The Ramsey Show - Freedom Isn’t Found by Borrowing Money

Episode Date: May 10, 2024

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Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by Jade Warshaw this hour. The number to call is 888-825-5225. You call in, we'll talk about your life and your money. And if I feel spirited today, it's because I am, Jade, because we have an electric crowd that's here for our Total Money Makeover weekend. What feels like hundreds of people out in the lobby right now. I think it is hundreds. Preparing for a wonderful weekend, growing,

learning about money, getting motivated, and getting fired up. It's good to be with people. That's right. I know that's right. It's about to be a pep rally up in here. Well, let's kick it off with Joe in Newark, New Jersey. Joe, welcome to The Ramsey show. Hi, George. How Jade? Um, I, I'm, uh, graduated high school in 1994. I went to a Christian high school, a private high school. And while going there, they introduced us to FPU. And we, we went through some of that, uh, those courses and things like that. And I put that into my life and I did pretty well for myself. I'm now, um, 48, my wife's 49 and we have a family business now and we have a hot, very high net worth. Uh, we have no debt, multiple properties, and we don't really work. We're financially independent, we're comfortable. My question is, our son, we only have one child,

he is 14 and he is in ninth grade. We are considering pulling him out of school and letting him get his GED to fast track him into our family business and kind of bringing him in more into what's going on so that he can be more involved in preserving our, let's say, let's call it generational wealth. Not like he'll have any say. We have a trust and all that stuff. But for now, it just seems like we're not getting a, uh, the most, like, I don't know what, at what point should he keep going to school?

Like, what's the point? We're not, we're not seeing it, but if we're being kind of like out of touch by thinking that, uh, we're just wondering some perspective that's maybe faith-based on what we're asking. Well, the biggest thing I hear is it kind of, and you know, I'm not trying to overstep, but in many ways it kind of sounds like you're determining his, you're predetermining his path in life. You're saying, hey, it's not worth it for you to get your education, son, because you are going to run the family business. And there's a very good chance that, well, number one, it's putting the pressure and stress on him now at ninth grade to kind of say like this is this is my future whether I like it or not

and listen you might be seeing him say hey I do want to do this or I'm interested in that but at ninth grade he really doesn't know um so the reasoning that I would say not to do this and for at the very least let this guy finish out and graduate high school is because you know you don't know what he's going to want to do you know in the future you don't know that this is the career path he wants he might get into it and be like i don't like this and you don't want him to turn up turn around and have any kind of resentment or you know contention because of the way that you guys um pulled him out of school early and kind of stunted that that ability for him to really explore and see what he wants to do.

Sure. Okay. My overall thinking is this man's not even done with puberty. Do we really need to be throwing him into this, you know, family business at this stage? He's probably just, you know, the guy wants to get his first girlfriend at this point. And so I feel like we should let him be a teenager, let him be a kid. Let him grow a mustache. Let him grow a mustache.

Let him experience, you know, school and guess what the family business is still going to be there three years from now when he's graduating and then he can make a choice hey do you want to go to college do you want to take over the business and let him explore most 24 year olds don't know what they want to do with their life let alone a 14 year old so true so i don't want to fast track that to jade's point and then he's resentful at 30 going, I didn't even get a choice, man. This was like golden handcuffs to take over this business. And like Dave has said with family business,

you want them to feel called to it. And Daniel, his son, went through high school, went to college, graduated, and then when he felt called, he showed up. And it was on his, it was on his volition versus dad saying, Hey kid, I'm going to pull you out of school. You're going to be a part of the Ramsey organization and take over. But now that it's his choice, it's a very different mentality and a work ethic versus getting dragged into it. And there's probably a way that you could,

if you wanted to give him some exposure to what it is that you guys do all day to what the values of the company are like, there's probably ways that you could, uh wanted to give him some exposure to what it is that you guys do all day to what the values of the company are like there's probably ways that you could uh build that in you know like rachel says more is caught than taught so if you're talking about it at home you know every once in a while he's showing up with you on a saturday or you're you're talking about the things that you're working on you're talking about the things that you do that what the business does i think that he is he is going to understand that okay this is what my family does this is how we work this is what we're about um and i don't think that at any point that requires um pulling him out of high school okay that's that's great uh thank you very much

um definitely a lot to consider i i see the value in what you're saying. Listen, I'm going to flat out tell you, don't do it. I mean, I hope you don't do it. I'm 50-50 on it. It's like when he has a day at school and one of the teachers is kind of in the weeds and being silly about things, in my heart, in my mind, I'm we're kind of past that I don't we don't really need to deal with that that doesn't apply to us but that's kind of like the snotty side and I don't like I don't want him playing that card you know what I mean like I don't have to be like there's some truth to that but at the same time like you have to be a good person overall and sometimes you do have to go through um you have to be exposed good person overall and sometimes you do have to go through um

you have to be exposed to different challenges to make you a complete person right sure so if you're too sheltered you know you'll be a spoiled brat so it's you don't want that either for that's true child or children like if you're talking about what's going on like the educational situation where he goes to school if you don't like that like that's a completely separate issue if you're saying hey maybe this is not the right environment for him to have high school then yeah there's options there whether it's home school or online school or a different school or private school like there's a lot of options there but i i don't want to confuse the two topics i definitely sure you know

so that's a different that's a different thing what does he think about this joe when you ask him about it he he he's very opinionated so he likes and he he knows uh kind of the what we do and the velocity of what we do it and things like that and he thinks to himself why am i here why am i going to school this is dumb if i'm just gonna you know inherit the keys to the kingdom like he doesn't say it like that but he kind of has like a a spoiled brat attitude towards it so like well that's one reason to put pause on this whole thing correct correct i want to put him in military school and say i'll see you in four years you know what i mean so it's like it's but then sometimes he's really pleasant he's

like you know i get it i'm doing my best and it's like it's i feel like there's two issues we're talking about here i feel like the first thing you called in was you know we need somebody to pick up the family business now's the time for him to get the training now but i feel like now we've shifted into he doesn't want to be at school but i think he should be somewhere because he's kind of starting to show these spoiled tendencies i think there's two separate issues that need to be worked on one is he's in ninth grade figure out what the best you know school option is for him and what the best discipline is for him and then as for the business who's going to take on and carry that business on? That's a completely different conversation. And I can tell you, it's not your ninth grader. And you got to remind them, listen,

if you're going to be a part of this, you got to work twice as hard as everyone else. It's got your last name attached to it. That's how Dave sees this. And if he's got that entitlement, he's not going to be part of the business until he's emotionally ready. And we're talking about a 14 year old. He shouldn't be emotionally ready. Let him grow. Let him make the choice later on. This is The Ramsey Show. Hey, when you go against what society thinks is, quote, normal, like avoiding debt, for example, it might seem weird at first, and that is totally okay. We want you to be weird if that means doing things intentionally, including how you spend your healthcare dollars. And one way to be intentional

is with Christian Healthcare Ministries. CHM isn't health insurance. They're a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of healthcare costs without sacrificing their freedom. Find out more and join at chministries.org slash budget. That's chministries.org slash budget. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones

at 888-825-5225. You jump in, we'll talk about your life and your money. Well, it's graduation season and the grad in your life has now spent more than 4,300 hours in class. And the sad part is, I'm guessing nobody taught them how to handle money. That's unfortunate. So before you stick a crisp $100 bill inside that graduation card, why not give them the tools you wish someone had given you? And we've got you covered in the Ramsey store. We get gifts for teaching a grad about money. Of course, the Total Money Makeover, Dave's bestselling book. It's helped more than 10 million people get out of debt and build wealth. And yours truly, my book, Breaking Free from Broke, a number one bestseller, exposes all the money myths and traps that those grads are about to

experience. It'll help them avoid that and build wealth in spite of all of it. And if they're looking to help on their job search, Ken Coleman's got a brand new book called Find the Work You're Wired to Do, which includes his Get Clear Career Assessment. It's going to show them what they're good at, enjoy, and help narrow down the job search. So get the perfect grad gifts right now. RamseySolutions.com slash store is your one-stop shop. Andrew's up next in Toledo, Ohio.

Andrew, welcome to the show. Thank you very much for taking my call. So I'm going through a major life change, going through a separation. And once everything is said and done, I'm only going to have a car payment, and once the proceeds of everything are separated, I'm going to have a significant amount of money. It's not, you know, like millions, but upwards of $80,000, and I'm just curious how I can best set myself up for the future.

Wow. How recent was this? The situation that I've been put in. Within the last two months. Wow. Is it was this? That I've been put in, um, within the last two months. Wow. Is it finalized or is still processing? It is processing. Um, the paperwork has been signed just waiting to go in front of the judge. Okay. So you'll get 80 K out of this, but you'll have the car and the car payment. What's, what's going to be your living situation?

Uh, so I'm going to be moving in with my father temporarily. Okay. And then until you find, until you kind of get your footing and find where you want to live? Yeah. I'm just not trying to make any rash decisions and, you know, like rush out and buy a house or go and get an apartment to rent. I don't want to rent anything. Cause that's like throwing your money away. Um, we can talk about that. How old are you? Jinx Yomiko. 36. 36. Okay. Well, you're restarting your new life, new chapter. It's a clean slate. And part of that clean slate means we're going to become debt-free and stay debt-free for the rest of our life. So that's the good news. What's left on the car loan? My intention was, so I had to refinance it out of her name

so that she could get pre-approved for a house. And I think it's under $12,000. Okay. And what's your income? So my income last year was about $46,000 before deductions. My income is inconsistent. I'm a real estate agent. Got it.

Okay. Well, you're going to be able to easily pay off that car loan as soon as you get that 80K cleared. And it's still going to leave you with 68? Yeah. So that's going to become your fully funded emergency fund, which right now you don't have a lot of expenses, but you soon will as you step out and begin to rent. And so I would put away six months of expenses and then the rest becomes maybe your new home down payment fund. Okay.

And begin stacking money on top of that. You can store it in a high yield savings account. It'll grow at about, you know, four or five plus percent right now. And just diligently put money away. You've got very little living expenses living with your dad, and so I would take advantage of this season as sort of a temporary launch pad for you, but I would not have it become a hammock

where you get too comfortable and you're like, well, it's nice not having bills. I want you to get back out there because you need to get your mojo back after getting knocked out like this. Are there children? Yes, there are two children. Okay.

What's the custody situation? So it'll be shared. Okay. And is there child support, alimony? Well, no, there's none of that as long as everything is approved by the judge. Okay. So does that mean that you and her have just decided that you're both kicking in? Or what does that mean?

Well, I'm sorry, what do you mean by that? Like, have you guys decided your own method for splitting the cost that it's going to take to raise these kids? Or what does that mean specifically? Yes. So we've gone the route of disillusion rather than divorce. Um, it's just not as common for people to know what a disillusion is. Basically, um, we've decided we've, we've come to our own terms on everything and it just has to be approved by the judge. Got it. Got it. Got it. Okay. Yeah. You know, for me, I think with the,

with the kids, I don't know their ages. Um, I'd probably, I like your idea of kind of getting somewhere and getting your bearings, but I'd be, I definitely be looking towards figuring out a place that's yours that the kids can get used to and kind of creating some normalcy in this situation, some stability, some stability, um, um, sooner than later, I would say. Okay. Are the kids going to stay with you half the time? Yeah, yes. So it'll be a 50-50 week on, week off. And right now it'll be staying at grandpa's? Yes, when they're with me, yes. My father does have a very decent-sized home, so the kids will have their own space. I mean, we're all going

to have our own rooms. Okay. That's good. That's good. Yeah. So it's, I mean, it's temporary. My daughter is a little bit older. She is probably primarily going to stay with her mother because of where she intends to go to school. She's doing college classes. So she's kind of just going to come and go as she pleases. We've already had that conversation. It'll mostly just be my son. Okay. Well, the other piece to think about here is how can we increase your income in order to be able to afford rent with multiple bedrooms and all of that? And so that would be my next step as a real estate agent go, what do I need to do to get some more clients even in this market? Do I need a side hustle right now to supplement until things pick back up? So that'd be my next step as you knock out the debt and begin to save up for the down payment. And begin having those conversations about how you guys are planning to

help out with college as those things come on the forefront. Yes, don't let any assumptions happen. Yeah, make those expectations clear. We know what happens there. JC's up next in New York City. What's going on, JC? Hey, James and George. Thank you for taking my call. Sure. How can we help? Sure. My wife and I actually yesterday finished Baby Step 2. 13 months, we paid off over $144,000. Way to go!

Amazing. I just raised the roof on your behalf. You're just fully raised now. Thank you very much. I couldn't reach the roof, but I would have if I could have. Yeah, she brought a book home 13 and a half months ago. I picked it up, read it, and I said

we're doing this. Let's go. Proud of you guys. Thank you. My question is this. We'll have a fully funded emergency fund by October 1st. We want to do six months. At that point, we understand it's 15% of baby step four of our total combined household income. Where I have a little bit of confusion is, should I be factoring,

because I also do like an HSA and stuff, should that be part of the 15% or should that be separate? I wouldn't start with the HSA. I would, with the 15%, first of all, I do it off your gross numbers and I would start with whatever employee-based plan you have. whether it's a 401k or a 403b if you have a match there I would start with the match and if you don't have a match then I would just start with you opening up a Roth IRA you and your wife and I would fill those first I think you can do is it 7,000 7,500 7,000 this year this year and I would start with that if there's still money to go then you could go back to the 401k or 403b or whatever it is that you have what do you have uh well we have both uh well she has a 401k that's sitting dormant right now from an old employer so now she has a new employer she'll be eligible for a 403b and i have

a 401k through my employer i just don't think that will be eligible for the Roth so I guess well you can do a backdoor Roth if you're a high income earner which sounds like you are do you have a Roth 401k option and a Roth 403b option the 401k I can say yes for sure I'm not sure about her 403b well I'd start with the Roth 401k option, and you're probably going to be able to do up to the max 23,000. I'd start there. And then if she has a Roth option, I'd go there. And then like George said, if there's still money to be had since you're on the backdoor status, then you can move over to that backdoor Roth IRA and make sure that she's doing a direct transfer rollover for that old 401k. Yeah, don't let it sit there. We want her to have full control and the Roth IRA she's doing a direct transfer rollover for that old 401k. Yeah, don't let it sit there.

We want her to have full control, and the Roth IRA will give her a lot of options, or a traditional IRA, depending on what those funds are sitting in. You don't want to do a... Fantastic. You don't want to transfer it to a Roth account if it's not, because you'll have a tax burden there, and you only do that once you're in Baby Step 7, which I believe you guys are on the track to be there real soon.

Yeah. You're doing a great, great job. Get in touch with a SmartVestor Pro, RamseySolutions.com. They can help, you know, handle all the logistics of this process and get you squared away and get you confident about the future. This is The Ramsey Show. I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely

preventable. Yeah. And what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible. People that call in and their spouse has passed away suddenly and they don't have life insurance. When you have to think through how am I going to pay my bills in the middle of next week, in the middle of all that grief, like it's just it is it's terrible. So life insurance is the one thing, especially as a mom with three little kids that I'm so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here.

You got to say it out loud and you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of stinking pizza to get a free quote, call 800-356-4282. That's 800-356-4282 or go to zander.com. This is the Ramsey show. I'm George Campbell joined by Jade Warshaw. Open phones at 888-825-5225. Jade, you sent us this article that it piqued my interest, and I think the listeners can learn something from it. of came as a result of this. It's this Wall Street Journal, I believe, saying Gen Z sinks deeper in debt. And it's all about how Gen Z is facing kind of this debt to income ratio, rent to income ratio.

And, you know, we hear the frustrations that people are facing all the time with what they're earning versus what their lifestyle needs. You know what I mean? The needs of their lifestyle. And so I thought this was interesting. It says, their lifestyle needs. You know what I mean? The needs of their lifestyle. And so I thought this was interesting.

It says the median annual wage for recent college grads was $60,000 in 2023. And at the same time, rent, which typically takes up less than one third of the average worker's monthly paycheck, has actually soared. And so they give the numbers here. They say the median rent in the U.S. was about $1,987 as of January, which is a 22% increase over the past four years. And so as a result, Gen Z is saying, listen, our wages aren't keeping up with what the rent is, and it's becoming too great of a percentage of our take-home pay. And so as a result, we're seeing people, as always, George, whenever there's that strain, people go to credit cards and they go to debt to fill the gap.

And so I thought it was interesting as I was reading it. Sometimes you read numbers and they just kind of float around in your head. And I was like, let me just run these numbers out a little bit and let me see what this actually looks like. Because the fact is, even if you're not a recent grad, even if you're not a Gen Z, but if you're out there, you're making around 60K and you're renting, this kind of does apply to you because you're feeling that strain and you're feeling there you're making around 60k and you're renting this kind of does apply to you because you're feeling that strain and you're feeling that stress on your budget so let's see

how these numbers shake out so if you are making sixty thousand dollars a year the median rent is one thousand nine hundred twenty eight dollars that person that rent is far it far exceeds that that range that we're looking for usually your rent would be about a third of your take-home pay which is a little on the steep side that's why people want to own houses quarter of your take-home pay yeah especially if you're going to own a house and so if if you want to at least get to where it's a third that person would need to take take home around five thousand nine hundred and sixty one dollars per month so about six grand a month that's right just 72 grand a year meaning well meaning they would need to take home about 84 to 85 000 a year so that's a 25 000

increase in order to get this rent where it needs to be in their budget and so when you look at that okay 25 000 it sounds like a lot but then you go go, okay, that's about 2,000 a month, right? So my thought here is we're kind of the side hustle. This is like the side hustle generation until they get to the point where their core income gets higher. I mean, the point is you're going to have to side hustle. Like you can't supplement your lifestyle, 2,000 bucks a month, 500 bucks a month, whatever it is on credit cards to make this happen. So what I want to say is the problem is real. No one's going to sit here and say, it's not a problem. You're just not doing this or you're just not doing that.

It's a moot point at that point. This is a real problem. And it's frustrating when you get out of college. It's frustrating at any point when you're doing your job, you're going to work every single day and something as basic as your rent or where you live is taking up that big of a percentage of your take home pay. And so I get it. Like there's a lot of frustration around that. But what I really want to say is we can't make the solution debt. Like the moment you make the solution debt,

it takes it from being very inconvenient to just really crisis mode. And it takes it to robbing you of what your future can be. And so we've got to look at this and say, OK, how can we back this back out? And it really is with side hustles. It's finding ways to supplement your income. Maybe it's you taking on a roommate for a period of time until you can get that income where it needs to be. But this is, you know, when you look at the numbers, George, I think sitting where we're sitting, it's important to be able to look at numbers and say,

okay, this is what people are really facing. They're facing $2,000 deficits, $1,500 deficits, $700 deficits. But the good news is there's a lot of side hustles that can help make up that kind of cash. Yes. And I know it's not fun to go, we shouldn't have to work three jobs to make a living. And I'm going, listen, when I was 22 and I was a college graduate, this was my life. You know, it was side hustles, getting out of debt. I had roommates up until I was married. And I think a lot of young people have a picture of what their life was going to be after college. Yes. And it was going to be, I want to live where I want to live, do whatever I want to do.

And they didn't realize what life would look like. And yes, inflation has exacerbated the problem here, but you might need to get some roommates. Absolutely. You can't get your own flat in the best part of town. And the median means middle. Middle. That's right. That means half of the rent in America is less than that. Less than that. And half is more than that. And so you don't have to go, well, my rent is, you know,

here's an example. This girl is 26 in Salt Lake City. Her rent a little over a year ago for a one bedroom was a thousand. Since then, it's gone up by $200. And that puts a dent. She makes $30,000. She's got to get that income up. It's not rent that's the problem. Like we can find a way to make you 2,400 bucks, but getting your income up is really the key here. That's true. But I mean, for me, it's society's going to put an option out there as the solution. And we've really got to beware because I think when you do find yourself in a situation financially, that's not, you know, what you want to your point, George, where it's rent is high or there's inflation or their student loans, whatever that thing is, society is going to

say, oh, we have the solution for you. And it's almost always some sort of debt product, right? It's the most marketed product in history. That's right. And so in 2021, credit card companies loosened the qualifications for who could get credit cards and more people opened new accounts. And so Gen Z members opened new credit card lines at a faster rate than other generations during the pandemic. And so that's why I think the message that we're putting out here, George, is really, really important because we don't want to give you a Band-aid. Debt doesn't stop the bleeding. It's just an old Walmart brand band-aid that you put on for a moment, but it really doesn't heal you. It really

doesn't stop the bleeding. It's just a quick fix, and we want you to have a fix. We don't want you to go into debt. We don't want you to make the problem worse. We're saying, hey, sacrifice for a little while, whether that's, you know, side hustling, whether it's living in a cheaper part of town, whether it's finding a different place altogether. But definitely do not look to debt because that's just it's robbing you of your future because you're going to get into more payments. And then buy now, pay later becomes your solution, quote unquote. And the credit card companies are always marketing to you as, hey, we're going to give you financial freedom and breathing room. They're using the same language we do, but they're selling you a

change. That's what they're really giving you. Yeah. Here's some handcuffs that will temporarily make you feel a little bit better. And that's the thing. That's honestly, George, that's what you have to take away from this. Any company that's really benefiting from your bondage, benefiting from you being in debt, benefiting from you taking on more of that, they're not going to help you find freedom. And we're interested in helping you guys find freedom. And we're telling you, it is not by signing up for a new credit card. It is not by taking out personal loans. It is by you doing the hard work and doing some sacrifice on the front end. It's just, you can't get around it.

I remember when my husband and I had roommates. We were married and we had roommates. I mean. Because you needed the extra, the money. Yeah. The rent was, the rent was $1,200. And let's see, we each paid $650 or something like that. And it saved us $650.

It was temporary, but hey, you do what you got to do. That's a side hustle in its own right. And that's why I wrote the book Breaking Free from Broke was to help people understand all of these traps out there, show them a different way, regardless of what's happening with inflation and the economy and who's gonna be president in November. It was all so exhausting

because none of it led to solutions or freedom. It just led to wallowing and pity parties and complaining on social media. You can't let a good reason become a bad excuse. And that's what we want to get to. Listen, there are good reasons out there. Like the reason is inflation. The reason is rent prices.

The reason is wages are not keeping up with inflation. Those are all very valid reasons. And I don't want to go on the record as saying they're not. But the moment you let it become a bad excuse for you to go into debt is when things go off the rails. Amen. Well, we built a free tool to help people find a great side hustle for them. You can go to ramseysolutions.com slash side hustle.

And this is a tool that I help build that really helps people figure out how much time do I have? What's my target? What are my talents? What makes sense for me? Because everyone goes, yeah, do a side hustle. But what's the right one? What's the best one for my time and so this tool has been helping people um figure that out with a really quick free quiz so ramsay solutions.com slash side hustle tell them a little

more about that because what i when i saw this quiz for the first time a lot of people think i don't have time for a side hustle or um you know my skill set i don't have the right skills for side hustles, but the way this does it is really great. It talks about your time. It talks about your skill set. We have different kind of, in the back end, there's quadrants. You have low skill, high time.

Do you have high skill, low time? Do you have a mix of both? And what's fun is that most people said, no, I actually have some skills and I actually have some time. Love that. Listen, you got time. You're watching the show. You're scrolling social media. Don't tell me you have time. Tell me you won, you got time. You're watching the show. You're scrolling social media.

Don't tell me you have time. Tell me you won't make the time. But it's worth it. And it might be for a season. This is not your life forever. Gen Z, millennials, Gen X, boom, whatever. It will get better. It will get better.

Make it better. But you've got to be a part of that. You have agency. This is The Ramsey Show. This show is sponsored by BetterHelp. This is the season for Halloween. It's October. We're wearing costumes and we're wearing masks.

So if you haven't started planning your costume yet, get on it. And while you're thinking about it, I want you to be honest. A lot of us hide ourselves. We hide our true selves behind costumes and masks all the time. We do this at work. We do this around our friends. We do this around our families. We even do this when we look at ourselves all the time. We do this at work. We do this around our friends. We do this around our families. We even do this when we look at ourselves in the mirror.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. If you're enjoying the show today or any other day for that matter, do us a quick favor and hit the subscribe button, hit the follow button, leave a comment, leave a review, share it with a friend. day for that matter, do us a quick favor and hit the subscribe button, hit the follow button, leave a comment, leave a review, share it with a friend. All of that is the best marketing plan we have. And you guys are so good at it naturally, but it's helpful to remind you to do it because you may not have taken the time to actually hit those buttons and share it with a friend. And it could, who knows, it could affect someone else's life and help create a ripple effect from the show. So thank you for doing that. Andrew is up next in Portland, Maine.

What's going on, Andrew? Good afternoon. Thanks for having me. Sure. How can we help? So we, my wife and I have accrued some points from a credit card that we have. And really, I'm just curious on your opinion, if we should use those for vacation, probably this fall, take our kids on vacation, as we're just working through getting through that debt at the same time. Oh, how much debt do you have? So between on the credit cards, we have $64,000. And then you've got the two cars, that's about $44,000. And then the the two cars. That's about $44,000 and then the mortgage as well. What's your household income?

$122,000 or $120,000. I'm sorry. Okay. Whew. That's a lot of, that's not really a vacation. I feel like it's hard to vacate when you have that kind of debt tied around your body, right? And you're going into debt in order to make it happen with these credit cards we already have the points accrued so we've got like thirty three hundred dollars worth of gift cards so it probably cost us two thousand three thousand no it cost you sixty four thousand you said you had sixty four thousand dollars of credit card debt at twenty

two percent apr yeah so the points are the problem they're not the solution to anything and so i would clear the debt and you after you become debt free you still got some points use it to celebrate but you're going to do it with cash and right now you guys are broke regardless of the points you're still going to have to come out out of pocket for something you're not going to be able to gift card your way to a totally paid for vacation and you're better spent using that vacation time to be doing side hustles to get the income up even more because you are about in debt as much as you make an income. Why are you guys spending so much on these cards and not paying it off? Because the truth is, George, plenty of people

argue with us and say, oh, I use my credit cards for the points, but I pay it off every month. And you're a really great example of somebody who's not paying it off every month. So what's happening that you're putting $64,000 worth of debt on a credit card? Yeah, that's a great question. So we relocated about five years ago. And before we moved, that was exactly what we did. But with that relocation, we started to just be foolish and lived outside of our means. And I wasn't making or we weren't making the amount of money that we are now. I just took a new opportunity and my income went up by $40,000 annually. And along with that is kind of what has really got me bought in.

And my wife bought in. We talked a couple weeks ago and she's really bought in with it. But she's kind of hung up on this vacation because our kids are young and she wants to take advantage of that. So that's kind of what I'm trying to navigate through. Okay. I get it. I think in her mind, it's like, listen, we have this free money sitting here. Why not use it? And then we can tackle these credit cards. I'm just worried that to George's point, how many is your new family family of four yes yeah family of four is it's going to cost more and i don't think that the mentality is there i think that if you continue

to say well we're going to use these credit cards for this benefit and she's still viewing it as some sort of a benefit in her mind uh the mentality is not there to do what it takes to clear this debt. And that's where my red flag goes off. Right. So we've got $5,000 or so in savings, so more than just the emergency fund. And I could just put that obviously on the credit cards that kind of kept it there with us in the back of my mind, knowing that she wants to do this. How bought in are you guys? Are you ready to sell the cars level? I don't think we're quite there. I drive a lot for my job, so I'm not sure I'm ready to get a beater of any.

You know what that means? If you drive a lot for your job, it means your car is depreciating faster than the average person, which means you are going to be upside down on this car if you're not already. That's true. Hey, before we get too far into the cars, you said you had the $3,300 on gift cards. Is that what I heard you say?

Yeah. You can redeem it for gift cards. They're already gift cards. They're already redeemed. What kind of gift cards are they? They're for Disney. Oh, you redeemed them for Disney gift cards. Well, ain't that a... Here's my thing. I

think we hang on to the gift cards. They're not going to lose value over time. That's right. Let's wait till we're debt-free, and then we'll do a Disney celebration, and these gift cards will help pay for it, but not until we're completely debt-free. So break down these cars. You said $44,000 in cars. What's yours, and what's your wife's? So I drive a Jeep Cherokee. It's a 2021 Jeep Cherokee. And then my wife drives a 2019 Chrysler Pacifica. And what's the debt on your 2021? $23,000. Okay, so it's about equally split.

Are the credit cards, are they split amongst a bunch of cards? Yes. Okay. Here's my rule where it comes to these cars. And I don't think you're going to be able to do it so i think one of them is going to get sold if you can't pay it off in two years or less then it's out right and so you're making 122 000 i'm guessing your wife staying home with the kids well that's combined with her. She works part-time. She brings in less than 10. Okay. And is that because she's staying home with kids? Right. Okay. Is there a way that she can make more part-time? Do you think? I don't think so. She takes up as much as she can for

extra shifts, but without having to add in child care, we don't have any um she she takes up as much as she can for extra shifts but without having to add in child care we don't have any family nearby okay um they could pick the kids up from school so adding in the cost of child care i hear you we've really looked at that but it doesn't want to work if i were you if you're not yet upside down in one of these vehicles if i were you i might get rid of one of these vehicles and take four000 of your saved money and put a little money with it and get you an $8,000 car that she can drive the whatever, whoever wants to drive it. I don't really care, but I get, I'd clear one of these out now. That's what I would do to knock this down, especially since you don't see your income going up anytime soon. And that clears out, you know,

20 some thousand dollars of this. And then I'm going to get busy on these credit cards what's the smallest one uh it's nine thousand yeah that's where we're starting we're listing them in order from smallest to largest we're paying minimum payments on everything so you don't have debt collectors and whatnot and then all the extra money you got to put it at the smallest debt and i know you said it doesn't, it's not possible, but I really want you guys to sit down and truly, truly get sober and somber about this and say, okay, what do we have to do? Is there truly no other time? Is there truly no other way that we can be earning money? Because I think if you stretch, there's some money that can come in somewhere, but I can tell you this, it's not going to be comfortable. So the other aspect that I haven't shared yet, but I don't know really about it yet because I just started this new opportunity, but I'll bonus twice a year.

Okay, good. It could be $18,000 twice a year. Great. So kind of in the back of my mind, I was thinking that I'll use that and pay off one of the cards as quick as possible or put it on the credit cards, one or the other. When you say could, is this like a 80% thing, like a 90% thing or like a 20% chance? I will.

That's where it's going to go. Okay. I just don't know which is the right one to do, if I put it on the cards or if I pay off the cards. You put it on the smallest balance and when it's knocked out, you attack the next smallest balance, making minimums on the rest. If I were you, I wouldn't let those bonuses

keep me from selling one of these vehicles. I would still do that because i want you out of this debt as quickly as possible 108 000 in debt you make 120 and here's the deal the context for what jade's saying is on average it takes people about 18 to 24 months to pay off the debt so it's going to take massively longer than that we need to make a deeper sacrifice which may include selling the car so for you that's we got to put 5555,000 a year onto the debt. That looks suspiciously like a little over $4,500 a month. And if you can't find $4,500 a month in your budget, we need to sell something. We need to increase income, cut the expenses in order to get rid of this debt in two years. Yeah. Our monthly expense is not factoring in anything extra like clothes for the kids. Just the base expenses is just over $6,000.

Is this because of your mortgage? You must have a massive mortgage. Yeah, what's the mortgage payment? The mortgage is $2,100. Okay, and what's your take-home pay every month? So like I said, I just started this opportunity, so I've literally gotten half of a paycheck so far. What is it?

What will a full paycheck be? Full paycheck should be $4,200 bi-weekly. Ooh, lordy, lordy. Okay, that's twice a week, so twice a month. So it'll be about $8,000. Then you're okay. So pause all investing. If you're getting a refund every year, you need to change your withholdings. We need to find any

money we can in the proverbial couch cushions to get out of debt fast. That's the only way out of this. Cut up the cards, never look back. That puts this hour of The Ramsey Show in the books. Thank you to Jade Warshaw, all the folks in the booth, and you, America, will be back before you know it. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Jade Warshaw. It's your show, America, so call us up at 888-825-5225,

and we will give you our opinion about your situation, and that's about what it's worth. It's our two cents. Two cents. If that. That's the price of admission. There it is. Phil joins us up first in Redding, Pennsylvania.

What's happening, Phil? Hi, guys. Thanks so much for having me. Sure. What's going on? I have a pretty good problem. My wife and I and our three daughters, we are saving for the college. They're eight, six, and four. And we've

started their 529 accounts as soon as they got a social security number. Amazing. We agree that we should eventually tell them that they have these accounts. We're just not sure when it's appropriate or when it would be wise to tell them. And if it's ever a good idea to tell them how much is in the account. Oh man, I think it's a great idea to let kids know that we're planning for your education and the expectation is that you are going to continue your education in some form or fashion. I think it's great to start sharing that, honestly, as early as it makes sense without being weird. My guess is middle school, high school is when they start even thinking about that. So I don't think there's a need to tell a four-year-old, hey, buddy, there's $100,000 in your 529 plan. You know, they might be like, whoa, that's a lot of money. But there's just not as much context as

to why it matters. And it's not like you're going to give them a trust fund that they're going to go blow in Vegas here. You know, this is a 529 account. It's to be used for education only. So I don't think they're going to like lose their minds and become entitled brats. But I think it helps when deciding about college. Hey, here's what here's our plan. Mom and dad really prepared. And here's your part of the plan. You're going to work your tail off.

You're going to get scholarships. You know, if we don't have to use all this money, even better. We're able to roll that over to a retirement account or leave it to grandkids and other people in the family and so i think you have that honest conversation with them as they mature into you know probably early high school and i would i would take it a step further too and letting them know i don't think it's wrong for them to know the amount at the right age to say let's say uh for the eight year old there's i don't know seventy thousand000 in the account by the time she's ready to go on to further education to kind of say, hey, this is the budget.

And it doesn't go beyond this. And the only way it goes beyond this is if you decide that you're kicking in some cash because we're not doing student loan debt. So I think that the 529, obviously the point of it is to save up, but it also creates an opportunity to open up these lines of communication to where you are speaking about the things and the expectations around college that a lot of people, frankly, they don't have those conversations. Parents just kind of it's like, you know, junior year.

It's like, all right, pick your school and that's it. And that's how we have all this. And then we'll figure out the rest later and figure it out means taking out a whole bunch of loans and parent plus loans and delaying their future so to me this it i'm already convinced that you're going to send these kids to college debt free and so i'm not worried about that you've done a great job phil i think as they get into high school you start having the conversation and saying hey you're going to finish college in four years that's what dave said to all the ramsey kids going here's the deal i'm gonna pay for college butsey kids going, here's the deal. I'm going to pay for college, but here's the budget. Here's the limit. You're going to go to an in-state school and you're going to finish in four years. And if you do it that way, I will pay for it. And have them watch Borrowed Future and go, here's what it could have looked like if mom and dad didn't prepare. If we just chose whatever famous school because of the football team, here's what our life could look like. So I hope that helps kind of start these conversations, but you're definitely early on the game in the best way. Yeah, for sure. And we were really just, like you guys said, you know, they are going to start to

hear about college, middle school, high school. Their friends are going to start talking about it. The teachers start to talk about it. And we figured, you know, one less thing to stress over, you know, figuring out how to get there. My wife and I both worked our way to get through college and we feel blessed to be able to offer this for our daughters. But we just figured one less thing to worry about. Yeah. You know, where I, one thing thing that i like and this is kind of an approach that my husband and i are trying to take is i want to be the authority on all conversations for my kids i want them to hear about the things from the first time from us so the first person you're going to hear talking about school and college is is me and papa right and the guidance not from the guidance counselor and that goes on a lot of other issues, by the way, as well. But if you guys, you want to be the authority when it comes to

how to pay for college, how to handle your money, how to do, and the way you do that is you're the first person that they ever hear talking about it. And so I think that that's an advantage that you guys have in this situation too, that they're looking to you for advice, not anybody else. That's the forward. Yeah. you guys are doing a great job. And you show them that, hey, money comes from work. You can give, save, spend, teach those lessons early on. When they get to college, it's not going to be a whiny entitled. I just want to go where I want to go, regardless of my guidance.

Counselor said there were student loan options for me. Oh, my goodness. Yeah. And that's a bunch of financial aid in the form of loans. No, thank you. All right. Jessica is in Miami up next. What's happening, Jessica? Hi, George and Jade.

I'm so excited to be out with you guys. We're excited as well. What's your question today? Thank you for taking my question. So I was just looking for some guidance and some wisdom. It's kind of on the same vein as the last caller. Up to this point, my husband and I have been putting our kids' birthday and Christmas money into the regular savings account. My oldest is now six. So should we be teaching

Spend, Save, Give with their Christmas and birthday money? Or should we just do that with any earned money, like allowance or chores? I teach them with all the money because it is with all of your money. So I would just, if you're teaching it to them as a just kind of as an umbrella way of thinking about money, then I think that it does apply to all of that. And obviously the ratios of it, you know, might differ depending on how much it is or what they've already done. But as long as they know there's three things that you can do with your money, you know. I think that's enough. And then would you would you recommend a high yield savings to put that away or just a regular savings is fine? I mean, if it's no, it's no cost to you to do a high yield.

Right. Yeah, it'll earn more interest. It's not going to be life changing when they've got, you know, 100 bucks in there. But it's a great principle to teach them that, you know, broke people pay interest, wealthy people earn it. And this is what it looks like to prepare for the future. How old are the kids? My oldest is six and then my little one is, he's four. That's fun.

My kids are that age too. So are they in the kindergarten phase? The six-year-old, are they in elementary now? Yeah, my six-year-old is just finishing kindergarten. Okay. I'm going to make sure our team sends you a great blog from our friend Rachel Cruz called 15 Ways to Teach Kids About Money. And it goes through age appropriate ways to teach kids, whether they're in preschool, kindergarten. So, you know, this starts with a clear jar for savings, setting an example with your own money habits, show them that stuff costs money. You know, if they're going to buy the toy, bring cash and have them actually hand over the cash to get the

item. Because when you get older, you realize, oh, I just put my card in, I got my card back, and I got stuff. That's right. And so that's a big thing. Opportunity cost as well. If, hey, if you buy this video game, you're not going to have money to spend on shoes. And then on top of that, commissions, as they start doing chores, give them commissions instead of allowance. That's a big thing, is you don't just get money for existing, you get money for work and there's some things you do because you're part of the family you brush your teeth because that's what you do as an as a healthy person but hey if you help mom clean up the garage or clean up the leaves you're gonna get five dollars oh i'm gonna add something to the list another one i'd add to

the list is the idea of in a moment if you want to buy, it'll be there a week from now and two weeks from now. So it's like, hey, we're not going to buy that today. And then go back and show them a couple weeks later. Listen, it's still there. You can buy it. You don't have to buy it in the moment every time. That's good. I love this.

Teach your mother young. This is preventative medicine, America. And I'll make sure our team puts the blog, 15 Ways to Teach Kids About Money, in the description and the show notes. If you want to read through that, it'll give you some great tips on how to teach your kids about money. And, of course, check out Rachel and Dave's book, Smart Money, Smart Kids. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. We've got an electric crowd in the lobby today for our Total Money Makeover weekend event. They are happy to be here. Ooh, they're cheering and everything. They're enthused. This is the kind of live audience we've been missing out on, Jade.

That's right. I could get used to this. This is wonderful. You guys want to come back next time? Next week? We've got our event kicking off tonight up at the brand new Ramsey Event Center. It's going to be a good time,

and we appreciate all of them traveling from all over the world to be here. Jordan is on the line in New York City. What's going on, Jordan? Hi, how are you guys? Doing well. How can we help? I just needed a little bit of, maybe more than a little bit of financial guidance. I'm getting a settlement cost of around $75,000. Okay. And I'm not sure what to do with it. What was the settlement for? I was in a car accident.

Was everything okay? Are you good and healthy at this point? After a couple years, yeah. For the most part, I'm good now. You're able to work? Yeah. So I currently got my real estate license April 30th. So I just started that journey. Okay.

How old are you? I'm 23. Okay. Are you working full-time outside of the real estate right now? No, sir. So you're doing real estate full-time? No, sir. So you're doing real estate full-time? Yes, sir. Are you making any money yet? No, not as of right now. That worries me. Where are you living? I live in A-side. Okay. Are you living alone with family? I live with my mother. Okay. So you living alone with family? I live with my mother.

Okay. So you have very little expenses? Yes, yes, sir. Do you have any debt? Currently, I am paying off a car loan of $10,000 right now. Okay. But that's it? Nothing else? No, that's it. Okay. Do you have any money saved?

I have about a couple thousand in my savings, in my checking account, and I have about $7,200 invested in Google and Amazon. Okay, so that couple of thousand, is that like $2,000 or $6,000? How much is it? That's like $1,000 or 6,000? How much is it? That's like 1,500. Okay. Cool. When is the settlement going to hit your account?

Well, my lawyer wanted to meet again in one month, so I think around a month. Okay. If I were in your shoes, there's a couple of approaches I'd take here. When this money comes through, I would pay off the car. I'd get that car debt out of your life with the caveat that you're not going to borrow money for cars ever again. At this point, you're set up to buy cars and cash from this point forward. If I were you, I would also consider liquidating these single stocks because they're just not the investment

that you want at this point in your career as an investor. That's later on down the line if you wanted to get into that. And I do a very small percentage in single stocks, but definitely not a starting spot. And then for me, I would be thinking about, okay, I've got this $65,000 left from the settlement. I've got $7,200 minus any taxes or whatever from these stocks. I've got another $1,500 saved. I'd move it into

a high yield. I'd call that three to six months of expenses plus a little bit of savings towards a down payment or my first rent payment whenever you get stable from this real estate. But I don't think you have the stability of a paycheck or a job that's bringing in regular income for you to move out at this point. And I think that that's the second thing that I'd be focused on. Were you working before this, Jordan? Yeah, I was a pharmacy technician for around four years. Okay. What were you making doing that? Around $32,000.

Okay. My worry is that the real estate game right now could be tough to get into and actually see a paycheck from because it's commission-based. And so I think you might need to get a part-time job right now or even a full-time job and do real estate on the side and start to build that up until you can kind of, instead of it being a leap, it becomes a step. Yo, how'd you get out of the pharmacy tech? Did you quit or did something else happen? Well, at one point I joined a contracting agency to where you were contracted to return hospitals for certain times that needed help. And when my contract ended, I decided to step full into the real estate journey, I guess.

Are you working for a broker right now? Yes. Which one? Keller Williams. So it's costing you money right now to be a real estate agent. You're losing money because of all the fees associated with this. You've got the NAR fees, you've got the Keller Williams fees, and you're not selling any houses.

And so that's the part that worries me is from the settlement i'm scared you're going to just drain this thing down to survive and live while hoping real estate takes off what's it cost every month um 100 okay that's not bad i i agree with george 100 i think that you need to go back to doing either pharmacy teching or whatever it was you were doing I think that you need to go back to doing either pharmacy teching or whatever it was you were doing before. Either way, you need a full-time income and real estate is a hobby until it becomes something that's making you actual money. And as Ken would say, you kind of need to pull the boat closer to the dock before you make that leap. Otherwise,

you're going to drown. Right. Hope that helps, Jordan. I wish we could just snap our fingers and make this pretty, but it's going to be hard work. Real estate is no joke. And right now the market's tough. You're in a very intense market in the New York City area. And so I would get a mentor in the space to go, hey, how do you get your feet wet here? How do I actually make my first sale? Yeah. Because that's another thing is who's going to take the chance on Jordan as a 23-year-old first-time real estate agent to go, sure, you can help me sell this $1.5 million condo

in New York City. That's a tough game to be in. And if I could just offer a little piece of, I'm going to say this because I think to be good at real estate, you got to be a people person and you got to be, have a little bit of pizzazz, a little bit of razzle dazzle. And I didn't feel that from my guy. I wasn't getting the rizz, Jordan.

I didn't get the razzle and I didn't get the dazzle. So that's one woman's opinion, but this is- No, that's a good point. Real estate, it takes a certain personality type. You kind of want, you kind of need to like the spotlight in order to do it. Good with your words, good at selling. And people get into real estate thinking this is going to be, I'm going to own the job. I'm going to make great money. And you can eventually, but it can be a grind to get there. And it's not going to come to you. You have to go get it. Yes. You know, back a few years ago, a monkey could sell houses because they were flying off

the shelves. Right now, you got to be a real pro to do it. And so for that reason, Jordan, I would try to get as much training as you can and get this thing off the ground while working full time. That's right. So, all right. John is up next in Shreveport. John, we're up against the clock. Get right to your question.

How can we help? Hey, thanks for making me debt-free first. Woo, you did it! We didn't do nothing, but thank you. Yeah, back in 2010, we went with the plan and got debt-free. But my question is, my granddaughter is a senior in high school. She's leaving to go to George Washington University, and she's got a scholarship, but it doesn't meet all her needs. And she's going to have about a $20,000 a year gap in her scholarship and tuition. And I'm sitting here thinking, should I pay that or make her take out student loans? And I don't

want to do that. Well, you're not making her do anything. If you're in a financial position to bless her in that way, that's something that my wife's grandparents did for her, and it was a huge blessing. And she didn't even realize it until she was out of college in the real world. Are you financially able to do that without affecting your own life? I am. Well, my wife passed away a few years ago, but we're debt-free. I'll have just close to probably about a million dollars in liquid and real estate. Amazing.

Yeah, I can afford it. So if you've got the cash to do it, it's not holding you back. I think that's a wonderful blessing. Or you could split it and say, hey, you work part-time and pay $500 and I'll pay the gap each month. Because studies do show that when students work part-time, they do better all around in school. If she's got some skin in the game, she's going to go, I've got to finish in four years.

I've got to actually go to class. And so I think it's a— Yeah, seriously, she's already got a part-time—well, will have a part-time job. Okay, good. Wonderful. We've got a good head on our shoulders. She's got an awesome grandpa. Man, I think that's one of the coolest ways you can live and give like no one else,

is start with your own family. Cause that generational change where she gets to graduate and go, because of my granddad's hard work, I was able to go to college debt-free. And so that's a beautiful thing. Thanks for inspiring us all. to graduate and go, because of my granddad's hard work, I was able to go to college debt-free. And so that's a beautiful thing. Thanks for inspiring us all. And I would say, hold the trigger, man. Help her go to school debt-free if you can. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour. Phone lines are open at 888-825-5225. Well, don't call it a comeback, but the Live Like No One Else cruise is back, Jade.

It's happening March 22nd through the 29th of 2025. Join Dave and all of us Ramsey personalities for seven days at sea with a lot of special guests from magicians to musicians to comedians to celebrity chefs. It's going to be an amazing time. And let me call out that this cruise is for a specific portion of our audience. Who is that? Baby Step 4 and Beyond, which means you have no consumer debt, you've got the emergency fund, and you're ready to have some fun and celebrate. This is the ultimate debt-free celebration. I think we're going to try to set a world record for largest debt-free screen. I'm here for it.

Let's go. I've always wanted to be a part of a Guinness world record. This is my chance. So we're going to take over the entire cruise ship. It's going to be all Ramsey fans. That's going to be intense. We're going to stop at some incredible spots, including Turks and Caicos, St. Thomas, San Juan, the Bahamas. And VIP upgrades already sold out. Most of the suites are sold out, but we do have some amazing

cabins still available, like ones with the ocean view. You got to get your deposit in now. That's what you're committing to. This thing will sell out because the first one sold out within weeks. Wow. And we launched this thing a few weeks ago, and it's happening less than a year from now, March 22nd through the 29th. Go ahead, budget for it. Talk to your spouse. Book your cabin. I did find out that you can bring your kids.

Yes, I'm bringing my kids. Should I be saying that on the air? Uh-oh. I'm not bringing them. Warshaw kids are going to be running rampant. But someone said, hey, can I bring my teenager? And I asked the team. They said, yeah.

Yeah. That's great. It's your whole family, as long as y'all are debt- free and baby step four. Love it. So go book your cabin, ramsaysolutions.com slash cruise. That's the place to go. Can't wait for that. CJ is up next in Atlanta, Georgia. What's going on, CJ? Good afternoon. How are y'all? Doing well. Good, good. My question is me and my wife are interested in purchasing a laundromat. I'm just wondering, would it be better to do a seller financing route or would it be better to take out an SBA loan? Trey leadership book, the whole brand. We are big on launching and starting and running and growing your business completely debt-free, which tells me we're not ready to start this business.

Gotcha. So what's this laundromat going to cost? Approximately around $750,000, but we're still kind of shopping around. That's just to get in? That's the lowest entry point? Yes and no. We're still kind of looking around. But that was one of the starting prices that I had for one that I kind of selected here in Atlanta. What made you go, I'm going to buy a laundromat in Atlanta? Well, we were just looking at businesses that obviously have that type of cash flow that we can kind of self-manage. And just something, just a starter for us to continue

to develop income over the years. So laundromat and or smaller car wash kind of came about. When I hear 750 to start, that doesn't feel like what you just said, like a starter, like an entry-level thing just for you to get in and manage. That feels like something that is a huge undertaking to manage and honestly financial output before you're able to earn it back because you're not profitable until you've paid back the $750,000. What's the cash flow of this place? The cash flow is about $250,000 fifty three hundred thousand dollars a year and revenue um after uh no top line i think is around ninety two hundred thousand no it's it

the bottom line would be the smaller number i'm sorry yeah i'm sorry yeah yes sir yeah ninety two hundred thousand um profit bottom line sir. Bottom line profit going to you, not net profit? Yes. Okay. And this would be your full-time job? No, this would be something outside of my full-time job. Okay. What's your current household income? Current household is $148,000. Cool. And how much, do you have any debt right now?

No, sir. We are debt-000. Cool. And how much, do you have any debt right now? No, sir. We are debt free. Wonderful. If I were you, I would not forfeit your debt freedom. In any case, I would not do this deal in debt, but especially you forfeiting debt freedom because you guys have chosen that to be a value in your life. And so this doesn't align with what you guys have said are your values. If you you clearly care about being debt free because you went through that journey. If I were you and obviously it looks like you're buying an existing business. If I were you, I'd say, OK, if we just we are on fire about clean clothes like this is what gives us the juice, as Ken Coleman would say, then I would start looking at what does it look like for us to create a business from the ground up that we can move at the speed of cash to create.

And then that's going to be something that truly, you know, you're going to be able to get into the business that you want to get into it in the right way. Does that make sense? Gotcha. Yeah, that does make sense. Yes. I know just for us, we're just looking just to buy a victim business, just to kind of create more income change down the road. So that was the main purpose, but now you understand. If the goal is to create more income i want you to understand that you can do that it you don't have to buy something existing to create income you can create income

tomorrow selling the the things out of your garage i mean if that's the goal so when you when you run it through that lens you go okay that that makes sense now if you're thinking that it'll be less work for me if I buy something that's existing and I can have, quote, make money while I sleep and it's not going to require anything because somebody else got this up and running, I would caution you on that because I don't care what business you do. It takes work and effort and time and attention, even if you do buy something that's existing. And it's going to add a whole lot of risk to this. And that's what we find with business owners that do it with debt is they end up adding a whole bunch of risks

to their life. You're going to take out most of this with financing and with an interest rate. And then what happens if something goes wrong? What happens when you want to move? You don't really have the freedom you think when you owe three quarters of a million dollars in debt. That's right. That's tied to a physical location. So I would caution you against this. I know there's a lot of TikToks out there being like, oh, bro, it's so easy. It's easy money. And the reality is, if you talk to anyone that actually runs a business, it takes years. It's a grind. And when you do it debt free, at least it takes a whole layer of risk out of the picture. And so. And the truth is, when you when you operate a business with debt, my husband and I's business, we've always operated it at the speed of cash. It's a debt-free business. And I can't imagine having to make the decisions that we've had to make on a daily basis with the caveat of debt, right? Because then you're going, well, I've got to make this because I've got these bills coming in and I've got to make this. Like it creates a level of franticness around your decisions that I wouldn't want there.

We can make decisions purely from the place of profit. Wow, that was really purely from the place of profit. That was a lot. But you see what I'm saying here is debt changes the way that you make decisions. It changes your heart rate, all of those things. So if it's just about cash flow, CJ, you might want to look into a real estate investment property that you pay cash for. Maybe that's a $200,000, $300,000 condo that you pay cash for

and it's going to cash flow $2,000 a month and we start there and build. But it doesn't sound like you're passionate about laundromats. You love the idea of cash flow. Yeah, everybody wants to make money. That's nothing wrong with that. Yeah, we all want that kind of freedom. But adding debt to the picture is not going to give you

the freedom you think. Thanks for the call. Kelly is up next in Phoenix. What's going on, Kelly? Hey, thanks for having me. I just had a quick question about the two cars I own. One is paid off. One has an $11,000 loan on it. The one with the loan I use recreationally on the weekends, and then the other one I use as a city commuter. I'm just curious to know if I should sell one of them to kind of get a jump start on investing and saving more and things like that. Do you have any other debt? My second car.

I do not. No, just the car. How much money do you have in savings? Just the starter emergency fund of $1,000. And what's your income? $40,000 after taxes. Okay. It's just you?

Just me, single, yep. What's your other car worth, the paid-for one? I think $5,000, give or take, on Kelly Blue Book. It's a Hyundai Veloster. Wow. And your recreational vehicle is worth how much? I think $5,000, give or take, on Kelley Blue Book. It's a Hyundai Velocity. Wow. And your recreational vehicle is worth how much? About what the loan is worth, about $11,000 or $12,000.

Yeah, I would sell that thing because it's a toy. It doesn't have any functional utility other than having a good time, and I'd rather you get rid of that, clear your debt, build a fully funded emergency fund, and then save back up and pay cash for that recreational toy next time. Got it. Okay. That's what I would do in your shoes. And if you want to aggressively pay it off, you can, but making 40 after tax, it's going to take a long time. And this thing really has no functionality in your life. I'd rather use that time you would have spent recreationally to be doing side hustles to get rid of debt and get you in a good financial spot. So we'll get back to the fun in no time. But for now, we're doing some grown-up

stuff, Kelly. Thanks for the call. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Our question of the day today comes from Anna in Coloradoado and we have phoned a friend if you're wondering what dr john deloney is doing here it revolves around mental health and we grabbed john and said john i've always wanted to phone a friend like who wants to be a millionaire and john was kind enough to join us that's right i was i was just doing somersaults in the hallway back there and you're like hey you want to come on the show he's generally if you're wondering what john's doing when he's not on the show, he's working out constantly.

Right. Probably not. Well, thanks for being here to help us answer this question, John. All right. So Anne in Colorado says, she says, I'm the wife of a military veteran who suffers from mental illness

and a traumatic brain injury. Because of his injuries, I am responsible for handling all the finances in our house. I try to sit down with him once a month to go over the budget, but even if he participates, he will forget it almost immediately. His injuries have impacted his memory, his ability

to concentrate, and they make him become impulsive. We are currently on baby step two with a lot of debt. My husband says that he's on board with becoming debt-free. However, his mood swings and impulsivity make it extremely difficult to keep moving forward he continues to overspend in all areas of the budget when i try to talk to him about it he becomes defensive and tells me i'm trying to control his life it's almost like dealing with a fourth child it is making it very difficult to stay motivated and getting us debt free my ultimate question is how do i manage both his mental health while staying on budget and working towards a debt-free life i want to continue doing this as a team but i don't know if i should that one's a heavy one um

so this is one of those strange situations that because of the nature of something like this whether it's traumatic brain injury or it's a mental health challenge or let's say somebody loses a sibling or a parent and they just go into a black hole of grief for a season right this is one of those moments that you got to pull yourself out 30 000 feet and we teach these principles and we just repeat them and repeat them and repeat them and there is some moments when we have to say stop you have to stay safe and you've got to preserve the integrity of your home that's right and so like for instance we might tell somebody who like get out of get out of debt baby step two baby step two oh you're pregnant okay stop just stop until the baby's

born and then you can dump all that cash in there this is a similar situation where um for this particular person for bethany um i've got some like one of my oldest best friends on planet earth struggled from a pretty significant tbi you're you in many ways you can be dealing with someone who has the capacity the emotional capacity the cognitive capacity of a kid of a teenager of a young adult and so i have to build in um structures for lack of better terms they're going to keep me and my kids safe right so i'm not going to recommend this couple share a bank account that's not safe and it's not smart yeah i'm also going to recommend if she decides to stay in this marriage which i hope she will i think death till death do us part is an important thing sickness and health is an important thing and i know it's hard hard hard um she's gonna have to get some people um on her side

that will look at him and say because he might not be able to hear it from her she's gonna give you some money every month right that's gonna help create boundaries that she by herself can't can't do um and then we are gonna there, there is going to be an area of this that it feels like she's a parent. Like, here's what you can spend on this. And we're going to take away access for other ways to get money. Does this improve over time, John?

Or is this kind of what it is? Man, TBI is, it's like taking a rubber bouncy ball and the three of us just throwing it in a room. That path of that ball is the different constellations of how tbi can be healed how it can be managed how it cannot be healed it's just everybody's situation is different wow so you're saying we need to put some guardrails here and that includes separating the bank account maybe taking away because she's saying he feels like it's controlling his life but at some point does she have to have a conversation and go listen

i do have to control our finances you know that almost like a power of attorney yeah situation where financial power of attorney um yeah i mean that's that's that's a pretty significant move to take um you know financial power of attorney well i'm not saying that it's it's kind of the idea though that somebody else is not really in a health state that they can make those decisions so i'm not saying legally she should do it, but it's... So I think the way we would say it is you have to be unified in your marriage when you're dealing with your money.

She's not going to have that luxury. So she's going to have to get somebody else that she can make some of these bigger decisions with. And often he can't hear it from her. If she says, I can't give you any more access to money, I'm going to freeze your credit. I'm going to do these things for you. He can't hear it from her. If she says, I can't give you any more access to money, I'm going to freeze your credit. I'm going to do these things for you. He can't hear it from her. He might hear it from one of his military buddies who was with him. He might hear it from a financial coach, a military doctor who he trusts and who would come sit with all three of them, right? Sit down as all three

of them. So it's about looking at the situation and being honest about it and knowing there are situations when we have these principles, we are saying over and over and over again. Maybe your husband or wife is bipolar. Bipolar one and cannot, it has real lows and real high highs. Part of managing that is saying, I'm going to hold the debit card in the house, right?

And you're not going to have access to the account. If you ever need anything, we're going to talk about it as a couple, but it's my job to keep us safe when you are real high or real low. So it's not a control mechanism where I go, it's beyond just like, I don't trust you. It's you don't have the ability to make wise decisions day in and day out. We all agree on that. And we all agree on that.

And so I think letting him see the budget and have access to it and say, here's your fund money. Here's the the limit remember what we talked about yesterday we said you have a hundred dollars left and you spent that well and so in is that part of well but here it's saying um injuries have impacted memory right and so yeah we can have a long talk a a talk full of tears we're committed to go forward he wakes up the day and has no recollection of that conversation. Which I'm sure is frustrating for the other spouse. And it's frustrating for him. He doesn't want to disappoint.

And so he may respond with shame. She may respond with anger. It's just a part of it. But she has to know he's not going to remember this conversation tomorrow. So I've got to put some breaks and boundaries on this thing.

And that's really, really hard. It's hard. It's tough. It's hard. Yeah. I mean, she's taking a role of caretaker at that point. Yeah. And we take this call all the time about adult parents, right?

Sure. Who maybe have dementia or maybe not making great choices as they're entering into their 70s and 80s. Or if there's an addiction. What do you do? There's gambling, things like that. It's the same principles underneath it of we need to be in control we need to take away access and at the end of the day that is never a comfortable conversation and um i remember sitting with a group of policemen we were talking about when

they were going into homes doing doing mental health calls and one guy said the thought of walking into somebody else's home and taking away their civil rights, their right to have freedom. And I take them just because of their minds not working. It pained him. And when he said that, I was like, exactly. That's that. It's hard to look at somebody, an adult and say. You're taking away their agency in a way. That's exactly right. Well, I would think there's probably a grief that both of them are going to experience because she thought, hey, we're in this thing together. This is going to be part of our life together. We're

making financial goals. We're making financial goals. We're tackling these things. And it's not going to happen that way. And I'm sure in the moment that he remembers, he probably felt that same way. So they both have something that they've lost. And that's sad. And a traumatic brain injury, especially certain mental health challenges, is extra hard because there's no outward. There's not any big scars, there's not missing limbs. It just looks like my old guy, right? It just looks like my old wife.

It just looks like the old fill in the blank and yet everything's different now. And so Bethany, I would tell you your grief and your exhaustion is real and it's right. And it's, it's, it's totally right. And you have to make a plan that is going to keep you and those kids and your exhaustion is real and it's right. And it's totally right. And you have to make a plan that is going to keep you and those kids and your husband safe. And that means you're going to have to go at this alone or not as a marriage partner, but you're going to have to find somebody else,

a Ramsey coach, a local FPU leader, somebody that can walk with you and help you make some money decisions, a parent, a therapist, somebody. And then you're going to have to get some other people in your life to help create some boundaries with this with their husband there's no easy way to go about this but those steps are at least practical and tactical go we're gonna set the boundaries have the hard conversations put the guardrails in place get third parties involved well i tell her to get connected with

better help at least she can be talking to somebody on a regular basis, somebody to help her put those guardrails in place, like what you spoke about. And let me say this. Often people who find themselves dealing with kids, financial challenges, and then a spouse, romantic partner that's got challenges, right? Whether it's any number of mental health challenges, TBI, whatever.

Often the phrase is, I can't keep doing this anymore. And I agree with that. But often we think that this is the marriage. It's not. It's this chaos. So get some help, get some boundaries and start putting some barriers up. And then maybe you can continue with the marriage. Super helpful. John, thanks for jumping in, phoning a friend. It really works. It's good to have friends like John. Be sure to check out his book, Building a Non-Anxious Life. It's so good, and I love the way he helps people navigate all the challenges that touch money

but are so much deeper. Thanks, John. That puts this hour of The Ramsey Show in the books. Thank you to John and Jade and you, America. We'll be back before you know it. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by the one and only Jade Warshaw.

Open phones at 888-825-5225. You call us and we'll do our best to help you take the right next step for your life and your money. Denise kicks us off in Provo, Utah. Denise, welcome to The Ramsey Show. Thank you so much. I'm so nervous to be on the phone with you guys. I know. We'll take good care of you.

I really love you and Jade. You guys are amazing, and I just look up to you guys so much. Oh, thank you. I'll let Ken know. She's no fan. I'm just kidding. I love Ken'm kidding. Ken, I'm going to get your book. There we go. Ken's not here. Don't worry. He can't hear you. I'm just having fun. How can we help you today, Denise? Thank you. Okay. So I have a question. Our house, we're needing to get our HVAC replaced. And so we've gotten a few estimates, you know, right now we're on baby step number two,

and we are going to be done paying off our car, which is the last thing that we have to pay off next month. So we're so excited about that. And we're just grateful for the baby steps that you guys have laid out because it's really helped us to be able to get financially ahead have financial peace um however our hvac is needing replaced it's going to be about eighteen thousand dollars and so my husband that's the best quote you got um that's the one that we have um from the people that service that we have a membership with um we are planning on getting other quotes is there a. Sorry to cut in. Is there a way that you can kind of do the heating thing first and then the cooling thing or whichever one is most pertinent to the time of year to spread it out? I hadn't thought about that just because

I've been told that it's usually like you can either replace one, the other one usually is needing to be replaced around the same time and it is the cost is a little bit less when you do both. But I hadn't thought about that. What is this membership? I'm sorry? What is this membership? It's through Whipple. They're just like a local plumbing, heating, HVAC services.

And so it's a $20 a month fee that that we pay to them and they come out and like service our ac our furnace um we have like drain cleaning electrical safety stuff that there's like a warranty kind of company or like a yeah repair okay yeah i would get um many quotes because 18 000 just hearing that feels high i don't know your house and your situation it could be real but that just i would get a lot more opinions okay even if there's a way to like keep it going for six more months to allow you guys to save up you know we got to just see what all of the options are before deciding because my guess is you're saying hey are we gonna should we just go ahead and take out a bunch of debt for this. Right. Well, because, you know, like originally my husband and I were like going to save our six months to do baby step number three.

So save six months worth of expenses. And then at that point, start saving for the HVAC. And then hopefully it doesn't die in between that time. And if it did, we would just pull from that emergency savings if that did happen. However, the guy that came yesterday to do the AC tune-up said that the prices probably will be going up just because of the rate of inflation. And so he said, maybe it'd be better if you guys finance.

Of course he did. This guy's a real salesman. I mean, come on. I know. I did tell him, I said, no, we're not going to finance. We're going to save and then pay it in full so we don't have any debt. And so he said that's, you know, he agreed and said that's great, but the prices could go up next year. And so instead of paying 18, you might have to pay 21.

So maybe it would be better if you guys just did it now. And so I only, I thought about it only, you know, when my husband presented it to me. And I thought, I don't know. I don't think, I don't want to like go back to debt again. Like we're almost hanging off our car. We're not going back to debt again. That's got to be the line in the sand. So how much money do you guys make a year?

Our household, including our, so we rent out our basement. That's the only reason why we're also considering this is because we rent our basement. We just want to make sure that it's a good livable place and we're not having issues with our renters downstairs. Um, do you need the rent in order to, do you need the rent in order to make the mortgage payment? Um, it helps a lot. It helps it. So that way I don't have to work cause I stay home with my children. And so when we bought this property seven years ago, we bought it so that way i don't have to work because i stay home with my children and so when we bought this property seven years ago we bought it with that intent was for me to not have to work anymore i just wanted to know i just wanted to know in case something like in case you do have to elongate this and in case it does cause that a basement apartment or whatever

to be uncomfortable i just kind of wanted that little bit of information okay what's left on the car um forty four hundred dollars okay and what's it worth which will be paid off by the end of next month what's the car worth um our car our minivan it's worth uh i'd say like probably 24 so the first the first key is that that that george is getting as we've got to pause the baby steps like this is kind of an on-fire emergency so i know you're saying oh the car will be paid off by this point but that's to your point that's 4 400 that are are now going to be freed up to go towards at least half of this system um what i'm wondering here's another solution that could fix this temporarily is if you sold the van and you netted $20,000, you covered the HVAC, and you came up a little bit extra money and got a beater car to get you by until you can upgrade that car.

We probably could look into that. We just got this minivan because we had our third child about 15 months ago. And so we, I don't know if that's, I mean, I would definitely like consider it and entertain the thought. I just. You can get, he's not saying that you have to get a car. You can still get a vehicle that fits everybody. It would just be a lot older with a lot more miles on it. And it would only be temporary. It might be like a six month thing until you upgrade, you know,

to a five grand more expensive van, to another five, you know, so you kind of stair-step back into a $24,000 van, but at least this gets you an HVAC without debt. Yeah. So that's at least one option. What's the household income? Sorry, $100,000. $100,000.

Okay, so how quickly could you save up $18,000? If you guys cut your expenses down to nothing, you pause the baby steps, maybe he picks up another side hustle, maybe you're working part-time, how quickly could you save up $18,000? I'd say we could. So I had projected us because I set the goals for our financial goals. And so we were going to have our six months and every six month emergency fund by just by the beginning of December. So I think and so that would be about

14,000 that we would have saved up by December. So probably like another month or two after that. So like I'd say next year by February. Well, I bet you could do it sooner because remember, you're pausing the baby steps. So all that money that you were throwing towards debt in that equation, that's now back in your pocket. So I think you'd still be on track to have this done probably by October or November. So if you got aggressive and this HVAC can live until October and you get a few quotes and now you find one for 13 or 14 instead of 18, well, now we're cooking with gas quite literally. Yeah. Okay. So I would look into all of those options and as a worst

case scenario i think you sell the van and figure it out if you need to cover the if it becomes a true emergency where hey this thing's out and we're freezing we're to whatever it is that becomes sort of your scapegoat to get out of this thing and we'll figure out the car borrow from family rent one for a little whatever we got to do to get by. But do not go take out a $20,000 loan because some salesman said the price is going up next year. Yeah, he doesn't know. That's a classic tactic. And he might be right, but I'd rather you spend $3,000 more than go into all this debt and go backwards. So you guys are working hard.

Keep working the plan. It works. Pause the steps if you have to. Cover the emergency, and you'll be back on the horse in no time. This is The Ramsey Show. you'll be back on the horse in no time this is the ramsey show we'll be right back welcome back to the ramsey show i'm george camel joined by jared warshaw the number to call is 888-825-5225 well jade as we like to do we you know we try to do, we try to stay hip. We try to keep our finger on the pulse. That's right.

And this headline got me that we saw the era of no show fees is here and it's going to cost you. So this is kind of coming out of this tipping over crazy tipping culture. Yes. And now there's a fee culture and that includes the no show fee. Yeah, it's basically you set up an appointment and if you don't show up, you get charged. Right. So it says we all have that friend who texts to say he or she is running late after you were already supposed to be there.

So now businesses have a way of putting those flakes in their place and they're charging people for not showing up. So if you're getting a haircut, if you're used to kind of a low tech operation, then these people can say, no, if you don't show up for your haircut appointment, we can charge you a fee. I know when I get my nails done, they'll make you put a deposit up front. And then if you don't show up for the appointment, they keep the deposit. That's the thing is they go, hey, you got to put a card on file. And if you don't show, we're going to charge you. And one barber in California charges customers up

to a hundred dollars, double the price of a normal haircut for missing an appointment. And on one hand, George, I get it because you're not just paying for a service, you're paying for their time. Like there's a time element there. And I remember when I used to teach lessons, it's so frustrating. The way I had it set up, it was like, hey, after you do your lesson, you pay me. And then I started noticing, you know, people would easily be like, oh, I can't make it. You know, my grandma was late or I had to pick up the dog from the groomer and it's like okay so then i started making people pay up front and it's like if you miss your lesson that money is mine you don't get it back you don't get it back yeah and so which is fair for like a small business

owner a solopreneur your time is money especially something that you're trading time for money like a lesson an appointment a personal service that's right so i can understand you know a no-show fee for that but can they can george here's my question and i want to know what the audience thinks about this can it be flip flopped like can it go on both sides because here's my thing if i set the doctor's appointment for two o'clock and they say okay jade and also up at 1.45 so you can do the paperwork. And if I show up at 1.45 and you don't see me until 2.45, can I get a refund on my time? That would change the game. You know what I'm saying? Yeah, especially in the healthcare world.

This happens a lot. Yeah, look, they're clapping. They're like, yes, Jade. The doctor's office. Hold on. Why is your time worth something but mine isn't? You made me wait 45 minutes. Even the the repair people they give you that crazy window they say whoa well you know the hvac guy will show up sometime between 1 and 4 p.m the internet guy is like i'll be there

sometime between 8 and 5 you take off work you take off time from work and then they're like oh our technician couldn't make it out there couldn't make it out there what are you like can i yeah can i get a refund can i get some dollars off for my time that's all i'm saying can i give you a life hack what i don't know that it's fully ethical so let me just put that caveat out there but i use a service this is not a sponsor they're called privacy.com and it's a way to create virtual debit cards okay so sometimes what i'll do if i'm uncomfortable putting my card info in, but they require it, I'll go make a virtual debit card and then you can set limits. So it can say, hey, if it charges over a dollar, decline it.

But does it do it on the spot? So it'll give me a new card number, a new expiration date, three digits, all that. I input that. Yes. And I can set a limit on that card to say, don't let any transactions through it are over a dollar. And so it'll get declined if someone tried to run that. Got it. For $40.

So you're hacking the system. So that's, you know, do what you will with that information. It's not none of my business. But to be fair, I had to cancel a haircut this week and get it rescheduled for today, if you can tell, America. It looks good. And my barber, because we have a relationship, I've been with this guy for many, many years.

He was kind enough to not charge the cancellation fee. And because I pay cash, he said, well, if you had a card on file i would have it would have charged you yeah and well i don't have a card on file because i'm a cash guy and he went dang it foiled again uh so you know i think the key here is it's got to go both ways yes and maybe just like you said a little bit of human, a little human nature to this. And sometimes it's kind of the nature of the beast. You pay the fee and go, yep, that was on me.

Yeah, it says cancellation fees started taking off in 2020 because the businesses were being so hit, hit so hard by COVID. It kind of was like, this is a way that we can make sure we're not losing money hand over fist. Yeah, you got to see both sides here.

And I think there is a lack of commitment in today's world. And we're so scattered, we're not losing money hand over fist. Yeah, you got to see both sides here. And I think there is a lack of commitment in today's world. And we're so scattered, we're so busy, and we're so focused on ourselves that it can affect. You got to think about how this affects other people. Well, and your business too, because it says that customers are actually resenting paying the services for fees that they don't receive. Like there can be a resentment that it's like,

oh man, every time time you know i really did have something that came up with my kids and this guy's been cutting my hair for years and now he's going to take he's going to charge me so it can build a resentment or even if you're the customer and the technician doesn't show up and it's like you know i think the takeaway here is show up on time have grace yeah when people have things that pop up i think that's that's the situation have some grace on both sides if you're the business owner if you're the person have some grace be understanding but also be a person of commitment yeah of character and if you condition out you better be able to take it if you're gonna dish those fees

i'm gonna ask for my money back can i you just give me a discount code and we'll call it square i fight i fight every cancellation fee i can count on one finger how many times i've paid one of those bad boys so there you go that was fun josh is up next in dayton ohio what is happening josh hey how's it going guys good how are you doing well hey um so my question is I just started listening to your show about a week ago. Someone recommended it to me. I was talking about getting out of debt, and I've been listening to it religiously. So I have about $22,000 in consumer debt, and I kind of already have the first baby step done. I have $5,000 saved up, And I was usually saving $800 a month.

Now I'm applying that $800 to all my debt. I'm going to start with my highest credit card, and then I'm going to work my way down. And I kind of have it set up that it's going to be about 18 months, and I'll be debt-free, except for my mortgage. I'm just kind of looking for some more pointers and see if I missed something. This is your guys' career, and I'm just kind of hoping.

It's just the $22,000? It's just the $22,000 of debt? Right. And it's all credit cards? So I got four credit cards. I have a car note, and then I have some student loans that are lingering. How much is the car note? I owe $5,600 on it.

Okay, $5,600. Okay, and that's part of the $22,000. And then you told me you have $5,000 set aside. So if we're walking through the baby steps real quick for you and any other new listener, first baby step is you keep $1,000 saved or you get $1,000 saved. And then anything beyond that goes to baby step two, which is paying off all of your debt using the debt snowball, which is what you alluded to. You list them smallest to largest. Now you said the height, you were paying the highest card first. You got to pay the smallest balance first while making minimums on the rest. Well, I meant my, the highest APR. So my smallest balance happens to be a 31.49 APR. So let's, let's reverse that. Let's reverse that. So the way we teach is in the

debt snowball, you list them by balance, smallest to largest, and you pay the smallest balance first. And the reason we do that is because it's psychological. Like you want to get those quick wins and you want to keep going. And in the end, any interest is negligible, honestly. And you said that happens to be the highest interest, that smallest balance? Yes. Okay. So that's just a coincidence there. Okay. So you're attacking that. If you used $4,000 of your $5,000 to knock down the debt, you'd be down to $18,000. And you said you're able to put $800 a month right now toward it? Right. Correct. Okay. How do we make more, how do we create more margins so you can put $1,000 toward it, $1,200 toward it?

Oh, I have two kids and a house payment and my wife, she's getting ready to go through school. The budget's real tight anyways. I just downloaded the Everyday Dollar app and I put it all on there and I thought I was a lot more expendable money. It turns out I don't. I don't know how I was making it this far. What's your income?

I make about net, I make $970 a week. So my, at the end of the year, it's about $50,000. What's your paycheck look like every month? What's it say in every dollar that you bring home? I bring home right now, I'm getting a raise here starting June, but it's $970. Per week? I think it's a week.

So a month, it's $3,880. $3,880. $3,880. Okay, and the wife's not working. She's home with the kids? No, she's working. She's a server at a restaurant. Will she continue that while in school? Yes, she is.

And that's why I'm trying to get out of debt, too, so that way if she's starting to struggle, I can kind of do my husbandly duty and take care of it. Okay. Well, the key here is margin. You've got to cut all the expenses you can make as much as you can. That's going to speed up this whole process. 18 months to pay off 22. I think we can do better than that. It just feels like too long. It's not that much

debt comparatively. And so I want to see you knock this out fast. So hang on the line. I'm going to send you FPU, Financial Peace University, along with every dollar to help you gain some tools and you can go through this with your wife. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. You've heard us talk about EveryDollar on the show today. And if you're wondering what the heck that is, that is our budgeting app that our team created to help you make the most of your money and actually hit your money goals. And so EveryDollar is an app that our team created to help you make the most of your money and actually hit your money goals. And so every dollar is an app. It makes it super simple to plan your spending, track your expenses, save for what matters to you.

And it's all in a easy to use app. Both people, if you're married, both spouses can be logged into this and have that transparency and accountability. Helps you keep a pulse on your spending. So it's not for broke people. It's not for rich people. It's not for nerds or accountants. Budgets are for people who want to win with money. It's that simple.

I always say budgets are like toothbrushes. Everybody needs one. Mmm, I like that. If you don't got one. It's ratchet. Oof. Mm-mm. It's funky.

It does get funky if you're not budgeting. So download EveryDollar for free in the App Store or Google Play today. Thank us later. All right. Gunner is in St. Louis. Gunnar, what's happening? Hey, what's happening? How can we help today? Yeah, you sound great. Awesome, fantastic. All right, so I guess I'll just jump right into the question. So I was online and I found several different debit cards that you can get a 1% return on,

depending on however much money you spend. And I was curious if you think this might be a good alternative to credit cards, because you can get the rewards, but you can also avoid going into debt. I mean... Is it a better alternative to credit cards? Absolutely. Is it worth your time and effort and money?

That's debatable. 1%. I don't have a cashback debit card if it tells you anything and here's the reason just mathematics and so i wouldn't get the card because of the cashback if it happens to be a thing for example i got a costco membership and i'm i got the executive membership that's the kind of guy i am and they give you like two percent cashback and so if you're doing the math on that you're going okay for okay, for every $10,000 I spend, they're

going to give me 200 bucks. That's what I'm saying. It's not, that's nothing to get excited about. And for how much I actually put on my debit card gunner, I'm not spending, you know, $50,000 a year, $100,000 a year on my debit card. And so I don't think the cash back would be worth it. But if you're going to do it, do not let the cash back sway you in any way well there is a negative side to that and i think there is a piece psychologically that if you think if i spend more

i get some sort of reward reward in quotes i think we already know that when people use plastic over cash they do spend more and that goes up when it's a credit card versus a debit card but i do think there's something around that that it's like, okay, if there's somewhere floating around in your psyche that the more you spend, the more, like I said, quote, reward you get. I don't like that. And so I, like George said, if it happens to be, if it happens to be there and it's like, oh, I got a little money back, who cares? But I wouldn't go out of my way to select that because like you said, that one to 2%, it's not breaking anybody free financially. Like, it's not the holy grail to financial peace.

What do you think, Gunnar? No, certainly that makes sense. Yeah, that all makes sense. I'm not against this. I just don't think the benefit's really not there, especially, you know, 1% is negligible when you're talking about, you know, let's say you have $3,000 of expenses you could put on the card. That's $36,000. So when you start doing the math on this, you're like, okay, I'm going to spend $36,000 in order to get 360.

Okay. Is that going to change my life? No, because if you're making good money, I can find 360 in a single month if I'm just intentional about it. So that's the key. If you're budgeting already and you're not spending any more, that's always the argument with credit cards that I hear, Jade, is, I don't spend any more than I would have with a debit card. No, that's trickery. That's not true. That's a lie from the pit of hell. I don't buy that for a second. So I like the spirit of the question, Gunnar. I don't think, you know, the biggest part is you can't spend more than you have with a debit card.

So you have a built-in fail-safe. So if you want to do it, go for it. But again, I don't think it's going to be worth the time and energy or switching banks and debit cards and all of that. So it's a good question, though. We're seeing more of these cashback debit cards pop up. Yeah, I'm like you, George. I don't think it's a bad thing or a negative thing.

I think sometimes people, to your point, they don't really do the math, and they think, oh, this is something I'm getting, and it says it's a reward and it says it's a prize, and I think sometimes it can make people go, well, I get the cashback. I'll just go ahead and buy it. I get the cashback, whether credit or debit. And I'm like, wait a second. Be like George and do the math, and then you'll think twice about buying those.

Thank you, Jay. Be like George. That's what America needs right now. Like George. Be like Mike. Be like George. All right. William is in Iowa City up next.

William, welcome to The Ramsey Show. Hi. Thanks for taking my call. Sure. How can we help? So I have a couple of investment accounts. One of them has about $18,000 and the other one has about $14,000. I have one of them kind of earmarked as our three to six months of expenses for the emergency fund.

We also have two car payments right now. One of them is pretty low and the other one is a decent amount, but I get that vehicle allowance from work. And I guess my question is, would it make sense to take money out of the other investment account that I don't have really earmarked as an emergency fund to pay off one and a portion of the other vehicle loans. Are they retirement investments or are they just a brokerage you have?

Just a brokerage I have. One of them was started for me when I was a baby, actually. My grandpa started it for me. And then the other one was money that my wife and I paid up. And rather than just kind of having it sitting around as an emergency fund, we asked the investor to put it somewhere where if we needed it, we could get it out within a matter of a day or two. So it's just a regular investment.

Well, the emergency fund is insurance, not an investment. So it worries me when anyone puts their emergency fund in something that's volatile. And so if you want your money to grow a little, we're seeing some amazing rates on high-yield savings accounts right now of 5%. And so I would absolutely, even for your emergency fund, if you do nothing else, move that money over to an emergency fund and just let it grow at 5%. It's not there to grow. Again, it's insurance against life happening. And I don't want that to be volatile to where you lose $3,000 and all of a sudden you have an emergency and it hurts then to use that money. What do you owe on these two cars?

So on my wife's vehicle, we owe about $9,000. And on my vehicle, it's probably $25,000. And that's the one that you're using a credit for or an allowance from your job? Yes. Do you get the allowance regardless of... The vehicle... Yes, we get the allowance regardless. And actually, the vehicle allowance covers my payment and my wife's car payment the allowance covers both the amount that i get if

you get it regardless if if the vehicles are paid off even if if not i would pay off both of these vehicles as quickly as possible and i would liquidate both of these investment funds in order to do that. Because that's walking through, what I'm telling you is walking through our baby steps, which is our framework for getting people to financial peace in the fastest, most risk-free way. And so if I were you, I'd say, okay, yeah, I'm gonna liquidate both of these.

I'm gonna pay off the $9,000 and then I'm gonna take what's left that I have here and I'm gonna throw it at this $25,000, which is almost enough to to take what's left that I have here. And I'm going to throw it at this $25,000, which is almost enough to clear it. And you're going to be getting those allowances anyway. So you can knock out the rest fairly quickly now that you don't have a car payment. And then in the next two months, you're going to be completely car debt free. And then you can take your cash, all those payments that were freed up in the allowance that you have from work. And you can stock up three to six months of expenses and do what George said, which is throw them in a high-yield savings account.

And that's going to be the most stable you've ever been with that money. Got it. So then at that point, we would be debt-free. That's right. You will be debt-free. Ooh, ding, ding. Think about this. You have 32 in investments. I don't know what you'll owe in taxes on the capital gains of the investments, but let's pretend it's zero right now. And $32,000 minus your wife's car, minus $22,000 that we could still throw at it, leaves you with $1,000 left over for your starter emergency fund. Well, now you only have $3,000 left on that car. And with your allowance and a free to payment from your wife's car, plus your income, you're going to knock out three grand in what, a month or two? Yeah, that's easy.

Boom. So we're talking about two months from now, you're completely debt free. Then we can restock the emergency fund inside of a high yield savings account, probably over the next five or six months. And now we're cooking with gas. Now we can get back to investing with intentionality and start investing 15% of our income. What's your income household? Right around 125, 130. Yeah, yeah. You guys are going to be baby steps millionaires in no time. Get this. In one year, 15% of 130 is 19.5. That's more than you have in that investment account. And so I have full faith you'll be back to investing in no time. You're going to build wealth.

But I think we've been doing a lot of good things at once, trying to pay off debt, trying to save, trying to invest. But when you do it with focused intensity, you get this amazing thing called progress. And that's the power of the baby steps. So thank you for the call. I hope you do what we said. It will work every time you work it, man. This is The Ramsey Show. Welcome back to The Ramsey Show,

our scripture of the day, Proverbs 31, 31. Honor her for all that her hands have done and let her works bring her praise at the city gate. What a beautiful verse in honor of Mother's Day this weekend. Oh, I thought you were reading that for Whitney. I mean, I was, but I didn't choose this weekend. Oh, I thought you were reading that for Whitney. I mean, I was, but I didn't choose this verse. The team did a great job reminding us all that it's Mother's Day on Sunday. So do all the things.

Get her the pancakes in bed and the flowers and the card and the gift. Is it bad that sometimes on Mother's Day, I just want to be alone? There was a great skit I just saw where it was the best gift you can give mom is 24 hours alone at the bottom of a well just let her do her thing man give me a day peace and quiet a bath a hot bath like leave leave breakfast by the door y'all go away oh that's smart i'm gonna do that i'm gonna take our eight month old and just be gone the mother the dogs be gone the mothers know they said amen with me lauren hill once said that that strong mother doesn't tell her cub son stay weak so the wolves can get you she says toughen up this is reality we're living in oh strong words strong strong words from lauren hill right there she's right sometimes you need a little proverbs and lauren

hill in your life that's all i'm saying that good. All right. Brittany is up next in Denver, Colorado. Brittany, welcome to the show. Hello. How can we help today? I'm calling because I've been very illiterate with the financial literacy and I feel like I have six children. I have a small, four small toddlers. So now I'm just trying to get on track, and I'm trying to learn how to budget. And I'm on a housing program, so I pay very little rent. I have no debt, and I'm just trying to see where all my money's going. I'm surprised you got some peace and quiet to make this phone call. You're impressive. I'll forget the car.

Did you say you have no debt? I have none. Okay, excellent. I paid off all my debt, I think, in 2020. Come on. Way to go. Way to go. And are you single momming it? Is dad in the picture? I'm a single mother. Okay, of six. And is there child support coming in? No. Why not? We don't know where the the father is we separated and he went about his way and i'll just you know and there's no court there's no court that can find him well we have a court order he just doesn't pay so i'm hoping soon that we'll get some compensation and no wages to garnish i'm guessing nope girlfriend okay so what's the nature of your question you're you're here you're no debt you've been supporting these six kids on your own in my book like superwoman so how can we help well i have a well i do have debt i just have like a car i guess i'll say whoa whoa hold the phone britney you told us you were debt free we got to start this relationship off with truth and honesty.

Debt is money you owe to anyone for any reason. I looked at my notes, and I have it circled. I forgot it. My car is my only debt. What's left on the car? I think I just bought it last year, so it's still fairly fresh. I think it's about $14,000, maybe $15,000. Left on the loan?

Yeah. Could have been worse. What do you make a year? Last year it was about $45,000 to $50,000. Okay, good. What's the child care situation like for the six kids? They're all in school full time, so I'm pretty free, but it's just I don't know where my money's going.

Okay, so you're making 50 grand, your rent is low. All the kids are kindergarten and above? I thought you said you had toddlers. They're all kindergartners. They're preschool, three pre-K and one kindergartner. I'm a teenager, he's 16, and I have one that's graduating college next year. Okay, good. Cool. So your next goal, if you're following the baby steps, would be to get rid of this car loan aggressively. Okay. Do you have any money in savings?

No, I just exuded all of that because I wasn't working for three months, and now I'm getting back into a job and the job that I'm getting into pays a little bit less hourly but I can compensate that with like working extra shifts or something but I'm just trying to figure out how to budget the money that I'm going to have coming in. So do you have every dollar? Do you have the every dollar app? I have the app but I was running into issues that I was not you know it's just I couldn't keep up with it. What do you mean? I do have that. What do you mean you couldn't keep up with it? With like putting the expenses and all the little categories and with all the kids. So I just really couldn't keep up with the, with it. So once you, okay, let's, let's see if we can identify this problem. So with every dollar, once you set the budget, like once you go in, you put your checks in there in the income section, you put your

income, or I'm sorry, you put your your expenses everything you can think to spend money on it's it's pretty much set um and then as each month goes there's a button on the bottom that you can click that says copy this budget to next month so you shouldn't be restarting every single month you should be having that baseline of hey this is this is basically my life. And each month I go in and make the small tweaks and changes that have to do with that month. So that's thing number one. And then thing number two is, if that's not the problem,

then it sounds like you've just not set up the habit of kind of going in there and tracking your transactions when they pop in. Is that right? It sounds like you might need the premium version. Okay. So what I want is, I can't see who's manning the phones over there, but they're going to pick up and I want to make sure you get

the premium version of every dollar, at least a free trial of it for you to check it out because it does a lot of that automatically for you. That'll help us process. Okay. And another question I wanted to ask is because I'm on the housing, Section 8 housing program, and they help you buy a house. But in Colorado with the housing market so high, I don't know if that's a good idea. It's not a good idea. Let's define what they mean by help. They're going to help you get into a house with nothing down, with a mortgage that you can't handle.

And so the right time to buy a house is when you're financially ready, not when the right homebuyer's program comes along. And there's so many strings attached to these programs, Brittany, and I want you to be in control of your life instead of having to, you know, be controlled by someone else. And they also, you have to utilize the money to start a business.

So I wanted to start a host, like a group home for like, I'm a CNA, so I'm into caregiving. So I wanted to take the money to maybe start a business to have income before I go purchase a personal home. We got to take it one to maybe start a business to have income before I go purchase a personal home. We got to take it one thing at a time. Let's look at it one thing at a time. A1 is we're paying off this $15,000 car. Your A1 right now is the baby steps.

So number one is you don't have $1,000 saved. So we need to find $1,000 quickly. Which you have next paycheck. Yeah, most people get in 30 days. So put that $1,000 quickly. Which you have next paycheck. Yeah, most people get it in 30 days. So put that $1,000 aside. Then very quickly, we're paying off this $15,000 car as quickly as possible. If you can pick up extra hours. I don't know if you can or not with the way your life is set up. But pay that $15,000 off quickly because then your next goal is you got to save six months of expenses. And for you, it needs to be six months of expenses expenses because it's just you and you've got six kids and then after that you're going to begin investing

okay and so these right now these are your goals home ownership is not there yet it might be there after baby step three if you feel good about your situation if you feel good about where the kids are going they're going off to college like all that stuff but the more what you're going to find is the more you're going to begin to work these baby steps the more money you're going to want to earn and the more money you earn you're going to be off section 8 housing okay so that's the first goal and being off section 8 housing doesn't necessarily mean that you went and bought a place it just means that you can afford rent on your own where you want to live and And I think that's pretty amazing. So that's the goal. Brittany, what is your take-home pay every month? Probably, I think my last job was making $1,700 a week, every two weeks.

Every two weeks. So you got about $3,400 coming in? And what are your actual monthly expenses? What does that add up to? $1,600. and what are your actual monthly expenses what does that add up to 1600 so you're telling me that there should be eighteen hundred dollars left over that you can do whatever you want with yeah ah ding ding well all of a sudden you got a thousand bucks saved up with your next paycheck and all of a sudden you got yeah i can make i can put it that i can save a thousand and once you have a thousand,000, you now have $1,800. Think about this. $1,800 times, let's call it, eight months would get your car paid off. I love that.

If you stick to the budget. All right. Okay. So eight months from now, that car is paid off. Now the next probably five or six months will go toward building the emergency fund. Then we can begin investing. You're not investing right now through your employer, right? Sometimes, and I invest on my own sometimes

because I do like private contract work. So like this weekend, I'll go to work and make like 900 bucks. That needs to go toward your debt. Let's pause all investing. You're doing a lot of great things at once, but the problem is you're not going to make progress by doing that. I focus on one thing at a time. Yeah, you are in survival mode, and we want to get you out of that cycle.

That's how you find freedom. So hang on the line. We're going to send you every dollar premium. I'm also going to send you my book, Breaking Free from Broke, to help you gain some confidence and hope that things aren't going to be this way for much longer. Thank you so much for the call. That puts this hour of The Ramsey Show in the books. Thank you to Jade Warshaw, all the folks in the booth,

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