The Ramsey Show - What Are You Willing To Give Up for Financial Freedom?

Episode Date: February 24, 2025

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From the Ramsey Network, it's the Ramsey Show. I'm Jade Warshaw. Next to me is George Campbell. We are taking calls all afternoon about your life and your money and if you'd like to get involved it is a live call you can call the numbers 888-8255-225 that will get you on the line George you ready to get this thing started game on let's do it we got Chris he's in Seattle Washington Chris what's going on hey guys uh so happy to be on the show thanks for for having me. My wife for the last two years has wanted to get a mommy makeover and I haven't heard an answer to this question yet so I figured

I'd give you guys a shot. We collectively make about $180,000 a year. We have two businesses that we own and operate and last year we jumped on the we completed financial peace University and we paid off $25,000 worth of debt that we had we're currently thank you let's see we cut up all our credit cards and we have a net worth of about 950,000. Wow. Awesome. Yeah. So it's been a hard road, but last year I decided to spend some of my free time working more and open up a handyman business and I added about 75k on top of our regular income last year.

Way to go. So is that on top of the 180 or that's what you're at now? That's on top of the 180K. Wow, good job. So you upped it to 250, is that sustainable? Do you want to continue doing that? You know, I turned 42 in March and I want to kind of work hard in my 40s.

So hopefully it pays off and we can retire when we want to sell the businesses in our home and get out of Washington. Sure. So what's your question today? How much is the mommy make over? 28 and 35 thousand and I I have about 50k set aside on top of our Emergency fund emergency fund. Thank you. Okay. Is that what you earmarked it for the 50,000? Is that what you guys said this money is for or was it originally for something else? No, we've been putting it away for for this as well as I have a daughter in college and that our responsibility for her is about $14,000 per year.

And we've been paying that in full in cash when it comes about. My son just got braces and paid that in cash. So you're cash flowing everything. There's no worry about the future and retirement and kids college and you've got some extra money and you wanna do the selective surgery for her. Listen, mom is getting a new lease on life. Yeah.

Mom is getting an upgrade. She is amazing and she has trouble spending money on herself. And so like, you know, I told her I've been putting this money aside and I wanna pay for for it for her and... Does she want the surgery or do you want... Does she want it or is this a you thing?

No, she wants it. Okay, just checking. I'm happy with the way she is. Okay. She's just... She's been going through a health thing, getting herself in shape and changing her diet and all this stuff. So this is kind of the icing on the cake for her.

For the good of the group and knowing this is a family friendly show, can you entail what this 35,000 includes? It would be a tummy tuck and a lift. Okay, good. Got it. Good. Here's the thing. I think guys do more to their forerunners

and spend more on that. So I got no problem with the selective surgery for all the guys, but I can't believe she spent all that. Listen, bro, let's talk about that underlight LED kit you needed to have. Live like no one else so later you can live like no one else. That's what it's about. Right, you know, I want her to be happy with her body

and happy with herself. And I think that she deserves this so much. Yeah, I think you can afford it. You guys have been really smart with your money. Congratulations. You guys are young and you've done a lot. And yeah, well, my only question would be, are you guys done having babies? We are. Okay. No more babies for us. We got and are you having the elective and elective surgery? No, I spend my money. my play money goes to cards. Got you, okay. There we go.

Yeah. All right. Well, you guys have done really well. You're doing it by the book. You guys are debt-free with the emergency fund. You're cash flowing everything in your life. You're on the verge of being a baby steps millionaire. And so this might be a shock to a lot of people listening.

I can't believe they said they, listen. Do it. We never said don't spend money. You know, I'm a frugal guy, but once you've hit that different place financially, they make a great income. listening. I can't believe they said they could. Listen, we never said don't spend money. You know, I'm a frugal guy, but once you hit that different place financially, they make a great income. It's a small part of their world and they're super young. Yeah, I love it for them. That's a really, really good treat that they get to enjoy because they've done everything right. All right, let's go to Kevin. He's in Spokane, Washington,

the city I was born. What's up, Kevin? How can we help? Hi, this is Kevin. So I have a question about what to do for the future. I'm 18. I make around an average of $14,000 a month doing home improvement sales. And right now I'm saving about 96% of what I make and putting it between S&P 500 and some other funds just to pull cash out of really easily. I want to retire by the time I'm 26. I want to have the ability to retire,

maybe not stop working, but I want to have the ability through dividends and rent from my renters to retire. How would you best position myself to get to that position by 26. Have you determined how much money that is? Like, do you know what that amount needs to be in your portfolio where you'll be like, hey, I'm working because I want to at this point? I wanna make $12,000 a month from properties and dividends. I'm not sure the exact amount I'll need, but I do know that I'll need quite a few properties

and quite a bit of cash in my accounts in order to make that income. Okay. That was the other question. What part of it is you, is this, let me ask this clear question. Is this you really drawing the money out or is this a more of a theoretical I could retire? But, or is this you really, you're pulling the money out of the portfolio? I'm pulling the money out of the portfolio. I mean, like, I don't want to pulling the money out of the portfolio? Pulling the money out of the portfolio. I mean, like, I don't want to pull the money out. I just want to let it sit and give me money. So you really would be drawing out that money to live on

is what I'm saying. It's not just a theoretical feeling. Oh, yes. That I know I have it. Okay, George, you're looking at some numbers over there. Yeah, I got two questions. Number one, way to go. You're 18 and you're making 14,000 a month legally. Right? Is that true?

Yes, sir. Number two, who hurts you? Where did this idea come from that I gotta have this all done by 26 or else? Where did this idea come from? Well, when I was 14, I really, I was watching a bunch of financial shows, including yours, and I realized what I really wanted was to have the ability to say, F you, to anyone

when I reach 26, and I want to be able to have a direct view of any direction in my life. I hate that. You work for yourself, so that's going to be right in the mirror, my friend, if you're your own boss. But I like the attitude. I just want to make sure the motive is a healthy one because I get a lot of calls and questions

from people who are in your shoes. They don't make the money you make, but they go, I need a million dollars by 26. And I go, why? They go, well, I just, I feel like I'll never be wealthy. And so there's this element of just chasing and this element of I don't wanna get burnt out. So I'd rather you sink your teeth into something

that you love to do and continue to work. But the way you phrased it, you said, I just want to be able to let go of this. So here's the deal, 144 grand a year, that's 12 grand a month invested. Eight years of that at a 10% return, you'd have 1.6 million sitting in a taxable brokerage account. So that's one strategy.

That's without any other rental income or anything. That's just if it was spitting out 10% on average. I understand that's a crazy thing to say, but. It's just if it was spitting out 10% on average. I understand That's a crazy thing to say but it's not crazy George. I'm right there with you. So that's one strategy Okay, 1.6 million if I could take out a hundred hundred grand a year. Yeah, it probably lasts me a long time I don't know that you're gonna retire off that forever But that'll buy you some thinking time to figure out what you want to do for the rest of your life Yeah, I don't know that I would draw off that

I think I'd rather have it there knowing that I have given the middle finger and I'd be motivated to do other things in life. Just know the goalpost is always going to move my friend. So stop chasing. This is The Ramsey Show. Statistics show that half of Americans don't have enough life insurance or they don't have any at all. I don't understand this, John.

Why don't people want to take care of their family? They think they're not going to die or something? Well, I used to be one of those guys, I didn't even think about it. And one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids. And I immediately went and got term life insurance. That's a gut punch. For decades, Dave, I've sat across people who've lost a spouse.

They've lost somebody important to them. Me too. They don't know what to do next. Terrifying. You're gonna have a crisis here. You know, you got two options while you're sitting and talking to a young widow. She's concerned about how she's gonna invest

all this money properly and not mess this up, or she's concerned how she's gonna eat tomorrow. That's exactly right. These are the two options. It's saying I love you to your family. Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable.

I've used them personally for 25 years. They're the only people I trust. Go to Zander.com or call 800-356-4282. George, the truth is running a business is hard. It's so difficult. If you're a business owner or you know someone who's a business owner, it's tough. It's very difficult and some days the challenges they pile up and the fears creep in and you're just left wondering whether you're doing it right. I know that my husband and I ran a business. My husband still runs it. It's been over a decade and it truly can feel overwhelming. That's why Dave, Dave Ramsey wrote a new book called Build a Business You Love

where he unpacks how he took his business from a small card table in his living room to a $250 million business. It's the proven system for business owners to grow faster, avoid common mistakes, and create something they're proud of. Truly, it's the baby steps for running a business, which is what we all need.

So, pre-order now for $ 29.99, that's nothing, and you get over $350 in free bonus items that includes instant access to Entrez Leadership, the Entrez Leadership Hiring Playbook, you get early access to the eBook and an enhanced version of the audiobook. Pre-order that today at ramsysolutions.com slash store, or if you're watching on YouTube or podcasts,

you can click the link in the description, get that book today. All right, George, let's go to Baltimore, Maryland. We've got Sam on the line. What's up, Sam? Hi, thanks for taking my call. New listener as of about a week ago. And my question is, should I be paying off all of my debt

prior to starting to save for a down payment? And if yes, should we just keep renting? I think my future fiance, we're going to be engaged soon, will be ready to kind of buy land or a house before I am if I do have to wait until I get all of my debt paid off because I have quite a bit. Awesome. Well, thanks for joining us. Glad you're a new listener. Yes and yes. So yes, you're gonna wait until you have all of your debt paid off.

You have a fully funded emergency fund before you begin saving up for the down payment. The answer is simple. You wanna free up as much money as possible to get out of debt as quickly as possible. And so trying to do seven things at once means you're not gonna accomplish any of it. You're gonna stay in debt.

You're never gonna make progress on the down payment. So just aggressively attack the debt and keep renting while you're at it. How much do you have left? So I'm just starting to pay it off because I just switched from a W-2 worker to a 1099 like consistent contract. So I was making, I'm making enough, but like to make all my payments, everything's current. Um,

but I just haven't been able to get out of it because I was living above my means for a little while. I, I have 160 myself. Um, he was debt free, but he just got a truck. So he's got about 50. Um, he makes more than I do. I make 85 and he makes, uh, 138 a year, but he also does some side jobs. So that's kind of like his base. You said future fiance, you guys aren't engaged just yet. No, but we do live together and we split our rent and expenses pretty evenly. So one conversation, I mean, this is kind of aside from the point, but also also very important to it is

I would start having conversations now, since you do see that future of you guys getting married, I'd start having the conversation of what our philosophy is about debt and what do you think it will look like if you become a married couple? Because on the one side, I hear you saying, I'm working and fighting hard to pay off this debt, I wanna know, should I pay that off before we buy a house?

Which lets me know there's part of your brain that's like, debt is bad. I don't want to stay this way. But then you've got your future fiance who's just bought a $50,000 truck. Right. So you guys need to align. Now is a good time to start having those conversations is what I'm saying. So we have had those conversations. I'm kind of bullish on it's my debt. Like even though we're going to be married, it's my problem to solve.

And you're right. Right now. Yeah, he's offered to like pay additional like money towards our rent to help me get more of my debt off my plate. And we are aligned, but at the end of the day, like if he wants a truck and he can afford it on his salary, I don't want to like hold him back from that. But once you get married, and this is the question that you should be asking when you get married, are you going to view the finances as now we're one or is this like separate living going to continue? Because there's a reason that you're living separately now

and it makes sense. You're not married. It makes sense that you do your debt, he does his debt and you have your thing, he has his thing, that makes complete sense. But when you're married, the healthy way to do it is to become one and to come together on that. So that's kind of why I'm bringing that up

because the truth is, who knows? I don't know what you guys' timeline is. If it's, you know, six months from now or a year and a half from now, but that $50,000 has the ability to become yours as well when you get married. So that's something for you guys to talk about here at Ramsey. You know, we believe that marriage makes you one. So when you come into the relationship, it's our income, it's our debt, these are our assets, and this is our bank account and our budget. We find that when people do that, not only do they

have a happier marriage and the studies do show that they're happier, but they have a more successful marriage. They're able to build debt or I'm sorry, they're able to pay off debt faster and build wealth faster. And so there's a lot of positives that come to sharing your money, not just financial, but also in the relationship. Yeah, I come from separated parents and that like wasn't a great financial example. So I'm like trying to make sure if we do buy a house, like I have skin in the game and like it's not just on him. So it's just been he's very good and we have healthy conversations about it. I just feel

like guilty about it. Hey, before you get off, let's send her a copy of Know Yourself Know Your Money. That's Rachel Cruz's book. I think it'll give you some insights on just how you feel about money and why, you know, why you spend the way you do, why you make the choices you make, why you're bent towards certain behaviors. I think that'll help you and your spouse to kind of see each other. Also, I wanna give you both Financial Peace University. I think that'll be good. Just to get you guys on the same page and get you started looking at things the same way.

And that's really gonna help you in the future. What do you think, George? Well, when you mentioned, Sam, that he can afford the truck, by definition, if he couldn't pay for it in cash, he couldn't afford it. So what you're saying is he can afford the payment. That's fair. Right? And what I found to be true

is that everyone can afford the payment until they can't and until it steals from their paycheck, it steals from their future. And so if he really cares about this future dream of land and marriage, I would go, you know what, the truck is, I'm gonna have some delayed gratification and buy the truck when I can afford it in cash and probably buy one that's a lot cheaper right now

because we got her debt to clean up and I'm willing to make some sacrifices to get us to a better place financially. Do you feel a difference in that? Yeah, I'm actually selling my beloved car. So you're making sacrifices, right? Yeah, well, and he has offered. He even said, like, let me sell the truck.

I'm just a little, I would feel really bad. I would, I would feel really bad. That's true love. If a man is willing to sell his truck for you, he might be the truck. I'm just a little, I would feel really bad. I would. I would feel really bad. That's true love. If a man is willing to sell his truck for you, he might be the one. Why would you feel bad? Tell us more about that.

He's making a sacrifice that you've already admitted, hey, it's not the best thing. I mean, it's $50,000 of debt. Why would that make you feel bad? Because he'll have his paid off in like two years, maybe max, because he works a lot of overtime. But I'm gonna probably be in this like three, four years if I'm lucky.

What kind of debt is your 160? What does that make up? Student loans is 100. I have the car for 38, which I'm gonna let go of. And I have a consolidation loan for some credit cards because I was living above my means for a little while. That's the rest of it. Okay, so you sell the car. Can you get 38 for it? Will you be able to break even or make profit? Yeah, so I can sell it privately for 46 or 47. But again, I owe the bank 38.

Great, and you'll use the difference? Hopefully coming. Yeah, I'll put it towards that consolidation loan. But you'll need a car to still get around, right? Actually, no, because I work from home. So I can either borrow a car from my parents, which it's already paid off. It was my car before. It's in my name still.

Or we have a... Would it be borrowing or they give it to you? Would they sell it to you just for not much that you could know that you have it? No, it'd be fine to borrow. They don't need it. It just kind of is there for when they do. So I can use that or, you know, if he keeps his new truck, he does have a beater that he drives to and come work. So, yeah. Oh, I just had him get rid of a car that was almost as old as me.

Wow. Listen, one thing I want to encourage you is I, you know, again, I don't know the timeframe that you guys have for this and I'm not trying to rush you, but I would not delay moving forward in a relationship because of debt. I would encourage having those conversations because the truth is a good man and a good woman says, hey, I love you despite your debt and I'm coming alongside of you with that debt. And I get it. Like you do feel guilt. You can feel shame

about that. Those are very real emotions, but emotions are meant to go through you. It's when you stay there that they prevent you from moving forward. And so allow that to you know, you can feel that and let it pass through but let this good man or whoever's listening let you get that relationship that you want to have and you guys can tackle this together. For free tools and resources to help you reach your home goals, go to ramsysolutions.com real estate or click the link in the show notes. go to ramsysolutions.com slash real estate or click the link in the show notes. You know how when you go against what society thinks is quote normal, like avoiding debt, it feels weird at first? Well, I'm here to tell you that is okay. I want you to be weird. If that means you're being intentional, including how you budget. And one way to be intentional about how you

spend your health care dollars is with Christian health care ministries. CHM isn't health insurance. They're a biblically-based alternative. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families take care of health care costs without sacrificing their freedom. As a CHM member, you'll share 100% of your eligible health care costs with a dedicated Christian community.

And in return, your monthly contribution goes towards other members' medical costs. So no matter where you are in your financial journey, CHM can help you reach your money goals and still get the care you need. Plus, programs start as low as $98 a month. So go to chministries.org slash budget to find out more. That's chministries.org slash budget. George, let's take it back to the phone lines. We've got Aiden who's in Fayetteville, Arkansas.

Aiden, you're on the line. How can we help? Hi, how are you guys doing? Doing great. What's up? Hi, so I'm guys doing? Doing great. What's up? Hi. So I'm a current University of Arkansas student and I am basically on my own when it comes financially.

I'm having to pay for my own rent and basically my necessities to get by. And I'm just really struggling trying to find the balance because obviously I want to focus on my academics, but the troubles with my finances have really put me under a lot of intense stress and I could just use some help navigating that. Are you working? Like, tell us about your working situation. Yeah, so I have two jobs right now. I do Amazon delivery and I also am a brand investor for Anheuser-Busch. But the problem with those two jobs is that they aren't really on a set schedule necessarily.

It's more of like they just come up with offers during the week and I pick them up. Got it. How much are you working? How many hours per week on average? On average, I'd say about 25. And what are you making? I'd say weekly before my expenses, about 300 to $500. OK, I'm wondering, could we find you a job that's maybe 15 to 20 hours but pays as much, if not more? That is a little more consistent. Would that solve all of your problems? I'm not totally sure because I have, well, if you want to go through my expenses, I have $700 to pay for rent and then usually

about $300 for groceries for the month and other various expenses for gas and things. Do you have a car note? No, I do not. Okay, so paid for a car. In your cash flowing college right now, How are you paying for that tuition? And just my grandpa before he passed away, he had set up a college fund for me. So I've paid for my college so far. But that money has run out now. So now I only have two years left. I'm going to be forced to take out student loans. Can I ask about your parents? Where they're at in this or are you just kind of on your

own at this point? They want me to be more independent so they don't really like if I ask they might help me here and there but they really get annoyed by that And I don't like having to ask them for money. I wonder if the context changed. Like, I wonder if the context changed from, hey, mom and dad. And I'm not saying that you did this, but if you said, hey, mom and dad, I need money to go out and, you know, for food and clothes like that has a different context possibly than mom and dad.

This money from granddad is running out, I really don't want to go into debt because I know that debt is a bad thing. Is there any deal we can make where we're working together to pay this tuition in cash or we're cash flowing this? I'm willing to do what it takes. Like, I wonder if those are two different conversations. Do you think that they could value that second conversation? I think they possibly could, yeah. Do they know the situation that grandpa's college money ran out? They do, yes.

And they go, we don't give a rip, take out as many student loans as you need, bud. You're a grown man. Yeah, they don't really feel the same about debt as I do. They are like take out student loans and I really do not want to do that. But you know, I'm going to have to end up doing what I have to do to be able to finish school. What degree are you pursuing? I'm in finance. Okay. And you have two years left. What is the next semester going to cost you? Luckily, I'm not originally from Arkansas.

I'm from Oklahoma, but I was able to get in-state residency. So I'm looking at about $6,000 a semester. Okay. Okay, that's not as bad. And you have all summer to work too? To try to cash flow that? Yes. I just got an internship as well that will be paying $20 an hour and I'll be able to

work lots of hours this summer. So that should be able to help a lot. Do you need to live on campus? Is there or are you close enough? Like would your parents let you live at home and save that $700 a month that way to go towards this tuition? My parents, they live in Tulsa, Oklahoma and and my school's in Fayetteville, Arkansas, so I wouldn't be able to live at my parents'.

Do you have roommates right now? I do, yes. How many? I have three other roommates. Oh, it's a party. So you're doing the most. And have you applied for all the scholarships and grants? Is that part of your part-time work?

That is, yes. I do receive financial aid and I have gotten like the max Pell Grant for school, but I don't really have any like excess from that. And you have no savings? I do not know. I'm really just trying to figure out how I can get at least a baby step one. Yeah, I mean, it's going to be a struggle when you're, you have a, you have a lot of expenses coming out every single month to cover your normal life plus school. And so, you know, it's going to take a full-time job just to cover this, which is going to make it really difficult. So you're going to need to find something that pays more,

but you can work less and still cover all of your bills and create a little savings cushion to cashflow. Cause your next payment is gonna be in the fall. Are you paid up? Yes. Can I ask a question? I'm not trying to throw a huge wrench in this, but I wanna make this happen for you.

Cause I do believe that you don't want student loan debt. Is there a situation, have you looked in Tulsa to say, hey, I want to finish my degree there. I can live at home. I can do it less expensive. They'll take my credits. Have you explored that? Because getting the $700 back over the course of a year

is going to make a big difference on all of, I mean, it's almost a thousand bucks a month. Getting those expenses back is going to make, really difference on all of, I mean, it's almost a thousand bucks a month. Getting those expenses back is going to make, really could be the difference between making this possible and not being possible. Yeah. The thing is, um, I just feel like I'm already so far into this school here. And the thing with going back home is there's only one four year university

there and I don't know if I'd be able to get into it or not. But that's what I'm saying. I want you to look into it because transferring schools, it happens all the time. Like don't get me wrong. I get that you're comfortable. Comfort is a real thing. But transferring schools, as long as you know that they'll take your credits and you don't have to go back at all, then that's great.

But if you look into that school and say, okay, here's where I am now, you get in with their admissions office and find out what it would look like. This is all research is what I'm asking for. Just so you can really see what your options are because a lot of times we paint ourselves into a corner and we're really not in a corner.

There's lots of options. So I would look into that. I'd also look into an online situation and see if there's a way that you can mitigate some of these costs and live elsewhere. What's the end goal with the finance degree? I'd like to become a financial advisor. Okay, here's the good news.

There are, I'm taking, I'm going through a certified financial planning course right now, completely online. And it is not nearly what it costs for even one semester at Arkansas. So I'm telling through a certified financial planning course right now, completely online. And it is not nearly what it costs for even one semester at Arkansas. So I'm telling you that to say there are other paths to the thing you wanna do. And my friend Ken Coleman says it this way,

is it the only way, is it the best way? And right now you haven't explored all of those options. And so I believe it's called Boston Institute of Finance. I think that's the one. They've got an online course you can take for a few thousand bucks total. We'll get you through this whole thing. And so that might mean you don't need

to spend another two years. You can go through this course in a year, get your foot in the door as a financial advisor and start getting some clients and get your experience hours. Yeah, I definitely would like to explore my options for sure. I think the thing to take away here is you're going to have there's there's going to be a level of discomfort in the solution.

From what you're saying, I don't think you're going to be able to go on as you have. And I think letting yourself know that like just kind of taking a moment and standing in the mirror and going, OK, the way I thought this was going to happen is not going to be the way this is going to happen. It doesn't mean it's a bad thing. It doesn't mean I failed. It just means I've got to embrace a new solution. And if you can just get your mind on track with that, I think you're going to find that

you have a lot of solutions. And to George's point, I think you're going to end up with a better solution that's faster and cheaper and gets you where you want to go. You know, that's the goal. Take that you where you want to go. You know? That's the goal. Take that off the table, get creative, do your homework, and you will be shocked at how much easier it is. So just do it.

Go to school debt-free. As a finance major. I know, right? That's the guy I want to hire. I know, that's right. But it's so hard, you know, when we have a way where we thought things were going, it's kind of hard to deviate from that path. You feel like you failed.

Yeah. But you didn't. You just chose a better path. Hey guys, I'm Jade Warshaw and I want to talk to you for a quick second about student loan refinancing. If your payment and your interest rate are burying you and you feel like you can't dig out, refinancing your student loan debt might make sense. That's because a lower rate could free up more money in your budget and a shorter term could help you pay down your debt faster. So reach out to the student loan refinancing experts today at laurelroad.com slash ramsey. There you'll find helpful resources like a student loan rate

table, a refinancing calculator, and other tools. Plus you can get an initial rate in just a few minutes. Laurel Road offers low competitive rates starting under 5%. And you can get your interest rate even lower if you sign up for auto pay. But if your situation is more complex, sign up for a free 30 minute consultation with one of their student loan refinancing experts

to get your tough questions answered. Listen, not everybody should refinance their student loan refinancing experts to get your tough questions answered. Listen, not everybody should refinance their student loan. So make sure you run the numbers. But for some people, it is the right move. Learn more at laurelroad.com slash Ramsey to find out more about their student loan refinancing. That's laurelroad.com slash Ramsey. Laurel Road is a brand of Key Bank National Association.

All credit products are subject to credit approval. All right, George, we have a segment that it's one of my favorites. We call it asking for a friend because how often does a topic come up where we don't feel comfortable saying, I don't know, or I don't, I don't know what that means. And so instead of asking directly, we're like, oh, my friend wants to know what a 401k is. Or, you know, my grandma was wondering, what's the best place to keep

her high yield savings account, right? When really, you're the one who wants to know the answer. And so asking for a friend. What's today's? What is a reverse mortgage? Oh, all right. This is one that if you're my age, maybe your parents or grandparents have fallen into.

Yeah, yeah, it's a big one. You see commercials in between, I don't know, Snuggies and timeshares for this thing on late night TV from a washed up actor. Yes. So here's the definition here. A reverse mortgage is kind of what it sounds like. You're converting your home equity into money for you.

So it lets homeowners that are 62 or older borrow against their home equity. So instead of making payments, the bank will send you money, either in monthly payments as a lump sum or through a line of credit, similar to a HELOC. So here's the deal. With the loan repayment side,

there's no payments while you still live there, which is why people are like, oh my gosh, that sounds wonderful. But the loan plus interest has to be paid back when you move, sell, or you hit the old dusty trail and pass away. Ooh, that sounds risky because you never know what the housing market's gonna do.

But then if I'm that person, you go, well, it's someone else's problem. Yeah, that's the people you love. It's gonna be their problem. So here's the deal. As you borrow, your home's equity dwindles down. So let's say you start with a paid for home. It could end up where half of that is gone

and you now owe 250,000 on a $500,000 home. So you're eating up your biggest asset and you're leaving less for your future and your family. And by the way, they're super expensive. They're one of the worst financial products on the market because of high upfront costs, origination fees, closing costs, mortgage insurance, and then the interest keeps piling up,

which by the way, if you're getting this as a monthly payment or a line of credit, the interest is gonna be variable. Oh, boo, yeah, that's terrible. Which means the lender's passing on the risk of variable interest rates to you. And you're still on the hook, George, for taxes, insurance, property, you know, all HLAs. You still have to cover all of that

on your own. Home maintenance. You still have to pay for all that. Yeah. And, I mean, it's not on here, but, you know, a lot of folks, when they get older, they think, I don't have much retirement, I'll use this and this'll fund my lifestyle until I, you know, take the highway to heaven.

And then they end up living longer and they've eaten through all of this equity. And then it's like, okay, now what? So it's kind of a scary thing. There's a lot of risk there. So here's the pros. Tell us the pros. The people fall for this. It's immediate cash.

I can get money during retirement because I didn't save. There's no monthly payments. I get a break from mortgage payment, that's great. And then flexible use. I can spend it on whatever I want. Medical bills, travel. Here's the cons. Here's where it gets real.

Super high costs, like I mentioned, loaded with fees. Then you're losing your home's equity bit by bit. You have nothing to leave to your kids and they have to deal with this mess. And then there's foreclosure risk. These almost always end in foreclosure. Yeah, you miss property taxes, insurance payments, and you could lose the house.

These are for broke people and they think it's some shortcut that's gonna let them live their best retirement life and it ends up just making things worse. So here's better alternatives if you're thinking about a reverse mortgage or someone that's in one. Downsize. Sell the house, buy a smaller one, pocket the difference if you really need money. Investments are savings.

Use retirement accounts for income instead of one of these terrible products. And then lastly, rent out part of your home. Oh, thank you for being a friend. There you go, you can make it like a sitcom situation out of this. You know, just have someone living in there in a spare bedroom, giving you 500 bucks a month, that'll replace the payment without the risk.

And that'll help you out. So, reverse mortgages seem like a quick fix, but they have long-term risks that could wreck your financial future. So look at other options, stay debt-free, make a commitment to do that, and keep your home working for you, not the bank. And if you need help, if you're sitting on a mortgage

that you're like, hey, maybe I do need to downsize, check out our real estate hub there. That's a good one. They'll put the ticket to it in the show notes. There we go. The ticket also known as the link. There you go. Yeah, we get the ticket for you.

There it is. Oh boy, let's go to the phone lines. Please. Do you go. Yeah, we get the ticket for you. There it is. Oh boy. Ah, let's go to the phone lines. Please. Do you have more that you want to say? Like I need her to Tums after just reading all that about reverse mortgages. That's true.

That pit in my stomach. I know. Well, we've got Stephanie. She's in Charleston, West Virginia. What's up, Stephanie? Jen. Hey. I'm trying to be, oh, first of all,

I just wanted to say hi. say hi and I have a question. I my father's 80 years old. My mother passed away in December of 2020 from COVID and during that transition I realized how horrible their finances were. They make a lot of money. They were retired and they had a lot. Um, but, um, my dad has since, um, had a stroke and a heart attack. So I'm now power returning.

Yes. Now there are two children. There's me and my sister. I'm the oldest. I am the beneficiary on everything. And that is because my sister is an alcoholic. She has never held a job for any reasonable length of time. Um, her kids and her have lived off of my parents forever. Now everybody in this scenario is an adult. So there's going to be it when my dad passes away there's about $350,000 that I am going to inherit but I have made the

promise to my dad to take care of my sister to help her and I want to know with respect to his wishes what is the fair thing to do? And how do you go about taking care of somebody who is an alcoholic? Because in my opinion, I cannot just give her half. Yeah, you can't give her half. That really would be giving a drunk a drink. I mean, I hear Dave say all the time dealing with folks who are in addiction, they don't get control over money, especially large sums of money.

So in this case, you're putting just fuel on the fire of misbehavior by just throwing money at this. So what I would do is define what it means to help take care of sister. Does that mean we enable her for the rest of her life and fund her whatever she wants to do? Or does it mean there's strings attached? Do we help her get on her own feet and cause her to be independent and have her go through rehab and put a certain dollar amount every month and increase it over time as she's able

to stay sober? I think we can structure this in a way where it actually helps her instead of just makes the problem worse. Has she attempted to get help before or does she realize she has a problem? Tell us about that. She knows she has a problem. She's been forced to get help. I committed her one time for her alcoholism.

But once you're past a certain date in treatment, you can check yourself out and that's what she does. She has no desire to get help. Um, and you know, I, they've, they've, they've purchased everything for her. Um, a house, uh, cars. She, she had brand new car that she took a loan out on and got it repossessed. Um, and her kids have all had cars. They've had all their, everything they've ever done has been financed through my parents. Me and my house and my children

we've never had anything we know or we've never received anything. We don't ask for anything. I make a you know we my husband and I are retired. We make a great retirement every month. Everything we have is paid for. How many children does your sister have? Well, she had three. One of them just passed away last April. So that took her into a terrible tailspin, as well as the other children. And they're adult children?

How old are they? They're adults. The youngest is going to be 19, and the other one is going to be 23 next month. Okay. And are they healthy? Are they reasonable and healthy and taking care of themselves or no? Well, the daughter that will just takes care of herself, but she also has the drinks every

day. Oh, gosh. So it's not a good option to give to her children. The other one, the youngest one is, oh, he's just manipulative and has manipulated my father out of. Hey you guys, I'm not a fan of the big banks and you probably already know which ones I mean.

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And speaking of what's next, download the CFO's guide to AI and machine learning at netsuite.com slash Ramsey. It's free at netsuite.com slash Ramsey. Thousands. And when I say thousands since my parents, my mom died, it's close to about 182, 185 thousand that they have went through with nothing to show for it. Nothing. So you're going, I mean, you don't have a great option of who to give this money to

instead of your sister-in-law that's directly related to your sister-in-law. You know, I would, if I were you, I'd probably hold onto that money and keep it somewhere and earmark it for if she's ever willing to get the help that she needs. That was something like that. It almost feels like she needs to hit her own rock bottom and be willing to change

before we throw any money at this problem. It's just going to disappear into the ether. Exactly. And you're going to be more resentful. And so I don't think that honors your father's wishes either. This is a tough situation. It's not easy. But yeah, I'd hold on to the money.

I mean, you're executor, so you have good reason why not to give that money. And I would just stand on business as far as that's concerned. We'll see you guys after this break. From the Ramsey Network, it's the Ramsey Show. I'm Jade Warshaw next to me, George Campbell, taking calls about your life and your money. George.

Hit me. You ready to get into it? Let's go, I'm always ready. Listen, I'm ready to get right into some calls. All right, Cindy in Kansas City, Missouri is on the line. What's up, Cindy? I have a question concerning group life insurance to my company who now are having me pay the taxes on it, the yearly taxes on it, and it has just run up $300 since last year and I

have been trying to cancel this policy. What's the problem with you canceling it? Like what happens when you let it lapse, or when you just say, I don't want it anymore? Well, first off, I'm getting this, you need to talk to your employer. And then my employer says, no, you need to talk to your employer. And then my employer says, no, you need to talk

to the insurance company. And they're sending me back and forth. I started this process in December of last year, 24. They ended up sending me a waiver paper to cancel the policy and it is still not canceled. Did you re-up it for the new year? Cause usually you have to go in there and opt in.

Did you do that or did you? No, I didn't do nothing with this policy. In fact, I just found this policy out last year. You didn't know you were paying for it? Because the impunitive, excuse me? You didn't know you were paying for it? Because of the impunitive, excuse me? You didn't know you were paying for it? No. What does it cost every month or every paycheck?

It costs, I don't know, and they said it's being taken out to the other tax. And what do you mean by tax? Are you talking about the premium for the life insurance? I don't understand what you mean by the taxes are going on. My employer is paying for the premium. Okay, so they're paying for it, not you.

Not me. So what are you seeing on your pay stub? What's it being listed as? Okay, I was informed, it comes out once a year that I have to pay the taxes on this policy because it is considered impunitive wages. How much is that? Well, last year I paid 182 and this year I'm paying $485. So that's the, so they're saying, hey, if we cover this,

this is your fee for having full coverage for the entire year, $182. Essentially the IRS sees this as income from your employer because they're covering this expense for you. Exactly. But it's on you to pay the taxes. Okay, I understand that. It's on me to pay the taxes. And it's going up and it's now 485 bucks a year.

Do you know what the face value of the policy is? Yes, they just told me that today, matter of fact. They're saying, hold on a second, I will get, they're saying that the face value, hold on, I gotta get this paperwork. Like is it a hundred thousand or is it a million? It's 84,500 for basic life and 42,250 for personal. Okay, do you have life insurance of your own?

No, I do not. Are you self-insured? No, I am not. Does anyone rely on you? I am not insured because I have no one to cash in on. Okay. So nobody relies on your income. If you were, God forbid, you were to pass away today, nobody's going, oh my goodness,

what am I going to do? Nobody relies on my income. Okay. Except for my employer. Well, they don't even because they pay me. But I mean, um. Well, I mean, the truth is you paying for the truth is you might be able to, if you want to opt out of this, you 100% could and put that money into something else.

You could invest it. Or if you did want to have your own term life policy, you could do that. But my question is, what are they telling you when you say, hey, I don't want this policy anymore? Is it something that's some sort of a requirement? Tell me what they're telling you. Okay, what they're telling me is, it's not a requirement, obviously, but they didn't let us know about this until recently. And who knows how long they've had this policy out on me.

Well, it's too late now. You're not going to get reimbursed for the years you paid for it, so I think we need to let go of that resentment. I can tell you're up in arms about this. I'd be frustrated too. And part of it is we weren't paying attention about what was happening with our paycheck. And so at least you know going forward,

I'm gonna be looking at exactly what's taken out of my paycheck. If something seems off, I'm gonna go to HR. And so you need to look into your own policy. Look at the contract and look at the waiver and go, what do I need to do to make this go away? You are sure and be the squeaky wheel I can tell Cindy is the squeaky wheel and the squeaky wheel is gonna get that grace

Yeah, I'd be sitting in the in HR every day just sitting there waiting That's what they tell me to do. They told me to go to HR now HR is telling me I have to go through the insurance company to cancel about well Have you have you called them up and said hey, I have this policy. insurance company to cancel it out. Well, have you? Have you called them up and said, hey, I have this policy, I don't want it anymore? Oh, yes. Yes, I have called. Today was probably my fifth call in the last two days.

OK, here's what you do. Keep a record of every single piece of communication, who you spoke to, what time, what they said, what document they said you needed, and get a next step. Regardless of who you talk to, say, OK, what document they said you needed, and get a next step, regardless of who you talk to, say, okay, what is the next step? Or what I do is I'd set up a meeting with someone from HR and in the meeting call the life insurance and say,

I want you guys to figure this out because you're doing the Spider-Man thing where you all point at each other, and I want this figured out now. And you set up that kind of a, I don't know, a group call that you can kind of a, I don't know, a group call that you can kind of sit through and watch what's going on and give everybody permission

to do what needs to be done on your behalf while you're sitting there. That's what I would do, George. And I did that today. And what happened? And they said they're gonna get back with me. I bet they will. I'd be having, I'd have a scheduled follow-up email

every two days until they finally go, okay, we gotta get Cindy off our back. Can someone just freaking cancel this policy? Yeah, this sounds like something that is set in place. Somebody in HR is like, this has never happened before. Nobody's asked. Like we should have asked her how big her company was. Oh yeah, nobody's actually canceled before.

So we don't know. You gotta figure this out for the first time. Yeah, but the truth is, I mean, let's actually canceled before so we don't know you got to figure this out for the first time Yeah, but the truth is I mean, let's talk a little bit about these kind of work life insurance policies You know a lot of people when you ask them, do you have life insurance? They're like, yes, dude, I have life insurance and it turns out they've got maybe 50 or a hundred thousand dollars Like their work Cindy she's got 80,000. That's not enough. No need 10 to 12 times your annual income Yeah And the purpose is for folks

who do depend on your income. If you've got kids, if you've got anybody that says, hey, if something happens to Jade Warshaw, these people were dependent on me making money. If that's you, then you need life insurance. And so, like George said, 10 to 12 times term life from Zander Insurance is what we would suggest. So if you don't have it, you need it today.

And for the price that she's paying, if you're a healthy person, you could probably get the same, for the same amount, get way more coverage is what we're talking about. So if you haven't done that, you need to do that today. Life insurance, for clarification, is not a baby step. It's not something you say,

when I'm out of baby step two, I'll do it, or once I hit baby step four. Life insurance is something that you get in place as soon as you find out About it if you are someone who needs it so that goes for Everything across the board right absolutely so don't just rely on your workplace because guess what you leave that job You lose that measly insurance you need insurance on your own separate of that jump on to Xander.com and get a quote It's super easy, and it's way more affordable than you even think. Yeah, way more affordable than you think.

Get that today. Hey guys, I've got a big announcement. George Campbell and I are bringing back Investing Essentials, our two-night virtual event deep diving into investing and real estate. Learn step-by-step how to get the most out of your 401k mutual funds and real estate. Learn step by step how to get the most out of your 401k mutual funds and real estate investments because there's no better time to get the clarity you need to invest with confidence. Watch live on March 4th and 5th. Get tickets today at ramsysolutions.com

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gift to your family. That's nokbox.com slash Ramsey. All right let's get into that Ramsey Show question of the day. Today's Ramsey Show question of the day is brought to you by Y-Refi. When the payment on your defaulted private student loan is as much as some mortgages, it's hard to get ahead. Oh, I know that's right. That's when Y-Refi can help refinancing to a low fixed rate loan that's built just for you. Find out more at Y-Refi.com slash Ramsey.

That's the letter Y, R-E-F-Y.com slash Ramsey. May not be available in all states. Today's question comes from Isaac in Maryland. Should I purchase term life insurance even if my employer allows me to purchase voluntary life insurance up to 500,000? Would a combination of voluntary and term life insurance be wise?

I'm 41, so if I'm going to get term life insurance, I would like to do it now for 20 years instead of waiting. It's a great question. We answered a very similar question just now. I know it. So yes, I would absolutely purchase a term life insurance, even if your employer allows you to purchase one. Oftentimes the employer one is very affordable, and so if you want to have that as a little bit of buffer gravy on top, that's fine, but I would definitely get your own term life insurance through Xander. You can jump onto xander.com and get that If you wanna have that as a little bit of buffer gravy on top, that's fine, but I would definitely get

your own term life insurance through Xander. You can jump onto xander.com and get that handled. And at 41, it should still be reasonably affordable. And you said you want it for 20 years, you can do a 20 year term policy on that and do a combination. You may not need the employer one on top of that. So you may just wanna go 10 to 12 times your salary

on your own and not pay for the employer one, unless the employer one is just such an incredibly cheap deal, it's like five bucks a month or something. Yeah. And what would you recommend George for like a stay at home mom who says, hey, I don't, I don't work, but I do provide value and people depend on me every single day.

This is a big one. Yeah. At least half a million dollars. At least half a million. Cause you think about, let's say $50,000 salary times 10, you're looking at half a million dollars. Because you think about, let's say $50,000 salary times 10, you're looking at half a million on the short side, especially now with how much childcare costs. I mean, you got to hire Mary Poppins to do this thing.

And so daycare alone, you talk about all of the things they're running and doing and chauffeuring around and cooking and cleaning and taking care of all of the household pieces. That has real value. Real monetary value. You need multiple people to fill that role. So you need to have at least half a million on a stay at home spouse.

So, so good. All right, we've got Aisha in New Haven, Connecticut. What's going on, Aisha? Hi guys, thank you for taking my call. So my question is two parts. I am on baby step two, I have a thousand dollars saved and now I'm trying to pay off my debt through the debt snowball. However, I'm 41 and my husband is 57 and he, well, he has no retirement, um, in

place and so I wanted to know if I should do the debt snowball and Put away for retirement and the reason I say that is because by the time we pay off our debt It'll be about four years. And so then I feel like I haven't put anything into the retirement Okay, and then my second question. I have a second question. Sorry My second question is I have a second question. Sorry. My second question is should I pay off my credit card, which is 5,000 with no interest for the first year and then start the rest of the debt snowball from lowest to highest or just do the whole debt snowball with my credit card. Yeah. card in situations like yours, you feel desperate, right?

Like it's just like, oh my gosh, the time is ticking. And the first instinct is let me let me get in here and we reweave this plan and make it better. What you think is better for your situation. But the truth is, I would work it as is. What are your debts? How much do you have? So with everything about 50,000 between the two of you. Yeah, so there's a couple of hospitals and then so that's no

interest with the hospital. How much is only interest we total I mean, I have a you know, maybe two, three, four, five, uh, like 5,000 total. Okay. So, so 5,000 from credit cards, 5,000 from medical. What else? No, from medical. So, so 5,000, yes, 5,000 for credit cards with 0% interest for the first year right now. Now tell us the medical. I'm sorry. Now tell us the medical. Go through and list them out. We don't care about the interest rates. Just tell us the amount. Okay so yes so roughly five thousand total in health medical, five thousand in credit card, and then I have tax bills. So tax? four thousand. Yeah, we owe back taxes.

Okay. So four thousand to the IRS. That's one of them. And then another four and then seven and then eight and then 13. Okay. Four, seven, eight and 13 all to IRS. Yeah. And then, then that's 1000, 2000, 3000 thousand in medical and then four thousand in credit,

which totals fifty thousand. And if I do it right, based on our income and snowballing it, I can knock this out in four years. Well, what's your household income? Will be like fifty something. What's your household income between the two of you? And I want them separate. Can you tell me what you make every month, what you bring home in your paycheck and what your husband brings home in his paycheck? So I'm a stay home mom, but my husband is self-employed. So we bring monthly is about 6,000. Okay.

And how many kids do you guys have? Sorry, I'm going through this. I just want to make sure we have plenty of time to help you. So we're just getting the particulars. No, it's okay. We have one child, one one-year-old. One one-year-old, okay. Okay, so when we're talking about the debt snowball,

let's go back to that right quick. These IRS debts have to go first, smallest to largest. They get a fast pass to the front of the line. They sure do, as lickety split. The other issue here is, okay, so your husband makes $6,000 self-employed. How many hours is he working a week? A lot.

Okay. All day. Okay. What kind of business is this? What is he doing? Contract in New York. Could he do contract work for someone else? Full-time and make more? No, he's self-employed. I know I'm saying could he make more working less for someone else versus on his own?

I don't I don't know. I mean he makes I mean, we're we're not I don't think we have an income, me too. Well, you do when you look at the debt. You do when you look at the debt, because if it was just, hey, 6,000 bucks a month, we're debt free, our living expenses are fine, then yeah. But in this case, we gotta get this done in faster than four years,

is what George and myself are getting at. Because to your point, you're on a timetable. Like you gotta get this thing zoom zooming. Yeah, what you're saying is I can only throw a thousand bucks a month at the debt total. Yeah, what's your living? How much does it cost for where you rent

or where you are you renters or buyers? Okay, so if I do, because I did all the math out. So if based off of one expenses, so the house is paid off, I can put, yeah, about 1100 to each debt. So 11, so if I did the highest amount, 13,000, then yeah, I can put 1175. Can you go back, Ayesha,

did you say the house is paid off? No, no, no. What did you say? No, we owe a mortgage. Okay, what's the mortgage and what's your... $2,800 a month. $2,800. So half of his income is going to the mortgage. Yeah, just about, yeah.

Yeah, because when you add in probably HOAs, taxes, insurance, everything like that. We don't have HOAs. No HOA, okay. Here's the deal, he doesn't have money to throw retirement anyways. Total monthly is 2,800. You guys are paycheck to paycheck. No.

And so throwing a little bit of some pennies into retirement is not gonna solve this problem. What will help you retire with dignity one day is at least being debt-free and you having a lot more timeline to go back to work. You're gonna need to do that eventually unless he gets his income way up. Yeah, well, my plan is to go back to work. You're gonna need to do that eventually unless he gets his income way up. Yeah, well, my plan is to go back to work once

he's a little older. How much? So about five years from now. See, that's, I don't think you guys can float a mortgage that's half of your income for five years and tackle the problem that you have here. Like your timeframe is tight. Can you tell me how much the house is worth?

Like if you were to sell it, would it bring anything? Yeah, it's up to five and we owe 300. Okay. About 300, 300,000. I don't know how to do that. So maybe if you sold it, you could take home 170 or somewhere in there. Yeah.

I could knock out your debt and you could rent for a while. I might consider that. You can sell a house. I would consider that because the truth is your timeline is really tight. Your husband is saying he's not gonna wanna work much longer, which I don't know how much I agree with that.

I don't think it's a choice he has. He's gonna have to work until his body says no. Yeah. And if you want to be a stay at home mom, that selling that house and getting it right sides with your income is what you're going to need to do. George budgeting is such a huge part of the foundation of everything we teach here, right? We teach the seven baby steps and a big part of that is saying, okay, you've got to get on a budget.

And for a lot of folks, they start working out their budget and they run into a couple of walls that they're not quite sure how to overcome, which is completely normal. And so one of my favorite things we do here are a budget breakdown where you send us your budget and we're able to kind of talk you through it. And so Tyler did that. He's from Tacoma, Washington. He sent us his budget and said, Hey, can you guys help me out? Tyler, you're on the line. How's it going? It's going good. Thanks for sharing your budget with us. Running a business is freaking hard. It's easy to get caught up in the daily challenges and fears that keep you stuck.

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the essential guide for every business owner like you that wants to grow yourself, lead your team, and scale your business. To reserve your copy go to ramsysolutions.com slash store ramsysolutions.com slash store. Of course. Okay so I'll kind of, George has got your every dollar budget opened up and I'll kind of go down the line and we'll talk through it and you tell us if we've got it wrong or if there's something that we need to know but for right now you're telling us you're 21 years old you're in the Air Force? Yes ma'am. Okay cool married with two kids at 21 wow. Yeah. How old are the kids?

Uh first one is uh 18 months about to turn 19 and the other one just turned a month today. Oh man, you're in the midst of it. Wow. So you're bringing home $63,000. That equates to $4,754 that you see in your paycheck every month. Is that consistent?

Roughly, yeah. Oh yeah, pretty consistent as long as they don't have a government shutdown or nothing like that. Yeah, true that. Does consistent as long as they don't have a government shutdown or nothing like that. Yeah. Okay. Does that include like a housing allowance or do you get one? It does, but it doesn't. So the housing allowance is tax free. So it's roughly 52,000 or 5,200 a month because the housing allowance is not taxed.

Okay. Okay, so, but that's not, obviously that's not, you said it's $5,200 a month? Yes. So that's not included in the 4,754 you told us? Oh, well, yeah, I guess. I don't know. It's kind of hard to track down because it's, I was like, oh shoot, forgot to include

the zero tax part for that. What ends up in your bank account is 47.54 every month? Roughly. Okay. Now I see here that you don't have any debt. You've got about 5,000 in savings. Roughly. Okay.

And I see if you can, I'm looking at the every dollar budget, you are 73 bucks over budget every single month based on all of the expenses you laid out. So you are definitely living paycheck to paycheck. In fact, you're in the red a little bit. Does that sound right? Yeah. Yeah. It's pretty rough. Pretty right. So let's help you out here. What is your next goal? It looks like your savings is low. Cause if you're in baby step three, you, we need to fully fund the emergency fund. Correct. Yeah.

And if I see this right, you've got 200 going into savings, but you're also, you skipped to Baby Step 4 and you're investing 248 a month. Is that true? Yeah. So what I was doing is that, um, uh, the military matches a Roth IRA and I was just trying to get to the match. So, uh, pretty much, uh, since basic training, I've put all that money away and I've never trying to get to the match. So pretty much since basic training, I've put all that money away and I've never really seen it. So I kind of thought it was as a- Okay, if I told you,

you could be a multimillionaire at 21 if you just follow the baby steps, would you believe me? Probably, yeah. Okay. I've listened to the show, but that was a new holograph office. So what if we pause your investing to get you some financial foundation?

Cause that'll free up 248 bucks that can now go toward that emergency fund, because at this pace, it's gonna take you two years to get a fully funded emergency fund. That's too long. That's right. So that's some money right there we can free up. So what I'm gonna do is I'm gonna move that to zero

when investing and add it to your savings so that you now have, was that 448, going to savings. Tracking? Okay. Now we still have to find some more room. We're still 73 bucks over budget. So, Jade, look through the list here of the expenses. I assume your income can't change. You can't do anything over time. You can't get side jobs. How much flexibility do we have on the income side? Actually, for my career, I can start doing like a basically extra thing and if I so it's a called flying crew cheese basically okay that's what I am I'm a

mechanic on a big heavy aircraft right what can you make do if I'm in a 21 day trip I can make roughly two grand in that and how often can you do that as much as they need me but I have to get to that point, if that makes sense. So I don't know exactly when that'll start, but that's something I could possibly do. Is it a month away or a year away? Probably less than three months away. Okay. Okay.

So we'll just for this sake's budget, we're not going to include that, but that could be a game changer going forward for your next goal. Yeah, it could be because honestly, when I look at your budget, the thing that stands out to me is your rent. And again, I'm not quite sure exactly how your housing allowance is working into this, but all I'm seeing is you're bringing in 47, but then your rent coming out is almost half of that at 23. And so that feels very, very high.

I don't know. Are you on base or what is that? Yeah, I'm on base housing. That's kind of a fixed thing. I can't fix that or I can't change that at all. And I kind of look at the present cons of living on base versus off. So like there's free security.

I don't have that off base and it's kind of a sketchy area to live off base. Got you, okay. That is an area that's gonna be tough because when it's almost half your income, your margin is just so low at that point. So that's one area. What about gas? We're actually pretty good. We use probably a hundred bucks per vehicle. So I have two vehicles, so a hundred bucks every two weeks. So per vehicle. So it's 400 a month. That's what's in

the budget and there's not much we can do there. Are you driving a lot or is it more your wife? That's what's in the budget. Yeah, and you there's not much we can do there. Are you driving a lot or is it more your wife? It's not really driving a lot. It's more I got a Nasty truck where it's got a big old turbo on it and likes to drink fuel. Oh boy. Can we get rid of the truck? Yes, we could but I'd rather not how much Wait a minute now You just made Jade angry. No, I'm not mad. I just, one of the things that you'll have to do, we were talking about this in an earlier segment, at some point you're going to have to look at this and go something has to give and it's

not going to go. If you want to get this budget right side up, you're going to have to hold everything very loosely in order to do that. So tell us more about this truck. I'm going to pull that string a little bit. What's it worth? What do you own on it? I don't So I put I bought it for four thousand dollars Back in what 2017 and now it's probably worth about 15 With everything to it, but like I said, there's a lot of work into it that I've done It's not like I brought it to a shop and did it, so. Sure.

It's a very sentimental thing, if that makes sense. It was me and my dad's project, so. OK, I understand. All right, all right, all right, all right. What else can we, so we can't really move the income, we can't move the rent, but I see a bunch of bills here that can go, who's watching all this cable? Yeah, that's my, that'd be my daughter.

She likes to watch certain shows and it kind of sucks because it's on multiple things if that makes sense. But I was also thinking about just dropping a couple of those. Well, you got 47 bucks in subscriptions too. So you got $88 going out in cable and subscriptions. Listen, they have Cocoa Bellen on YouTube and it's free. My daughter just watches old Barney clips on YouTube. Yeah.

So that's a much cheaper option. Yeah, I would tonight. We just got her into the old Sesame Street, which is pretty good. Yeah, tonight I think cable and maybe keep one subscription just so you're not completely in the Stone Age. But I dropped that.

I mean, that's finding you almost 80 bucks right there. Right. And then the phone bill, you guys have two cell phones? Yes we do. Are the phones kind of being financed through the plan? Because I see that it's... No, no, they are, everything's paid off, there's no debt at all. Okay, who's the carrier? Because you are overpaying for two phones.

It is T-Mobile. All right, you're paying 65 bucks a pop. I would switch to a budget friendly carrier like Telo or Mint or Boost and reduce that down to, you could get that down to 50 bucks easily. Right. Which would save you a good, what, 80 bucks? Just by doing that this month.

80 bucks a month freed up just by doing that. Yeah, but it's in the greenish. So give me a sense of where we're at, Tyler. Now if I cut your phone bill down to 50, right, and I cut, let's say we can cut cable and we just keep one of the subscriptions and we cut a few of the subscriptions, we get it down to 30 bucks for subscriptions, now instead of being 70 something bucks in the hole, you're 63 bucks in the black, just by doing those few things without changing your rent or your income. So I feel better about this already.

And on top of that, have you reshopped your insurance lately? Your renter's insurance, your auto insurance? Yeah, I did. And I did find the cheapest one out of all the names. So okay. There's not a whole lot else here, Jade. I mean, groceries, you're feeding four people. Yeah. That's like 800 bucks in today's world. The only thing your wife could do is she could

get together with maybe some other wives on base and say, let's create some sort of a co-op that I take you guys as kids, you take my kids and I go work and you go work and you figure out times. She's actually going to school right now to become a teacher so that's what we're working on. Okay good listen you guys... We're about two years out for that. You guys are young and you are in the thick of it right now and I think the horizon for you guys is good. I think if you do what George said you'll make a lot of changes but this is going to be slow going for you guys. Just don't give up. It's that time again folks, tax season is here. I know some of you would rather bury your head in the sand until April 15th than face your taxes. But here's a better idea. If your tax situation is complicated, get in touch with a Ramsey Trusted Tax Pro today.

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George, what do you wanna say about this? Cause you're part of it. Oh my goodness. Well, number one, I make it fun. And so I'm the proxy for the audience. Last time, just so you guys know, I got punched by Dave and he threw a chocolate chip cookie at me.

I remember. So, you know, it sounds like nerdy and boring, but we really bring it to life. He was trying to get that gluten on you. That's right. I remember that. I miss me with that. But really we answer your questions.

So you could submit the questions live via email and I'm taking them live. We're sorting them and going, hey, this one's really gonna help a lot of people out there. And so I'm getting a lot of these questions in my DMs. Hey, I don't even know where to get started. Or, hey, I'm in baby step four, but is there more? Or, hey, I'm in baby step seven.

What can I do beyond the baby steps? We go really deep, more than we ever have on this show. And it's a really good time. You're gonna walk away with a lot of value for just less than 200 bucks to get five hours of coaching. That's legit. I know, that's right. And it's live.

Like it's you guys in real time. It's not one of those canned things that they just air over and over. You know how places will just air the same thing over and over. No, this is live in real time. You're getting Dave and George at their finest moments. And you have seven days for the standard ticket

of 109,000 bucks. You have seven days to access the recording. And so if you want to go back, listen to it again, take notes, if you missed it on the night it was live, don't worry, you have access to it. Go check it out. RamseySolutions.com slash events. All right, let's get back into your calls.

But before we do, just remember after this hour, if you want to keep watching the show, you'll have to go into our Ramsey Network app in order to finish it, unless you're on radio. So if you're watching right now on podcast or watching on YouTube, just know that the Ramsey Network app is where you go if you wanna watch the rest of the show.

If you need that, you can just download it for free using the link in the show notes, or you could just search Ramsey Network in your app store. And that's how you do it. Of course, if you're on radio, just stay where you're at. All right, let's go to the phones. Logan in Philadelphia, Pennsylvania. What's up, Logan?

Hey, how are you guys doing today? Doing good. How can we help you? Yeah, I just had a quick question. I'm currently, I'm only 19 years old though. I'm a real estate agent just right out of high school. Didn't bother with college. And last year I made just a little over 50 grand. This year, so far, as long as it keeps this pattern,

I'm projected to make right around 80. And I've always been a frugal person throughout life and I just wanted to see what you guys thought about taking a trip to Thailand. I've always wanted to go. It would cost right around 3,500, four grand and you know just spending that much money on a vacation seems strange to me. Well how'd the idea come about of Thailand? Thailand's great, by the way I've been. It's a bucket list place. I had a family go there and they all love it. You know, I always see pictures online. People love it. I've had friends go. So just kind of from word of mouth, I've been all over the Bahamas numerous times. It's just, I've never been anywhere in that part of the world.

Well, let's see, can you afford it? I mean mean you're making the projection is 80,000 a year. What's your living situation? So my living, I'm actually currently still with my parents. So you know, I don't have many expenses other than lifestyle. You don't have any debt? I'm not in debt at all. No, well I do. My parents, they helped me invest in real estate.

So I have a loan out with them. It's for a duplex though. Their plan is they are, like I have a mortgage through them. They're gonna forgive that instead of, usually for my siblings, they pay for college. They're just gonna forget that in a couple years once I move in. So I don't really consider that debt.

I'm still paying on mortgage. I have tenants in there that pay it. What would make them not forgive it? It sounds like there's a stipulation here. No, there's no stipulation. The reason why they have it so they'll pay it off just in a couple of years is because I'm not going to college. They paid for all my siblings' college.

Okay, so they have the money to pay off this mortgage? Yes, yep, yep, they're very well off. Okay, so they basically bought you a house as a kind of a gift instead of funding college. They went, hey, if you wanna get into real estate, you're doing well, we'll just go ahead and still give you that money in a different way. That's cool, what's it worth?

Yes. Let's see, I bought it well. I bought it at right around 240 and right now I could get it for, so it's probably 330. Okay. And you would rent out one half and live in the other? Yes.

Okay, how much money do you have in savings right now? Savings right around 40 grand. Whoa good. All right, and what's the plan to move out? The plan currently I just have a girlfriend at the time or right now, but most likely within next 18 to 24 months Okay, why so long? You know, I just think I'm still young. I'm 19. I have a few older brothers and they all still live at home. So I mean,

If you're old enough to buy a house, you're old enough to move out and live in the house, right? Yeah, no, that's right. Who's living in the duplex now? I just have tenants in there on both sides. Who's getting the money? I am. I'm cash flowing.

I'm paying them a mortgage. They have amortized over 30 years. I'm still paying one, though they're just gonna forgive the rest, whatever is remaining. So you're gonna kick out a tenant to live in one of them? Eventually, yes. So, okay, let me, I'm just, sorry.

We're gonna answer the Thailand question, but I've got a lot of interest in what you're telling me. So right now there's two tenants in the duplex. Who has the short, like who's, let me ask you this. Like obviously if they're good tenants, you're like, I want to keep them in there, but you're also paying for it. So that doesn't leave a whole lot

for you to go rent somewhere. Is that where the problem is? The problem is I'm just, usually when I put money into savings, like this 40 grand, I never touch it. So, you know, it's very strange to me just to pull out a few grand for a vacation when I'm so used to just bashing money away. Got it.

Here's what solved this for me, Logan. Let me unlock this for you. You need to label your money. Right now, it's just labeled savings. It needs to be labeled Emergency Fund High Yield Savings, Vacation Fund High Yield Savings, Car Upgrade High Yield Savings. And that way, there's no guilt when it comes to what this money is for and should be spent on, you've gotta label. So an emergency fund for you for six months, right now doesn't even really make sense because you don't have a lot of expenses.

But let's say it's 25 grand. That leaves 15 grand of money you can assign to whatever task you want. I would say, all right, we're gonna take this four grand vacation. The other nine grand we're gonna put as a car upgrade fund or a home maintenance sinking fund for the duplex, whatever you want, but I would say, all right, we're gonna take this four grand vacation, the other nine grand we're gonna put as a car upgrade fund or a home maintenance sinking fund for the duplex, whatever you want. But I would label them and put them in separate accounts

to help solve this in the future. Okay, yeah, that makes perfect sense. Short answer, enjoy the vacation. You're doing very well for your age, you've done a great job, stay out of debt. And I would move out as soon as you can because I think you have a maturity beyond a lot of older callers that I talk to.

Yeah. And there's the kind of the comfort crisis vibe. You know, Michael Easter's book of, if I'm in mommy and daddy's house and I'm living rent free and I'm making money from my tenants, what real benefit is there to ever move out? I know.

Keep me here in my warm cocoon. You know what I mean? Yeah, but he needs that feeling of rent cocoon. You know what I mean? Yeah, but he needs that feeling of rent is due. You know what I mean? You need that feeling of I need to buy groceries. I need that urgency. Gotta go find some problems. Yeah, and especially if he wants to be in real estate.

I mean, have a time where you're a renter so you know what it feels like. Learn what that feels like. So I think that'd be good for him. He is the renter and the landlord. You know. It's gonna be an awkward phone call when the HVAC goes out.

Hello, hello. But what he's talking about, I've heard from a lot of folks who are in the baby steps where it's like, okay, I finally got into baby step four, or I finally got into baby step seven, and they're just worried about, can I spend my money? Is this too crazy?

Is this lifestyle creep? Am I going off the deep end? And so I felt that way as well And so I kind of came up with five pillars that if you can check green on chances are you can say yes hit me So number one if you're a person who lives on a budget like no matter what even if you're in baby step six You're still on a budget. You're still doing that. Are you a person who's out of debt and staying out of debt, right? Yes, I am. Do I carry the proper insurances? Am I you know doing my coverage checkup yearly? Yes, I'm doing that. Are you a person who's out of debt and staying out of debt? Right? Yes, I am. Do I carry the proper insurances? Am I, you know, doing my coverage checkup yearly? Yes, I'm doing that. Okay. Am I a person who's saving for the future? If I'm baby step four,

I'm continuing that process. Yes, that's a green light. And is generosity a priority in my life? That month to month I'm practicing that? Yes. Chances are if you're hitting green on all those, when you're beyond baby step four and above, that is a green light to go, yeah, I can take this trip. I can do this fun thing. I can buy that couch. You're doing all the things that make you a financially responsible adult,

and it's good to remind yourself of those things from time to time. Music The right questions are the key to unlock personal and professional potential. That means if you're not where you want to be, you are not asking the right questions. I'm Ken Coleman and this is what my new show Front Row Seat is all about. Over my career I've had the distinct privilege to interview successful people from all walks of life and to coach over 10,000 professionals who wanted more. What sets successful people apart is a never-ending desire to learn and grow. Each week I'll be joined by industry leaders and world-class experts to have a conversation about how to get better, move up, and lead well in work and life. But the best part of this show is you

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