's go to Richard next in Los Angeles. Richard, how can we help?

Starting point is 01:11:32 Hi, guys. Hopefully you can be some great assistance and some great recommendations for me. I currently have owned my home for about four and a half years. I have about 300K in equity, big mortgage payment. I'm single income in my family. I'm married with three children. I take care of the household. My wife's a stay-at-home wife.

Starting point is 01:11:52 Home school is the kids as well. So she's busy, busy, busy, okay? Basically, I'm just living every two weeks when I get paid. I net about $9,000 a month. My mortgage is about five. I don't have any car payments. My cars are paid for. I have about a $2,000 credit card that I owe some money.

Starting point is 01:12:12 I owe money on, and I have a $5,000 credit card very well money on. My utilities are averaging anywhere from all the utilities include about 700 a month. So, you know, and then I got food bill. So I got to feed the whole family. So it's just, I'm literally just, you know, tired of just hand to mouth. I'm 51 years old. So I need to know, you know, should I sell my home and just move out of the state and buy something within my means? You know, my mortgage rate's 3.9. So it's very low rate, you know, so I hate to lose that because rates are high. But I'm just torn, and I'm tired of living this, you know, every two-week paycheck-to-paycheck

Starting point is 01:12:51 kind of thing. It's just, it's tough. And not to mention, I do have a little bit saved away in my 401K. Not a whole lot, but, you know, I can't even do the, you know, 7% company match. I'm barely hitting 3%. So, you know, it's just... Yeah, you're treading water in every area. You're trying to pay off the debt, but even that's hard.

Starting point is 01:13:11 You don't have anything in savings. you're putting a piddly amount in retirement and things are tight. And it's directly tied to that gigantic mortgage payment. I mean, that's eating your lunch right now. That's over half your take-home pay. And it doesn't seem like any of the variables are changing. Your income is not going to go up drastically in the near future, is it? Six to 12 months?

Starting point is 01:13:30 No, no. I've been on the job for 13 years. I'm not going anywhere. Okay. And so 9K is where we're staying. And guess what? The mortgage is only going to go up because part of that is your escrow, which is your taxes and insurance.

Starting point is 01:13:42 and as we know, insurance has been going up. Taxes are going to continually go up on property taxes, especially in California. And so the issue here is, if your income stays about the same and the mortgage goes up, it's only going to get worse. And so your best bet would be to downsize. Take that equity you have. It might be renting for a little while. It might be taking that $300K equity and putting a down payment on a much, you know, cheaper or smaller house.

Starting point is 01:14:08 I don't know how that affects your family and where you are location. wise. It affects them. The average house in California is, I think, 540,000 right now, average in the region where we live. So, you know, but I don't, I wouldn't be able to, those neighborhoods aren't, you live in, I hate to say that, but the neighborhood just wouldn't be something that we would feel comfortable living in. Yeah.

Starting point is 01:14:36 Well, the reality is you're in a very high cost of living area and it requires a very high income. And you have a great income, but you bought too much house too soon. And so you need to make some drastic decisions here. And that probably includes relocating, downsizing, and maybe a rent in a neighborhood you want for now, and hang on to that $300,000, get out of debt, get the emergency fund, and get to a better spot before purchasing your next one. Plan on retiring a millionaire. Yes. Oh, that was that rhetorical? I'm sorry.

Starting point is 01:15:42 No, no. I mean, a lot of people do, but the vast majority of Americans, George, never hit that mark. Here's a piece of data that I thought was shocking. Only 3% of U.S. adults have $1 million saved for retirement. Is that shocking to you? Are you so in the numbers that you're unshooked? Yeah, I mean, 97% have less than a million dollars saved. If you switch the data around, you go, yeah, that tracks.

Starting point is 01:16:07 That tracks. And here's the funny part, Ken, in the comment section, as I encourage people to do this, they go, a million dollars is nothing in today's America. I go, are you even investing? No, the answer is no. So here's the thing. We're not saying that you only need a million dollars for some people that might be more than enough. For some, it might not be near enough. But I want to show people today that you can retire with a million dollar nest egg no matter how old you are. All right. Cynics, pay attention. So it's not about income. It's about margin, how much you're

Starting point is 01:16:38 able to put away a month and how early you start. And here's the other thing. We talk about investing. It's different than saving. You can't save your way to wealth. Saving is just parking money in an account. A high-yield savings account maybe gets 3%. Investing, we're talking about in the stock market, in companies we're rooting for, partial ownership called shares, and we're rooting for these companies to grow in revenue, which increases the share price, which increases our nest egg. That's how compound growth works. Your money making more money, making more money. So I'm going to use the Ramsey investment calculator today to inspire you all to become wealthy. All right? And if you don't become wealthy after watching this, that's your own fault. So you guys can

Starting point is 01:17:17 click the link in the description or jump on a Ramsey Solutions.com to use the calculator. So Ken, let's throw out some scenarios, some ages, and I'll tell you how much you need to invest at that age to become a millionaire by 65. Okay, good. Or 62 in this case. All right. Am I throwing these at you? Throw it out. Okay, here we go. How about age 24? Oh, okay, so we're out of college. We got our first big boy job probably, right? And 24, and let's say you're going to retire, 62. You have the ability to do that because you started early. We're going to invest. And we're going to also imagine you got, I don't know, $1,000 in there so far. How much will you contribute monthly? $150 a month. We're going to assume an 11% average annual

Starting point is 01:17:59 rate of return. People go, where are you getting 11%? This guy's crazy. I'm literally looking at historical data of the U.S. stock market over the last several decades. And if you look at the last few years, it's been up 23%, 25%, 17%. So don't act like these numbers are crazy. This is pretty conservative here. So calculate, as you can see, almost $1.1 million, 24 to 62, $150 a month. It's unbelievable. All right, let's jump it up a bit.

Starting point is 01:18:28 All right. So let's talk about these people. They've been out of college for 10 years or so, no longer the young professional, but still young. Yep. 35. Okay. So let's say by 35, you followed the plan. You're debt-free. You've got the emergency fund. You are ready to invest.

Starting point is 01:18:44 35, you would need to invest. And we're going to say 65. You've got a little bit of a later start. 65 is still a great age to be retiring, to not have to work anymore. You're going to have to invest $375 a month, and you would have a little over a million bucks. Now, what you'll notice here, Ken, is you have to invest a whole lot more as you get older in order to hit that same goal. And the beautiful part here is you don't need to invest a million dollars to have a million dollars. If you look at my screen here, you contributed $135,000. The growth alone was $942,000. That's the magic money of you just staying in the market, staying put, letting compound growth do the work.

Starting point is 01:19:25 87% was just the growth. So let's say you get an even later start. Yeah, let's take a 10-year swing here. Let's go to 45. Okay, 45, most people who call in the show at 45 go, I am way behind. I got nothing saved in retirement. You need to invest. Here's, you ready for the sticker shock?

Starting point is 01:19:42 $1,200 a month to have a little over a million in that one account. You see what I'm talking about here? We went from $150 a month to $1,200 bucks a month if you had a 20-year gap. And so the power of starting early is powerful. And you'll notice at 45 to 65, you had to contribute $288,000 to get that million. But at the right page of, well, we go back to that 24 to 62, look at this. You didn't contribute 288. you contributed about half a mill oh sorry i messed it up here let me go back to that 150 all right here we go

Starting point is 01:20:13 look at this 68 000 so not only did you have to contribute less per month but it was a total of 68 grand that got you that million that's wild it's doable that 94% of that account balance was compound growth and it's the power of starting early and let me tell you if you're listening and you're going well george must be nice to be 24 or 35 or even 45 it is not too late for you there is still hope yet and that is just one account. And so think about it, you got a paid-for house. Well, that reduces the expenses that you'll have in retirement. So it's not defined by your age, but by your financial goal.

Starting point is 01:20:47 It's a number and you can get there. So go use the calculator for yourself to get inspired, not to lose hope, but to gain hope that you can build wealth for your family and leave a legacy. We'll drop a link in the description to that investment calculator for you guys to check out. And this is why, by the way, you need to be using every dollar, right? When you've got to get to a point to say, okay, I've got to be disciplined, now no longer am I going to let just money come in and leave and not know where it's going. So having a budget like every dollar to use that app to have a coach, a personalized plan,

Starting point is 01:21:18 that's what's going to help you be disciplined to be able to put the right amount of money away to actually take care of you long terms. Exactly. Check out every dollar. Ken, where am I going to get 400 bucks a month? I'm going, dude, your car payment, 600 bucks a month. I think we found the investment money. You just traded it for something going down in value.

Starting point is 01:21:32 Yeah, it's exactly right. It's there. Use every dollar. It'll find you that margin. All right. Let's go to John in Boston, Massachusetts. John, what's your question? Hey, Dave.

Starting point is 01:21:42 And how are you doing? Good. My wife and I have been there about a year. I moved from South America here to Boston with her, which was a big life change. We're now making 60. She's making 80 a year. And right now we're doing like half and half,

Starting point is 01:21:59 and it's starting to weigh on me a little bit. My wife feels very strongly that her a little bit, bigger salary and her savings. It should be all hers. And I don't feel like telling her that we should combine it. But it's, in a way, I'm because we moved into an apartment that she preferred, and we bought a car that she preferred. So I'm just feeling the pressure of paying half the expensive expenses.

Starting point is 01:22:28 So you guys have never been aligned on money. Right? Right? I mean, we've tried. We did the financial piece in University. We took a couple of shortcuts, I would say. No, let's be in shortcuts. You're not only feeling pressure. You're feeling depressed because your wife doesn't listen to one thing you say about money. Does it make you feel disrespected, emasculated, a little small, a little left out? Yeah. Well, I'm trying to keep up, you know, but I'd be like. Marriage isn't about keeping up. You said a minute ago, I don't...

Starting point is 01:23:09 You said, I don't feel like telling her. I mean, you have been absolutely putting a jar, my friend. And I don't need you to validate that. I was just trying to get you to realize what we're hearing. We're on your side. But you guys have a massive marriage communication and values alignment problem that you've got to get fixed. George and I can't give you some little one, two punch today.

Starting point is 01:23:31 You guys need to get on the same page, and you may need a professional to help you. Or you're going to end up resent. your wife if you don't already. Are you feeling what I'm saying? Yeah, absolutely. Am I wrong? Well, I feel like she's a bit more open to find a solution that it sounds like maybe I

Starting point is 01:23:56 might it sound a bit more. Okay. Well, then if she's open. Okay, great. If she's open to meet you in the middle, then you guys need to have a candlelight dinner tonight and we get out every dollar and we say we're going to combine finances and then after we combine finances we're going to put it in a budget and we're going to get aligned and we're not going to take shortcuts we're just not going to do it because she's thinking a shortcut's okay

Starting point is 01:24:21 you're stressed out by the shortcut which leads back to the same problem you guys aren't on the same page George what advice would you give here well everything right now is well that's yours this is mine I make this money you make this money this is my thing that's your thing that's thing. When you guys got married, everything became one. Total unity. Right? You share a house. You share a bed. You should share a bank account. You should share the debts. Share the load. Everything goes in one pot if you want to have a successful marriage. You can do it separately. It's just going to be a whole lot harder. And there's so many more ways you can screw it up. And so you need to reset the conversations that, hey, I have not done a good job leading in this area. I would like to restart and be totally

Starting point is 01:25:01 unified for our financial goals so that we can win together. That's why we got married. married. Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm Ken Coleman, George Campbell, is alongside, and we're here for you. Triple-8-8-25-5-2-25 is the number. Robert joins us now in Denver, Colorado. Robert, how can we help? Hey, Ramsey, team. So I got a lot of debt. It kind of escalated back in June, and I'm looking at things, and I think I need some help. Okay, how can we help? So I got a car that was too expensive and I ended up putting a lot of my daily expenses on a credit card. And so it was at a point where I couldn't really afford the car payment and I was putting everything else on a credit card.

Starting point is 01:26:15 So now I'm kind of looking back at everything and I just recently got rid of the car and how'd you do that? So I traded it in at a dealership. and yeah, I just got trade in value for the vehicle. And that paid off the loan? It did not. So I actually have too much debt to income, and I couldn't get a loan to pay for the negative equity. So I had to borrow money from my dad to pay that negative equity. How much was that?

Starting point is 01:26:50 That was $4,100. Okay. So $4,100 to dad, what else, what other debts do you have now? And then I also have another $4,100 on a credit card. I got $3,000 in a personal loan and $34,000 in student loans. Okay, so that's the big one. Is that split up into a bunch of separate loans? No, I actually refinanced in June, and so now it's just one loan for that.

Starting point is 01:27:20 Okay. With a private lender? Yes. Okay. Well, we're going to debt snowball. this thing. Do you have the income to support it and do you have reliable transportation right now? I do and that's another part of this. So I ended up borrowing money from my boss to buy a car. Oh my goodness. My boss sold me one of his old work cars and I'm currently making him payments on that.

Starting point is 01:27:47 Well, that's an awkward situation. Yeah, so it's real debt and I'll use. Hard to ask for a raise right now, isn't it? A little bit. What do you make? Uh, so I make about $46,000 a year. Doing what? I'm an arborist. Okay. And how old are you? I'm 27 years old.

Starting point is 01:28:09 Okay. Single? Single. Great. Which means we have a lot of time on our hands and we can cut our expenses down to the bone and no one is affected but you. Uh-huh. We agree. We agree. Sweet. So what can we do to make more money?

Starting point is 01:28:25 Because right now, uh, you've got to. a big pile of debt, right? You've got as much debt as you do income. Yeah. Is that right? That is true. That is right. So that debt to income ratio, you're going, all right, something needs to change here. We can't change the debt picture. There's nothing we can sell. You've already got rid of the car. You owe, how much do you owe your boss? I owe my boss, $500. Oh, what car was this? It was that a $500 car? Or did you give him money on top of that? It was a $2,000 car, and I told him, I was like, hey, I really don't have the money right now, but I want the truck. And he's like, okay, well.

Starting point is 01:29:05 Is he garnishing your wages? He is not garnishing my wages. No, he is not. Where did the $1,500 come from? It came from my tax return. Okay, which is essentially your wages. That was money that would have been in your paycheck. Okay.

Starting point is 01:29:21 Well, Robert, the path forward is going to involve a whole lot of money. work. So what can you do? Is there anything in your field as an arborist that you can do on the side? Probably. I would just need tools for it because right now my company supplies all the tools and I'd have to go out and buy all that stuff. So that's kind of why I'm hesitant to do something like that. Wait, wait, wait, wait, wait. What can you do that doesn't require you to buy tools? You're breaking up on us. Sorry about that. I could work overtime. Boom.

Starting point is 01:29:58 How much? Yeah. I could probably get an extra hour or two a day. Okay. But what else? What I'm getting at is I want you to think outside of the box of, well, I'm an arborist, and I usually use my company tools, so I'd have to go buy tools. No.

Starting point is 01:30:14 What are the skill sets, or if it's just manual labor? What can you do to make an additional $1,000 to $2,000 a month? You don't have to answer it on the air, but that's the homework exercise, right? Okay. Let's go make some more money and throw it at this debt because as a young guy, you have, and George put you on the spot, you have all kinds of time. And the more you can work, the more money you make, the faster you get out of this. That's the mindset. What can I do?

Starting point is 01:30:41 Where can I, can I sell something? This kind of intensity gets you out of the situation. Can you cut down some trees? Can you do landscaping? How wide is your skill set here? So it's between trimming and plant health care, so applying herbicides and fungicides, pesticides, things like that. Great. Those guys are knocking on doors all day long, selling people.

Starting point is 01:31:06 And so you can be doing that. You can jump on a Facebook group and say, hey, here's what I provide. I'm not going to rip you off. I know what I'm doing. I'm an actual arborist. Here's what I provide. Here's my services. You do a few good jobs in the neighborhood.

Starting point is 01:31:18 Now all of a sudden you've got 14 homes in the neighborhood that you're taking care of. You see where I'm going with this? I do, yeah. I mean, we just had a storm come through Nashville, Ken. The amounts of money people were charging just to remove a tree branch was astronomical. I had to cut one of my trees down. There you go. Of course I.

Starting point is 01:31:36 Where were you, where we're getting out here. Get creative with the skills you have. And if that runs out of steam, you can always do some of the side gig economy stuff. But you're going to make way more doing the thing that you're already good at. I like that idea. So yes to overtime. because right now at this rate, it's going to take you forever to pay off this debt. You only have a few hundred bucks a month if you're lucky to throw it the debt, right?

Starting point is 01:32:00 Yeah, yeah. But if we could throw two grand a month for debt, now we're done in two years. That's the math. So that's your number, is I need to find two grand worth of margin to throw at these debts. Smallest the largest balance, attack the little one with a vengeance while making minimum payments on the rest. Once one balance is knocked out, frees up a payment, applied to the next one. That's the debt snowball method. I understand.

Starting point is 01:32:25 Have you ever done a budget? Not really, no. Today is your lucky day, Robert. I'm going to hook you up with every dollar if you promise to use it. This is our budgeting app. And as you go through the onboarding experience, it's going to personalize recommendations to help you find more margin. Just like I'm doing right now, it's going to do this on steroids all day long,

Starting point is 01:32:45 inside of the app, making a plan for every dollar. Are you in? Yeah, I'm in. All right, 24 months. That I hope you do it even faster than that, but 24 months is the final, final, final cutoff. Make that a goal. Find the margin. Stick to it. Oh, to be young again, Ken. Because when I was his day, that's what I was doing. When I started here at 23, I had $40,000 in debt. I wasn't making $40,000. What did you do? I did about 17 side hustles. I was building websites for entrepreneurs and speakers and authors. I was doing marketing consulting. I was driving for Uber, driving for Lyft, on top of cutting my groceries down to, of the bone. How many hours a week, do you remember how many hours you were doing? It was at least two hours every night when I got home from work, and then I would go heavier on

Starting point is 01:33:32 the weekends, trying to knock out six hours at least. And how much additional money were you making per month as a result of all of this? I probably made an extra 25 grand my first year just in side house as alone. That's huge. That's huge. It's very doable. It's possible. And the younger you are, the less responsibilities you have, even better. Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show.

Starting point is 01:34:41 Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and. free to use. Go to Ramsey Solutions.com and try Ask Ramsey today. That's Ramsey Solutions.com. All right. Let's go to Daniel in Chicago. Daniel. How can we help? Hi. Yes. My father has a term life policy that he's considering canceling. There's 10 years left on the policy. My mother passed away in September, so he no longer has my mother to provide for and he's always had a little bit of a strange relationship with life insurance. And so now he's highly considering canceling that policy. And I'm just trying to get him the best advice

Starting point is 01:35:55 on whether that is a wise decision now or not. He doesn't have anyone else at home. My mom was the only other person there. And so I'm just looking to give him the best advice I can on whether he should keep that policy or let it go. Yeah, tell me about the weird relationship. I didn't know you could have a weird relationship with term life insurance. He has, from his father and from his bringing up, you know, my grandfather never had life insurance. It's always been seen as something of, you know, people getting rich off of your death type of mentality. He's changed that view a little bit over the years. I think your show has helped him with that, and he does understand that it's to help provide for your family if you were to pass type of thing.

Starting point is 01:36:50 How old is he? He is 65 years old. All right. And what is his net worth? That's a little tough to say. I mean, I think he estimated it somewhere around the 350 to 400k when he said it was all. all said and done. That is his entire estate, his retirement, everything. That's what he's told me he estimates it at. And what's the face value of the policy? $250,000. I'll tell you right now it's a steal of a deal, because that's half of his net worth right there. Does he still have any debts,

Starting point is 01:37:31 any mortgage? No, his only debt is one car payment that he continues to pay on. But the house the state and everything else has been paid off. Okay. Well, the rule of thumb with life insurance is exist to replace your income to cover the people who need it. And you're saying that there's no one who needs it at this point. The kids are grown and gone. They're doing well on their own. He has enough assets to cover final expenses, burial, the debts, all of that is what you're saying?

Starting point is 01:38:04 As far as what he's communicated to me, yes, he does have that. think my one main concern is he has talked about dating in the future where there would be somebody that might be in the picture in the future. That's a great reason to hold on to it. Because if he gets rid of it now, he's going to have a real tough time getting it again, especially for the rate he's paying. That's right. How much is he paying per month? $80. Oh my gosh. Okay. What's his income? Roughly about $50,000 a year. Okay. So as I As a part of his world, it's not much. It's very reasonable, especially for a guy his age. It's not a huge policy, if we're going to be honest. We recommend 10 to 12 times your income.

Starting point is 01:38:50 And so if he makes 50, it should be a half million dollar policy or more. And he's got 250. So he's got half of as much as he needs. But again, he doesn't fully need it. What he needs is a bigger nest egg. And unfortunately, he's not going to be able to get that out of the insurance policy. So if I'm in his shoes, I would personally keep it for the peace of mind. Because if you look at the actual math on this, we're talking, he's paying $960 a year for 10 more years, right? Yes. So what we're really saying is, is it worth the risk transfer? If something were to happen to me from $65 to $75,000, there would be a $250,000 payout to the beneficiary for the low, low price of $9,600. Correct.

Starting point is 01:39:32 You see, so when I put it in those terms, I go, that's a good buy. I would hang on to that, not knowing what the future holds, not know. knowing if I'm going to get remarried one day. Ten years is a long time. That's been my advice to him. He has just been hesitant to take that advice, mostly because he feels that he should take that extra $1,000 a year and invested into something, so it's guaranteed return,

Starting point is 01:40:00 even though it's not as big of a return. Got it. At what age did your mother pass? She was 63 years old. Wow. was it health reasons? Yes, she died of lung cancer. Oh, my goodness, I'm so sorry.

Starting point is 01:40:15 Thank you. Well, that would put things in perspective for me going, we're not promised tomorrow. I mean, he's 65, not 25. And so the chances go up over time that he could pass. And so I hope he lives a very long life, 30 more years, and the policy lapses. And he goes, wow, well, that was a waste of $9,600 bucks. I would love for us to be looking back in hindsight, having never used it. That's sort of the goal with term life, is that you never have to use it.

Starting point is 01:40:37 And that's the point of insurance. I don't want to have to use my car insurance, but I sure as heck as I'm going to have it. So I can't make the decision for him, but I would find 80 bucks elsewhere to go invest. And he should be investing. And that 80 bucks is not going to make or break his world right now, and therefore I would keep it for the next 10 years. And Daniel, again, we talk about this all the time on much bigger issues, much stickier issues in this. It's very difficult for an adult to convince or persuade their parent to do something. You can advise, you can give some ideas, but other than that, you got to let it go. And he's going to decide, I think your winning point is, hey, you mentioned wanting to date, and that could turn into something, then this would be a good thing to have.

Starting point is 01:41:19 I think George's point on that's probably the best case you can make for him why he should keep it. Because, again, it's just not that much money. And if you don't have term life or you don't have enough, which can a lot of people, they go, well, I have it through my employer. And I go, how much do you have through your employer? $10,000. Right. that's barely going to cover the coffin, man.

Starting point is 01:41:39 You've got to have 10 to 12 times your annual income, 15, 20 year level term policy, and the people that I have mine through Ken has his through is Xander Insurance. You can jump on to zander.com and just knock this out. It really is not that difficult. Some of these now can, the policies are no medical exam. You can literally do it online. If you're in good health, if it's under a million dollars and you're in good health, there's a lot of these that way you don't even need to get your blood checked.

Starting point is 01:42:02 I've had to do the old nurse. I've had to do that. Shows up, takes the blood panel. Even that is just really not a problem. They do such a good job of scheduling around a year of time. They come in, they do the thing, and you got peace of mind. And by the way, it does not increase your chances of dying if you get term life insurance. You're going to, it's the same exact chances regardless. I know. And I got three kids and wife. I put a pretty good amount on me. I sleep with one eye over. You got enough in there that you're a little bit worried. I like that. I told Stacy, well, get any ideas here. All right. There's a clause in there where George has to sign off on it after he does his. investigation. Oh, I like that. You liked it? I love a clause. Can I say? You like a clause where

Starting point is 01:42:43 you're the main part of it. Can you imagine if I'd have done that with Xander? Is there a way to put George Campbell in this? He comes in. He's got a lot of questions. He's very suspicious. There's enough money in here to handle George hiring a private investigator, and you would then determine whether or not Stacey gets the money. If I get to be Camel P.I., sign me up. I think I may ask if I can write you into that. That could be great. Stranger things have happened. I'm sure a lot of people are leaving me as beneficiary on their term life and in their wills for all I've done for the world.

Starting point is 01:43:14 Now, that's a really dumb question, but let me tell about good questions. People are flooding to ask Ramsey, our free AI tool that's built and trained on our proven Ramsey principles. And today, George, we're going to break down the most asked question from this week. Are you ready? The main question is, what are the best strategies for paying off debt while maintaining a good, credit score. Interesting. Okay, well, I'll tell you my take on this. You start by making a budget, save a thousand dollars, start our emergency fund, list all your debts, accept your mortgage from smallest to largest balance, regardless of the interest rate, and pay minimum payments

Starting point is 01:43:47 on all the debts, except the smallest one, knock it out quick, move on to the next debt. And by the way, I cheated. That was from Ask Ramsey. Yeah. Jokes on you guys. See, it actually does. Life is an open book test. Why would I not utilize the tool at hand? Well, Ask Ramsey is playing off of what we say on the air. And here, let's talk about the credit score angle. It hits this too. For your credit score, it may dip a little as you pay off debt and close accounts, but that's okay. The goal is financial freedom, not a good credit score. So I love this comment. Can I read this to you real quick? Yeah, go for it. I just saw this in the Ramsey Facebook group. Donald said, it has answered some very obscure questions I've had for a long time. I listened to about five

Starting point is 01:44:26 total years of Ramsey shows and try to hear some situations, but this tool can answer them right away for your specific situation. There it is. Go to Ramsey's You can't miss it right there at the top. Ask Ramsey or, you know, I like to send you to the show notes, folks. Click the link down there. There's just good stuff in the show notes. Click the link. When people hear my story of paying off debt, they say things like, dang, that must have been so hard. I can never do that.

Starting point is 01:45:08 And I tell them, sure you can. It's a short-term sacrifice for a long-term gain. But do you know what's really hard? working your whole life and never having anything to show for it, never having the long-term gain, just feeling broke and stressed and maxed all the time. And sadly, that's the hard that most people choose. Listen, you're capable of transforming your situation and living a life of freedom, but you need the right tools to do it, like our every dollar budget app. In minutes, it'll build you a step-by-step plan that's tailored to your money situation. And every day, it finds ways you can free up

Starting point is 01:45:43 extra money in your budget so you can get rid of your debt and actually build wealth. So make the choice today. Short-term sacrifice, long-term gain. Choose the tool to help you get it done fast. Download the every dollar app and start for free today. Tax season is upon us to get free checklist and guides that will help you file. Make sure that you go to ramsysolutions.com slash taxes. Ramsey Solutions.com slash taxes. All right, let's go to Josh and Baton, Rouge, Louisiana. Josh, how can we help? Yes, hi. Could I hear me? So we'll make sure I can hear me. Yes, we hear you well. It's an honor to be here on the show with you guys.

Starting point is 01:46:42 Y'all are awesome. Thank you. How can we help? So my question is, my dad's going to be calling me here shortly, and I need some help with communicating with him without overstepping as being the son. He's going to be giving me good news that he's retiring after six. six years with the company. And he wants to take out his whole retirement and pay off the house, which I'm okay with. It's not really a house of a mobile home. And he has a lot of other debt, though, like a lot of other debt.

Starting point is 01:47:19 Cars, Alene, a house. Why is he retiring? He wants to go to another company. He said he was offered the job today. Okay, so he's not retiring. He's switching jobs. Yeah, but I just wish he would take the money and maybe move it to another account. It's $70,000 is all it is, but it's all he's got.

Starting point is 01:47:48 But what is it? Is it in a 401K? It's in the single stock. With the company? Yikes. Oh, okay. So it's really not retirement money. It's just he's got stock.

Starting point is 01:48:00 in the company. Right. Oh, yeah, it's not, is it trapped in a retirement account or is it a non-retirement account buying stock up from the company, like an employee stock purchase program? Yeah. Yes. Yeah, it's like a stock option, so he can cash out. Okay, so he has a lean on his mobile home?

Starting point is 01:48:23 Yeah, for my understanding, like he wasn't really up front with me. Well, about my wife about it, he had just talked to her at lunch and he's going to be calling me because I just got off work. Oh, I see. So he's all excited. I feel like he could ring in while we're talking to you. This is like fresh. So you don't want to be a buzzkill going. Dad, congrats, and don't do this really dumb thing.

Starting point is 01:48:47 Yeah, I just have a little struggling moment right now. Well, what's his total debt? What's his total debt? It's $800 on the house for sure. He's got he just rolled over to car twice, so I, I don't even want to know how much that... He rolled over negative equity twice. Yes.

Starting point is 01:49:08 Oh, my gosh. And then he's got a bunch of credit card debt that I know of. Well, he's going to get taxed. So let's reframe this. Let's reframe this. I appreciate you calling us about this, but we need to reframe this whole thing because your dad is excited. He's so excited he called your wife at lunch today.

Starting point is 01:49:30 Right. Okay? This is hilarious. and he's coming into some money, and he's excited, and he's 62 years old, and he's made a bunch of boneheaded decisions with money. All right, let's just, can we pour all that into the cup? Because that's the cocktail we're dealing with, all right? And you've got to think through this, and as an objective bystander,

Starting point is 01:49:51 you call it, hey, what's your opinion? This is my take. Okay? All you can do is ask him some really good questions. questions are better than suggestions when we're talking about our dad who's excited about cashing out and has made a bunch of bonehead decisions you would you agree with that yes okay so questions like and george you jump in here popcorn in but some questions are hey dad are you aware how much you're going to have to pay in taxes on that stock i'd start with

Starting point is 01:50:23 that right and who knows what he's going to say but that that that question versus a suggestion is it's your best chance of allowing him to think through some stuff that he may not think through and you're not making a suggestion. Or if you said, Dad, you know, you're going to pay this in taxes. So here's what I think you ought to do. Boom, boom, boom, boom. And he's like, hey, man, I just called to hear you say congrats. So questions, not suggestions. That would be my advice. First question I would ask is, Dad, are you aware what the tax implications? Do you know what you're going to pay in taxes on that?

Starting point is 01:51:05 And hopefully he registers, oh, so I'm not walking away with $70,000 or whatever it is. I'm going to end up walking away with this. And then you go, what are you thinking about doing with that money? And then when he tells you what he's going to tell you, then you can ask some other questions. I just think it's the son. That's about all you can do. George, I want to bring you in here.

Starting point is 01:51:23 You're not going to force him to do anything, but if you can scare him into it or excite him into something, that's a better route. The main question is finding out if this is in a retirement account or in a brokerage account because that vastly changes the advice here. Either way, we want to get out of this single stock. That is very risky. If it's in a brokerage account, it's simpler because like Ken said, there's going to be some capital gains taxes and that's it versus early withdrawal penalties on top of income tax,

Starting point is 01:51:52 which is going to be a whole lot more. But let me show you the math on this. If he just left the 70 grand, he rolled it over to a rollover IRA. So a direct rollover never withdraws the money, but rolls it over to an IRA in his control, sells the stock inside of that and buys diversified mutual funds. Now we're talking. And now you'll see an 11% return over the long haul. So from 58 to 68, if he does that, his 70 grand turns into over 200 grand.

Starting point is 01:52:18 That's pretty wild, right? That is wild. And I just, I kind of know that. I have... Pull up the calculator. Say, hey, I talk to my financial advisor about your situation because I was curious as to what they would say. Because now it's not just your opinion against his. You brought a professional into it and said, hey, I talked to this guy.

Starting point is 01:52:40 He thinks you really need to be thinking about the taxes on this and the implications of unplugging the compound growth, the withdrawal penalties, and it would be a much wiser use to use your future income to pay down this debts, pay down the mobile home, of robbing your retirement early. Because here's what it will turn into if you just left it alone and never added a dime. See, now we're equipped with some facts. We're not leaning into just anger or emotion. It's just very calm, very much you love him,

Starting point is 01:53:09 you want the best for him, you have no skin in the game here. You would treat him like he was a friend of yours. So the question is, does he respect your opinion enough? Oh. There's your answer. we've been Dave Ramsey fans for a while who not him

Starting point is 01:53:36 I followed me and my yeah me and me and my wife oh okay I was like you and your dad I mean we already got the answer when you ask someone does he respect your opinion and your answer is I mean that's like a whole paragraph and that's where the third

Starting point is 01:53:50 I think the third party angle based on what you said is the best route to go of hey I really this is a big decision I'm so excited for you This is a huge next chapter of your life. And I just thought I'd bounce it off of a friend of mine who's a financial advisor. And he's got no skin in the game. He just had this to say. And then you share everything we've talked about.

Starting point is 01:54:07 Yeah, but I... Ask questions, though. Ask questions. Listen, he can't get defensive if you're just asking questions. Yeah, but yes. But that's the right kind of question. In other words, don't ask a question where he feels pinned in. Just be like real light.

Starting point is 01:54:21 Like as soon as the call comes in, just go, okay, I don't want to tell dad, I don't want to tell dad, I don't want to tell dad. I want to ask, ask, ask, and I want to just be low-key, light, and let's just see where it goes from there. Because the minute, listen, after your long sigh and you reaching for the words to answer the question, does he respect your opinion? I already know where this is at. And this is really hard. And by the way, I'm going through this in a different level.

Starting point is 01:54:45 My parents are in great financial shape. But my parents are 75 and 74. And it's just a function of life that when they get to this age and your dad's younger, I understand. but still, it's like the parent becomes the child. And the child becomes the parent. And that's just life. And so you've got to honor but still keep a boundary there. And I catch myself all the time kind of saying something in a way.

Starting point is 01:55:10 I go, well, that was a little bit like, you know. And so just be really careful here because it's his life, his mistakes. There's only so much you can do. But at least you can sleep well knowing you said your piece. And you make this the Oreo method here, all right? The top layer is, Dad, I'm so excited for you. That's awesome. Middle layer, a little bit of advice, going into the questioning, and then the bottom layer, again, I'm so excited for you.

Starting point is 01:55:32 That's the way to attempt it so he doesn't get too defensive and shut down. It's that time again, folks. Tax season is here. I know some of you would rather bury your head in the sand until April 15th than face your taxes. But here's a better idea. If your tax situation is complicated, get in touch with a Ramsey trusted tax pro today. That way they can take the stress off your shoulders once those. tax forms come in and teach you how to keep your tax bill as low as possible. But don't wait, Ramsey trusted pros can book up fast. Go to ramsysolutions.com slash tax pro to find one who serves your area with excellence. That's ramsysolutions.com slash tax pro.

Starting point is 01:56:49 Our scripture of the day is Proverbs 9, verse 9, instruct the wise, and they will be wiser still. teach the righteous and they will add to their learning. Our quote today from one of George's favorite entertainment icons, Joan Rivers. A classic. People say that money is not the key to happiness, but I always figured if you have enough money, you can have a key made. That's actually pretty good. Thank you, Joan.

Starting point is 01:57:25 To the late Joan Rivers. Yes. Zachary is up in Springfield, Michigan. Zachary, how can we help? Hi, hey, Ken, hey, George. Hey, appreciate you guys taking my phone call. Sure. Yeah, I was wondering if you guys could share some advice or wisdom.

Starting point is 01:57:41 So I've been reading the Bible lately. It gets me thinking if my wife and I are being generous enough at the moment. I know the Bible talks about tithing, and I'm wondering if that's the best approach when I'm on baby steps four through six. Baby steps four through six, and you say you're tithing and you're saying, is that enough? You're doing 10% of your income? No, no. No, I know the Bible talks about tithing. I'm currently given about one and a half to two percent of my, well, one and a half gross income, two percent take home pay.

Starting point is 01:58:14 Well, what do you believe? I'm wondering if... Let's just, well, but this is, this is, so, so if you're going to come at this from a biblical point of view, then it comes down to what the Bible says, what do you believe it says, because there's a lot of people that have a lot of different opinions about a lot of different parts of scripture. And so ultimately, you know, we can't tell you if you're giving enough, but I can ask you a few questions. So the first question is, do you believe in tithing? Do you believe that's something that you should do? It's something that I definitely want to work up to. I didn't ask you that. I didn't ask you that. Yeah, no, I do believe in tithing. I don't think the

Starting point is 01:58:56 Bible would mention it as many times. Okay. So there's that standard. And again, you didn't call, and I'm not preaching at you, but you called and you asked, based on reading the Bible. And so that's between you and God as to how you take obedience on that particular issue. Okay? So you don't need me to preach at you. So you've already stated, well, I do believe I should be tithing. I'm not now. I believe I'm going to work up to it. But again, that's your deal. I do believe in the tithe. and I think that you should, and so that's a baseline. And many people in different sects of the faith still believe that there's a tithe and an offering. And again, the offering is above and beyond the tithe, and that's between you and God as well. Okay? So without getting into a theological, you know, foundational lesson or some type of debate, you get to answer, am I giving enough?

Starting point is 01:59:56 that you get to answer that we don't. It's a matter of the heart. Yeah. So I'm not trying to evade your question, but that's as solid as I can answer that. You have to decide. Right. I think maybe a more specific question is if that would apply to people of all ages,

Starting point is 02:00:17 of all incomes. Yes. I mean, we're in a financial good situation right now where, let's say I did want to go about tithing right now. you go from 1.5% up to 10%. It would just kind of slow down, you know, what I'm putting into, like, the brokers right now, which is in the future going to be for a house. And then also, like, for retirement, we are looking into saving for children's college soon.

Starting point is 02:00:44 Here's what I would tell you to do, okay? I would tell you to go read more scripture, buy a book or two on tithing, go listen to some sermons on tithing, and I think you're going to hear a consensus. And if Dave were sitting here, and I'm not going to try to quote Dave, but if he were sitting here, I'm pretty certain he would say that that's the wrong mindset to look at tithing, that if I tithe, it's going to slow down my financial progress. He would say, if you tithe and you give, you will receive more blessing. And it doesn't mean it's dollar for dollar, so that's bad theology. I'm not saying that. But this idea, and George, I want you to weigh in on this as well, this idea. This idea,

Starting point is 02:01:24 that if I tithe and give a tenth of my increase, my income to the Lord who blesses me with it, it's his money, I'm not going to be slowed down at all. But again, that's a spiritual mindset in believing in what the Bible says about tithe. I want to bring George in. George, what am I love what you said, Pastor Ken, and I want to add to that. I'll be taking an offering, by the way, at the end of the show. At the heart of this, I feel like, it's actually a really good spiritual challenge for you, because what we're really saying is, you see it as a finite pie. If I take this slice away, then I don't have that slice for X, Y, Z, for the house, for the kids. And I think what's so cool about the Bible is it's outside

Starting point is 02:02:09 of a pie. It's, we can't look at it in finite when you're talking about the infinite, right? And so we can't think of it like, if I give 10%, I won't have enough to pay off the mortgage. I think what you'll find is when you are obedient, when you are faithful, you never lack. you are given enough to manage. And I can throw some verses for you to look up later. You can watch this back. Proverbs 3, 9, and 10. Honor the Lord with your wealth with the first fruits of all your crops.

Starting point is 02:02:33 Then your barns will be filled to overflowing. Your vats will brim over with new wine. Malachi 3, 9 and 10. Bring the whole tithe into the storehouse, not 1.5%. Whole tithe that there may be food in my house. Test me in this, says the Lord Almighty. Woo! Them fight in words and see if I will not throw open the floodgates of heaven

Starting point is 02:02:50 and pour out so much blessing that there will not be room enough to store it. And finally, Matthew 626, I love this one. Look at the birds. They don't plant or harvest or store food in barns, for your heavenly father feeds them, and aren't you far more valuable to him than they are. So I think at the heart of this, it's a scarcity versus abundance spiritual challenge, Zachary, and this is, you are not alone in this. I struggle with this. This is still something I'm figuring out and grappling with because it doesn't make sense on paper, right? But I think if you can learn to live, on the 90 of what God has blessed you with, which I assume you have a great income, right? What's your household income?

Starting point is 02:03:27 Oh, so gross is about 101. That's a pretty fabulous income anywhere in America. Would you agree? Yeah, yeah, no, it's enough for us. And how much are you putting away? Are you right at the 15% in Baby Step 4? I was doing the math. It's closer to 20%.

Starting point is 02:03:48 I mean, overall retirement, we're putting about 27, a little over 27. 27%. So now you're going 12% extra above what we teach, and you're having a hard time giving 10%. Oh, no, I'm sorry. It's 27,000. So, oh, actually. 27,000 out of your 101? Oh, yeah.

Starting point is 02:04:10 Yeah, that's 27%. That's 27%. I didn't have to take my shoes off. That was easy math. I'm sorry. Here's my challenge for you. You try it for a month. Try it for a month. If your life is worse and you hate it and you're going to retire broke because of it, you can go back to the way you were doing it. But I think what you'll find is that when you're spiritually challenged, you will actually mature and you will find that you lack for nothing. That's going to be my hypothesis in this fun social experiment. So, Zach, you call us back and let us know how it goes. But I think there's there's room to tithe. I mean, you read about the widow giving her last pennies. Well, here's the irony in this, Zachary, and I'm not picking on you, but I do, I want to give you this context before we let you go.

Starting point is 02:04:54 You are concerned about tithing the 10% because you feel it's going to slow you down in these other areas. And then we dig into the baby step four. And we recommend 15% of your income towards retirement. And you're doing 27%. So there is fear driving all of this. you're afraid if I tithe I won't be able to do as much as I'd like to do over here

Starting point is 02:05:18 and we've got a try and true system and we say 15%'s enough and George can run through the investment calculator all day long until he's blue in the face so what we're getting out of this is that you're really afraid and fear is not a good driver for any decision

Starting point is 02:05:35 would you agree with that? Yeah no that's fair there's definitely some anxiety of like currently given like I said about 1500 a year year. Here's what I want you to do. Extra homework. Okay, George, George gave you some verses. I want you to do a little Bible study tonight or tomorrow while it's fresh on worry. What does the Bible say about worry? Be anxious for nothing. That one comes to mind. Oh, George, you were all over

Starting point is 02:05:58 it today. I mean, you got, you pulled up a concordance over there. I got my concord. If I could play a keyboard, I would have noodled underneath of you while you were, see, you can play the keys. Yeah, I can hit a nice chord. You'd be, you'd be, you'd be, you'd, I could fake it. Well, if I put an acoustic guitar on you, you could have, uh, there we go. What do you call that? A little altar call? No, it's, if, if noodling is on the keys, what's the, what do you call the equivalent? Ah, don't quick on that. Strumming? Strumming? Strung while I preach. All right. Speaking of. Speaking of preaching. Remember, there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus.

Starting point is 02:06:38 This is the Ramsey Show. The Ramsey Show live is your chance to actually be part of the show. Ask your burning question live. Finally win that money argument in your house. My mom occasionally asked us to borrow money. That's a no all the way around. I'm a spender. He's a safer. I'm a tight wad at heart. How many tight wads are out there? Thank you for making yourself known. Do a pre-prenup? What's a pre-prenup? I don't know. I thought there'd be something. The Ramsey Show Live is your chance to be in the room with other people that are on the same journey as you. There's always something you can do to better your situation. We don't sell magic wands. And so that person in the mirror, they are really the secret sauce. They are the

Starting point is 02:07:30 solution. I'm really, really proud of you. That's awesome. That's pretty fun. You guys are great. The Ramsey Show Live, one night only coming to a city near you.

The Ramsey Show - Focus On What You Can Control And Start Crushing Debt

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