The Ramsey Show - There’s No Good Reason To Make a Bad Financial Decision

Episode Date: May 29, 2024

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From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by bestselling author Jade Warshaw, and we're taking your calls at 888-825-5225. This is the show where we talk about you right in front of you because we want to help you, and we do that one caller at a time. And our first caller today is Dylan from Pittsburgh, Pennsylvania. Dylan, welcome to The Ramsey Show. Thanks for having me, guys. Sure. How can Jade and I help today? So I recently had to switch from my full-time, or well, I say full-time. It was a commission job

that I had in sales, and I recently had to switch over to basically just doing this here and there because of moral issues. I don't agree anymore with how they do their sales. When I first started, I was very, very careful to do it the right way. Even if they told me to do it a different way, I'd go out of my way. I've lost sales because of it. Give us an example. Well, there's been instances. It's point-of-sale systems is what it is.

It's credit and debit card processing. My actual boss is amazing, but it's the company above him that really makes this difficult. So they'll tell me, oh, yeah, we integrate with that system that we're going to pitch to these people. And I'll be like, all right, you sure? And they're like, yeah, yeah, we do. And so we'll pitch it, and then it turns out later down the road

we don't integrate. And then the business owner is put into a hassle of having to deal with this. And I don't feel morally obligated to do that to a business owner. Yeah, you don't want to lie to them. Exactly, exactly. I don't want to do that. So I've gone out of my way for a long time to make sure I would even vet ahead of time,

hey, do we do this? And if I know we didn't, I would just flat out tell the business owner, hey, by the way, we don't actually integrate with this, even though my sales team wanted me to say we did. So I'm in a place now where I need to find another sales job or I need to find another job. And I'm going to be putting myself in a major financial stress here soon. They do owe me a little bit of money on sales that are still going through, still going through probably roughly six to eight grand. But obviously none of that's guaranteed because deals can obviously fall through,

especially with how flimsy their sales are. But I was the top rep in my company. I didn't know I was any good at sales until I joined them. I was just a regular old redneck from Indiana. And then somehow I got into sales and did really, really well. So what do you make annually? What do you need to replace? So I've been with them for nine months now. And last year when I first started from August to December, I made about $5,300 a month on average, which for me, that is phenomenal money. I'd never had that kind of money in my life before, and I absolutely blew it all.

Because I didn't have any budgeting. I didn't have anything in place. You said $5,300 per month? Yeah. Okay, got it. So about $60,000 a year. And what are your actual expenses? What do you need to get by from food, utility, shelter, transportation, insurance? It's not hardly anything at all.

Now, I did travel for them, so that upped that a little bit. But when I did the math on it last year with really short-distance travel, it was roughly about $1,200 to $1,300. That includes your rent? That's everything, yeah. Wow. I pay $500 in rent. So that becomes our next goal. We just need to be able to cover $1,300 to get by until we can replace this income.

So you said you're going to be struggling financially. What does that mean? Are you in crippling debt? No, I'm actually not. I'm in a pretty good situation. I've listened to you guys for the last three weeks now on a roll. I mean, I've read your book when I was 10 years old, 11 years ago, you know, stole it from my mom's room and read it.

Total money makeover? Total money makeover, yeah. So give us a snapshot. Tell us what's going on. No debt. Do you have three to six months of expenses saved? So I have a little bit of debt. I do have like 5,300 in school loans that I'm honestly just paying the minimum on because it's like at 3%, and I'm not too concerned with it right now. And then I owe my mom about $2,300.

She started me out whenever I first started with this company because I was in a pinch, and I did not have any money to start. Okay, what else? So she gave me a little bit of money. She is not in a good financial situation, so I'd like to get her paid back. I thought y'all read Total Money Makeover. What happened over the last decade, man? It never really got through my head you're talking bragging about your low interest rates okay keep going keep going we won't beat you up too much keep going

well this one you're gonna like um i'm kidding you're gonna hate this i have about 1900 bucks that i still owe the irs i originally had the money um from last year and i was trying to pay them but for some reason maybe I did something wrong online, but it would not go through. And so I got so fed up with it that my work had not paid me for a couple months, so I ended up using that as regular everyday expenses. You're not blowing every paycheck. Can we just say that?

And George is right. You're blowing every paycheck. But what's really a red flag to me, George, and to you, too, is every debt you listed, it had a caveat. It's five. I got 5300 student loans, but it's a low interest rate. So blah, blah, blah, blah, blah, blah. And I owe my mom 2300, but I needed it to get started and blah, blah, blah, blah, blah. And I have 1900 to the IRS and I tried to pay it, but blah, blah, blah. It's like that same sure you gotta i think the key to this yes you're great at sales i have no doubt that you're gonna go on find another job you're gonna make 60 000 plus plus plus plus because you're persuasive you're persuading yourself that all of these situations are fine and they're small debts you know they're small debts but that same um characteristic that makes you great at sales is also you're pulling the wool over your own eyes here. And you're exactly. So I just want to call that out. And then the next thing we need is we need temporary income in the short term.

And that might mean side hustles. And then while you're doing that, you need to be aggressively looking for that next sales job, if that's the path for you. And I would obviously start with some of these, you know, point of sale companies because you have the experience there. But with sales, they just want people who know how to sell and who care. And you have that level of service. That's what it comes down to. So I would look for any sales job. And if you can find one that's in the point of sale business, that would be even better. And I have no doubt you'll be making six figures. The point of sale companies tend to be a little bit unreliable. There is a couple of them that are, but I'd prefer to get out of that and move on to just a normal sales job if possible. I mean, you can go into tech sales.

I mean, the world's your oyster as far as what kind of sales, but I wouldn't just sit around waiting for some dream sales job to happen. Just get the next thing and the next thing and the next thing until you get there. And I do think take advantage of this situation. I mean, you've got $500 rent. I don't know if that's because you have roommates or you're living at home or what that is, but... It's just a cheap place. It's just a cheap place. I love that.

Take advantage of that low rent. And this is an opportunity for you to start cleaning up this debt because the good news is it's not a ton. It's like these little ankle biters that if you put your head down you can pay one off every two to three months right and so i think that that's the plan from here on out do you have any money saved we didn't ask that yeah what do you have in the bank right now down to pretty much nothing um my work has has paid me the bare minimum um because none of my deals have cashed out in the last couple months and so again they again, they owe me about $6,000 to $8,000 as of right now. But we don't know that you're going to get that.

Not 100%. Let's live our life like that's not going to happen. Let's just go get side hustles and get the bills covered for the next few months when this money comes in from your work. Or if it doesn't, you still need to cover the bills. And then once you have some stable income, then attack those debts. Smalls to largest balance, but the IRS one goes first because they can screw up your life. Before we hang up, Christian can pick up and let's give you paycheck to purpose. Let's give you Ken's career assessment. Let's make sure you have all the tools because if I'm you,

I'm starting the job hunt today. I'm going on all the sites and I'm looking for a new job and I want you to land something in the next two to three months and be out of there and be on to the next thing. But to George's point, until you land the job, any job will do because this job is causing you to be dishonest and you don't even know if they're going to pay you what they owe you. About to go Uber, Instacart, Amazon, Flex, dog sit, dog watch, dog walk, whatever you got to do to make income happen. I'm also going to send you a copy of my book, Breaking Free from Broke. I hope I convince you that no debt is good, no matter how little, no matter the interest rate, it is holding you back and you deserve better, Dylan. You're a young dude with a bright future ahead if you stop playing stupid games.

So wishing you the best. More of your calls coming up, 888-825-5225. Give us a call. This is The Ramsey Show. And while you're thinking about it, I want you to be honest. A lot of us hide ourselves. We hide our true selves behind costumes and masks all the time. We do this at work. We do this around our friends. We do this around our families. We even do this when we look at ourselves in the mirror. I know because I've been there multiple times in my life, and it's the worst. If you feel like you're stuck hiding behind masks and costumes all the time,

if you find yourself hiding from your true self, I want you to consider talking with a therapist. Therapy is a place where you can be honest, where you can talk to somebody else and reflect and learn, and you can accept all the parts of yourself over time and start living an authentic life. Masks and costumes should be for Halloween parties, not for our emotions and our true selves.

And if you're considering therapy, try calling my friends at BetterHelp. BetterHelp is 100% online therapy. You can talk with your therapist anywhere, so it's convenient for you and your schedule. Just fill out a short online survey and you'll be matched with a licensed therapist. Plus, you can switch therapist at any time for no additional cost. Take off the costumes and take off the mask with BetterHelp. Visit betterhelp.com slash Deloney to get 10% off your first month. That's betterhelp.com slash Deloney. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225.

Well, all good things must come to an end, including our month-long sale. So do not wait. Friday is the last day to shop the sale and get our best-selling products that have helped millions. That includes No. 1 bestsellers like Baby Steps Millionaires for under $16. Building a Non-Anxious Life, less than $18. And From Paycheck to Purpose, also under $16. So a non-anxious life, less than $18. And from paycheck to purpose, also under $16. So hurry, get these bestselling books. Gain the confidence knowing you have a plan for your money, your career, your mental health, your relationships, and your life.

Go to ramseysolutions.com slash store. And remember, the sale ends Friday. That's May 31st at 1159 p.m. Central Time. Oh, there you go. And Jade, they try to throw me off. It says May 31st. Ooh. TH. They try to get me, but they're not catching old George today. I know how that works. May 31st. That's how you do it right there. RamseySolutions.com slash store. Beautiful. All right, let's get to the phones. Austin joins us in Chicago. What's going on, Austin? Hi, I was calling because I have about $40,000 in the bank saved. I do a lot of driving for work. I drive around 60,000 miles a year, which is, I know, crazy. It's not normal. I make about $83,000 a year, and I currently have a Toyota Camry that

has 100,000 miles on it. And I was just wondering your guys' perspective on if you think I should sell my Toyota Camry, which is worth about $9,000 or $10,000 right now, and get an electric car, like a Model 3 Tesla, which I wouldn't have to pay for gas. I currently pay about $9,000 in gas per year. So I was wondering, do you think it's a better idea to keep my current car and drive that for a few more years or get an electric vehicle like a Model 3 Tesla where I don't have to pay for gas? Are you debt free? Yes. And you've got $40,000 saved. Does that include your emergency fund? Yes. Okay, so let's call your emergency fund what, $20,000, $25,000? Yes.

So you really have... I had $15,000, but yeah. Okay, $15,000. So let's say you have $25,000 right now to buy a used vehicle. Yes. Plus the $10,000 from the sale of the Camry. Plus you'd make $10,000. Yeah, so $35,000.

And I found a car that was $36,000, so that's what I was calling. And that's a used Model 3? Yeah, I had 5,000 miles. It was a 2023, 5,000 miles, and it had no accidents, nothing like that. How far are you actually driving in a given workday? In a given workday? Are these like local or are you traveling across states? Like a half tank per day. I have to fill up every other day. Okay. Hmm. I have thoughts on this. Number one, I don't mind you buying a used vehicle as long as everything that you own that has wheels and motors adds up to no more than half of your income. And so for you, that means 40 grand all in everything you own. I assume you just have one vehicle. You don't have motorcycles, boats,

other toys? No, no, just one vehicle. Okay. But as far as I, the thing I do have issue with is that this idea that like, I'm not going to have to pay for gas. I have an electric vehicle and it does cost money to charge. Electricity, in fact, costs money. What does it cost you like monthly? So luckily I can charge at Ramsey for free. Thanks, Dave. But I often charge at home as well. And it costs about 10 cents a kilowatt here in Nashville.

Now, my parents have an electric vehicle up in Boston. It's triple the cost to charge per kilowatt. So it adds up for me about, you know, 20, 30 bucks a month. Now I don't, I have a five minute commute. I don't drive much. I can charge at work. So this is different for you, Austin. The other thing to think about is depreciation. You're going to run that Tesla into the ground. It's going to be worth $10,000 within two years, the way you're driving it. So I'd rather you drive that Camry from 100 000 to 200 000 because that thing will go upwards of 3 350 easily um what is the nature of your job that causes this because that's the

that's really the question is this long term like or is this just something you're doing for the next couple years i have a a ton of different things i do i have a bunch of different things I do. I have a bunch of different families I grocery shop for and a personal assistant for. I also use the apps that are extremely, I live in an extremely rich city that tons of people order for like groceries and delivery and DoorDash. But I also have about 10 families that I essentially am like their personal assistant. Got it. And so you're doing all sorts of things. Is that your long term?

Like if I say, hey, what do you plan on doing 10 years from now? Are you like, this is it, Jade? I love serving. I've been doing it for seven years. I haven't planned on changing anything because it's been so good for so long. Okay. Then I agree with George. You can do it. I just don't want you to do it under the false premise that you're not going to have to pay something because supercharging is very expensive, way more expensive than just charging at home even. And I don't know about the Chicago area and there's certain times that are cheaper for charging depending on where you live. So I would do some more homework before you make this jump because I don't want you to think about it in terms of saving money on gas. I want you to think about it in terms of it's costing me an extra $20,000 or $30,000 to get this car that I will depreciate very quickly.

Whereas the Camry's already, most depreciations already happen on your Camry. Yeah, and you can run that for another 100,000 miles and be good. So I'd rather you buy an even cheaper Model 3 for now that has a lot of miles on it because those things can go upwards of half a million or more. And so that might be a good test run to go get you a $20,000 Tesla versus a $35,000 Tesla and start there. Okay. So you would get the Tesla if it was $20,000, but if it was more than that, you would not. It's not about the exact dollar amount. I'm just saying because that car you buy is going to depreciate much faster than a traditional car, than someone else driving it, because of how many miles you're putting on it. So think about it. Two years from now, that Tesla has 120,000 miles on it.

So two years from now, you go from a $35,000 car to 20 or less. Yeah. No, that was all my question was. Do you think I would save more money by getting the car without paying but currently um currently i i have a i have a friend who has a tesla charging station that my best friend for years and he said i could charge it for free that hit his house oh boy until he gets his electric bill and it doubled. Here's the thing, though. It's not just about the gas. It's not just about the gas.

And now you've got to go to your buddy's house to sit there for hours and charge whether he likes it or not, whether you like it or not. And here, my thing on this,

you've still got a vehicle that works and is worth something that, you know, you have to think about how quickly am I going to recoup the $35,000 that I've spent on this? Because right now you're driving a paid for vehicle that's got a lot of, you know, pardon the pun, but a lot of gas left in the tank. You know what

I'm saying? Like you can keep going on this. So if honestly, I'm kind of changing my answer. If I were in your shoes, I'd probably drive this thing into the ground. And all that time, you're stacking up money, stacking up money. and maybe you get to the point where you drive kind of like a beater for your job, and then maybe you have another vehicle that's just a normal, that you're not just destroying, you know, every day after day because you're so hard on it. There's an idea. Just a little thought there. Okay, thank you. I appreciate it. Thanks for the advice.

Absolutely. Yeah, there's a lot to think about there, especially with a newer vehicle will also cost you more with insurance because it's going to cost more to replace. Yeah. In so many ways, he's kind of sitting pretty with what the situation he's got here. It's just not as black and white as I think. And I'm a fan of electric vehicles since I own one and I've experienced the joy of not ever having to go to a gas station. But I also know it can be a pain. This dude might be on the road and be like, oh, there's no chargers nearby. And I'm running this last errand.

And I got to run back and charge. Super charging is very expensive comparatively to normal charging. And so I just want him to do more homework before he bites the bullet on this. What super charging? Is that like fast? Tesla has their super chargers around the country. And so you can charge much faster. You can get to zero to 100 within 20 30 minutes and what could that cost um but that can cost a few bucks uh per minute so when you're talking about

it might cost you 20 bucks okay to fully charge which you know is still better than gas right right now yeah i think over time we're going to see things even out, where electricity starts to become not on par with gas, but it's not as money-saving as we all would like to think. Yeah, I could see that, because more and more vehicles are going towards electric. So no matter what you're thinking about buying, upgrading a car, here's what you need to remember. You're doing it with cash, no auto loans. You're doing it once you're debt-free with an emergency fund, and you want to make sure that the total of all the things with wheels and motors doesn't add up to more of half of your household income if you do it that way you will drive away with so much peace and you will drive it differently because you own it and it doesn't own you so those are the principles austin is

spot on he's thinking through this wisely i just want him to pause and do a little bit more homework before he bites the electric bullet, if you will. This is The Ramsey Show. Are you working the baby steps? One of the smartest and most impactful changes you can make is to ditch your cash value life insurance plan, if you have one, and replace it with a term life policy. Listen, the only thing a cash value policy is good for is overcharging you for the life insurance and then paying you a crappy rate of return on your overpayment. Stop wasting your money and really focus on getting out of debt and growing your savings. For over 25 years, I've trusted and used Zander Insurance to find the best rates on term life insurance

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Eli is up next in Indianapolis. What is happening, Eli? How are you doing, guys? We're doing well. How are you? I'm doing well. So my question is, I lied to my girlfriend. That's not the question. That's an admission. That's a confession. We appreciate the honesty here. I'm not a priest, though. I can't help. Maybe we can help financially. For two years now that I can't afford

stuff that I'm broke and that I like staying in, I'm not. I'm not broke. I can afford pretty much what I want. I'm out of debt 100%. I own not broke. I can afford pretty much what I want. I'm out of debt 100%. I own my house.

And she thinks you're broke because for two years you were like, hey, listen, I'm strapped for cash. Yep, pretty much. And it's not like I've been mooching off her or anything. I pay my way. I'm not trying to be worthless in that matter or anything. Why then? I've got a 95 Toyota Tacoma.

She's always asking me, why don't I get something else? I always tell her I can't afford it. Why? Why not just tell her I'm happy with my truck? I mean, yeah. What's behind all the pathological lies? It was pretty stupid, wasn't it? Is it because you just said it, and then once you said it, I mean, yeah. What's behind all the pathological lies? It was pretty stupid, wasn't it?

Is it because you just said it, and then once you said it, you were like, I got to stick to it now? You got to play this weird character? No, I mean... What is her financial situation? Is she bad with money? Is that why? Are you afraid that if you tell her that you are good with money, that she'll start mooching off you?

That's what I've had happen in the past past baggage and trauma and so you're going well i'm not going to do that again that hurt yes and so now i'm going to lie because if she knows i have money i could get hurt again yes is that a more accurate picture so because usually behind every lie, there's a fear. There's a lie that you've told yourself long before you lied to someone else. Yes. And honestly, I didn't even realize it's been a lie until a couple months ago. And then I'm thinking, like, I'm wanting to get serious with this girl, and I'm wanting to make things happen. So she's going to have to find out sooner than later.

How long have you been dating? We've been about two years. So two years, and you've been saying this from the jump. Here's what I want to know, because I know you're saying that you've been lying. I'm trying to, I want to go a little bit deeper on this. So does she think that you have mortgage debt or you just haven't mentioned it does she think that you carry debt she knows my house is paid off okay okay so i was i was uh i was very proud whenever i paid my house off i

she was the first one that i let know when i paid my house off about six months ago but like when it comes to doing fun or what you might think of extravagant things even though you're thinking hey I might enjoy doing that you're lying and saying no I don't want to spend money on that I just like a simple life right yes is it affecting your relationship is she frustrated that you guys can't enjoy experiences and eating out? No, I mean, she's a very, very simple woman, and that's kind of what's... I would just have to come to Jesus' conversation. Take her to a different environment and maybe a different place, a date, whatever, and say, listen, I got to come clean because I want this relationship to be built on trust.

I've done a poor job of that. And then say, here's what I did. Here's why I did it. And I am very sorry. Will you forgive me? Can we move forward with this relationship with honesty? Yes, I'll care. That's the only way forward.

And her response is now that's up to her how she responds. She might say, kick rocks, pound sand. I'm done with this relationship. I just have a funny thought about this, though. Like, usually, okay, here's the thing, Eli. Usually if somebody says they've been lying, I'm like ready to go hard in the paint. But I'm listening to you.

You have no debt. You have a paid off mortgage. Part of me is like, how much are you lying? Because I'm like, you seem like you are kind of a simple guy who doesn't want to spend a lot of money because you've done all of these things. So'm trying to i need an example of like what you said that was a lie like what you've been saying to her because i'm like it sounds you sound pretty simple to me the the most the simplest example is uh i was working on my my pickup truck it's a 95 toyota and it's kind of a hunk of junk

but i i grew up dirt poor okay and i love i love that truck i don't need anything else yeah i drive i i hardly ever drive let's what she asked me well why don't i just get something newer and better and i told i told her i can't afford it okay when really you feel like the reason is I just don't want it it's not a priority for you yeah okay but you felt weird saying that it was easier for you to lie to have the guise of like well it's just it's too much money for me yes and then there her her her family went on a cruise a while back, and I didn't go because I couldn't afford it, is what I said. But really what you're feeling is you came from being dirt poor, and it sounds like you're afraid to go back to that. And so certain things that other people might splurge and spend money on, you're like, listen, I don't feel the need to do that.

Yes, I really don't. Okay. So maybe it's just a simple thing of changing the language. And next time you talk to her, you're saying, you know what? I've been telling you I can't afford things, but I want you to know my heart. Technically, I can't afford it. I just don't care about spending money on those sorts of things. You know me.

I've got a paid off house. You know, I don't carry debt. And my priorities with money, I feel like sometimes our priorities with money are different. And maybe that's the conversation because you kind of painted yourself to be a liar about it. I don't know. It doesn't feel like- You don't seem like a terrible person.

Yeah, it's not like a terrible- And it's the weirdest thing to lie. Most people would say, I lied. I'm actually in crippling debt. Right. And she thinks I'm very wealthy. Yeah. It's just your motivation. You're not telling her your true motivation. But I would say I would I think it's OK to just sit her down and say, I need to be honest with you. I know like this is a big deal

to me. It may not be to you, but my phrasing and language has not been honest. Yeah. When I tell you that I'm broke, I don't have the money. Really, it's just it's not a priority for me and I don't care to spend money on those things. But it's my bad for positioning myself like I was some broke person when truly I'm not. That's right. And maybe even line it up with the next part of that, which you did let us know that you're kind of worried that if she knows that you technically can't afford to do these things, you're worried that she's going to try to inflate your lifestyle in a way that you don't necessarily agree with or want to do and I think it's important to have those conversations before you think about things like getting engaged or getting married because

you do want to find out you know and it's don't get me wrong it's okay if she's different from you but you guys need to start figuring out what that balance looks like and to George's point you being very honest in your communication from here on out is going to be very important. Okay. I hope that helps, Eli. That's a very interesting conundrum. Thanks for trusting us with this situation. Yeah. Wow. All right. Let's try to take a quick one here from Mike in St. Louis. Up next, what's happening, Mike? Hey, guys. Thanks for taking my call. Sure. How can we help? Hey, so I'm wondering if my wife and I can pause baby steps four and five to finish baby step six in under 24 months. And the reason I'm kind of feeling that way is because I'm looking at it the same way you guys look at baby

step three, B, where you can pause investing for two years or less while you're saving up money for a house it's just i already have a house so i'm trying to get your guys thoughts on that short answer is i'm always going to tell somebody to walk the baby steps in order um how much do you owe on the house what are we talking about just check yeah it's 137,000 left. And how many kids do you have? Just one. And how old are you guys? I'm 30 and she's 28. Okay. And the child I imagine is very young? Actually, she's 13. She's from previous relationship. Okay. So we're talking

college in five years. Do you have enough covered right now to cover college or to help pay for it? We have about $30,000 which would cover the first probably year or two, depending on where she went. And you're doing no investing right now?

Oh no, we are doing baby steps four and five right now. We would pause to do this. I love your excitement to get the house paid off. I don't think the juice is worth the squeeze on this, to pause the investing, to pause college. I would just keep investing 15%, put some money towards college. The house will get paid off probably a year later. Big whoop.

I don't think you need the gazelle intensity that you currently have. You're moving from intense to intentional in baby steps four, five, and six. I'd stay that way. Thanks for the call. This is The Ramsey Show. Hey, when you go against what society thinks is, quote, normal, like avoiding debt, for example, it might seem weird at first, and that is totally okay.

We want you to be weird if that means doing things intentionally, including how you spend your health care dollars. And one way to be intentional is with Christian Health Care Ministries. CHM isn't health insurance. They're a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of health care costs without sacrificing their freedom. Find out more and join at chministries.org slash budget. That's chministries.org slash budget. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. If you're enjoying the show today or any other day for that matter, do us a quick favor. The show is free. What

I'm asking you to do is free. Just hit the subscribe button, hit the follow button, leave us a kind review, share it with a friend. Maybe it's a clip or a highlight from the show, a full episode. Tell them, hey, you got to check out this podcast. All of that helps us get higher up on the algorithms. And it's not for our own egos. It's so that we can reach more people who may not know that this show even exists. And we're trying to displace all the filth and nonsense out there in this toxic money culture. And you guys sharing, you're the best marketing plan we have. So thank you for doing all of those things. Danielle is up next in Houston, Texas. What's going on, Danielle? Hi, good afternoon. How are you doing?

We're doing great. How can we help? Awesome, awesome. So I'm in a little dilemma that I've almost been dealing with for almost a year with my vehicle. Okay. After attempting to make a repair, I started having the same issues. Now I need a new engine. I still owe about $65,000 on this vehicle that I've only had for a year and a half. $65,000?

What kind of vehicle is it? It's $65,000, and it's an Audi Q8 2019. I did buy it used. So it was a bad decision. I know now, but I do not know what to do. On top of that, I do have student loan debt about $32,000 and about $2,000 in credit card debt. So I'm looking at around $100,000 that I made up. So my question is, I don't know what to do with this vehicle. The warranty company only wants to cover about $7,000

for a total repair that costs $20,000. So I would have to come out of pocket. I don't know if I should get rid of this vehicle. I don't know how much they would give me for the vehicle, the dealership. They haven't given me that answer yet. I wouldn't give it to the dealership. What's it worth? If you don't repair it, what's it worth? If you were to sell

it? Now it doesn't have an engine, right? I would have to get a new engine. So I'm thinking around $30,000. I honestly don't know. And it's going to cost $7,000 out of your pocket, you said, to get it fixed? No, the warranty company is willing to give me $7,000. Why are they only willing to cover a third of it? I have no idea. Either they cover it or they don't. I'm confused why they go, well, it's kind of our fault, so I guess we'll cover $7,000. Audi made a repair. Two weeks later, I get my car back after a few months.

And then two weeks later, after I get my vehicle back, I had the same issues. But now my engine went out. I would fight this to where they cover the full 20K. Personally, what I would do is I probably would not sleep, and I would just badger them and wear them down until they go, all right, she's a squeaky wheel. Let's just cover this repair. Honestly, we've been doing it at the Dwarf Company since November.

Speak directly on your phone, Danielle. We're having a hard time hearing you. Sorry. Okay. So they pretty much told me that I've been dealing with this since November of 2023. So as you can see, we're- What are you driving now? Well, Audi gave me a loaner vehicle

so that's what I've been driving Yes I still have the loaner vehicle Do you have any money saved? I do not have any money saved Are you single? Yes What do you make a year? 65k

Girlfriend, girlfriend, girlfriend What were you thinking buying a how much did this car cost you 70 grand yeah around 75 grand oh do you yeah okay what's the payment i know i know um the payment is high what is it so i'm currently $1,600 a month. Girlfriend? $1,600? Yes. What's the interest rate?

12%. Woo! Jade's stretching. She might need to take a walk. I need to take a walk. I totally got screwed. No, you didn't get screwed. You chose this. Let's be honest.

You chose it because here's i just want you to know i what i want to i need to be able to sleep tonight and so i need to understand that had you not had any engine problems let's just pretend this last year was gravy and you had no engine problems you're just paying sixteen hundred dollars a month on a seventy five thousand dollar vehicle when you make sixty five. I was hoping you were going to say, yeah, make $200,000. I was like, okay, this tracks. Did you know it wasn't good? Like, the first two months were you like, dang.

Honestly, at first I was renting out that vehicle, so I didn't have those payments. You were renting it out, like on Turo or something? Yeah, yeah. So you fell for the scheme that I'm going to make money off this, and they'll pay the payment for me? Pretty much. And then my other vehicle that I had, it ended up getting stolen from me. So I ended up using the Audi, and then...

Someone stole your vehicle? Yes. And they never found it? They never found it, no. Did insurance cover vehicle? Yes. And they never found it? They never found it, no. Did insurance cover it? Yes. I got insurance in Gap, so they did cover it. And what did you do with the insurance money?

Yes. They didn't give me anything because I had to go on that vehicle. Oh, my. It's not your first rodeo making bad decisions. Yeah, I know. So this vehicle, I don't know what to do. So tell me again, you said it before, but I was writing down. So warranty so far is only going to pay $7,000. What are you on the hook for?

I would have to pay the difference. They said the total cost would be about $20,000 just to get a new engine. Okay. So you're on for $13,000. Let's play out both scenarios. Let's say you sold it as is and you get $30,000. That's what you told us. That means you're in the hole $35,000 where you need to go out and find $35,000, whether it's your own money or getting a loan. You need to go into debt another $35,000. The other option is you're in debt $13,000 extra

to cover this engine repair because the warranty company is going to cover seven, right? Yes. So on paper, option B is a better option. They're both terrible, but that's a better option right now is that you get the engine repaired. And then you're able to at least sell it. So that's what I would do if I was in your shoes. Whatever you need to do to get this engine repaired, do that and then sell the vehicle immediately.

But not to the dealer. Not to the, they're going to screw you on this deal because they already did. So you'd have to sell a private party to get the most value out of it. And I want you to talk to, I want you to get with somebody on this because cars,

I know you've been trying to make it your thing, but I don't think it's your thing. And so find the wisest person that you know. I don't know if that's dad or big brother or a cousin or your best friend's brother, whoever it is. Get with that person when it's time to sell this vehicle and when it's time to get this vehicle fixed because I don't want them taking you for a ride figuratively

when it comes to the price anymore on this. I just feel like you've been screwed every way, which way possible. And I don't want that to continue for you on the fixing or the sale of this vehicle. And from here on out, George, tell her the rule on buying these cars from here on out. I think you should buy the cheapest car possible, Danielle, at this point. But the parameter, Ramsey, is you pay cash. It's a used car, unless you're a millionaire, probably four plus years old. And the value of the vehicle is no more than half of your annual income. The value of all things with wheels and motors.

So for you, if that's one vehicle, which do you have multiple toys or vehicles? No, it's just my own vehicle. This is it. It's the only one. Okay. And so right now that would mean with your $65,000 income, you would buy no more than about a $30,000 car. When the time comes in cash.

I still think that's, you don't need to worry about that until you're out of debt completely. You get the student loans knocked out, the credit cards knocked out, you have an emergency fund. Let's get the income up, then let's save up and pay cash. So this could be years down the road. But for now, we need to figure out a way to get that $13,000. That might be you go to a credit union if your credit's not shot already and you go, hey, I need $13,000 to cover the difference to get this engine fixed to then. Do you have the car loan through someone? It's through Wells Fargo. Okay. You might want to go to them and say, listen, you got bad collateral on this thing, because it's only worth $30,000 right now. I owe you $65,000. I want to get this loan paid off.

It's impossible right now, unless you guys loan me this $13,000 on a personal loan to get this engine replaced. Yeah, my credit's good. I don't have an issue with that. Okay, then let's do it. I made a bad decision. Yeah, so that's what I would do, Danielle, and it's going to hurt. And God bless the USA when we can be $100,000 in consumer debt,

but we have great credit by gosh. Look at that, Jade. I got an 850, but I don't have 800 bucks in the bank account, and I'm $100,000 in debt. That is the American way. I can't even respond. I'm shooketh. She hath been shooketh. What a way to end this hour of the Ramsey Show.

Thank you to my co-host, Jade Warshaw, all the folks in the booth keeping the show flow, including Kelly Daniel filling in on the producing, who's done a fantastic job. Better than James, I might add. We'll be back with you before you know it. From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality George Campbell, joined by my good friend and colleague, Ms. Jade Warshaw. And we are here to take your calls at 888-825-5225.

You call us and we'll talk about your life and your money, and we will give you our opinion. Some take it, some leave it. I hope you take it. We think it's in your best interest, but we're biased. Keith joins us up first in San Francisco. What's going on, Keith? Oh, Ken Kupan, how are y'all doing today? We are doing well.

What's your question today? So I'm 37 years old, just recently divorced. I make $96,000 after taxes. That includes 100% disability pay that I have. I'm about $105,000 in debt at the current moment. A large majority of that debt is a $62,000 vehicle that I have. That vehicle is currently at a trading value of $12,000. Do you roll negative equity? What happened?

It's an electric vehicle. I don't know what happened. I've been trying to get rid of it for the longest time. Even if I sell it to a private party, I will only get about maybe $22,000. What kind of car is this? Just to warn people.

What is it? A Kia EV6. A Kia EV6? Kia. Okay, you got a Kia. Yes. All right. And you bought it for how much?

I bought it for $62,000. And it's worth $20,000 now? I'm confused. Yes. When did you buy it? Well, you can be confused. It's crazy. I bought it back in 22. And in two years, the value dropped. Yes.

By like 60-something percent? Yes. I've taken it to about three different dealerships. When they ran it, they're like, how did this happen? Did you have high mileage on it? Does it have issues, wear and tear? Everything is perfectly fine with it. I have about 30,000 miles on it. There's no damage to the vehicle. There's only 30,000 miles on it? Yes. Wow. I think there's a mix of things happening here, Jay. Number one is the EV car market has taken a hit. There's a lot of saturation.

There's been people kind of going away from the EV side, car manufacturers. There was an overproduction. Then there's the Tesla battle against the other EV cars, and Kia apparently is not up to snuff in the EV world. So I'm sorry, Keith, you're going through this. Let's try to figure out a solution here. So what other debt do you have? Another portion of my debt is I did debt consolidation

and also a personal loan about probably two years ago. Everything happened two years ago. About two years ago, I did debt consolidation and everything. That's another $30,000 or $40,000 right there. Was two years ago the divorce? Oh, yeah. I love it. Was this like a post-divorce, like I'm just going to implode my life?

Like did it just, did you cope through spending? No. This will recover. I was paying $1,500 per month in child support for about a year and a half. Okay. But that doesn't, where does the car payment fit into this? When you went and bought this car? So before the divorce, before everything happened with the child support,

I had a bright idea that I would go ahead and sell the vehicle that I currently possess. So I sold that vehicle off to try to get out of bed. It did not work out because she was unwilling to work with our agreed parenting schedule. So I had to go out and get a vehicle at that time. I had the bright idea like, hey, you know what? If I get an electric vehicle, it'll all work out. Everything will be fine. I could pay the vehicle off within three, four years. That didn't happen.

You allowed a good reason to make you make a bad choice. Like, it's a good reason to need a new vehicle, but we go crazy when we say we need a $62,000 new vehicle. So you got the $62,000 from the Kia, and then you got the $40,000. That's all rolled together in a consolidation you did. I'm guessing that was what, like credit cards and other types of things like that odds and ends correct and my credit card debt that i have is pretty minimal i believe it's maybe about five thousand dollars or so okay so that accounts for the missing five listen nothing is minimal at this point everything is taking my breath away

keith so let's try to get you out of this because I don't want you, there is hope for you yet. You have a great take-home pay of $96,000. That's $8,000 a month. What are your total monthly expenses just to cover the bills and your minimum payments on your debt? Okay. So remember I live in California. Okay. So I have a two bedroom looking at $2,225 for rent. Electricity, we're running about $250 for that. Water, probably like $35. So what do you have left when it's all said and done after you've paid for? You make the minimums on your debt. You pay your rent, your utilities, your insurance bills. How much is left each month or how much should be left?

If I only do necessities, I will have about $1,500 left. Okay. So that's our magic number right now because let me show you the math on this. $1,500, let's say you applied that extra on your smallest balance using the debt snowball, that's $18,000 a month toward your $105,000, $18,000 a year. Now, basic math says it's going to take you over five years at that point to pay off your debt. Can we agree that sucks? I do agree that sucks. So what if we could put $2,000 or $3,000 a month toward the debt?

$4,000. Now we're talking, right? Right, and I looked at that too, and I'm going to say a very bad word here, okay? Uh-oh. I was looking at filing. I know. Don't even say it. No, you're not going to say a very bad word here okay oh i was looking at filing i know i was looking at don't even say no you're not gonna file bankruptcy okay you said you're did you say you're 100 disabled i'm 100 disabled so that will give me three thousand six hundred and

fifty five dollars per month saved because they can't put that into the bankruptcy they will no i'm not talking about I'm not talking about with the bankruptcy. I'm talking about your income now. You said that you're receiving that, but you're 100% disabled. So you can't go out and make more money? Is that what you're getting at? I can't. No, I'm employable.

Oh, you're employable. Great. So can you do something to supplement? My question that I'm trying to get at is, can you do something to supplement this already great ninety six thousand dollar income um i have attempted to ever since i would say november of last year uh with trying to find something that works with the parenting schedule because i can't you know break away from that obviously um i'm already facing it's a whole other story i mean you got this great electric vehicle.

What about doing some of these driving apps? I have tried multiple times. This area is so saturated. Okay. No one is hiring right now for it. That is a problem. Yeah. Wait, wait, wait. Something.

Let's just show you the math on it. If you can get an extra $2,000 in net take-home pay, that would mean you could put that $1,500 plus the $2,000. That's $3,500 a month. That's $42,000 a year towards your debt. Now we're debt-free in two plus years. Now we're talking two and a half years, you're completely debt-free. So that's what we need to figure out. That's the gap. There's no way around it. You're not going to go into more debt and try to solve this. The only way is more income and less expenses. Is there any savings anywhere? Did you guys have stock that you can sell off anything?

No. And also the quote unquote retirement that I have, it's locked because you can't touch it. So whatever savings, whatever 401 that I have, I can't even mess with it. Well, I wouldn't suggest you mess with your 401k. I just didn't know if you had any liquid money anywhere that we could apply towards this. Yeah. You're underwater in this car by a large portion. We're talking 30 grand potentially. I would still see how much you could get for a private party if you did it the right way.

And maybe that would get you closer because getting rid of this car would get rid of half of your debt. So that I think is we got to solve for that first. But beyond that, we got to make more and we got to spend less. And so I don't know what you can do in San Francisco to do that. I know it's crazy over there, but you have to find a way and bankruptcy is not it. There is hope for you yet, Keith. Hang on line. We're going to send you Financial Peace University. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. Jade, I think it's time for a come-to-Jesus moment here on the show.

A little hard conversation, if you will. Yeah, a little real talk. About debt. Yes. And the normalization of debt, and how over time it has robbed us of the so-called American dream. And not just any debt, George. Today, we got to talk specifically about credit card debt. Because I think, you know, it really hits people a certain way.

If I want to guaranteed lose followers on social media, all I have to do is start talking about credit cards and cutting up your credit cards and people just scatter. I've complained about this for a long time because our friend, Dr. John Deloney, he'll do a clip on, you know,

Tik TOK or Instagram and he'll, it'll be a clip from his show and he'll just be looking at the camera. Like you are not a burden. And it's like 10 million views. Everyone's like, Oh my gosh, it's what I needed to hear. Then I do a video and I'm like,

Hey guys, what if we just like didn't use credit cards and stuck to debit? And they're like, kill him. It gets four views and they're all haters. Like I don't understand what people's obsession is with credit cards. I don't either. And so I posted a meme that basically says, well, I won't tell you what it says.

Let's play it, Kelly. Let's show them if you're watching on YouTube or elsewhere. Let's show you the meme and then i'll give you the caption so basically it's when someone tells me that they pay off their credit card debt every month and it's you know all these shady looks from michael jackson mariah carey alia janet jackson like prince they're just like yeah right like you don't pay off your credit card debt and And so I posted that. It's kind of a little side eye, a little shady, a little snark. And number one, it went viral.

But number two, people went bananas. They got, they were mad at me. Well, just like Janet, sometimes you go viral for the wrong reasons. You go viral. Listen, I don't go viral for those reasons. But like the comments behind this were, I knew I was going to catch shade for it, but I didn't know this book was going to catch shade for it but i didn't know this what are some of the comments give us the spark notes here of the sentiment okay so one

person says i don't spend more than i have which is a responsible mindset we get that one a lot okay and then there's other people saying things like hey it's possible it's called budgeting and after all we get points oh okay so you budget for things that you're not paying for that makes sense and this person said oh i faithfully do i pay back my cash and i pay paid off to get the points so the the sentiment here is jade absolutely not i pay off my credit card every month to which my comment was listen the country's in over a trillion dollars of credit card debt somebody Somebody's lying. Like, what are y'all?

What are y'all is lying? Based on data, about half of the people are lying. Half the people are lying. And so then... Or we just get the loud half that's apparently doing it, quote, perfectly. Right. And so then it was like a day later, CNBC came out with this report that said, average consumer carries $6,218 in credit card debt. So as more borrowers are falling behind on their payments. Yeah. And, and, and we just know, George, this

has been a crazy economic time with inflation and prices going up, prices of insurance going up, prices of home buying going up, prices on everything going up. We have seen more people default to credit cards and in many cases not to just go out and wild out but to really just to make ends meet a lot of people feel like i don't have a choice jade i gotta put their expenses on yeah i gotta lean on credit cards and so my point is people are going into debt and people are not paying off their credit card balance and it's just a matter it's a house house of cards. And for a lot of people, yeah, today you might be paying it off every single month or whatever, but all it takes is for one ball to drop

and suddenly it's like, oh crap, I can't pay off my balance. Because when I look at $6,218 in credit card debt, that suspiciously sounds close to somebody's monthly budget that they've just been floating, right? And so my point to this is you know i was talking to i don't know if it was you george or if i was talking to john but i was saying how when it comes to debt we really kind of pick and choose because if you talk about student loan debt people are ready to grab pitchforks and like yes i hate student loan

debt it's the worst thing ever how could could the government do this? The government needs to forgive this. Yes, and people are quick to say how much they have and why it sucks. But some reason, George, when it comes to credit cards, people are like, no, that's good debt. Like, I don't want to talk about it. Don't take my credit card away. And they're very secretive about the fact, you know, if they have a balance

or if they don't have a balance. You know, what's funny is people brag about their credit card companies. I mean, American Express and Capital One is getting all this free marketing. Nobody's bragging like, oh, I got that Sally Mae card, it's titanium. And yet we do that with Apple. Yeah. It's insane.

Yeah, I don't get it. I'll never understand it. So this number, I talked about this in my book, Breaking Free from Broke. I devoted a whole chapter to credit cards. Yes. To try to convince people that there's another way. I even outlined eight different character archetypes. One is called the perfect spender. That's the person you just described as I pay it off every month. Well, here's the problem. Every study shows that you spend more when you use someone else's money and

pay it back later. That is human nature. And don't tell me that you've somehow transcended that and become the perfect human. I don't believe it. No, I don't believe it. We know it's not true. I mean, like you said, there's enough studies that show that when you use cash, it lights up the pain centers. You feel it. And then it goes down a step when you use a debit card. And then it goes down another step when you use somebody else's money on credit.

And so we do know that that's the case. But it's just interesting to me. I think that we have to, you know, the first step to solving a problem is admitting that you have a problem. And like I said before, if we're willing to say that we know, OK, car loan debt, that's inconvenient. Student loan debt, that sucks. We also have to accept that credit card debt is also holding us back in the exact same

way that those other debts are holding us back. The only the only difference is we keep choosing to go into credit card debt and we're really defending the very thing that's strike attempting to victimize us like we'll defend the creditors and we'll defend chase freedom and american express till the grave oh yeah here's what's crazy i don't get it the delinquencies are up yeah and part of it, we can all point fingers at inflation, all this stuff. But credit cards are one of the most expensive ways to borrow money. The current average APR is 22% now. And then you wonder why you can't get rid of it.

I mean, it's a plague once you get into this debt. And the companies, they're going to try to get you to spend more. They're going to try to get you to carry a balance. They're going to try to get you to pay another fee, whether it's the annual fee, the late fee, the interest, you name it. They're going to get you. That's right. It's their whole game. It's why they changed from cashback into points. Because now you get 10,000 points and you think you're winning like it's Chuck E. Cheese. That's right. Turns out you get a sticky finger on a warhead for 10,000 points and getting you to Boise for that. So it's a major, major problem that I think we're going to need to have. There's

going to be a crisis. And if it's not happening at 1.12 trillion, which is the current credit card rate, it's got to hit a limit where people go enough is enough. I mean, it started as a result, credit card delinquency rates are higher across the board. The New York Federal and TransUnion found that over last year, roughly 8.9% of credit card balances transitioned to delinquency. So we're starting to see that. We've started to see car loans go into delinquency. People are realizing, okay, I've been trying to float my lifestyle with options that aren't sustainable. And that's why what we teach is so relevant.

Because at some point, you can't take on any more debt. Like at some point, you look around, you're like, I can't't float this i've got a million balls that i'm juggling in the air and that's tiresome like at some point you go okay i just need to stop i need to simplify my life i need to pay off this debt i need to stack up some savings so if i do come across on a hard month there's money there waiting for me and there's a way to live life with more peace and credit. Like, I think the answer, it's just not the answer. I've lived on both sides of that coin. And you think that your freedom is in credit, but they could care less about your freedom. And I was that guy. I mean, when I started here in 2013, I had my, my MX Delta SkyMiles

because I was going to get them and get my free flights. And I had my Discover cash back. I was getting 5% that rotated on restaurants and dining out. And I was broke up to my eyeballs. And here's the thing, that's $6,218. Most people that call on the show, they go, well, Jade, it's minimal debt. I just have, it's about $6,000 in credit card debt. And here's the thing, all that takes to get there is $17 a day. It's $518 a month you put on that card. That's what adds up to $6,200. And guess what? You pay the minimum, it's going to be even more.

The balance moves up faster because you're making that minimum payment. So here's the key. Debt snowball. Smallest balance to largest. I don't care about your freaking interest rate, whether it's 3% or 22%. Pay it off smallest to largest balance, and then cut up the cards. And if you can't do that yet, just do a pause. 30 days, no credit card challenge, put it in the freezer, lock it up in a safe, and use your own money and pay for things now and see if it

doesn't cause more pain and see if it doesn't increase the amount of money you have in your budget every month. That's right. And if you're not the perfect spender, I wasn't the perfect spender, but it caused me to get my income up so I didn't have to rely on credit cards. So that's an option for you as well. That's right. You get that emergency fund in place. You don't need Capital One or American Express anymore. You become the bank. You are a very gracious lender. What's in your wallet?

Freedom, baby. Freedom! This is The Ramsey Show. I'm George Campbell, joined by jade warshaw this is the ramsey show open phones at 888-825-5225 well jade it's back by popular demand five years after we launched it and then a pandemic happened the live like no one else cruise is back full. Full throttle. That was pretty good. Not bad, huh? You fooled me. I thought we had a sound effects guy in the booth. I toyed with whether to try it or not, but I'm glad I went for it. It really panned out for you.

March 22nd through the 29th of 2025, you've got time to budget for it if you're in baby step four or above, meaning you're completely debt free, you have an emergency fund, and you want to celebrate. This is the ultimate debt-free celebration cruise we'll have dave ramsey all of the ramsey personalities special guests from musicians to tv chefs to magicians to comedians we've got it all and we're going to be taking over the entire cruise ship that's going to be a spectacle to behold oh yeah a spectacle about 2400 ramsey fans and the personalities crew and we're stopping at some incredible spots turks and cacos saint thomas puerto rico the bahamas

george you get to bring your speedo i cannot wait jade it's time me and borat where we've been holding down the fort for too long it's time i promise you that won't be happening because people will be getting refunds if that was the case. So listen, here's the deal. This thing sold out back in 2020 in only a couple of weeks. So the cabins are booking fast. VIP upgrades are already sold out. The suites are almost sold out.

So go ahead and book your cabin at RamseySolutions.com slash cruise and begin to plan for the ultimate debt-free celebration of a lifetime, March of 2025. That's RamseySolutions.com slash cruise. Can't wait. Love it. I got to work on my base tan before I get out there, Jade. That's right. I'm burning easy. All right, Grant is in Indianapolis up next.

Grant, how can we help you today? Hey, it's an honor to talk to you guys. You as well. What's going on? Well, I'll give a little back story. Just over a year ago, we have three kids within two years of each other. And over a year ago, my wife was pregnant with our third child, and she went into multiple seizures. In her head, her brain stopped sending signals to her legs.

And she is still in a wheelchair. It's been over a year. And after the baby was born, I stopped. I was able to continue working up until October last year. And I was blessed enough to get paid at least half my salary up until the baby was born. And then my wife and I decide she can't really take care of the children because she's still having seizures. And so she went to work and I am a stay-at-home dad. And I already had a side gig of mowing lawns. So now we're in season in Indiana. So, but I can't afford childcare. So I literally put on a headlamp and mow commercial properties at night. And I'm just trying to figure out how to up my income or what can I be doing while I'm still home to get ready to go back into the workforce in five years.

Because it's just daycare for three kids within two years of each other. So what's the current household income between your wife's income and yours? My wife brings in $2,800 a month, and I bring in $350 a month with my mowing. Okay. Oh, you guys are rock stars, number one. I feel like you've just kind of wrapped your arms around the situation and said, this is what it is, and we're going to start solving problems and doing whatever we can with what we have. And so kudos to doing that. Because this is not...

My wife's a boss. Yeah, both of you are. Both of you are. This is amazing. What is she doing for work? Right now, she works in customer service, helping people with their 401, their retirement plans. Okay. And is she doing that how many hours a week? 40 hours a week. Okay. And that's her, is that her take-home pay or her gross pay before taxes? That's her take-home.

Okay, good. So you guys are taking home right now, and you're $350,000. Of course, you've got to pay some taxes on that, but that's about $37,000 take home. Yeah. And so you're going, we need more money. Is this enough to cover your expenses right now? Do you guys have any debt? What's your financial picture? So we have no debt. My business has a little debt. It has a mower to pay off, which I plan on paying off next month. Sadly, I got the loan right after, or right before I took the financial peace class with my wife. But that'll be paid off next month.

Do you guys have an emergency fund? We have 6,500 in our emergency fund. Good. So are you guys making enough to make ends meet and you're just trying to increase it or are you having a hard time paying the bills every month? We are barely making ends meet and you're just trying to increase it or are you having a hard time paying the bills every month we are barely making and we have the every dollar app and we crunch the numbers as hard as we can we have combined home and auto we've found cheaper wi-fi because she has to have wi-fi for the work because she's able to work from home so five hundred

dollars would change your world five hundred bucks a month? Yeah, yeah, just $500 a month would change our world. We'd be able to save a little bit more. Are you guys getting a big tax return every year? We did. Tax refund? Sadly, we did last year, or this year, based on last year, because my wife had two kids last year in February and December. But we also didn't know if my wife or the baby was going to make it, so we did no adjustments to our tax. So we got $8,000 back. So we paid off. I had a small school loan, got that paid off,

and I would say smaller than like $1,400. Okay, because that $8,000, obviously you're not going to get that again this year, but even if it was $6,000, that suspiciously looks like $500 a month that could go back in your paycheck. Okay. And so that's something to look into if you're going to get another big refund.

It sounds like you guys are doing all the right things to try to trim down this budget because the only thing you can do is spend less and make more. Yeah. So there are ways you can make more. How much time can you devote to some of these side hustles? The hard part is not, I could go get a lot of jobs, but I can't mow during the day. Well, outside of mowing, because what are you making per hour? Yeah, you said you're making $350 a month, right?

Right. Now, that's also a question I had for you guys. So I can grow consistently if I don't have other side jobs because I will do like landscape jobs at night and stuff too on the side. What pays the most? Out of all the things that you're doing, what pays the most? The lawns? Lawn is kind of, mown lawns is bread and butter guaranteed $1,000. Landscaping, I can make more if I did more. But the problem is nobody wants me to do their landscaping in the middle of the night. So I can only get away with it because I'm doing it at commercial cost. So I think we need to find a different job that has nothing to do with

landscaping or mowing because you need something that works at night. Right. So I would look into your other skill set, even if you don't have a specific skill set, even doing, you know, pizza delivery at night or Instacart or Uber, Amazon Flex, some of these other jobs where you can kind of just turn on the app and go at night, which is when people are using them. That's an option. And then you're not limited. Are you handy at all? You sound like you are. I'm a hard worker. I can work hard. I'm wondering if you start a little handyman business, and as people are off of work, you charge $50 an hour to change light bulbs and screw some things in and build IKEA furniture and do whatever. Because there's some guys that do that in my neighborhood. They are booked out.

I'm like, hey, can I get some help? And they go, yeah, three weeks. Yeah, hire them to come hang out, mount the TV on the wall, hire them to come fix whatever. And you could literally do that, like George said, from four to... Nights and weekends. Yeah, from four to whatever. And then when it gets late enough to where people don't want you in their house, then you can go and do some of these driving apps. I've given some of these guys dinner because they're there when I'm at home. No, I don't want them there past eight. We hang out. Well, that's the problem. My kids go

to bed at eight and I can only really start doing work at 8, 9 o'clock because it's hard. My wife's a boss, but we just haven't gotten there yet. Yeah, I understand. Okay. Well, listen, I think you keep doing what you're doing and you're slowly replacing it with what George said and you're kind of trying to do that handoff to where you're getting more hours back and you're able to do more with those hours um just because to George's point I I just at night you're very limited with lawn service plus who wants to hear a lawnmower at 9 p.m. I'd be reporting that Grant here's a resource for you that will help number one I'm going to send you Ken Coleman's book, From Paycheck to Purpose, and his Get Clear Career Assessment. But I'm also

going to give you one thing in the meantime. Go to ramsaysolutions.com slash side hustle. I built a quiz that helps people figure out the right side hustle for them based on how much time they have, what talents they have, and their target goals. So anyone listening out there can go use that ramsaysolutions.com slash side hustle. It'll start to point you in the right direction of what makes sense for you with your situation. So hope that helps, Grant. You guys are warriors. Pulling for you guys. You're willing to do whatever it takes, and you got nothing but respect from me. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Here's your friendly reminder as we head into summer. Come visit us here at the Ramsey Solutions headquarters just south of Nashville, Tennessee. Make us a part of your trip if you're driving or flying somewhere. We love to see folks. We've got a beautiful audience here today in the lobby.

And most people, Jade, are shocked when they walk in because they think we do this thing out of like a double wide somewhere. I don't know. I don't know why. But we created this beautiful headquarters, a fan experience for you guys, because we wanted you to celebrate you and your debt-free journeys. And as you build wealth, and we made it a great experience with free coffee, free baked goods, a little museum timeline wall, and all kinds of goodies. So bring the family on by. The show is free. We're live one to four every day,

and you can jump on RamseySolutions.com and plan your visit there. Nolan is up next in Cedar Rapids. What is going on, Nolan? Hey there. So I've been a listener for a long time. My parents were Dave Ramsey followers, and so I'm familiar with the process. However, I've made a series of probably poor uneducated decisions. Um, and I'm getting

married in a little bit less than a year from now. Uh, I'm 19 years old and I have about $35,000 in debt. Okay. What kind of debt is this? So that's compromised of, I have a car loan for 23,000. I have student loans, which I'm not paying yet because I'm still in school for about 6,000. I have a consolidated loan, which was a credit card when I first became an adult and also tuition for my EMT training. Um, and that's about 3000. And then I have most recently a credit card with $1,900 on it because my fiance and I had a car wreck and had to end up pitching in to help each other out with that. Do you guys not have insurance? No, we do.

So this was her car, so I was mostly helping her because she's having some job trouble right now, but her parents didn't inform her that she is only limited liability. And so when I heard her parents say that on the phone, I was like, oh, crap. So you stepped in to save the day by going into two grand of credit card debt at 22% APR. Right. Now, I am on a payment plan because the credit card that I have has, like,

it's really not that great, but it's, like, $ dollars a month flat fee no interest pay it off in six months or auto for like auto mechanic things over a thousand dollars all right we're not doing any more debt we got to learn we got to learn our lesson here i don't care what they i don't care what it is are you working right now i am yeah How much do you make? So I make a base salary of $50,000. Good. And then significant commissions on top of that, depending on the month. So what's a good month look like? What do you take home on a good to normal month? A month usually looks like $6,000, $7,000 a month. And where's that money going towards?

What's causing you to take out debt at this rate at so young when we were making $6,000 a month? So I just started this job. So before that, I was only making like $1,700 a month. Got it. Okay, so... I'm in my third month. And you're in school full-time? And I wasn't making that for the beginning.

Yes, online. Okay, and what's your living situation? Are you renting? school full time? And I wasn't making that for the beginning. Yes, online. Okay. And what's your living situation? Are you renting? Are you... Tell us more about that. I'm living at home. Great.

Well, I was about to move out just because everybody was trying to tell me that I should have the experience of living on your own before you get married. You should. But let's take... If I'm you, I'm taking advantage of this moment. You're 19. It's not like you're yeah you're not 31 so you're 19 years old I'd stay at home for a while and I would get this

debt cleaned up and financially I don't even see you having the money right now to buy an engagement ring to help pay for a wedding you're 19 I think you've got time to just take a breather and clean up some of this debt before you make that next step. And then, because once you're engaged, there's, I mean, more money comes along with that. Yes, we're already engaged. So you already got a ring? Yeah, I mean, we decided on like a $500 ring

because we decided later when we're in a financial situation. And the wedding, is the venue already booked? The date's already set? The invitation sent out? Yes. Oh, so we're already in it. Yeah. We gone. How long have you guys been together? Um, a year and a half, two years. All right. All right. All right. So we're in it now. Who's paying for the wedding? Uh, kind of both of us. We're both pitching in, and then my parents have a little fund that kind of helps us out. What's the budget? We're doing it small. We're staying below $6,000.

Below $6,000. And how much of that are you on the hook for? Probably between the two of us, probably $2,000. So $1,000 from you and $1,000 from her? Yeah. If you were to look at it like that. Okay. And is she bringing any debt into this?

No. Okay. She doesn't have a credit card, which is why I ended up putting it on mine. Good. I'm glad she doesn't have a credit card. And then I also did that because with not living at home right now, so I don't have an emergency fund right now. That was my next step with this job was to start building that up.

No, your next step is to get rid of this debt while you have no bills. Right, and so that's what my, when I had to fix her car, I was like, okay, well, I guess instead of setting $2,000 aside this month, I'm just going to have to do that next month. No, you didn't have to do anything. You chose to do this. Well, yes. I mean, I stand by my decision. Here's the way we would teach going forward. I'm going to give you the blueprint going forward because what I want you to accept out of this, and I know you had good intentions all the time.

I said it earlier this hour. We have a good reason and we use that good reason to make a bad choice. And so you had noble intentions, but going into debt, there's always a better way. And so going forward, because I think your heart was in the right place. You just made a not the best choice. Well, you also bought a what? Twenty five thousand dollar car while making twenty grand a year. Yeah. You're're going to debt yeah you're you're just you're turning to debt um more in places where you shouldn't have to turn to debt and we're going to teach you to where you're never going to have to turn to debt again so your first things first is you just need a thousand bucks saved so when you get paid your next paycheck a thousand bucks set it aside and then that's kind of like your rainy day fund if anything should happen

and right now your your a1 is then you got to save up for the wedding right because that's happening come hell or high water so it's a year from now so you have a year to pay off your debt so let's call it 35k is your debt another thousand for the wedding that's 36 grand total so you need 36 grand of net income on top of your expenses to knock all this out before you get married. Right? Correct. Which is kind of possible. You're living at home. So this is very much possible.

Your expenses are what? How much do they add up to a month for everything that you have to cover? Minimum debt payments, your bills. Give or take $900 to $1,000. Okay. So let's say you bring home $6,000. That's $5,000 a month you could throw at the debt. Now, obviously, you take taxes into account. Right. But even $5,000 a month you could throw at the debt. Now, obviously, you take taxes into account.

Right. But even $4,000 a month, your debt's cleared in less than a year, and the wedding's paid for if you can throw all of that at the debt. So that's your A1 goal. You're not spending a dime. We're not going further into debt. We're cutting up the credit cards. Every extra dime we can throw is going toward our smallest debt,

regardless of the interest rate. And if you want to go faster, pick up a little side hustle. I do. I do photography. And so I've shot a few weddings, some concerts, stuff like that. Good. So the first stop is the credit card, next the consolidation loan, then the student loan, and then the car loan. But the biggest thing I want you to take away from this is you're not going into debt anymore.

Like, this turns over a new leaf, right? I don't care what the intentions are and how good of a person you're not going into debt anymore. Like, this turns over a new leaf, right? I don't care what the intentions are and how good of a person you're trying to be. You do not take on the burden of anyone else, and you don't take on any more burden on yourself. You've made a lot of adult decisions at 19 years old. Yeah, it's been like a mountain on my chest, and I've always been somebody who thought that I knew what I was doing

and didn't seek help from others until this, probably this, this past year that started to wake up for me. And so with this being said, I wasn't even going to help my fiance, but I didn't know what to do because her parents wouldn't help her. My parents offered help a little bit and they did, which was so kind of them. But, um um she had paid the week before her accident she had paid two thousand dollars to fix her car and then the accident and so i was like in a scramble to help her because she has rent and all that stuff to pay for herself is she working full time she is yeah well close to full time as many jobs as many hours as they'll give her on a weekly basis. Good.

Well, hey, Nolan, hang on the line as a little pre-wedding gift. I'm going to send you my book, Breaking Free from Broke, and I want you and your fiancé to read it, and you're going to vow to never go into debt again. Let's give them Financial Peace University, too, as a wedding gift. Yes, there we go. There's some wedding gifts for you coming your way, Nolan. This puts this hour of the Ramsey show in the books.

We'll be back with you before you know it. From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey Personality, George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. You call us and we will help you take the right next step for your life and your money. Jane is kicking us off in Boston, Massachusetts. Jane, welcome to The Ramsey Show. Thank you. How's it going? How can we help? So I was trying to help my husband about, I about, I guess a year and a half ago, September, 2023, basically. I, um, asked if I could borrow from his 401k so that I could, you know, invest in flips and flip them and then help pay down the mortgage so he could retire

earlier. Um, the first house did not sell and I was nearing the end of the loan, a high money loan. So I had to refinance. We refinanced that. So now we're stuck with that house, but the renter is paying for that. It's covering the expenses. I did it again with the hopes of, you know, the same goal. And now I'm stuck with a house that is nearing its maturity for the hard money loan to be paid. So I'm trying to figure out whether I should refinance and go, cause I'm going to, I'm going to suffer a loss. I can't sell this for some reason. It's the interest rates in the area that we're in. So I don't know if I should sell it at a loss or refinance it into a hard, I mean,

to a conventional loan again, so that I can pay back the hard money lender and just keep the house and rent it for a while to recoup my money back and try to resell it later. I think we need to, we got a sunk cost fallacy here. And you keep digging yourself into a hole and you touch the hot stove and then you did it again. And so I think we need to get out of the real estate game entirely. I don't know that I would, if, what's the loss on this that you would take? It would be at least $12,000. Okay.

I'm getting out. Do you guys have this money? Do we have it? Do you have any money in the bank? We have about, let's see, for the, like an emergency fund, like $9,001. Okay. And then in another, in like the business account,

it's like maybe $4,000 or $5,000 in that. And then he has a little more left in his 401k, like $49,000. Let's stop robbing the 401k. How much have you taken out? $40,000. $40,000, and that was a straight-up withdrawal? Yeah. So you paid upwards of what, 35% in taxes and penalties?

Actually, it wasn't even, yes, yes, yes. That's exactly what happened. Funny you knew that, but yeah. No, it's not. That's just what happens when you take it out before 59 and a half. That's why we tell people not to. He's actually 68. He's 68.

He was 68 when he took it out, but he was trying to put it back in, a little back in, and they said he couldn't put it back in because he was over an age, if that makes sense. Yeah, it doesn't work like that where you can just put the money back in. And so you took a withdrawal out of that of $40,000, which robbed you of all the compound growth that could have happened along with that amount. And so now you're out that money. You sold one of the houses. You got out of that flip, right? I didn't sell. We were renting it. We couldn't sell it because

of the area that the interest rate is higher than the... So how many properties do you have? We have the main one we live in, the one that I was trying to help pay down so he could retire. And then the one that we tried to flip the first one, and now that's a conventional loan, and we're renting that. And then we have this one now that we're trying to figure out what to do I mean I don't know whether to so three total so one is being rented and one you can't sell right now and you're thinking about doing the same thing how long has it been on the market the first one how long have you tell us more about the efforts okay so the the real estate person um i i'm i'm not sure if she knows a lot about the economic area i mean about the area but who is this person is this a trusted real estate agent that you're

working with well yeah i mean she was referred to me through um an agency that i worked with they um it's called i don't know if i should mention names but that yeah when you get off the phone i want you to go on to ramsey solutions.com and i want you to get hooked up with one of our real estate trusted pros because whoever it is should know the economics of the area and i don't know like what did you put the house on the market and after 30 days if it didn't sell you pulled it like tell me more because when was the hard money loan due on the first on the first house you're asking me on the first house it was on the market for um i say maybe almost four months four months and we didn't get yeah we didn't get any offers at all was it priced right at all

supposedly it was priced right you know i mean she supposedly what area of boston is this no this is in bir, Alabama. Okay. You're buying real estate across the country? Yeah. Are both rentals in Birmingham? Say that again? Are both of these properties in Birmingham? Yes.

What made you go, we're going to purchase property thousands of miles away and hope for the best? Someone on YouTube. youtube oh goodness gracious unsubscribe and yeah and then they um you know the properties are just cheaper it was just easier to get into the market i mean you could buy a house i mean i think i like paid like 47 in cash for it so what'd you buy the house for and what are you trying to sell them let's talk about flip number one what'd you buy it for and what are you trying to sell it? Let's talk about flip number one. What'd you buy it for? And what are you trying to sell it for? Because something tells me it's not priced right.

House number one. Um, I think we, I pay 64, five. Okay. Um, and that was what, what, what my husband gave me and what we had to go towards it. And then we took the hard money loan for one Oh two, five to rehab it. Okay. So you've got like $168,000 all in on this house, right? Right. And what would it sell for? We were told it should sell for $229,000, and it did not. It didn't move. What could it sell for?

That's what she said. I mean, that's what everyone's saying. Could it sell for $180? Maybe. Maybe. Well, I would sell it and get out of this thing, and you still made a little bit of profit, and you learned a lesson. The fact that you got zero offers makes

me think that it's overpriced. Are there other houses in the area similar that sold for $229? Yeah. The thing is, I refi'd, so actually I would be in it for a little more because my refi costs were like $4,000. Okay, so you're in for $172,000.

I'm saying if you even sold it for, you got $180,000 after fees, you still can walk away from this. I think we don't need to get greedy and try to get 230 out of it. Right now, we just need to get out of it. If you can get 12,000 more, then you can cut your losses on the other one and sleep well at night. I think that's the goal. The goal is to try to clear 12,000 from this and get out of the other loan and then never go into real estate flipping again. How much have you invested into this third property?

So that's the issue. So it's $138,500, and that is for all hard money loan money. It's straight hard loan money. When is it due? $138,500. It was due like three months ago, and he extended it again, and then I had to pay on top of the interest, the monthly interest, I had to pay an extra month of interest to's the interest now $1,385 a month only that's it yeah a month until you until you do what pay it all back until I sell until I sell yeah until I pay it all back

but the thing is like now so this come June he's going to charge me an additional $1,385. A solid 1% every single month that this thing doesn't sell. Right, but he's charging me a 2% on the third month that it doesn't sell. You need to get out of this chain, and you need to never touch real estate again. Let's just cut our losses.

Yeah, sell it at a loss. I don't care what you have to do. And y'all are not meant to be real estate moguls and unsubscribe from the freaking YouTube channel. And I hope this is a lesson to all of you, America. This is how Dave Ramsey went bankrupt in the 80s. It's the same exact concept. He's been telling y'all for 30 years not to do this crap. And here you are trying to be a money mogul real estate agent. And it's going to rob you blind.

I'm sorry, Jane. I hate that that happened. Welcome back to The Ramsey Show. I'm George Camel here with Jade Warshaw. Open phones at 888-825-5225. Well, y'all, I'm going to be honest. I had to decompress after a previous call we took about real estate and some mistakes that someone made trying to get into flips and become a real estate mogul. Borrowing from the 401k to do so. Working with a terrible real estate agent who doesn't know the economics of the area across the country trying to do this thing. And let me tell you, there's a right way to do real

estate. There's a way to do it the Ramsey way with peace. And one of the ways you do that is you got to work with a pro. We want you to have the experience where selling or buying the home is a blessing instead of a burden. And the Ramsey Trusted Program is the only way to find an agent that you can trust to keep you on track with what we teach here at Ramsey and get the best offer on your house or find the right house for you. So here's how it works. We're going to send you some of the top agents in your area who we trust, and our team vets these people. You get to review their stats.

You get to interview them. You decide which one you want to work with. But we've done the hard work of vetting these people down so you have a nice short list of folks in your area who can help with this experience. These Ramsey-trusted agents have years of experience, and they're going to help you make wise decisions when it comes to pricing, marketing, and making or choosing the right offer. So do yourself a favor. Find a Ramsey Trusted Real Estate Agent for free at ramsesolutions.com slash agent. I love my Ramsey Trusted Real Estate Agent.

That's, you know, when you can say I'm a big fan of my real estate agent, that tells you something. Mandy Lynn Festy, let's go. There we go. Shout out. Shout out to Mandy in the Nashville area. Come through. Let's go to the phone. Sean's up next in Dallas. Sean, welcome to the show. How can we help?

First of all, thank you for taking my call. I'm proud to say because of Ramsey and the organization, I am debt free. House and everything? I'm sorry? House and everything orsey and the organization, I am debt-free. Woo-hoo! House and everything? Woo-hoo! I'm sorry? House and everything, or is this your consumer debt you paid off? Well, I paid off consumer debt, so that's my question.

So currently living in a townhome. I'm recently married, both of our second, and our children are grown and out of the house, so it's just her and I. Woo-hoo! I'm sorry. So we have some living expenses, but they're minimal. So our combined income is around $250,000 on the low end annually. Nice. Cool.

I have an emergency savings fund and my credit union earning a little over 4% of $25,000. Good. I've been saving for, during our dating period, we saved feverishly. I currently have about $225,000, also earning 4% at the credit union. Wow. Is that for a down payment?

A year ago. So far, so good, right? So I paid cash for a lot in a new uh community going in we intend for this to be our forever home uh the plans are done and um we are looking at an approximate build cost um of a five hundred thousand dollars i always figure a ten percent window could go to 550 we're prepared for that okay so my question is um and again, following Ramsey, definitely not going to mortgage for longer than 15, plan to pay it off in 10 or sooner. So my question is, my current savings for the home, and that could grow between this point and the construction in

eight months, but do I put all that down since I have my $25,000 emergency fund separate, totally separate account? But nonetheless, do I put down as much as possible? That's going to put us down to a smaller amount. But nonetheless, I feel like with the $25,000 in the savings fund. So seeking your advice and perhaps some validation that I've planned this properly just by listening to the show along the way. I mean, if I were in your shoes and I had $225,000 to put down, I mean, if you said, listen, I just want to have a little bit more cushion than $25,000, is that three or six months of expenses for you? Easily six months. That's easily six months. You guys have a great income you said over 250 000

right yes if i were you with the numbers you gave me i'd probably go ahead and put it all down on a construction a permanent loan okay for this house and that way you're closing one time and you're kind of locking it in and you know that once the build is done it's going to convert to your permanent loan mortgage loan and you're you're set to go and you're kind of locking it in. And you know that once the build is done, it's going to convert to your permanent loan, mortgage loan. And you're set to go. And you're paying for basically half of this up front, which is really cool. How much more can you save between now and eight months from now when you close? Easily $30,000 to $40,000.

Wow. My next question would be, is that added to the down payment, or is that added to just savings and life expenses and vacations? I would put as much down as possible. And the only thing you need to think through is, okay, we're going to have some moving expenses, some closing costs, outside of the down payment. Right. So as long as you have that piece set aside, yeah, furniture, all of that.

So if you want to have, you know, 10, 20 grand set aside for all of that stuff, moving, furniture, closing costs, you can do that. But the rest, I would throw all of it. If you can save up 260 and throw it at this on the down payment, I would do it. That's exciting. And I tell you, as someone who did that, now not on that number, but we bought a townhome. It was $300,000. We put down $145,000, which meant we had a $165,000

loan on a 15-year fixed rate mortgage, and we paid it off aggressively. And so the same thing's going to happen for you, Sean. Making $250,000, you're going to pay that mortgage off, my guess, is in three years. That thing's gone. Yeah, and our cars are paid for. So, you know, in that regard, you know, but insurance, homeowners insurance and everything is going to be required to go into the escrow fund. That'll be all built into your monthly payment. But the lower the payment, the more you can put extra on top of the principal,

which means the faster you're going to pay it off. And the more things you can do fun around the house. Like for me, the more you put down, the lower that payment is, that frees up more of your income where you guys can do furniture room by room and do it at the speed of cash and do all those little fun things

that go along with having a brand new house and a brand new property. And so if I were in your shoes, I'd put as much as I can towards that. And stick to that 15-year fixed rate mortgage and you'll pay it off, worst case in half the time. But knowing you,

you're going to pay it off in three years and you're going to save hundreds of thousands of dollars in interest compared to someone who did the 30-year and just attempted to pay it off in that timeframe. So way to go. I'm proud of you, man.

That's impressive. Beautiful thing. I needed an inspiring call, Jade, and that was it. Yeah, we did. We were saying, this has been a tough day for calls, George. I needed a win.

I got my win from Sean. All right, let's go to Matthew. Right down the road in Nashville, Tennessee. What's going on, Matthew? Hello? Hey, George. Hey, Jade. How are you? Hey, doing well. How are you? How can we help? Doing well, thanks. So I was having lunch with a friend of mine today and my main question is about HSA and investing and my buddy that I was with today you know we were talking about HSA in general and he was he said that a lot of you, HSA portfolios will allow you to invest part or all of the funds. That's right.

And I was unaware of that. I thought, you know, like I always assumed the HSA was just basically a holding account for medical expenses and everything. No, it's a great vehicle. You can, okay, so if you put your money in your hsa you that money is growing tax-free and you can use it for obviously medical purchases and you're not you don't have to pay taxes on that but here at ramsey we love using it as an investment vehicle after you've maxed out a roth uh ira after you've maxed out your 401k it's great if you have a high deductible insurance plan that you can reach over and start contributing to your HSA. That's what I do.

And I invest the money. And I think you have to keep like $1,000 liquid and then you can invest the rest. Above $1,000 threshold, you can invest that into mutual funds. They have options within there that you can invest. And that's exactly what I do. And when you turn 62, you can have access to it.

65, it turns into like a traditional 401k account. So what's your exact question, Matthew? Well, so I guess my exact question would be, so I opened up my health equity app, you know, that kind of gives me control and access to my HSA funds and everything. And sure enough, there was an investment tab on there with Smart Investment Pro or something. I can't remember the exact name of it, but it didn't give you a whole lot of options as far as what the portfolio was, what the spread was that it would invest those funds in. So I guess my question is kind of twofold. Number one, is it smart to invest in something

that you don't know what? No, don't invest in anything that you don't understand. And if you need more help, you can get with one of our SmartVestor pros to help explain the different ways that you can invest that money. But no, I would not pick funds until I know what I'm investing in.

Sorry, ran out of time on that one, Matthew. But call us back if we can help again. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. We just had a call, Jade, about HSAs, health savings accounts. And we got cut off short. So I want to do a quick teaching recap for everyone listening to make sure they make the most of an HSAs, health savings accounts, and we got cut off short. So I want to do a quick teaching recap for everyone listening to make sure they make the most of an HSA.

So if you have a high deductible health care plan, you can access an HSA as part of that, a health savings account, which is different than a flexible savings account, the FSA. Yes. And the beauty is the HSA money rolls over year over year, so you get to keep it. That's right. Where the FSA does not. You got to use it within that timeframe. And the beautiful part is, number one, with a high deductible health care plan,

you have lower premiums, which helps save you money. But number two, the HSAs have a triple tax benefit. That's right. So this is amazing. The money going in is tax sheltered, right? So whatever you contribute to it, that lowers your taxable income. And then the growth on that money is tax-free. And if you pull out some of the money and use it on qualified purchases,

that money is tax-free as well. For your medical expenses, it's tax-free. So that's an amazing advantage there with a triple advantage. And then, like I mentioned, the HSA rolls over each year. But the really cool part is when it comes to retirement. So we mentioned it quickly on air, but let me explain this. As you build money in the HSA, you can invest it. And so most thresholds are going to be a thousand bucks. Once you have over a thousand bucks in that HSA, you can invest the money beyond that into mutual funds, just like you would in an IRA or a 401k.

And they should have the same options that we teach, the growth, growth and income, aggressive growth and international. You can still choose. I just checked my account. I'm invested across the four types of mutual funds that we teach. So you have some great options inside of there. But when you turn 65, the HSA sort of turns into a traditional IRA. So you can take money out for things that are not medical, but you will pay taxes like you would in a traditional IRA. So you can take money out for things that are not medical, but you will pay taxes like you would in a traditional IRA. That's right. So it's a really cool option for those that have a high deductible healthcare plan.

And part of it is people say, well, how does this work with the investment side? You buy mutual funds just like you would inside of an IRA or 401k. And then when you want to turn that money back into cash, those investment funds, you could sell the shares, turn it back into cash and use it. Here's the thing. If you've heard Dave Ramsey talk about this, he says, I would recommend you not using it. I never touch it. I mean, I think that's the whole point, right? Is we have the three to six months of emergency funds. And by the time you're even getting into this, all of your debt is paid off. You've kind of built that firm foundation to where truly you really shouldn't need

to liquidate any of that money for any reason. I treat it as retirement. Yeah, unless there's like chronic health issues in the family, you're constantly needing to use this. It can be a really great way to build a tertiary retirement account. I love it. I mean, we would say start with whatever your Roth

option is. So start with your Roth IRA if you can max that out. Maybe if you have a Roth 401k, you max that out and whatever your 401k option is. And then after that, if you're like, hey, Jade, I still have money to invest, moving over to an HSA if you have access to it, because everybody doesn't, depending on their medical plan. But if you have access, yeah, I'd max that out. And I think for families, it's like $8,300. $8,300 in 2024. For individuals, it's half of that at $4,150. And if you're 55 or older, you can have an extra thousand bucks in there to play catch up, which is amazing. So a good goal, if you're wondering, hey, based on my baby step, how much should I put in there? Well, where you are in your financial journey matters. So a good goal is to have enough money to cover your annual deductible each year. That way,

you're at least covered there. And so some employers have a match, like we have a match here at Ramsey for the HSA money. So if that's a match available to you, that's a great start. That's free money. Once you kind of become debt-free, you have the emergency fund, now you can look at maxing that out on top of your 15%, because another question we get is, does this count toward my 15% because I'm technically investing? It doesn't because this is for medical expenses only. So on top of your 15%, if you want to max out your HSAs once you're in that spot and baby step forward, that's great. But before then, it is wise to just have enough to cover your annual deductible. So there's a lot of information on this.

We're going to link in the show notes and description the article, How to Make the Most of Your HSA Investment from the Ramsey Solutions blog. That will be a great resource for you all to learn more about this. But I thought we just needed a recap since we didn't get a whole lot of time with Matthew. All right, let's get to our question of the day. It comes from abigail in oregon yeah she says my 24 year old son is already in credit card debt my mom made the mistake of telling him that my dad had left him 25 000 which was to be paid out when he turns 25 this year it's in my account for now i'd plan to tell him as soon as i thought he could be responsible with the money but now he expects it to be transferred to him on his birthday how do i handle this situation

well on the one hand if the money was meant to be given to him when he's 25 there's not really a lot that you can do about that um he's just already blown through it um she doesn't say how much credit card debt that he has is it two thousand or fifty thousand yeah it's a difference but i do think that you know there is you know you're his mom so you get to sit down and say here's here's what i want to make sure you understand like this money is going to go very quickly maybe it's already gotten i don't know maybe it's already spent but really sit down and talk to him about this now here's the other thing george i don't know a lot you know there's not a lot in

this question but i will say this especially with older children it's hard to tell them something if you didn't do it and it's hard to get them to listen so i don't know is her financial situation great if not he might not you know be willing to listen to her um so this is a tough one i well the the there's some legal questions here she said it's in my account now yeah i for me that must mean this wasn't done through a trust or something where there's legal boundaries where legally he gets at a 25. But if grandma already told her grandson, hey, pop pop left you 25 grand, you're getting it on your 25th birthday.

Well, now it's going to create a rift in the relationship with mom and son to where she goes, yeah, I have the money, but you're not getting it because I don't trust you with the money. And so part of it is trying to give them some financial literacy and saying, hey, grandpa left you this money.

I want you to honor his legacy. I want you to use this wisely. And here's how we're going to do that. And we're going to filter through the Ramsey baby steps. We're going to go through Financial Peace University to show him this money is best spent paying off the debt, getting an emergency fund in place. And then we can enjoy some, give some, save some. Here's the thing, though.

It's not like this kid's 18. Like he's about to be 25. He's a grown man. Hopefully. Yeah. And so part of, you know, we always say here that you should talk openly about money that, you know, whether it's money set aside for college, money that you're going to be getting for an inheritance. Like you don't keep these things a secret so that you can kind of like control it and then spring it on them you talk about it often so that you can control it and so that you can teach while you have the opportunity to teach and so i just don't think that this was handled in the best possible way i don't think that it's too late but you know at the same time he's grown yeah you if he's not

living under your roof and under your rule, I think you just got to go. Here's the money. Here's what I hope you do with it. I hope you honor his legacy. I hope you get rid of this debt and you don't go back in. I hope you use it toward financial goals and get the emergency fund. I think that's the most beautiful way to honor the legacy. Agree. But you're a grown adult. And if you want to go make some mistakes with it, that's going to be your mistakes to clean up. Yeah. You're about to make some big boy mistakes it's hard because as a parent you don't want to see your kid suffer you don't want to see them financially hurt themselves but at the same time if it's just mom said i had to then they're never going to grow yeah they have to mature and part of maturity is

making those mistakes sometimes so i hope he does the right thing but i think you just give him the money and have a stern conversation with love. Yeah, I think so, too. That's a tough one. If you were leaving money, there's also part of it's like, you know, if you're leaving money, would you just say, hey, I'm leaving this money, but. You can in a trust. You can have all kinds of stipulations about what you have to do with that money and. What you can and can't do.

What you can and can't do. And you don't get it if X y and z are the case and so there's a lot of things you can do within a trust to you know make sure your wishes are carried out do you want to know a crazy story we have a little bit of time tell me so when my husband and i were engaged he was left a sum of money from his grandfather but the stipulation was he had to marry someone jewish which you are not. I'm not. So what happened? I'm here, aren't I?

He didn't take the money? I got the last name. I got the ring. Listen. What did he do with the money? What happened? He had to stiff arm it. He stiff armed the money for you.

That is true love. That's true love. Then it turns out a lot of the grandkids also did not marry someone Jewish. So they were able to go. They went around it and they were still able to get through. Oh my goodness. Isn't that interesting? That is wild. What you won't do.

The things we do for love. I thought you were going meatloaf with that. I would do anything for love, but I won't do that. Sam did it. Sam did it. He did it. Respect to Sam Warshaw.

It paid off, man. That's awesome. This is The Ramsey Show. Welcome back to The Ramsey Show, our Scripture of the Day, 2 Corinthians 12.9. My grace is sufficient for you, for my power is made perfect in weakness. Therefore, I will boast

all the more gladly about my weaknesses so that Christ's power may rest on me. In a left turn, J.K. Rowling once said, anything's possible if you've got enough nerve. I like that level of persistence. George, you got some nerve. That's me getting discounts. That's my version of that. I've got enough nerve to ask for the discount. Listen, I've watched you in these breaks try to get these discounts on these Seinfeld tickets.

That's right. If anyone's got the hookup, I refuse. Jade's like, George, just go. Just pay the stub. I'm like, I'm not going to let the scalpers win. Not on my watch. I'm going to get these tickets at face value if it's the last thing I do.

Waving the white flag. That's my latest conundrum. If you're wondering what's happening in the world of George. It's a good problem. Trying to get a deal. Yeah. white flag. That's my latest conundrum if you're wondering what's happening in the world of George. It's a good problem. Trying to get a deal. Yeah. All right. That's fun. Let's go to Joan in Jacksonville, Florida. What's going on, Joan? Make us happy. How can we help? Well, hi. Thank you for taking my call. I have a situation where I have a couple of options, but I really don't know what to do. I'm 86 years old. I have only Social Security. I own my own home. I own my car, but I have about almost $30,000 credit card debt.

Oh, my goodness. I know. I am making minimum payments, but I've only left with maybe $100, $200 a month to eat, put gas in the car now i do have um help from a daughter and an ex-husband that feeds me you know as i need it if i make a suggestion but i it's embarrassing that I don't want to. I think about selling the car. It's 17 years old. I won't buy another one, but I'm pretty much going to be grounded. What's the car worth? Well, it's a Crown Victoria.

I don't think that's going to make a dent in your credit card debt. I'd rather you keep the car to get around. Yeah, true. And or sell the house. That's what I want to know. Oh, boy. And get an apartment. Well, the problem is right now you have a fixed expense with this paid for house. Right. So if you sold it to pay off your credit card debt, that leaves you with an expense that's ongoing and increasing. And with your Social Security, I don't know that you're going to be able to afford the payment of the rent. How much do you get every month?

$11,198. Okay. Almost $1,000. So about $1,200 a month. Right, yeah. And what are your monthly expenses right now? You're saying you have $100 left over. So you need about $1,100 to live? All of it.

$1,000? No. The reason I'm in credit card debt is I always need about $200 more. And so I use a credit card, and then I'll start paying the minimum payments, and then the interest starts hitting on them, and the bill, bill, bill. Now, the last two or three months, I had, what, almost $3,000 in car repair

and some other $700 to the dentist. Yeah. And so... that went on. You just have no cushion. You have no cushion to pay for anything that comes up beyond your $1,100 a month, right? Unless I beg it from either a daughter or an ex. I'm sorry.

Oh, my goodness. I'm so sorry. Joan, this is not a fun place to be. What is your house worth? My health? Your house. I'm sorry. Goodness. I'm so sorry. Joan, this is not a fun place to be. What is your house worth? My health? Your house. What's it worth?

Well, what do you mean by that? If you sold it today, what could you get for it? Oh, my health? Yes. Oh, the house is probably worth $195,000 to maybe $250,000. Okay. That's a big... But on either side, the houses have built around me, and they're worth $600,000 and $500,000. Why is yours so low?

I don't know. No updates? Is it in rough shape? No, mine is just old. When I came here 21 years ago... Oh, they built a bunch of new houses around you. Yeah, they built everybody around me

and I don't have an HOA and everybody else. Are you at the point where you can move in with your daughter? Well, I could, but I'm not too sure about that, you know, personalities. I mean, it's going to, it would be, I have some health problems, but they're under control. Well, the problem is, let's say if I snap my fingers and got you out of credit card debt,

you're going to be back in $30,000 of credit card debt because you're using the credit cards to float your life and expenses. Well, I promised her that from now on I would ask her after if I have to charge something. But you're still behind $200 a month, which you're using credit cards for, you told us. So you've got your... I know. That's not going to change anytime soon. You've got your daughter, and do you have other kids or is it just her um yes but that wouldn't be possible okay so your daughter has said mom let me know before you charge this credit card tell me i'm going to

try to help you out basically right yes so like you said it's embarrassing and it's tough but your options are you either reach out to your daughter and you say, hey, you told me that this lifeline is here. And the truth is, I need $200 every month in order to be able to live and not spend any more on this credit card. That $200 will help me make my minimum payments and not go over. If you said that to her, is she on board to say, okay, I'm going to help you in that way? And then, because the other option is we might have to look at this house, which doesn't really make sense because of the cost of living today. Like, there's not really an option. I know. You know.

Yeah, that's one thing that's made it gone up more. Well, okay. Your expenses are $1,400, and you're bringing in $1,200. That's the truth at the end of the day, right? Because you're going $200 in a debt on the credit cards. Yes. So we need to find a way to either lower our expenses somehow or increase our income. I don't know we're going to find a way to increase income. I wrote down every penny I've spent this past month.

Could you downgrade in-house? If you sold it for $250, could you go buy a place for $200? I'm not sure in Florida right now. Or even an apartment? No, it's a house. I'm saying could you Florida right now. I mean, by the clock. No, it's a house. I'm saying could you downgrade to an apartment? Oh, well, I could go. Yeah, I mean, I could, but I'm 86 years old. I know, but we also didn't set ourselves up for a bright future in retirement.

No. So this is part of it is we got to deal with the ramifications. No, I was a single mother since I was 19 years old with no child support, and I worked until I was almost 80. What were you doing for work?

I mean, maybe I better not say. I worked in a pharmacy technician. Okay. Is there something you could do to make a little bit of extra money right now? Are you able to get around and do that? Oh, yeah, I could. I mean, I...

I think we might need to find a little part-time job to clean up this debt and increase our income if you're able-bodied. It's not fun, but this might be your only option other than selling the house and downgrading to an apartment that you pay cash for, which allows you to clean up the credit card debt, lowering your monthly expenses. Right. Well, I have leukemia. I've had it for 21 years.

I really don't have a high energy level. And I have a dog. And the dog, I was going to tell you the expenses the dog cost. The dog was the biggest expense. I bet. I know.

I got two little French Bulldogs and they're the biggest line item in my budget right now. So, Joan, I'm so sorry. Yeah, it was $181 for the dog. Every month? No, just this month. Oh, Joan, I'm so sorry.

You have been through it. I would definitely look at downgrading a house and going to an apartment you pay cash for, getting rid of the credit card debt. If you need to rehome the dog, I'd rather you eat before the dog. So that's the hard truth. I hope it helps, and I hope your daughter or ex-husband can help. That puts this hour of the Ramsey Show in the dog. I'd rather you eat before the dog. So that's the hard truth. I hope it helps. And I hope your daughter or ex-husband can help. That puts this hour of the Ramsey Show in the books.

Thank you to Jade Warshaw, all the folks in the booth, and you, America. We'll be back before you know it. Hey, folks, Dave Ramsey here. You know, budgeting doesn't have to be boring. You just need a budgeting app that's made with you in mind, and that's EveryDollar. The EveryDollar app has helped millions of people work the baby steps and take the stress out of planning and managing their money. Start budgeting with EveryDollar for free right now. Just go to RamseySolutions.com slash EveryDollar and download the app today.

That's RamseySolutions.com slash EveryDollar.