The Ramsey Show - Start Telling Your Money What To Do

Starting point is 00:00:04 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fair Winds Credit Union Studio, this is The Ramsey Show. Thank you for joining us, America. Jade Washaw, Ramsey personality,

Starting point is 00:00:33 number one best-selling author, is my co-host today. Open phones here at AAA 825-5-225. Christy is in Philadelphia. Hi, Christy. How are you? Hi, I'm good. How are you?

Starting point is 00:00:47 Better than I deserve. What's up? I was just calling to see if you could help me figure out how to live a life and not be burdened by so much financial issues. Well, we can certainly try. Okay. What's going on? So I'm single, so I make about $50,000 a year. and I just am always in the negative every month.

Starting point is 00:01:16 And I can't really enjoy life. I just work and get back in the negative. So usually when people experience that problem, there's one or two things or both at play. So either your income, the money that you're bringing in is not enough, or there is something in your expenses that needs to lower, or a combination of both. Or just shared disorganization,

Starting point is 00:01:46 which we have no idea where the money goes and so it just leaves. Exactly. That's a good point. Do you have a budget? I don't, and I have no idea of what's coming and going. Okay.

Starting point is 00:01:56 So then that's day's point. Yeah. So what we're going to set you up with is every dollar. Every dollar is going to be the tool that's going to give you organization. It's the best budget app that's out there. And so when you open up every dollar, going to ask you some questions about yourself, is going to ask you about your goals. But once you get

Starting point is 00:02:14 into the actual budget, you'll have a place where you can list your income, and you'll have a place where you can list all of your expenses. And the goal is to list out everything that you could possibly spend money on until you hit zero. That's called a zero-based budget. You want to spend every single dollar of the money that you're bringing in on purpose. Now, when I say spend the money, I mean, that's everything from rent, groceries, if you have car payments, if you have debt. And then if there's margin, you also need to assign that money a task, whether it's paying off the smallest debt or, you know, maybe you're behind on something. That's how that's going to work. Does that make sense? Yeah. So John Maxwell said it this way. He said that a budget is people telling their

Starting point is 00:02:58 money what to do instead of wondering where it went. Okay. So on paper, on purpose, in this case, on app on purpose. You lay out what you want your month to look like, and then you be a grown-up and live what you laid out. No whining. It's your plan. You can put whatever you want to on it. Okay.

Starting point is 00:03:21 But you obviously won't plan to be in the red. Right. Okay. Now, do you have a bunch of debt? I have about $10,000. So it's not a lot. but, well, to be honest with you, 4,000 of it is, you probably never heard of this,

Starting point is 00:03:43 but it's called a firm. So it's like a buy now pay later plan. Oh, I've definitely heard of it. So you've been impulsing your butt off. Pretty much. So I have, yeah, I have like 4,000 of that. This is like you put a T-shirt on three payments. Pretty much, yeah.

Starting point is 00:04:01 What's the other 6,000? It's like a medical is 2000. No car debt? No car debt. Good. Okay. And what is the medical? Have you been ill?

Starting point is 00:04:14 No, it's actually dental. Okay. Do you know, are you current? 6,000 dental? No, no, 2000. Where's the other four? Just like just spending. Credit cards?

Starting point is 00:04:30 Just credit cards, yeah. Okay. Okay. You got to cut the credit cards up. I have a baby, and I tend to, like, put a lot of things for her on it. So, like, the $4,000, and I know it was this cringy, but I made her, like, a playroom, and I just put everything on the affirms. Like, I put everything on there just so I could. How old's a baby? It's a baby in arms?

Starting point is 00:04:54 She's two. No, no, she's two. Is she in daycare, or what's the plan there? No. I don't have any child care expense as far as that. there. Good. Okay. So step one was the budget. Step two also happens today. The budget happens today. Step two also happens today, which is you've got to cut up these credit cards. You can't, and please remember this, you cannot solve a problem while simultaneously creating it. Credit cards are your problem. Buy now, pay later. Basically, spending money that you don't have is your problem, so you cannot keep that source around in your life or you'll never be free. You've got to cut up those

Starting point is 00:05:30 credit cards. That has to happen tonight. Will you do it? No. Okay. That's thing number two. Thing number three is, are you investing money out of your paycheck? I have a 401k, and I do invest 8% of my pay. Okay. And my boss matches 3%. So it's really little, though. It's really little that I have in there. I only have 6,300. We don't want you to cash it out. We do want you to stop adding to it for a short period of time until you clear these debts. Okay. There's no reason to put money in investments while you're sitting on 10K in debt. And the reason why Dave is saying it, but even for the listening audience, your biggest

Starting point is 00:06:14 wealth building tool is your income. The biggest tool that's going to help you get out of debt is your income. As long as you're putting your income in lots of different places, it's going to take you longer to do the thing that you ultimately want to do, which is get out of debt and build wealth. You've got to have focus intensity with that income. So just temporarily pausing your retirement is going to give you 8% of your paycheck back into your hands that you can use to quickly pay off the $10,000 of debt. And also then to turn around and save up three to six months of expenses.

Starting point is 00:06:43 And before you know it, you'll be right back to investing. But at this point, you'll be investing 15%, not just 8%. Yeah, and you'll have the money to do that because you'll have no payments. So here's the thing, Christy. It sounds like that, you know, you have a two-year-old child, and the last two years of your life have had some stress to them. And during that time, you paid attention to dealing with the life situation and not the money situation. So the money situation just kind of ran on autopilot, and it really wasn't good at driving by, itself. So it needs you to now start driving it. And now, because if you want to win at anything,

Starting point is 00:07:32 you just start paying attention to it. And you're going to win at this because you called and said, I'm ready to pay attention to it. Teach me how. Okay. And so you're going, you're actually going to go do this. And I have a prediction that you probably will never borrow money on a credit card again. and you probably will never use a firm and get screwed by those people again. And by the way, that's what they're doing. They're screwing you. So don't, don't, you know, don't set yourself up to be the victim. These villains are out there.

Starting point is 00:08:08 They're real. And these companies are not your friend. They're their own friend. They're not looking out for Christy. I can affirm that. They are looking out for affirm. That's it. One person profiting in this transaction. This is a win-lose transaction. Affirm wins. Christy loses. Quit letting them do it. Get pissed off about the villain in this story. It's real.

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Starting point is 00:09:42 and with the family plan, your kids are covered for free. You work too. hard to let identity theft steal your time, your money, and your peace of mind. So go to zander.com to enroll today or call 800356-42-82. Rudy is in New York. Hi, Rudy. How are you? Hey, Dave. Good to be on the phone with you.

Starting point is 00:10:15 Good to be with you. What's up? So currently, I'm listening a little bit, I feel like, in a dead-end situation, and I don't really know what to do to get out of it. I'm currently about $6,500 in debt with personal and credit cards. I have no savings at all. And I have a $1,250 a month car note that I'm kind of stuck with at the moment. Why are you stuck with it?

Starting point is 00:10:51 It's a lease that I signed about 10 months ago for three years. and I wanted to get out of it. I went to the dealership, but just the fees to get out of it are just insane. So I decided to keep the car for the moment. Who gave you the fees? The dealer? Yeah.

Starting point is 00:11:10 Who'd you sign the lease with? What company? It's with Visions Credit Union. It's who? Oh, but it's a Toyota. It's a Toyota, but they did it with Visions Credit Union. Okay. And so you signed a lease.

Starting point is 00:11:24 You got a lease through your credit union. Union. Well, it was through Toyota Financial. They hooked me up with visions. Oh, Toyota Financial set this up. That's who screwed you. Okay. What's the early termination fee? Do you know what it is? It was like seven something, like seven grand something, because I also drove a lot with the car, too. So I went, I didn't go over the limit of miles, but for how long I've had the car, I drove it more than what I was supposed to. Okay, that's not how it works. So someone, they're trying, they're continuing to screw you. All right. So you need to call Toyota credit and ask them what the early buyout on the lease is.

Starting point is 00:12:11 What can I pay you off today for? That's like the early payoff on a debt. It does not include the interest through the entire 36 months. Okay. And there should be no fees on that. other than just what does it take? What is the check I need to write today? Okay. What car is this of Toyota?

Starting point is 00:12:35 It's a 2025 G.R. Corolla. Okay. So look that car up and figure out what it's worth. And then get the early buyout price. Have you looked up what it's worth, by the way? It's worth about $38,000. Okay. So you could get about $38,000 if you sold it.

Starting point is 00:12:59 Let's pretend that when you get the early buyout on the lease, $1,250 a month for 36 months? It's $700 a month, but my insurance, it makes it $12.50, so it's insane. Okay, that's different information, hon. Your insurance is a different thing. Okay, it's not your car payment. Your insurance is not in your car payment. You said you had a $1,250 car payment. You do not.

Starting point is 00:13:30 You have a $750 car payment. Okay. Now, that makes the numbers better. It makes them worse. It makes me understand the numbers. I didn't understand them at $1,250. I couldn't figure out what Toyota had done to you. All right.

Starting point is 00:13:42 So anyway, you find out what the early, if the cars were $38,000, you find out what the early buyout is. If I write you a check in full today, okay, then let's pretend that's 30,000. $34,000. You could simply go to the credit union and get a car loan for $34,000 and pay off the lease, then you would owe $34,000.

Starting point is 00:14:09 You follow me? Yeah. Now, or it's $42,000. So it's more than the early buyout on the lease, but has nothing to do with the mileage. This is simply the financial part of the transaction of, of what can I pay my loan off for early. That's what this is. Okay.

Starting point is 00:14:32 And you compare that to the car. Now, if it takes more than $38,000 to buy it out, let's call it $40,000, then you've got to arrange with your credit union to borrow $2,000 and sell the car to someone for $38,000. And you sell it and you buy out the lease early, which is paying off your loan early. And that's how you get out of a lease early. and it sounds like you desperately need to do that. Yeah. Okay.

Starting point is 00:15:03 How old are you? I'm 25. Okay. Yeah. Okay. So the number one mistake that 25-year-olds make is an expensive car with a big car payment and a big insurance payment. So you're like a normal 25-year-old, but you have discovered that sucks and you don't want to be that anymore. Yeah, that's right.

Starting point is 00:15:29 Okay. So you didn't do anything that almost every 25-year-old in America hadn't done. But the trick is you've really got to concentrate and not just, listen, if somebody screws you, like you went on that Toyota lot and Toyota financial screwed you, then don't go ask them how to fix it. Because they're not, that's like the wolf in the hen house, dude. You don't even know what that means. Okay. But that's like, you know.

Starting point is 00:15:54 Yeah, it's like asking an alligator if he's hungry. You know what I mean? It's like seriously. Right, right. Yes, yes, come on in. I will eat you, yes. I will help you. I will screw you again, says Toyota Financial.

Starting point is 00:16:06 Right. Well, good thing he called us because now I feel like he's got the next moves to get out of this. It just took him a second to get there. Yeah, yeah. Rudy, I would expend an amazing amount of energy to get out of this car. Yes. And not just accept laying down that this is your fate for the next 36 months. And part of that fate is after this car sold.

Starting point is 00:16:29 Now he's in the real business of driving a beater, driving something that's, you know, three or four thousand dollars. Really the ugliest car and the oldest car that you can find that still runs is what you're going to be driving for a while until. You need a car that has to have a name. It's so bad you have to name it. Bertha. Old blue, Bessie, whatever it is.

Starting point is 00:16:50 If it doesn't have a name, it's too good a car. You need a car that's so nasty that you have to name it. And then you walk out and you kick it in the door and say, all right, Bessie, we're going. Start up. Start up, Bessie. Here we go. You got to have the blue goose. You got to have whatever it is, right? And that's for a short period of time. But if you will drive like no one else, you can bank $1,250 a month. In 10 months, that's $12,500. That's going to feel good. And then you can get rid of old Bessie. Right, because your insurance is going to go down too.

Starting point is 00:17:25 Yeah, because you don't even get insurance for Bessie. Poor Bessie. She's not even worth health insurance. No, she's not even worth replacement costs. We're just going to put a bullet in her if she pulls over to the side. That's it. Yeah, that's it. I mean, this is the way you have to think.

Starting point is 00:17:43 And I did that. I drove a piece of crap when we were broke and getting out. And then I got a little better piece of crap, and it was so much better that I didn't think it was a piece of crap. Although it was a piece of crap still. Yeah, I mean, that's what you do for a little while so that you never have to do it again. It's not a way of life, but it's how you get out of these messes that we all find ourselves in when you wander into the finance office at Toyota Credit. We've all done it. We've all done it.

Starting point is 00:18:12 I remember when I met Sam, he had a Jeep Grand Cherokee, and he had finally made the final payment to pay it off. And they're not a good car. It's not a good car, but he paid it off. It breaks. And I'd never known anybody who, I'd never seen anybody who didn't have a car note. And don't you know, he went right down there to the Hummer dealership and bought a H3. Because we couldn't stand not having a car payment. Well, it was, the thought was, once your car hits 100,000 miles, it's going to start breaking down.

Starting point is 00:18:41 It's going to start messing, you know. Not a cheap Cherokee. Once it hits 10,000 miles, it starts breaking down. Yeah. And so we've all done stupid things, but the point is I remember the feeling of then selling that H3. you're used to ride pretty nice. Y'all are Miami Vice. Man, I know that's right.

Starting point is 00:18:57 You're in Miami riding around in the Hummer. And then had to sell that. And you get used to it. My point in telling that story is it feels nice to drive a new car. It is a hit to the pride when you have to start driving something older and sell your things.

Starting point is 00:19:12 But you do get used to it. Human beings are very flexible. At the time, it is a hit to the pride. Later on, it's a badge of honor. It is. Yes. I'm a grown-up and I did what it takes to be a grown-up. And I don't care what you people think about it.

Starting point is 00:19:29 Amen. High correlation between people who don't give a crap what other people think and those that build wealth. If you're worried about what other people think, you're going to be poor most of your life. You know, when I became a dad, something flipped. Suddenly, it wasn't just about me and my wife anymore. It was, what happens to my family if I'm not here tomorrow? And things like that just hit different when you become a parent. But I'll be honest, making a will feels heavy and complicated, and it's not exactly what I want to be doing with my time off.

Starting point is 00:20:20 But here's the deal. Being a parent means doing the hard stuff, especially stuff that protects your family. And that's why I used mama bear legal forms. No hassle, no lawyers, just a simple online tool that helped me create a legit will in about 20 minutes. So it was pretty much painless. Plus, I added a notch to my dad belt right there between installing car seats and bedtime stories. Listen, being a dad never stops. And making a will is how you make sure your family's covered even when you're not there. So get your will done today at mama bearlegalforms.com and use the promo code Ramsey to save 20% off when you check out. Again, that's mama bearlegalforms.com promo code Ramsey. Dustin is in Chicago. Hi, Dustin. How are you? I'm doing good. How are you? Better than I deserve. What's up? So I am recently married and I have a baby coming in August. And about a year ago, I was a single guy living by myself, not really having a care in the world.

Starting point is 00:21:38 And one day changed my life. And God blessed me with a beautiful wife and a 2B daughter. And I am on the wrong side of $37,500 in total debt. and I want to dig myself out and build a future for my family, and I know you're the guy and the crew to talk to. Good for you. Congratulations. Congrats. Thank you. Sounds like a great life you got laid out.

Starting point is 00:22:04 We just got to get rid of the mess on the $37,000. So what is the $37,000 owed to? So I owe $26,000 on my pickup truck, and I owe $11,500 in credit card debt. and I rent from my father, rent's cheap, but the bills add up because basically now that she's cut down on work, my wife, it's all about her and the baby now, and I got to make sure that I take care of them and money's super tight right now. What are you paying for rent? So rent is actually $750 a month.

Starting point is 00:22:42 What do you make? I make, well, gross is $635, my take home after taxes. is an insurance because she's on my insurance. It's about $3,015.50 a month. And there's no investing coming out of that, right? No, just, well, my 401K that I pay a little into, and then my company, Mantis is very little. That's exactly what I mean when I say investing.

Starting point is 00:23:06 How much, what percentage is coming out of your money? I believe it's like 3% or something. Okay. And you have a pickup you can't afford, right? Yeah, yeah. When I was single, it was right there on the cusp of what I could, but now that, you know, I got to man up and do what I got to do, I know this is coming.

Starting point is 00:23:27 So, yeah, that's definitely on the table. So when are you selling it? Apparently, as soon as I can. Okay, apparently. Because all of a sudden your life gets good. You got $11,000 in debt then. Get you a beat your car for a little while. Yep.

Starting point is 00:23:45 For just for a little while. You don't have to do it for your whole life. And then you lean in and you stop your 401K to what little is going in there and you clean up everything. Did you get a tax refund last year? I did, but it was very small. It was about $400. Okay. So you're not overpaying on your taxes, we don't think, but you might be with the baby on the way.

Starting point is 00:24:06 Yes, that's true. Yeah, so you may get a bigger refund. We'll have to wait and see. I don't want to monkey with that today. But I would pause the 401K today. I would pause it today and sell the pickup today. And just for clarity, that is just a pause. It's not stopping forever. It's pausing until you clear out the truck. You clear out the $11,000 of debt. And I'd like, I mean, following the baby steps, you do need to save three to six months of expenses. How good would it feel to know that you had your wife coming home, the baby, and six months of a cushion just in case anything would happen? No debt and $10,000 in the bank. It would be a godsend. It would be a godsend. It'll be God send and he sent Dustin to do it.

Starting point is 00:24:45 that's I couldn't have said it better myself yeah so cleaner up dude that's that's the thing so we're going to send you every dollar budgeting app premium version that we're going to pay for and give it to you as a baby gift so you and your wife sit down tonight and you look at that app and you lay out exactly where every dollar is going and you say all right the 401k stopping the pickup is leaving and now we're going to attack the $11,000 in credit card debt and beans and rice rice and beans and she needs to work as as she can without putting herself or the child in danger because we need money. And let's talk about that because, you know, this has been all angled at you, Dustin, but this really is you and your wife joining arms together and doing this together.

Starting point is 00:25:28 So rather than you getting off the phone and, you know, putting on your cape and doing this, you're going to have to have a conversation with her and make sure that she's on the same page and agrees with this strategy and agrees with the intensity and agrees that this is what needs to happen next. That's a big part of this. Paula is in Dallas. Hey, Paula, what's up? Hi, yes. Thank you for taking my call.

Starting point is 00:25:53 Sure. I basically have a predicament, I guess. We are new to the Dave Ramsey philosophy and all that. And we're now coming down to the numbers. We have bought a manufactured home back in 2022. And we still owe about 98. thousand dollars on that and uh interest rate is 8.95 so we feel like we definitely shouldn't have done that decision but we're in it now and we just started making 80,000 this year and so but we still

Starting point is 00:26:34 feel like one this is not our forever home two we feel like we could definitely free up some money in the housing area area because basically our mortgage is a thousand 70 a month but we need a place to put the house in and we didn't have that so we have we put the house in a community where they charge about 950 a month so it's about $2,000 that we have what's it worth paying at home? I'm not sure but that's the thing I feel like if we were to sell I didn't know that they depreciate I believe so. I don't think that if we were to sell, we would get it. We would break even if that makes sense.

Starting point is 00:27:16 It does make sense. You need to get rid of it. Every day you own it, it's going down in value. Exactly. And I think that's what's like we feel stuck because we feel like you're going to be more stuck the longer you wait. Yeah. So the point of that is there's not a good. The point of that is this is going to be, this is going to feel bad.

Starting point is 00:27:36 It's not going to feel good. Yeah. You're going to feel the weight of the. mistake when you look at the appraisal and see what it's actually worth. But Dave is exactly right. Waiting is not going to solve the problem. Waiting is going to make it more painful. Yeah, I agree, which is why we called. We thankfully had spiritual parents who guided us through the process of just, you know, creating a safe place for us for talking about budgeting and all that because we did not do that at all the past couple years. And with my husband's job,

Starting point is 00:28:06 They actually provide every dollar premium app for free for employees. Neat. What kind of margin do you have when you open up every dollar? What kind of margin do you see? I mean, well, it's a zero dollar based budget, right? So we assigned everything to it. Right. So after you've paid the essentials and you've got money that you can kind of decide,

Starting point is 00:28:31 here's what we're going to do with the extra, how much is the extra and what are you currently doing with it? because I'm trying to find some money to help offset the possible deficit here. Yeah, we have, thankfully, we don't have any debt on cars. We don't have any debt. We did the whole paying off our debt. So we're in baby step 3A margin-wise. I mean, it's just like $100 maybe.

Starting point is 00:28:56 Okay. And what do you have saved? A thousand four hundred. Okay, $1,400. Which is why we feel like the housing is such a big part of our check that we do. We can't put towards saving or putting it towards. If we sell it, we can put the rest of it, if that makes sense. Yeah, you're probably going to be in the hole,

Starting point is 00:29:15 and you're probably going to have a loan for the amount that you're in the hole, and you're probably temporarily moving into a rental so that you stop the bleeding. Okay. But every year you own this, you're losing $10,000 or more. Yeah, yeah, I agree. So the conversation really does need to start today. Yeah, like how are we getting rid of this house and start talking to real estate agents, start talking to people in the mobile home manufactured world. Yeah.

Starting point is 00:29:46 Who's going to come pick this up? Who's going to buy it? What are we going to sell it for? How are we going to get rid of it? What's the process look like in Texas? And then you also get rid of the $950 lot rent. Yes. And by the way, if there's more questions, go.

Starting point is 00:30:02 We have a really cool tool. It's called Ask Rams. if you have more questions, which I know you do, because there's a lot of nuance to this. Go on there and keep digging deeper. What I don't want you to do is stop because of a lack of information. I want you to keep digging in on your situation. And it's going to point you to all the resources that you need because we can only, you know, we can only do so much in this short call to help you.

Starting point is 00:30:26 Ladies and gentlemen, mobile homes are not a bargain. They go down in value. It's not a class thing. It's not a I'm a snob thing. It's a math thing. It's a car you sleep in. Don't buy one. If you run a business, you already know this.

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Starting point is 00:32:27 Better than I deserve. What's up? So my question is, how do we live confidently in the stage that we are financially and know what that looks like? We're married, I'm 25 and we have a little boy. We live just off my husband's income. I stay at home with him. And we're on baby steps four and five, well, kind of sitting on a down, 15% of a down payment for a house. And we kind of see people our age, drowning in debt and kind of feel good about ourselves when we see them. But then we have everyone else basically judging our financial decisions because we don't own a house and they make us kind of feel like...

Starting point is 00:33:02 Like who? Because we don't. people who are older than us parents people who own houses and we don't okay like your mother no not really kind of both sets of parents no particular parents

Starting point is 00:33:19 and then so then we kind of feel when we have margin in our budget and have some comfortable margins you know safety on vacation all that thing like my husband needs a new phone and we feel bad to spend because we have our mindset that we're poor and not really sure maybe where we are in the baby steps because we don't own a house. So I hear two things going on. I hear you just needing some clarification on where you are in

Starting point is 00:33:44 the baby steps. But then I hear a lot of comparison, whether it be positive or negative, just a lot of comparison to other people, whether it be we're doing better than these people or these people, we need to impress them, we need to care about what they think in some way. So those are the two things I hear. We can help you to find what baby step you're on. But the comparison part is something that you're going to have to think through because the only reason that you're, the only reason you have to compare are one of two reasons that I can clearly think of. One is positive and one is negative. One is you can look at other people and draw inspiration, right? You can look at them and go, okay, that's pretty good.

Starting point is 00:34:24 And then the other thing, if you're looking at them, it's because of competition. And that tends to be negative. And so. I don't think it's competition for us. And I like, So let me, let me stop you a second. Okay,

Starting point is 00:34:37 when you say, um, we feel judged. Okay. That's your feeling. True. They either are judging or they aren't judging. But you can choose to feel judged or you can choose to not feel judged.

Starting point is 00:34:55 That's just a choice. You're just going, you know, I, I, you know, I, there's lots of people that judge everything we do here.

Starting point is 00:35:03 on the air, right? And the number of times I care is precisely zero. True, exactly. I just don't care because I'm not really taking a poll from people that don't have a vote in my life. And so I have a set of values and a set of practices tactically that we, that Sharon and I engage in, and they work, and they're taking up. us to where we want to go. And if someone doesn't like that, I guess they're just going to have to have their own little problem party over there. Yeah. Because I'm not really taking, I'm not, you don't get a vote. Now, if you're not confident in your values and in the habits and the patterns that you're engaging in, if you're not confident it's going to get you to where you want

Starting point is 00:35:59 to go, then that's a different thing. That's between you and the value or the idea. Right. But if you're following, for instance, the baby steps in detail from the book The Total Money Makeover, if you're doing that in detail, well, you're following what, you know, somewhere around 10 or 15 million people have done. And so if your broke friends don't like it, well, good. That's like fat people making fun of your diet. True. True. I'm going to send you a copy of my book what no one tells you about money because I talk a lot about this very thing in the book. And I think it's going to help you. It'll also help you, by the way, identify exactly which baby step you're on. Yeah, exactly. So I think it's pretty simple. You

Starting point is 00:36:44 defined it. You're on baby step 3B. Yeah. You're out of debt. You have an emergency fund. You're saving for your house. And if you don't put money in retirement for a little while, up to a maximum of three years is what we teach. And you want to throw 100% of your extra money towards a house down payment, that's fine. If you want to throw some of your extra money and still do some retirement, people do that. Both of those we call Baby Step 3B. But this is the point at which you do save for a house. And it does take normal people a little while to save for a house.

Starting point is 00:37:15 Most people don't just go, woohoo, all of a sudden, I just bought a house. It's not like you're, you know, running down and picking up a pack of gum. This is a house. So it takes a minute. Yeah, I just, I go back to the comparison. thing. The point of comparison is to either learn best practices, to draw inspiration. It's not to make yourself feel good or bad. That's not the purpose of it. I think that that's a very thin line that you have to walk. If you're looking at other people and that's making you feel good or bad

Starting point is 00:37:47 about yourself, I think you've crossed the wrong territory. The point of that is to look and say, what can I learn from that? What can I be inspired from from that? Is there a best practice from that? Yeah, exactly. That's it. But if there's a, if someone is judging me and I'm unsure, then that goes a lot further than someone who's judging me and I'm sure. Absolutely.

Starting point is 00:38:11 Because then I don't care. Then I'm like, you know, beautiful thing. You have the right to be wrong. It's called freedom. That's right. You know, and so I'm going to keep going. And good luck with that. Good luck with your wrong thinking there.

Starting point is 00:38:23 And I just keep moving on. I'm not really taking a poll. I'm really not. And, well, Dave, you don't care what other people think. Exactly. Exactly. Exactly. I love other people.

Starting point is 00:38:34 But I don't care what they think. There's a difference. I'm not taking a poll. And so, and sometimes losers are in your family. You know, sometimes Debbie Downer is your cousin. Absolutely. You know, everybody's got crazy in their family. And if you don't think so, then it's you.

Starting point is 00:38:53 Everybody's got crazy in their family. And so, you know, that's just part of it. it and just go, well, that's crazy, crazy aunt so-and-so, right? Crazy uncle, so-and-so. You don't have to explain. And, you know, they're sweet, but they're crazier in a bean. You know, it's just like, it's all right. Then you don't get a vote, crazy so-and-so and loser so-and-so.

Starting point is 00:39:11 You know, look at your life. Who would aspire to be that? No, thank you. You don't get a vote. No, thank you. I'm not living like that. Uh-huh. And so this is best practices.

Starting point is 00:39:21 Yeah. You know, if you want to emulate or copy a series of habits, character traits, and so on, then find someone that's winning. That's right. Okay, so for instance, we had a pastor come and do a devotional for us a while back, 87 years old, and he walks in the room, you could see peace, the peace of the Holy Spirit on his face. And towards the end of the devotional, he said, so what I'm going to do is I'm just going to give you the book of Hebrews. And for 17 minutes, I clocked it and I sat and watched him word for word in my Bible.

Starting point is 00:39:57 He did the book of Hebrews. Just recited it? From memory. Oh, my goodness. And so, you know, I could aspire to be that guy. That's somebody that I... That's inspiring. That's an inspiring guy.

Starting point is 00:40:09 Very. That's an amazing person to be when you're 87. I want to be him when I grow up, you know? And I'm thinking, but, you know, versus so-and-so who's got all this, their life looks like a junk heap because of their decisions and the processes and the values that they have. And yet they have an opinion. You know, you really have to stop and think about this, folks. I mean, really, if your broke friends are making fun of your financial plan, you are right on track. That's a good point.

Starting point is 00:40:39 That's it. And so, you know, if you're, and just look, if someone is, if they're worth $10 million, we might sit and listen a minute. Maybe. But the person worth $10 million is usually not going to be the one inserting themselves in the conversation. anybody. They're usually the cheerleader. Yes. I'm so proud of you. You know, I love, you know, Jefferson Fisher. Yeah. I love the way he approaches those conversations when people kind of say judgmental or condescending remarks and you can just throw it right at him and say, did you mean for that to sound judgmental? Did you mean for that to sound condescending?

Starting point is 00:41:19 Were you trying to be hurtful? Yeah. Were you trying to be? I love it. I've tried it and let me just tell you it works. It just zip it. It zips it right up. It sure does. Shut it down. I just wish I could be as calm and nice as Jefferson. Yeah, because he smiles when he does it. He's so peaceful and calm. I just did his podcast the other day. We've got to spend several hours together. I just love the guy. Yeah. And he's just, he's just ridiculously nice. It's shameful how nice he is. It's inspiring. It's inspiring. Hey, you guys, did you know that there are thousands of data brokers whose entire business is collecting and selling personal information, things like your home address, your phone number, and even your relatives' names. You guys, that is just crazy, but that is why

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Starting point is 00:43:14 plan. That's join deleteme.com slash Ramsey. Welcome back to the Ramsey show in the Fair Winds Credit Union Studio. Michelle is in New York. Hi, Michelle. How are you? Hi, Dave. Good. How are you? Better than I deserve. What's up? Okay, so I have a question regarding my mother and her credit card debt and who is liable for her non-payments of credit cards. Only her. unless you're a co-signer. No, no, but she's accumulated 45,000 over five different credit cards,

Starting point is 00:44:04 and I only found this out after my father passed away in July, going through stuff. So she doesn't have any income besides the Social Security. She's already been sent three letters from three debt collectors, and one actually went to a summons. has sued, you know, is now in court and has sued her for the balance. Does she own a home? The home is transferred, so she does not own the property since 2006.

Starting point is 00:44:38 Whose name is the property in? Mine and my brothers. That was done in 2006. 2006, yes. And she ran up the debt after that? Yes. Okay. I mean, I'm sure it's a culmination of, I,

Starting point is 00:44:58 I mean, I don't have all. I have all the credit cards and the balances. Does she have any other assets at all? Does she own anything? Vehicles. She doesn't own anything. A car? She does, no.

Starting point is 00:45:10 She never drove. How old is she? 85. How long has it been since she charged on the cards the last time? So last time was probably, probably August, the beginning of August, and then of 2025. and then I told her to stop making the payment since September. Well, she had to choose between food and paying the credit cards. Who are the cards with who issued this 85-year-old broke widow credit cards?

Starting point is 00:45:44 She has Amex. She has a city master card, a city visa. So Citibank and Amex have screwed an 85-year-old widow. They issued an 85-year-old widow. her card, they issued her a card at a high interest rate and she has no income but social security. Correct. Correct. This is the American Express we know and love. Yeah, this is Citibank. What's in your wallet? We screw widows.

Starting point is 00:46:16 Yeah. Well, we didn't, I didn't make any attempts to reach out to any of the credit card companies either. I don't care. She doesn't have any money to give them anyway. Yeah. Now, I would explain to her that if she ever borrows money, again, she's stealing. Right, right. Because she has no ability to pay it back. Yes. So she has to stop this on a moral basis.

Starting point is 00:46:40 Well, now that I'm involved, it's that kind of is because I'm not allowing that to. I have her on a short leash. Okay. And you're watching over the money. Yes, I am. Does she have enough in her social security to handle the things she needs handled, including like food, utilities, all that? or does she need?

Starting point is 00:47:00 It covers as she has a surplus of maybe like $300 by the end of the month. Okay. Well, I appreciate you watching over with her. So the answer to your question is if someone passes away and they have zero assets, their debts simply don't get paid. Deats are not inherited in the United States. Okay. So you do not inherit debt.

Starting point is 00:47:25 It's impossible. Now, if for that reason we ask all these questions, If she owns a house, when you die, what you own stands good for what you owe. Your assets stand against your liabilities. And what's left over is called an inheritance. In this case, she doesn't own anything. Right? And so these people will simply not get paid upon her death.

Starting point is 00:47:52 By the way, you cannot garnish Social Security either. So sue away. She's what we call judgment proof. Sue away. And then if you guys want to talk to City or Amex, it's up to you and offer them 10 cents on the dollar to just go away just from the hassle standpoint. And the family just put together a little money and get rid of this. And she's not ever going to borrow again. And the cards are all cut up and the accounts are all closed.

Starting point is 00:48:22 That would be a nice thing to do. But I'm under no moral obligation. Because these people loan money to an 85-year-old widow who's on Social Security, they got what's coming to them. Okay. Okay. Yeah. When American Express and Citibank does this kind of thing, and they do it every day, they loan money to people who can't pay. And they know they can't pay.

Starting point is 00:48:46 And they know they can't pay. And they don't care. And your mother sits awake at night, wringing her hands because she has honor, and she wants to honor her obligations. but she has no ability mathematically to because these people screwed her. And that's probably the reason why if you can't settle, I would because there is an emotional tax. Get it off of her. Right. So she's not seeing the sheriff at the front door with a summons.

Starting point is 00:49:12 Exactly. Right. So the one that did issue the summons already is American Express. Yeah, of course. Yeah, there's some of the nastiest humans on the planet. We work with them all the time. You can tell they're lying if their mouth's moving. So I didn't know if it's something that needs to be responded to with an answer.

Starting point is 00:49:38 You can if you want. It's up to you. What's the balance on it? The Amex at the time without any interest that's now accrued was $9,385. Do you all want to give them, you and your husband want to give them $1,000 to go away? I mean, if it was to go away, I would. Okay, then call them. But do you call the lawyer or do you call the American?

Starting point is 00:50:03 They don't call a lawyer if you want. You just call a lawyer and go, hey, you're suing an 85-year-old woman who's on Social Security. You get nothing, honey. Do you have the money to do it? And if you got extra money laying around, and my husband and I are willing to give you guys $1,000 just so you piss off, but otherwise piss off. Okay, and they can't resell it to somebody else. They can sell it. They can do whatever they want.

Starting point is 00:50:26 Oh, no, not if you do that. You need to get it in writing. That's why I said that you can tell they're lying if they're mouse moving. So be sure you get it in writing and do not give them any access to any, don't give them any information on her, nothing about her. This is my mom. She's 85. She's on Social Security. She has no assets.

Starting point is 00:50:44 She's judgment proof. Our financial coach said to tell you to piss off, but I decided I'd make you an offer of $1,000 and see if you'll go away. And I'm your financial coach. I just told you that. So you can tell them I said that, okay? Okay. I hate those people. This is the stuff they do to regular people every day.

Starting point is 00:51:07 And then we dance around and go, I need an Amex card because I get a gold card or a platinum card. And I'm somebody based on the metal in my plastic. God. It's not good. Hey, you don't want to read the Bible and read what happens. happens to people that messes with orphans and widows. These are not two sets of people you want to mess with. God is not happy with you when you mess with these people. Wittles and orphans are protected class. Hello? You just don't want to be under that microscope. It's not a good

Starting point is 00:51:42 place to be. You want to be on the other side. You want to be blessings to widows and blessings to orphans. This is the side you want to be on of this equation. You get what you pay for. Okay, guys, let me ask you something. What would it take for you to switch your bank? Because if you're still earning next to nothing on your savings, you need to check out Fairwin's credit union. And I know what you're thinking. It might sound like a hassle. Moving your direct deposit, updating bills, getting a new debit card, feels like a lot. But here's what most people don't realize. Staying where you are could be costing you hundreds of dollars every year. Y'all, the average savings account pays less than half a percent. So let's say, for example, you've got $20,000 savings savings. you might earn around $70 a year. But with a Fairwind high-yield savings account, earning 3% APY or more, that same money could earn you over $600. And that's real money that you can use

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Starting point is 00:53:16 That's fairwinds.org slash Ramsey, insured by the NCUA. Well, house prices continue to go up last month. The median house price, that's the middle house price in America, went up to a little over $425,000. That's typical for the spring market that we continue to see bumps and increases, even in a fairly slow market like we got right now. If you want to learn more about housing market trends, because you're thinking about how do I get ready for this,

Starting point is 00:53:57 it's time to jump in, all that kind of stuff. We've got all kinds of mortgage rate updates, price market, market upgrades, market trends, all kinds of stuff at Ramsey Solutions.com slash market. Help you buy or sell with confidence. Ramsey Solutions.com slash market. And, of course, you click in the show notes if you're listening on a podcast or YouTube.

Starting point is 00:54:16 Jenna is in Utah. Hi, Jenna. How are you? Hi, I'm doing well. Good. What's up? My husband's grandpa wants to buy a a car and my husband thinks this is a great idea to help us on our financial journey and I think

Starting point is 00:54:36 it's a bad idea. He says I'm just being too proud. Why is it a bad idea? Yeah. Well, he would, the stipulation on this purchase is that we would have to buy it from a dealership. So it would have some kind of warranty. Okay. We don't have any money to contribute to this purchase because we just replaced the main water line to our house. Is he buying it in cash? I believe that's the plan. He would be willing to spend $19,000. And I'm just worried that's a very precise, weird number.

Starting point is 00:55:19 It's the amount that he was told by his financial person would not put him at risk for taxes or something. I'm not sure. Oh, it's a gift tax. That is correct. Okay. I want to know deeper because... Actually, is he married? Oh, no, you're married.

Starting point is 00:55:35 So it could be double that. His financial person's wrong. He could actually give you $38,000 because he could give you $19 and give your husband $19. Is he wanting you to finance this, or he just wants to give you the cash and he wants to go buy a car? He wants to go buy the car. Okay. What is the downside of this for you? Why are you saying this is not a good idea?

Starting point is 00:55:59 I'm concerned that I guess it does sound silly, that it's not going to be a car that I'm really going to like. I've been trying to save up for a nice car. I want to get a big SUV and I don't want to have a car that I feel like I have to keep driving year after year because it was a gift. Are you a two-car family? My point in asking that is what stops? My point in asking that is what would stop the car that grandfather buys reverting to your husband, and then you, when you're ready to buy the car you want, buying the car you want? The car that we have right now barely fits all of us, and so we could get another car.

Starting point is 00:56:52 Yeah, my point is whatever car you get now is probably better than the cars you have. Jenna, there's something else going on. You're not telling the whole story. guy's trying to give you a $19,000 car and you're bitching about it. Do you not like him? Do you not like him? Do you not like him? Is he going to come over at your house and visit to make sure you shine the car?

Starting point is 00:57:11 Yeah. Is he a jerk? What's going on? No, he's a nice guy. He has been a little critical lately, but I mean, I don't like. Oh, he's been critical. Unsolicited critical. Yeah.

Starting point is 00:57:25 And yeah, you're afraid that if you take a car from him, that gives him permission to be full-on critical. Yeah. Yeah, that's fair. That's a fair concern. You don't have to take the gift. If you think there's going to be strings attached, if you think it's going to add strain, you don't have to take it. But at the same time, if somebody is just blessing you and it is your pride or it is something that you're coming up within your mind that's going to block this, like we want to see that clearly with you. Wait a minute, too. When you're talking about buying the car you want, are you talking about buying that car on payments? I'm sorry, what was that? When you're talking about buying the car, you want to buy, apart from Grandpa's gift. We're not taking Grandpa's gift, and we're not taking it because he's critical and he'll be hypercritical if he gives you a gift. And because you want to go buy a car that's big enough for your whole family, because the car you have barely now holds your family, and you want to buy a car that holds your family.

Starting point is 00:58:20 Are you talking about taking out car payments? No. You're going to pay cash for the car of your dream that you were talking about a while ago? Yeah, I would like to spend about $30,000 on a car. You don't have $30,000. How close are you to saving that? We are set back to zero after replacing the main water line. So I would like to spend $30,000 I have no money.

Starting point is 00:58:50 How does that compute? No. So what I wanted to do was get a small car for my husband now and then sell it in a year or two when we, have more money as we've been saving. But I'm worried that if we want to sell a car, especially if it's the car that we've been gifted in a year or two from now, that that's not going to go over well. I'm going to be honest with you. I think that there's just as much issue on your end as there is on granddad's end. I think you both have something that is contributing negatively

Starting point is 00:59:25 to this equation. I have to say I don't want to take grandpa's $19,000 gift. because I want to buy a $30,000 car, but I have no money. This is not a logical sentence. Okay. That's fair. That's fair. You know, that's my husband's concern, is that I'm... Is he concerned?

Starting point is 00:59:46 It's not pride. So here's what I would do. With what I have heard, and I'm not sure, still not sure I got all of it, but with what I have heard, I would suggest that you either don't take the gift, and just start saving and work your plan and say, thank you, grandpa. I appreciate that very much. Or you visit with your husband or your husband visits, not you. You don't say a word. He visits with his grandpa and says, grandpa, we would like to take the gift, but we have to be able to, we have to know that it's a true gift. And the gift cannot come with criticism from you.

Starting point is 01:00:26 Are you critiquing everything we're doing in the future? You can't come over here and tell us how to live. if that comes with the gift, we can't take the gift. And we have to be able, grandpa, I appreciate the gift, and honor the gift. But if we take the gift, it's a gift. And if I want to sell it a month later, I might. Okay. And so if you're not good with not coming over and sticking your nose in our business, Grandpa, and you're not good with the fact that I own a stinking car.

Starting point is 01:00:51 And if I want to trade it later, I feel free to do so. If you're not good with those things, if that's not going to go over well to use your phrase, grandpa, then I can't take your gift. That's my two stipulations. And I do appreciate the offer. But if the offer comes with me being trapped in the car and you coming over here and sticking your nose up my business all the time, this ain't going, I don't need the car. I like that. Now, you can be a little bit nicer than that, but that's the message needs to be delivered. And if grandpa goes, no, honey, y'all do whatever you want. I just got some extra money. Y'all are struggling young couple. I love you and I just want you to win. And I'm trying to help. If you want to sell it next day after

Starting point is 01:01:26 I give it to you, that's fine. But I want you to get a good. solid car, those babies can ride in and be safe. I want it to have a warranty. I don't agree with that. It's a dumb idea. But if he wants to do that, it's his gift. That's fine. Is the husband concerned whatsoever that this is a bad idea? No, he's used to this family script where people stick their nose in where they're not supposed to. So he doesn't bother him a bit. Yeah. No, it doesn't bother him at all. Yeah. Got it. You get used to your family's dysfunction and you don't smell it. Right. Yeah, we all do. I mean, we all have that. And so, yeah, but But if your husband is willing to do that, you don't need to say a word because you'll be the wicked witch of the West.

Starting point is 01:02:05 You'll get painted up as the ungrateful little woman that married his grandson. Right. You don't need that paintbrush. I think she might already be painted up like that. Be very, very quiet. Yes, there's wabits. Yeah, be very quiet. From 10 years and things are getting better.

Starting point is 01:02:24 Good. Okay, okay. Yeah. So anyway, yeah, I think you just back. off, but also not taking it, and it's not because you're prideful, it's because I see boundary danger. You want to preserve the relationship. Both things are boundary violations. I'm not allowed to sell a car I own. That's a boundary violation because it won't go over well. And you're going to come over here and tell me how to live my life because you gave me $19,000 whole thousand dollars. No,

Starting point is 01:02:52 thank you. I'll pass. That's not pride. That's wisdom. So walking away from this, unless those two things are cleared up, is a good idea. I agree with you. And it's not because you're prideful. You're getting ready to hit the road this summer. You want to feel confident. Your car is ready to go. But when you don't fully understand what's going on under the hood, it's easier to either ignore something important or spend money you didn't need to. Because, let's be honest, you're not a mechanic. And you shouldn't have to be. That's why we trust Christian Brothers Automotive, the official auto repair partner of the Ramsey Show. They bring clarity to car repairs and maintenance. With their digital vehicle inspections,

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Starting point is 01:04:33 See store for details. You know when you change your life? When you finally say, I'm sick and tired of being sick and tired. and you yell, I've had it. That's when you change. Until then, it's all theory and discussion and intellectual exercise, but nothing changes until you get really, really, really, I've had it. I'm sick and tired of being sick and tired.

Starting point is 01:05:15 If you're tired of working so hard and getting nowhere, well, you've got to do something different to get something different. Hello, if you don't like the cake you're making, it turns out chocolate, maybe you ought to change the recipe. Or maybe you wanted chocolate. want chocolate actually. So if I keep getting vanilla, I need to change the recipe, right? So if you don't like what's happening, you need to change something. And one good idea is jump on every dollar and start laying out a game plan for changing your life. It's called a budget. It's called plan. It's

Starting point is 01:05:44 called a strategy. It's a tactical move. And you don't have to live this way. Normal's broke. Every dollar budgeting app helps you find extra money every month, build you a personalized plan, you get out of debt, and you become wealthy. It really does work. In the first 15 minutes, you're going to find thousands of dollars in hidden margin. You're going to feel like you've got to raise right now. It's free to download the every dollar app and get started. You can do that at Google Play or in the app store.

Starting point is 01:06:12 But it's not really free because you have to say, I've had it. And when you say, I've had it, that's not free. It's going to cost you something. We're not going to charge you because it's free from us, but it's not. going to cost you something. Get ready to pay a price if you want to win. No one wins without paying a price. Bree is with us. Bree is in Grand Rapids, Michigan. Hi, Bree. How are you? I'm well. How are you? Better than I deserve. What's up? So my husband and I worked diligently to be on track to retire at 55, if not sooner,

Starting point is 01:06:53 until we've realized that I can't touch my retirement until 59 and a half. And now I'm not sure what to do with my money. How old are you? I'm 30, he's 33. Oh, you got plenty of time. You sound like you're freaking out. So what are you going to do from 55 to 85 to 85? Nothing?

Starting point is 01:07:18 I don't know. I would love to have the ability to do nothing. You want to be work optional. Yeah, exactly Okay How much do you have in your 401ks and so forth now? So combined, we're at about 530. Excellent job.

Starting point is 01:07:37 Okay, and what do you all make? About 170 a year. Excellent. And you're debt-free, accept your house or including your house? Except our house. Okay. And what are you all in the home? About $100,000.

Starting point is 01:07:53 How much? $300,000. Okay, good, okay, cool. You're doing so good. There's nothing to panic about. Now, so the answer to your question from me, and I led Jade chime in, too, has two parts. One is I would continue to work the baby steps first and foremost, and that's putting 15% of your income away in retirement, the 59.5 accessible accounts, which you're worried about, and get your house paid off.

Starting point is 01:08:19 You're going to do that in plenty of time. when the house is paid off then to start funding a bridge. Because the bridge is not that big a bridge. You're only talking about four years, and so we only need $400,000. And how fast can you build up $400,000 really, really fast when you start putting your whole house payment away? Right.

Starting point is 01:08:42 Yeah. So, I mean, really you probably need $300,000, because it's actually going to be earning because you're going to put it in like an S&P 500. And so if you start that, you know, you're probably going to pay off the house in the next four or five years the way you're going. And you've got 15. And by the way, in seven years you're going to have a million. No, in about five years, because you're adding to it.

Starting point is 01:09:07 About five years, you're going to have a million in your 401k. And worst case is something comes along and stubbed your toe and you're sitting there at 50 and you have five years. years and you still don't have any bridge money built and you still think you want to get there. But by then you've got $3 million in your 401k. We'll stop your 401k for a little while and just build your bridge. What split would you do on? I'd do 100% if you did that. But here's the thing.

Starting point is 01:09:38 That scenario is not going to happen because you would have to have something pretty severe happen to cause you to have not had the house paid off and then start putting the house money aside. Because if you start putting your whole house payment away, you know, you start putting, what, $40,000 a year away, you're going to have, you're going to have $400,000 in about 20 minutes. It goes really, really fast. Okay. And you just would put that in stock. Yeah, just an S&P 500. You want to put it in something that's called a low, like an S&P 500 index because it's a low turnover ratio.

Starting point is 01:10:14 If the mutual fund is not in a retirement account and they say, the stocks inside of it, it creates taxes every year. But if it's in a low turnover mutual fund, meaning they don't sell the tax, sell the stocks inside of it very often, like hardly at all, like a 5% turnover ratio or less, which is what an S&P 500 index fund would be, they're not going to turn those stocks over. They just sit on them. And so that will grow without taxes until you sell it. And so it grows a capital gains rate and not already income rate when you do sell it if you keep it over a year and it grows without taxes. Because see, if you buy a stock, if you buy a mutual fund or anything and it's not,

Starting point is 01:10:55 you don't, you buy a stock in Home Depot and it's $55. I made that up. I don't even know what Home Depot is. Okay, if $55 and it goes to $155, you don't pay taxes on the $100 in growth until you sell it. And the same goes true of a mutual fund where they're not selling the stocks. You don't pay any taxes on it until you sell it. And so you could start that at 50 and you will be just fine.

Starting point is 01:11:17 but I think you're going to be there way earlier than that. And, yeah, you should look at building some wealth outside of retirement accounts because you're going to easily have $10 million in retirement. Right. Yeah, you guys are killing. You're doing so good. All this money that I can't touch. How did you do it?

Starting point is 01:11:34 How did you save so much money so quickly so young? Did you avoid debt? Like, what was the... Yeah, I mean, my husband and I both avoided that I had a little bit of student loans that I paid off pretty quick. And then he's just, we're probal. Okay. Well, here's the thing.

Starting point is 01:11:53 We turned over a house. Two times. We made a couple hundred. Yeah, very good. You are doing way better than the emotion that is in your voice, two different times in this conversation that said, the money is trapped. And it's like too much drama in that, okay?

Starting point is 01:12:12 You've got it. You're okay. You're going to be wealthy. You're okay. You just need to follow a plan through and there's no, like there's no alternative. We're going to be trapped all this. We're going to have $10 million and it's trapped. Oh, darn, I hate it when that happens.

Starting point is 01:12:28 You know, so you're be okay. Get the house paid off and then start building some other wealth. And the numbers never turn out like you're projecting when you're 30. You know, it's good to project out because it gives you peace and says, I'm going to retire with dignity. I don't have to eat Alpo, right? Right. Yeah, and I would go on to Ramsey Solutions.com and look at the investing calculator. And then you can run out and say, okay, at the current rate, we're investing 15%. How quickly do we need to pay off our mortgage so that we can bump up that 15% so that we can still put 15% in the 401k's and then put another percentage. plus some other. Yep.

Starting point is 01:13:07 And put it in the brokerage. And put that in a good S&P. Yep. And let that sucker ride. And then once you see, but once you see the numbers, then you can say, okay, I have a plan. I don't have to be dramatic. I can call it. You're going to be okay.

Starting point is 01:13:19 You got lots of times, lots of times in the next 20 years that you can stop adding to your 401k and still make your bridge. Absolutely. Okay. And still end up with millions of dollars. So don't stop now. That's way. premature. And here's the other thing. It's okay to have, quote, work optional, which means you

Starting point is 01:13:42 financially are able to do things, but work's really not optional. You need it for your brain. You should do something with your life. You're way too talented to sit on your butt and binge watch Netflix. You should do something with your life. And so work optional is fine, but then go work. Okay, I haven't had to work in decades. I work because I love. I work because I love. I love, because I love this. Let me tell you something I see happen way too often. People fall behind on their bills and they wait. They hope it will work itself out. It won't. That's why I recommend Guardian litigation group. Here's the deal. If you've missed payments, collectors are calling or if you're getting letters threatening legal action, that's not something to ignore. That's the moment to deal

Starting point is 01:14:59 with it. Because when you do nothing, it escalates. They can take you to court. And if you don't respond, they can win by default, and that gets expensive fast. Guardian litigation isn't a call center. They're an actual law firm. From day one, you're assigned an attorney to represent you. So if things do escalate, you're not scrambling and you're not hit with surprise legal fees. Guardian litigation only gets paid when the debt is negotiated and you accept the settlement offer. This isn't about shortcuts. It's about dealing with the problem before it gets worse. Go to Guard. Guardian lit.com slash Ramsey today. That's Guardian, L-I-T-D-com slash Ramsey today.

Starting point is 01:15:42 Attorney advertising, results may vary and no specific outcomes guaranteed. Philip is in Memphis. Hi, Philip, how are you? Good, Dave, how are you? Better than I deserve. What's up? Hey, so I wrecked up a little over 30,000 in debt, and I was wondering if I should try and pay it off or just file for bankruptcy,

Starting point is 01:16:22 because I'm kind of living paycheck to paycheck with all that debt. What do you owe it on? What kind of debt? Credit cards, personal loans. I have a couple things in collections now. What caused you to fall on such a hard time that you were putting that much debt on credit cards and personal loans? Did you lose a job? No, I started gambling last year.

Starting point is 01:16:50 Okay. You ran up 30,000? In 2000 in one year? You ran up 30K? Wait a minute, stop. You ran up 30K in one year? Yeah, I was winning pretty big, and then I just started losing. Apparently not.

Starting point is 01:17:04 Is this sports betting? No, this is in person, sometimes online casinos. No sports still. Okay. How long has it been since you gambled? Two days. Mm-hmm. Okay.

Starting point is 01:17:20 So let's be real clear. You identified in the first. in the first minute and a half that I know you, that you have a problem gambling and that it has run you up close to bankruptcy, and yet you continue. Sir, I'm just trying to chase the win. I'm sorry?

Starting point is 01:17:42 I'm just trying to chase the win back. Have you considered being some help? You're trying to take the win back. Is that what you said? I'm just trying to win the money back. Yeah, yeah, okay. So you have all the, symptoms of someone who has a gambling addiction.

Starting point is 01:18:03 It's not an addiction because I could stop right now. Then why don't you? Because he's trying to win and you've lost $30,000 and you're talking to me about bankruptcy. This is illogical, hon. You've got to figure out what causes the problem and stop what causes the problem. The debt is not the problem. It's the symptom. The problem is the gambling.

Starting point is 01:18:32 And so if you file bankruptcy on this and you continue to gamble, gamble, you did not fix the problem. You're under the illusion that you're good at this and you're not. You suck at it. You're $30,000 in the hole. I just want to be out of the clear so I can stop living paycheck to paycheck. And the way you do that is you stop first. And then...

Starting point is 01:18:57 I'll go in for the night and then I'll go back to next. Never go back again. Never go back again. You need to get online and get in touch with Gamblers Anonymous. us and you sit in a group and you never need to never play cards again you can't handle it you're not good at it it owns you right now the only problem i see with is just the debt the number but i don't think it's really like an addiction or anything we were you called us and based on your logic we both think that you do have an addiction so there's something about you here's there's something about

Starting point is 01:19:34 you that trusts us otherwise you wouldn't have called in so as Chad GBT and they said to file for bankruptcy. Yeah, and chat GPT just knows everything. It's kind of like God. No, it's not. I'm going to get a human answer because all my friends didn't say. Because the chat GBT didn't challenge you on what's really going on. It just said you had $30,000 and I'm living paycheck to paycheck.

Starting point is 01:20:00 And chat GPT has never had to live 30 years later, still filling out forms that says, have you ever filed bankruptcy? And for the rest of your life, you have to say, Yes. And if you do it, sure, it could clear your debt. You're not bankrupt. You're gambling too much. And if you don't stop that, then you'll be right back where you started.

Starting point is 01:20:18 So that's not the solution to the problem. A hundred percent chance you're going to be back in debt again after your bankruptcy if you don't stop the gambling. 100%. You don't see that, do you? You think you follow you just quit gambling? I mean, what if I just put my cards in collections? Yeah, what have you stopped gambling? I mean, that could work too, but...

Starting point is 01:20:44 Yeah, that would work. How old are you? 24. Okay. All right. Here's the thing. 100%. I've been doing coaching with people with financial problems for 10 years longer than you've been alive for 35 years.

Starting point is 01:21:09 Okay. And one of the things, sadly, I've been. I've gotten to spend a lot of time with, Philip, is people who are addicted to something because if you're addicted to cocaine, if you're addicted to pornography, if you're addicted to gambling, if you're addicted to something, 100% of addicts are broke eventually. A hundred percent probability if you're addicted to something, it eventually causes you to be broke. And it'll usually also cause you to lose all of your relationships, too. And so you've got two people here that know what we're talking about that love you. We're not trying to get anything from

Starting point is 01:21:47 you. We're not making a dime on this. There's no, there's no poker chips in the middle of the table. There's no bluff. It's just two people looking at you, telling you the truth. You're not bankrupt. You need three extra jobs, a detailed plan, and quit gambling. And you have a problem gambling. You're getting a high from it. You're getting a dopamine hit and you're going back and you're saying all the lines. You know what addicts always say. I can stop any time I want. You know what addicts always say. I'm waiting on the next win. I'm waiting on the next high. These are, these are classic. If you read addiction literature, it sounds like your verbiage, Philip. And so, I mean, we're not professional counselors, but, dude, I've worked with thousands of addicts.

Starting point is 01:22:42 And it's really distressing to hear the way you're talking. I'm scared for you, hon. I'm scared for you. If I can put my arm around you and pray for you right now, I would. So I will be at the commercial break. I can promise you that. But you're not going to get a good quality of life until you stop this because it's not blessing you. It's not bringing good things to your life. And it's costing you money and you're

Starting point is 01:23:10 believing a lie. The mythology in your language is enormous. So please get some help. Go see Gamblers Anonymous. Stop now. Now. Stop now. And go be the man you're supposed to be, which is a guy who's productive and prosperous and is worthy of the house. of a good woman and becomes a great dad someday and go be that guy. Don't be some guy who's looking for the next win. That's such a pitiful statement. Oh, you can do this. I promise you you can do it and we'll help you.

Starting point is 01:23:53 You call us back. We'll always tell you the truth, even if you don't like it. Sometimes, especially if you don't like it. But you're not bankrupt. $30,000 is not enough to file bankruptcy on. There's lots of ways you can pay that off. Stop paying your cards. Work your way right through it.

Starting point is 01:24:13 You can get with guardian litigation. They'll set up a plan, do it all. But they will not set it up for you if you have symptoms of addiction because they know that you're not going to follow through. You can't do a plan when you need, when you continue going back and losing money every night. Can't get out of a hole while you're digging out the bottom. Oh, no, you can't. So, guys, just to recap a minute and set Phillips case aside for a second, the fastest growing addiction in America that is destroying more households than anything else is online porn.

Starting point is 01:24:53 It has gotten completely out of control. It generates more revenue than 100% of the professional sports put together, including NASCAR. Baseball, football, soccer, basketball, NBA, MLB. Every single sport, billions and billions of dollars of sports added up, don't keep up with a porn industry in America. And the number of people who are losing their families and losing their lives to it is astronomical. The second fastest growing right now, gambling. And the reason it's the fastest growing is online accessibility. on both of those, porn and gambling. By far the fastest.

Starting point is 01:25:37 In sports betting among young men in their 20s, it's destroying them. Destroying them. Welcome back to the Ramsey Show in the Fair Winds Credit Union Studios. Christine is in Oklahoma. Hi, Christine, how are you? I'm good. How are you doing?

Starting point is 01:26:08 Better than I deserve. What's up? I had a question related to my career. I'm in my first year as an attorney. So I graduated last May, took the bar, eight months pregnant, passed the bar, had my baby in September, start work as a way too much later. And I'm currently working right now, and I really don't like it. I took out 115K in student loans to get this degree. And I really liked law school, but I am not liking it right now. And so I'm kind of out of point of law school.

Starting point is 01:26:46 I love learning about the law. I love the reading. What I'm struggling with right now is a lot of the billable hours. The job I'm in is a pretty fast-paced, high-earning firm, and so the billable hour requirements are pretty high. And with a nine-month-old, I'm just really struggling. So it's not the work, it's the pace that you have to do the work because of the baby. Yeah. I would like to be home with her more and have more flexibility. And I think when I went into law school, I wasn't planning on having a baby until a couple years down the road into my career. And I wasn't anticipating feeling so much more like I just want to be home with her. I mean, that's fair. Are you, are you obviously married? What, what does your husband make?

Starting point is 01:27:36 He makes about 60, 65K. He's a high school teacher and football coach. Yeah. And you make what at the high powered high billing law firm? I make a 105 based and I got a sign on bonus of 10. A bonus of 10? Yep. Okay.

Starting point is 01:27:54 And you've been a lawyer since September? Since, yeah. So I, well, I passed the bar in September and I started working as that journey in November. That's when I went back to work after the baby. All right. So seven months. Have you explored other options where the pace is not quite so fast or the hours aren't as high? I have so I I'm just not sure being in my first year for one I'm in Oklahoma and a lot of the jobs that aren't as high billing don't pay as much and with my honest loans I thought maybe I could last a year or two get them knocked out and be done with it and then go do whatever I mean how quickly can you pay off 15,000 on 170,000 150,000 oh I'm sorry I

Starting point is 01:28:42 misheard and I miss saw it on there. Okay, 115,000. Yeah, yeah, 115. And then my husband has like 12K, so around 130. I mean, I think I could get it knocked out pretty quick. I mean, it wouldn't be less than a year, though. No, it would take 18 months, yeah. Yeah, because we could, I mean, go ahead, sorry. There's two things we can do. One is, I think you're extrapolating, the situation that you're in to all lawyers. And all lawyers don't face what you're facing. So there's other ways to utilize the law degree and make a good living. Maybe not make what you're making at this instance seven or ten months into your career.

Starting point is 01:29:35 That's possible you're not going to make more, that you're probably not going to make this if you did something else. But, yeah, but you can't go postpartum and say, I'm going to throw away the amount of years and the amount of money invested into this, you know, just based on the fact that I'm pretty stressed out at this particular moment. Instead, we have to look at other ways to dial the stress down without going all the way to zero. Yeah. And so if you can't, and I can't put myself in your skin, only you and your husband can prayerfully consider this. If you can't suck it up and run the gauntlet for 18 months and clear the student loan, then the second thing, that's actually the best thing. But that's very hard to do. And I'm not saying everybody can do that, and I'm not saying you have to.

Starting point is 01:30:36 I'm just saying that's option one. That's actually plan A. Okay. Plan B would be how can we utilize the law degree, maybe make more, but maybe make a little less, and be in a situation where I can actually breathe and I'm not just about to punch everybody out because I'm so stressed out all the time and I'm trying to raise a baby. And so that's cool. That's fine.

Starting point is 01:31:02 So that's position B. but I'm not going all the way to position Z where we do nothing. Yeah, and I'm not the best of person who gave up the option of being a full-time mom sit at home with the baby when you made the decision to go $150,000 in debt. You gave that up. I agree, 100%. And I don't want to not work. I've never been that type of person that can just sit around.

Starting point is 01:31:27 I mean, that's kind of why I went to long. You need option B. You need an option that will allow you to. Well, and here's the thing. If you can get a real clear picture, like actually go interview for the job for option B, and you know it's there, sometimes if I have at least that, I don't feel as trapped. And then I can gut something out for a little while longer. Yeah, because you know if you have to pull that. But if it feels like this is extended for 10 years, it feels like it's forever.

Starting point is 01:31:59 I just can't do it. I lose my hope, you know. Yeah. Yeah. I agree. Yeah. And yeah, I think that's probably the way to go there. So guys, Christine's obviously a very bright lady, and I'm glad we were able to help her. Setting her particular situation and her particular self aside for a second. This is how the student loan crisis occurred. This is how we have almost $2 trillion now in student loan debt out there.

Starting point is 01:32:41 Because we told people that your life, if you go get an education, your life is going to be exactly what you want it to be. And it never works out that way. I talked to a lady not long ago who's making $400,000 a years in MD, and she had a special needs child. And now she's faced with, this desperate desire to be at home with a special needs child versus her $400,000 income

Starting point is 01:33:13 and her $600,000 in student loan debt. And so she's trapped between this in that situation. That's a more extreme version of what Christine is facing. But as Christine so eloquently said, they don't tell you this when you're in law school. No, they don't. That as soon as you hold that baby in your arms,

Starting point is 01:33:38 Things change. Things change. And you can't anticipate this until you're in it. And you can't see that coming. It's impossible. They don't tell you this when they say, oh, you're going to make so much more money because you got a degree. Yeah. When you're in your late teens and mid-20s, you're not thinking about the day you might have a baby. You're thinking about getting your education and doing whatever it takes to do so. You're not thinking about all the, that's a positive thing that could happen, but all the negative things that can happen. Absolutely. The tragedies that can come across your path. And those things happen to people every day. Yeah. So, yeah, don't sign up for these trips because you get trapped.

Starting point is 01:34:22 The borrower is slave to the lender, and Jesus said it's hard to serve two masters. You'll hate one and love the other. Hey, guys, Dave Ramsey here. Every day on this show, we help people work through real money problems. and figure out what to do next. Now, you can get that same kind of help any time with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help.

Starting point is 01:35:10 It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey today. That's Ramsey Solutions.com. Today's Ramsey Show question of the day is brought to you by Y Refai. Defaulted private student loans can derail your money plans, but YREFI helps borrowers explore refinancing options. They'll help you get on track again. Learn more at YREFI.com slash Ramsey. That's the letter Y, r-E-F-Y.com slash Ramsey might not be in all states.

Starting point is 01:35:59 Okay. Today's question comes from Keith in California. He says, my wife and I are in baby step two with $10,000 of remaining debt. We generally agree on our budget, but we have one reoccurring disagreement. I spend about $40 every three months on a haircut, which fits our budget. My wife would prefer that I visit a professional barber every month at a cost of around $110 per visit. Her argument is that it makes me look better. It helps my professional image. and I love this one, it makes her feel better when my hair and beard are styled. I don't think the barber is a waste of money, but my concern is that a 110 monthly bill doesn't

Starting point is 01:36:43 seem to fit our budget or align with the intensity of Baby Step 2. Is this the type of expense that should wait until we're debt-free, or is it reasonable to include it in the budget because of the personal and professional benefits? I have some opinions on this. I can't wait. Because I don't. My first thought is, my first thought is,

Starting point is 01:37:07 this woman is desperate. Like there's something that she, she's trying to be nice, but it sounds like you're really in the need of some grooming to be done. That's what I mean. He goes and gets a $40 haircut. They don't groom there. Every three months?

Starting point is 01:37:22 Three months. That's a quarter. That's a long time. And my, his beard, I'm imagining this guy with a long beard. You know, if you don't condition your beard, it's scraggly, start smelling weird. I think that this is a desperate woman speaking, however you are on Baby Step 2.

Starting point is 01:37:38 Is there a way? Here's what comes to mind. I don't have a point of perspective, so I have to interrupt you. Okay. What does Sam spend? I think it's probably around 110 or so. A month. Because I think George Camel spends somewhere around $1,400.

Starting point is 01:37:56 a minute. I'm kidding. I made that up. Well, George has more hair than Sam. George Camel has, he's got serious hair. He does. And he works at it really hard. Yeah.

Starting point is 01:38:05 I think the amount is not an abnormal amount that she's saying. That's what I was, because I don't have nothing to base it on. Because I haven't been to a barber in 30 years. Yeah. I don't think. I mean, what do you guys think, James? You're shaved. James, you're well coughed.

Starting point is 01:38:20 I mean, I get my hair cut every five weeks and it's like 50 bucks maybe. I don't know. I do like a membership thing, so I don't know what it is every single time. So that being said, I think you could probably split the difference. I think you can go more than once a quarter. And I think that you can spend less than $110 a month. I think you can probably spend $60 or $70 and do it every month. He is in California. Does that matter? That might matter. He's having Esteban do his, do his beard. I can't tell if we're dealing with a Zizi top beard here or what. A smelly beard. I didn't run into that one. Listen, you got to condition it with the oils.

Starting point is 01:39:00 I think if this is a point of contention, she's not digging what's going on there. Or you could shave the beard. That's half of the haircut. Go clean shaving and just do the top layer. You could do that. There's options here. I think you need to meet your wife halfway because, like he says, there are personal benefits that sounds like on the line, personal and professional. And for that reason, I'm going to say half the budget.

Starting point is 01:39:32 What do you say? The first thing that occurs to me is it's just not a lot of money we're talking about. No, it's not. Unless they don't make hardly any money. Yeah, they live in California. So I don't know. I mean, it's not a lot of money difference. But I also see a lot of, I mean, you can get a haircut and have a professional image without going over the top.

Starting point is 01:39:57 I suppose. I haven't ever done it, so I don't know. I mean, he might be getting a really bad sports clips haircut for $40 once a quarter. And that can make you look. Really? Unprofessional. Yeah, not the best. I guess they're not going to be a sponsor.

Starting point is 01:40:15 Sorry, sports clips. You know, when they accidentally cut off too much of your sideburns, it's not good. A bad haircut. It's not blended. Yeah, I am. You've never had a bad haircut, so maybe you don't. Yeah. There's just so many things I can say they're not funny here.

Starting point is 01:40:38 I would love to hear just one of them. I really, I mean, it's like the guy that called in the other day about hair replacement. And I'm like, I'm not the guy to ask. Like hair plugs? Obviously, I did a pass on that one. And so, you know, I'm not the guy to ask. I'm not sympathetic or even empathetic. So this is so interesting.

Starting point is 01:41:03 Did they want to go into debt for the hair plugs? No, we want to use the house down payment. Wow. That got a hard no. Yeah, I got to go back and listen to that one. Yeah, house is better than shallow. So the real discussion is if, I mean, there's a deeper discussion here. There's the money side of it.

Starting point is 01:41:23 But then it's like if one of your spouses is saying that's an unattractive quality. I need you to do something about that. I feel like you need to run and, run and fix that. What do you think? Yeah, yeah. I mean, that's why God sent you them. They take care of your blind spots. But yeah.

Starting point is 01:41:43 But the thing that's bottom me, I... Is it the 110? No, no, it's this idea that this somehow you can't get a good haircut except this one that makes you professional. And I'm just going, yeah, yeah. Judging from the number, I think that he's probably getting the worst haircut you can get. And she's probably like, can you just go to a normal barber? Do you have to go to the discount place?

Starting point is 01:42:13 Can you just go and get a fine haircut? And can you just please get it done once a month, please? That's what I'm hearing. I have no idea. And he's like, it doesn't matter. I really, I really just don't have anything to add intelligent. John is in Indianapolis. Hey John, what's up?

Starting point is 01:42:29 How's it going? Better than I deserve. Ask me something I know the answer to, please. So I have completed baby steps one through four on number five. Good. Trying to figure out how much I should be contributing to a 529 account. I have $13 extra a month. after my 15% of my household income saved.

Starting point is 01:43:02 So I'm really not clearing a bunch at the end. Yeah, so you're really not putting anything in your 529. How many children? How many children do you have? Just one. Okay. What's your household income? A single 117.

Starting point is 01:43:18 Okay. All right. Yeah. Until some things shift around. in your budget, you're probably just not starting your baby step five. That's okay. It's why it's after number four. Four is first, five is second, six is next. I mean, that's why we have in order. They're numbered that way for a reason and do them in that order. And you're not going to go the rest of your life and do nothing for college, but you may not be able to do something

Starting point is 01:43:43 substantial for right now. And you can't open a mutual fund account for $13 a month. They don't have them. Right, right. So, yeah, I mean, that's just, if you want to pile that money in the corner or something and have junior a little piggy bank or something, that's okay. How much do you need for a 529 account? Well, I mean, what I would recommend people do, and I don't want you to do this too stringently today because you can't really do anything today, and we don't want you stressed out or anything. But if you wanted to actually have a mathematical target, you could just contact your, you know, the University of Indiana, your state school, right? and say, or whatever in-state school tuition, which is usually going to be right now in the 10, 12 grand range, something like that, plus room and board times four.

Starting point is 01:44:37 And so, okay, that's our target. And we've got a lot of years to get there. So we will be accruing some gains on the mutual funds, some interest, so to speak. And so I don't have that much in actual dollars, because some of it's going to be growth. and I'm going to put it in a 529. And then you could sit down with your SmartVistor Pro and figure out what per month you need to do to hit that target. But you don't have to worry about that today.

Starting point is 01:45:04 You can't do it today. Hey guys, George Camel here. You ever feel like you make good money and still have nothing to show for it? You run into Target for one thing and somehow walk out $87 later with toothpaste and emotional support candles. Just me? Okay.

Starting point is 01:45:36 Well, that's the problem. Most people don't pay attention to how they spend their money, so it does whatever it wants. And that's why we created every dollar It's a budgeting app that helps you create a simple plan for your money. Every dollar's simple, it's clear, and it helps track where your money's actually going. Plus, you get daily lessons, to-dos, and reminders along the way. It's like having a money coach in your pocket.

Starting point is 01:45:55 Your money's been freelancing long enough. It's time to give every dollar a full-time job. Go download every dollar for free on the app store or Google Play. The right insurance acts as defense while you are on offense doing your investing. And you've got to have both sides of the ball if you're going to win the game. game. Hello. You want the right kinds of coverage, not the rip-off coverage, not the stuff that doesn't matter. And our free insurance coverage checkup helps you figure out if you have the right coverage and if you're paying too much for it. And we give you a personalized action plan with

Starting point is 01:46:49 some clear next steps. So you can get real clear Ramsey footprint right there on your insurance coverage. We don't sell insurance. We teach. And we will teach you what you're supposed to have and not supposed to have and help you with this. It's completely free. Take the free coverage checkup and find out if you got the protection you need. Ramsey Solutions.com slash checkup. Kristen is in Connecticut. Hi, Kristen, how are you?

Starting point is 01:47:17 Hi, oh my goodness gracious. Thank you all so much for taking my call. Thank you. What's up? So I am looking for advice. My husband and I, we were on babysat number two, working on three, and now we're back to number one. My husband is in sales, and that occupation requires work expenses to be paid up front, like out of our pocket.

Starting point is 01:47:40 It does get reimbursed, but it takes a month. So my ask is, how do you recommend taking my husband and I's personal income, our family expenses, and separating it from his work expenses, and in addition without using credit cards? What does the monthly expense run? It can range because it really depends if he travels or not, which he travels a couple times a month. So the expenses in a month, in a month, it takes a month for it to come back. What does he spend?

Starting point is 01:48:21 Between, I would say between three, like 3,000. Okay. All right. And what's your household income? Our combined is $3.74. And why is $3,000 a problem? Out of $30,000 a month. $3,000 to $6,000.

Starting point is 01:48:43 Well, we are investing a lot. We do have a lot of bills. But, like, for example, I would say, like, an Uber, last month, Uber is $800. And we have client dinners. That's $3,000 out of $30,000. Why is that? a problem. Even if it were six. You're spending a lot on other stuff. Yeah. A lot. I mean, there's a lot. A lot.

Starting point is 01:49:15 A lot. Right. But all it takes, Kristen, is for one month for you guys to set that $6,000 aside. Put $5,000 in on a separate checking account and put a debit card on it and spend it down, turn in the receipts. They give you $5,000 back from the company. They put the $5,000. They put 5,000 back in that account, spend it down, turn in the receipts. They give you 5,000 back from the company, you put it in that account. All you got to do is fund it one time and prime the pump. And then it recycles. But you're acting like him being on the road or having expenses is your household problem. It's not. You have $30,000 a month coming in and you've put a bull's eye on this three grand. Like, it's the problem. It's not. You guys got other problems. You're spending

Starting point is 01:49:59 like you're in Congress at home. We don't have 30. thousand coming in. That's because you're investing. It's because you're investing a ton. I get it. How much are you investing? Yeah.

Starting point is 01:50:12 We're investing just about total like 15 or sorry. Sorry. Oh, I have here 11%. Okay. 11%. Between our LERP, two IRAs, a LERP of 529, 2401Ks. Then I still don't. don't think that's even the problem. I think the problem is exactly what Dave said. That's $3,000 a month.

Starting point is 01:50:42 Uh-huh. I think you guys are just spending without a plan, and we'd love to give you a plan because I wish that you were investing 15%. How much debt do you guys have? So our credit cards are 10,000. I do have a student loan of about 90,000, and our daycare is $2,500 a month. The real kickers are a mortgage. How much is your mortgage? Trying to get around that. How much is your mortgage? How long have you been making this kind of money?

Starting point is 01:51:19 Is this new for you, or have you guys been earning like this for a while? It is new. He got promoted a year ago, and then he was. in January I got promoted. So I'm making an extra $13,000. So it wasn't always like this, but I think having a second checking account is a great idea. I would like to try that. When did you get the mortgage?

Starting point is 01:51:44 You want to do anything to keep from facing the fact that you have a $10,000 mortgage that you can't afford. You worked really, really hard in this conversation and never bring that up. Is that new? Did that happen after the... promotions or did you have that before? So we had it before because we knew we were getting the promotions. But we can't sell the house until we've been here two years because we pay capital gains tax.

Starting point is 01:52:14 But has it gone up that much in value? What's it gone up in value? I think it's projecting 100K a year. So we put 250K down and we're looking at getting about that in return. Yeah, so there's no capital gains because there's no gain. Yeah, not right now. So you don't have to worry about capital gains. That's a false flag, too.

Starting point is 01:52:41 Oh, so we don't have... If you don't have a gain, you don't have capital gains tax. Okay. Here's what I think. I think you guys have gotten way, way, way, way, way, way, way, way, too comfortable and way, way, way, way, too sloppy. And I think it's coming back to bite you in the butt. And what a shame because you make such good money, but you're not... able to fully experience it because you guys have gotten so sloppy and you're just adding more and

Starting point is 01:53:08 more to this mess. Yeah. So here's what I would say, okay. Mathematically, his expense account is not your problem. Mathematically, because it's $3,000. Okay. Mathematically, 11% going into investments is not that much. It's only $3,000.

Starting point is 01:53:30 That's only $6,000 between the two. So you can cover both of those with $3,000, $3,000. And so those really aren't the issue. But they're all, but they're straining or they're exposing a budget that is desperately strained by a house payment that you probably can't afford. So here's what I would try. I assume you like the house, right? Dream house. Okay.

Starting point is 01:53:57 Well, turn into a nightmare, but let's leave that to the side. The, okay, I'm, I have been in sales my whole life. I grew up in a salesman's household. And for a long, long time, as a salesman, I really thought, I didn't think this intellectually, but I acted as if I thought that I could out-earn my bad decisions, out-earned my stupidity. And so salesmen have a tendency to think that, because salesmen are glass-hound. have full people. They're optimists. I'll go knock another deal down. We'll be just fine, honey. And this guy's obviously a very good salesman. He's even sold himself on getting into this mess.

Starting point is 01:54:43 But salesmen have a tendency to those of us that are good at it, and I'm in the same bucket. That's how I can smell it. We have a tendency to try to out-earn our own stupidity. So what I want you to do is I want you guys to get on a very, very tight budget. stop your investing for a minute. Get the $5,000 in a separate account on the debit card so you can control the business expenses. And then we don't have arguments over $800 Uber or dinner out with clients because he's closing deals. And he needs to do the $800 Uber. And he needs to go out with dinner on clients because that's what's causing all this money to come in.

Starting point is 01:55:22 And so we need to protect that. But we need to not spend the expense money on anything except business reimbursable expenses. We need to stop investing temporarily, get the budget under control in detail, and see if you can afford to keep this house. I think you're going to find you can't keep it, but I want you to try to keep it first. You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage. To protect your biggest assets, I recommend using Ramsey trusted business. pros. Whether you're looking for car, home, or any other type of insurance, Ramsey trusted

Starting point is 01:56:27 providers have been coached and vetted to serve you like we would. Find what you need at ramsysolutions dot com slash insurance. Our scripture of the day, Proverbs 1628, a troublemaker plants seeds of strife. Gossip separates the best of friends. Teddy Roosevelt said, if you could kick the person in the pants responsible for most of your trouble, you wouldn't sit for a month. Oh, wow. Plot twist. You got to love Teddy Roosevelt. Donald in Boston, what's up?

Starting point is 01:57:23 Good afternoon, Dave. Afternoon. How can we help? Well, I'm 57. My wife's 64, and she wants to retire in three years. And I do not have a financial advisor, and I'm worried about running out of money. So I've been looking around, and I ran to somebody who wants to sell me an annuity, which doesn't sound like the best idea. So I thought I would touch base and see what your thoughts on were.

Starting point is 01:57:50 Okay. You did not find a financial advisor. You found a life insurance agent that called himself a financial advisor. Uh-huh. Because the typical financial advisor will not sell you an annuity except in very rare circumstances. They're not super bad, but they're not super good. It's the only way a life insurance agent can, that doesn't have a securities license, can get you into a mutual fund as through a variable annuity. And so they use that.

Starting point is 01:58:18 So no, don't do that and don't use that guy. So talk about your situation. How much money do you guys have saved now? Well, in 401Ks and IRAs, we have about $950,000. Way to go, millionaire. Not there yet. That's awesome. You are there.

Starting point is 01:58:36 I mean, you own some other stuff more than that. So you've got a million dollar net worth. I'm proud of you. What's your house worth? Maybe $5.50. It's paid off. And it's paid off. So there's your million four net worth, million six net worth.

Starting point is 01:58:50 Yeah, way to go, man. Proud of you. I'll start with nothing? Yeah, we were brought up poor, but I didn't discover you until 10 years ago, and I was buried in debt, and I owe pretty much my debt-free lifestyle to you, actually. So you did this whole thing in 10 years, from 45 to 55, or 50s? Way to go, man. I'm proud of you. So, no, hey, man, you've got plenty of money.

Starting point is 01:59:13 You don't, you stay away from an annuity. You simply need to get these 401ks all set up and your huge nest egg set up to work for you now instead of you working for it. You spent the last 10 years scratching and clawing and working to build it, and now it's time for it to work for you. So get online at Ramsey Solutions and get to a smart vestor pro and sit down and look at them and say, teach me until I learn, I do. do nothing. So teach me. That's their job is to teach you. And once you understand it enough to explain it back to them or back to me, then you're ready to do some more investing in, to move some of this stuff around and get it to working in your favor. You got plenty of time. So let me give you an example. Your wife wants to work. How long, three more years?

Starting point is 02:00:02 No, she quit today if she could, but I don't think we can. Again, I don't think we have the money. What's she earned? She earned 60,000. What do you earn? 175, but that's new as of three years ago. Well, I mean, if she quit, why can't she live on 175? We could, but again, not understanding how much money I have. Oh, you're saying you don't have enough money than this day.

Starting point is 02:00:27 I'm thinking we're going to run out of money when we're 85. You're not. You're not. You're not. Let's walk through it, okay? You're in great shape. Here's some numbers for you. Number one, I want you. you to go on Ramsey Solutions and pull up the Ramsey calculator retirement and look at it and start

Starting point is 02:00:41 running some numbers back and forth to get your head around this, okay? But here's a couple of things you can remember. Is your good, is your 401k and your retirement invested in good mutual funds? Yeah. Like we teach. Yeah. I don't know. Okay. So if they're averaging 10% that million dollars will double in seven years. You'll be 64. You'll have two million dollars if you don't touch it between now and then. And when you're 71, if you haven't touched it still, which is not likely, you will have touched some of it. But when you're 71, the $2 million will be $4 million, without adding anything to it. That's what it'll do. It'll double every seven years, if you're averaging 10%, a lump sum will. Okay? That's the math. Now, if that's happening,

Starting point is 02:01:30 you're roughly going to have $2 million to work with because you're going to live on, if you live on 175, between now and the time you're 64, you're going to, or 65, you're going to, and then you retire, you know, and you can do that easy. You're going to have $2 million sitting there waiting on you, plus whatever you add to it between now and then. So you probably have two, $2.5 million, okay? Now, if you pull off 10% a year off of $2.5 million, that's $2.5 million. $150,000 a year. If you pulled off half of that, that's $100.5 a year. And you're not even touching the...

Starting point is 02:02:17 And it's still growing. If it's invested and it's making 10 or 12 percent, and you're only pulling off five or six, seven percent to get back to the $150,000, you're not even touching the money. You're only pulling off the growth. Does that make sense? Makes a lot of sense. I was more thinking that you're going to tell me I was in trouble. No, you're not in trouble. You've done very well, my friend. You're a millionaire.

Starting point is 02:02:43 I'm so proud of you. I'm so happy the stuff we taught you worked. I knew it did, but I'm just so happy it worked for you. So you're just awesome, man. You're one of them, baby steps millionaires. You're one of America's success stories. You're proof that we can do it still. And you're proof that the communist college professor that's teaching people,

Starting point is 02:03:03 the socialism works, is wrong. Okay. And so you're the guy, man, you did it. I'm so proud of you. So just keep, keep being the proof. So you're going to have two, two and a half million dollars. If she quits the day and you all live on 175 and you keep adding a little bit to your 401k and you sit down with your smart vestor pro. And then if you want to live off of 5%, that's going to be 100 and a quarter. If you want to live off of 8% and it's growing at 10 or 12, it's still growing. You're not even touching it. So this runs. to the point that you make this amount of money the rest of your entire life and you still leave $2.5 million to your heirs because you never even touched the goose. You only lived off the golden eggs. And if you leave the principle alone and live off the income that it creates or some of the income that it creates, it runs in perpetuation to infinity and beyond, as Buzzlight year said, right? And that's it. So it just keeps going mathematically. So just Just have a big enough nest egg that you can live off of some of the income that it's creating and you'll be just fine.

Starting point is 02:04:12 Love that. That's so exciting. That's amazing. This is what happens when you get out of debt at 45 years old and tear into this. Of course, they're making two and a quarter between them. Yeah. They're kicking it. I mean, when you have no debt and no house payment, that number that you need to pull off goes way down.

Starting point is 02:04:32 Boom. Right. Boom. Way to go. Oh, Donald. You inspired me today, sir. Yeah, that's it. So that's what you're looking for. So a good rule of thumb is if you can put it in, the market is average 11.8%. Okay. And so if you leave 4% in for inflation, so it's growing, you're not only not touching your nesting, but it's growing by 4% a year. And you pulled off eight, that's about the most you should do. And so per million dollars, that's $80,000 a year.

Starting point is 02:05:04 So if you got $2 million bucks, that's $160,000 a year if you did that. Okay. And in his case, that's about right. Perfect. 120, 160 somewhere in there without, you know, he's got continuous to grow by inflation. So by the way, his 160 next year is going to go up because the balance has gone up. And he's living off a percentage of it. So it's 164 and then it's 169.

Starting point is 02:05:31 And so every year as inflation kicks, you're low. leaving 4% alone, which, by the way, if you go back and look at the CPI, the consumer price index, which is the measure of inflation, you will see over the last 100 years or so it's averaged right around 4.2%. I know Biden had 9.7, but we've had other years it was 3. It's averaged about 4.2%. I know Jimmy Carter had 10%, but Ronald Reagan had 4. Okay? And so you can argue about who, what, when, but go back, just look at the numbers.

Starting point is 02:06:01 They're right there in the historical data. And it's not a political. Math is not political. Very good, Donald. Score, baby. I love it. That puts this hour of the Ramsey show in the books. We'll be back with you before you know it.

Starting point is 02:06:16 In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

The Ramsey Show - Start Telling Your Money What To Do

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