The Ramsey Show - Your Financial Stupidity Has To Stop Today!

Starting point is 00:00:05 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fair Winds Credit Union Studio, this is The Ramsey Show. Rachel Cruz, Ramsey Personality, number one bestselling author and co-host of the Smart Money Happy Own.

Starting point is 00:00:29 My daughter is my co-host today. Open phones here at AAA 825-5-225. Shelby is in Springfield, Missouri. Hi, Shelby, how are you? Hi, I'm good. How are you guys? Better than we deserve. What's up? Well, thanks for taking my call. I'm calling today with a bit of a moral and financial question,

Starting point is 00:00:52 and I'm calling to see what is the best way for me to help my husband pay off his credit card debt that we have discovered recently. We have discovered. What does that mean? Well, you have discovered. Yeah. I found, unfortunately, I found some screenshots of sports betting, and he ended up having to come forward with three credit cards that added up to about $17,000. And unfortunately, this isn't the first time that the last time I didn't find it,

Starting point is 00:01:30 he came to me and told me about it, but this isn't the first time we struggled with credit card debt. Was the other time regarding sports betting? No, it was not. The last time his company had used his credit card on a trip, and they paid him back, and he just never paid the card off. He just spent the money. How old are you guys? So we're 25.

Starting point is 00:01:53 How long have you been married? Going on four years. Okay. All right. I'm so sorry, Shelby. What's his reaction to having, lost $17,000 of the family money sports betting? Well, he was hiding it for me for a really long time.

Starting point is 00:02:14 And then when I found it, I grabbed our two babies and I got in the car and I left and I told him to fix it. And we came back pretty quickly, but he's doing great, honestly. He's got two jobs. He's working a full-time job during the day and then a job in the evening, a part-time job in the evenings, and he's been working his butt off.

Starting point is 00:02:38 I found it about six months ago, so he's been working his butt off for six months, and he's got three cards down to one, and there's still quite a bit left on it. Okay, so it was originally $17,000, or now it's $17,000? It was originally $17,000. Now he's got it down to under 15, just under 15. Okay.

Starting point is 00:02:58 But in six months, he's only paid $2,000 of it? Yeah, because of the issues that we were having, we were really behind on bills and payments. And so we spent a couple months catching up. And then we had just a couple things. Our hot water heater went out. We got in a car accident. We had to go get a new car. There was just a few things, those first couple months that took up the extra income that he was starting to bring in.

Starting point is 00:03:30 Shelby, when you just mentioned that you guys were behind on bills, were you aware of that? Or did that come out with this secret credit card and the gambling and everything? Yes. You did not. I was aware of how short. So he was actually unemployed at the time. I was the only one bringing in income. I work from home.

Starting point is 00:03:48 And usually I work from home and I keep our kiddos. But he was in between jobs. And so I knew we were short. I just didn't know how short we were. and I didn't have access to the bank account. I used to, but I just had logged in and so long that... What does he do for a bank? Well, right now, he works out of school,

Starting point is 00:04:11 and then in the evenings, he works a retail job. At a school? Yes. Doing what? So he does... He's a teacher's aide at a school. Okay. All right.

Starting point is 00:04:27 So part of the reason I'm calling is because I was approached by my in-laws, and they were kind of telling me that it would be better for us all around if I just took out a loan and we paid off the card because the interest on this card is over 30 percent. And they said if I take out a loan and cover it and then we just pay back the bank with a lower interest rate, it was all around. I make 50 a year. And what does he make? Now, within the last few months, he brings home with the two jobs combined about $4,000 a month. Okay. So you've got about $90,000 coming in.

Starting point is 00:05:12 And you said you bought a car in the middle of this? Did you take out a car payment in the middle of this? I actually have just recently found you guys, and I just realized how dumb that was. Okay. But we got the car. how dumb it was. You were behind and you had a 30% credit card and then you went and took out a car payment. You already knew that. True.

Starting point is 00:05:34 So how much do you owe on this stupid car? We've got 30,000. Okay. All right. Okay. So there's a lot of things that need to happen here for you guys to get healthy financially and relationally and career-wise. There's a whole lot of negative things going on in this house. And the 30% loan interest on the credit card is not your preference.

Starting point is 00:05:57 problem. It's the symptom of all these other problems. So what would I do if I woke up in your shoes? Well, I do a lot of different things. The first thing is, is the two of you are going to start an every dollar budget tonight on our app, and we're going to give you a free trial on it so you guys can put it all together, and you're going to lay out exactly where every dollar of your income is going to go this month before it comes to you. You're going to have a plan for every You're not going out to eat. You're not going to see the inside of a restaurant unless you're working there as an extra job. You're not going on vacation.

Starting point is 00:06:33 You're not doing anything. You are broke and screwed with your money. And you both have got to lean into this and clean it up as fast as possible. Okay. That's thing one. Thing two is with your marriage counselor, you need to get commitments from him that he's never, on threat of ending your marriage going to do any

Starting point is 00:06:57 sports betting ever again and he's never going to hide any debt from you ever again. And we're going to be working together so it's going to be very difficult for him to hide anything because we both are going to see every single thing that's going on.

Starting point is 00:07:12 Yeah, and pulling credit reports every year. You know what I mean? And I would almost have him. I mean, I don't know how engaged this is because that, I mean, the sports betting world, it can be such a downward slope so fast. But what I would be wondering, Shelby, too, maybe you guys have talked about this. I just want to make sure that he's healthy in that way,

Starting point is 00:07:30 that there's not some level of addiction there. And that itch he was trying to scratch, that excitement that he was doing sports betting. Like, what is that about, right? So, like, that doing that work in the marriage counseling office is big. Could be that you were behind on your bills and he was trying to make some money fast to get the bills paid up. That's true, too.

Starting point is 00:07:48 You could have been desperate stupidity. Yeah, yeah. Okay. So I want a solid foundation laid the things he's never going to do again, and the two of you see every single dollar every month for the rest of your lives. Neither one of you are in control. Both of you are in control. Okay. Lastly, you need to sell the car. That was suicide. You put a bullet in the gun and put it to your head. You need to sell this car immediately. Stupid on steroids. You cannot afford a third. $30,000 car. You've got to get rid of this now. Oh my gosh, girl. That makes his sports betting look smart when you put it up beside this car.

Starting point is 00:08:32 Oh, my gosh. Neither one of them are smart. Oh, I hate them too. And who's the number one victim of sports betting? 25-year-old males. You got this, shall be you guys. You got this. When you're drowning in credit card debt and collectors start threatening lawsuits,

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Starting point is 00:10:11 Attorney advertising, results may vary and no specific outcomes guaranteed. Christina is in Nashville. Hi, Christina. How are you? Hi, Dave. Thank you so much for taking my call today. Sure. How can we help? So I'm going to do my best to get through this without crime. I am 46 years old, and my husband and I were married for 27 years, and he passed away. Suddenly in a motor vehicle accident this past June.

Starting point is 00:10:53 Oh, my gosh. I'm so sorry. So we have been Dave Ramsey fans for a very long time. I homeschool, and we're actually graduating our last child this May. Wow. And they've all been through, you know, financial peace university. Wow. So the question that I have is I'm looking to probably having to go to work this summer now with the loss of his income.

Starting point is 00:11:19 and just, I feel like with my age, it's probably the most responsible thing to do. But I do have some life insurance we received from his employer who was a, he was a Franklin firefighter. And then we also had a personal life insurance policy. And he was never super trusting of investing. And so I don't really have a lot of experience with it, but I have a family friend who's a financial advisor. And so he suggested that I invest like $100,000 back in October just to start kind of learning on.

Starting point is 00:11:58 But, you know, a lot of people say not to make any big decisions for that first year. And so I'm coming up on that year mark and needing to start making some decisions about, you know, going back to work. And, well, it's not really going back to work. It's really going to work full time for the first time. Yeah. So I'm just a little. need some reassurance that, you know, the markets right now are a little scary, but... Markets are always a little scary.

Starting point is 00:12:26 How much is the total life insurance process? The total was $500,000. And right now I have $100,000 invested in mutual funds. And then I have the other $400,000 in a high-interest account. Do you have any debt? We have no debt except for the car that he actually bought me just before he died. How much do you owe on the car? 20,000.

Starting point is 00:12:58 Okay. And you don't owe anything on your home? No, we actually paid our house off in 2015. He was in the Army, and we did a lot of house flipping when he was military, and we're able to just keep getting more and more for equity. I did the work all ourselves. So, wow. Well, it's, I mean, it takes a year to even breathe well. And you're just now getting where you can take a deep breath. And so you've been very wise and very careful, good for you. And, you know, you've walked with this last child through the graduation, which is getting ready to come up here and a lot of milestones and a lot of tears. So, yeah, I think your family friend gave you some good advice to dip your toe in the water and kind of get used to it a little bit with 100.

Starting point is 00:13:56 That's not a bad idea. And the second thing is there's two things that come to mine immediately. One is pay off the car today. Okay. You don't need to be carrying a car payment, not when you've got that money. So you should take a little bit of that money out of that high yield and pay that car off today. Okay. that's easy.

Starting point is 00:14:15 Okay. You're not going to regret that, and very few people would say that was dumb. Okay? Yeah, that payment has been like choking me every month. Exactly. Exactly. Exactly. Now, when you start your career, what's your plan there?

Starting point is 00:14:33 I'm hoping to get into some sort of a high school counselor for homeschoolers, potentially. I do have some background with working from home. is in medical transcription, so I could possibly even do just a medical office. Okay. With what you've investigated so far, do you think you can make enough to live on without touching this money? I think so. I think if I can get something that were to pay about $20 an hour, I think working full-time

Starting point is 00:15:05 I could do that. I do get a small pension, which is about $500. How have you been living during this year? So we had some savings about 50,000 is what I have in there right now. And so I get Social Security survivors for my son, and that will end in May. And that's where my biggest stressor is, is that $1,800 is going to go away. And that's really been what's kind of been carrying me so that I don't have to really dip into our savings or... Well, I would make plans to create an income large enough to at least...

Starting point is 00:15:43 live on as your first stage and then your second stage create a career for this next phase of your life for you. So, you know, what do you want to be when you grow up? You know, I mean, this is, this is chapter two. It isn't a chapter you wanted to write, but it is chapter two. And so, you know, let's make, you know, not just survival, let's go flourish. And, you know, that'll be part of your healing and process and everything. Yeah, and the wild thing, Christina, is just like high-level math. Kind of, it's that, what is it, the rule of 72, that your money doubles every seven years. And so, you know, the 500,000 and seven years will be a million if you don't touch it.

Starting point is 00:16:29 And then in 14 years, it'll be two million, right? So if you could find something that you really could put your heart in, that you're passionate about, that you love, that you're good at, you have a good work environment, you're excited to go, right? and you do that for the next 10, 15 years, this money's going to serve you really well at that point, right? You know, you're going to get into 65 and have two or three million dollars if you watch what you're doing. Now, that assumes that the money is invested better than it is now, and that's what you're calling about. So let's go finally to that, okay? Now, when you're investing, it's, I always think about the very first time I got behind the wheel of a car. and my dad told me to push down on that to go and push down on that to stop, you know,

Starting point is 00:17:16 and I didn't know what I was doing, and I wasn't very good at it, and I threw gravel from the driveway up against the house and everything. It's spinning the tires, you know, everything. But that didn't last long. That was a five minutes of that level of inexperience. And then within 10 minutes, you know, we're learning a little bit. And then, you know, obviously by the time you're. 16, you're driving the car on the road and passing a driver's test. And, and, you know, now I'm

Starting point is 00:17:46 65 and I don't have wrecks. And so, you know, I mean, you know, so what's that mean is the first time you do something, it is natural and wise to be fearful. That's normal. But it doesn't mean it's bad to learn how to do it. The first time you rode a bicycle. But then when you were teaching your children to ride a bicycle, they were afraid, but you weren't because you could hold the seat for a minute, number one, and then number two, when you let them go, you knew they weren't, you know, their life was not going to end. They were just going to fall over maybe, okay? Now, they may act like with a drama, but, you know, but still.

Starting point is 00:18:24 So this is like that your financial advisor is holding your seat for the first 100,000 here going, and then as you learn more and personally, emotionally experience more of the markets going up and the market's going down, then you're going to get to used to riding a bicycle. You know? And so I would have you learn as fast as you can learn and get comfortable by sitting with the financial advisor that you're using or getting a smart vester probe, the Ramsey Solutions.com, because they're going to have the heart of a teacher. Whoever's helping you with your money must teach you. Okay.

Starting point is 00:19:04 You must learn. And it's not complicated. That's the good news. It's because in that knowledge is going to give you comfort. And high level that he just put $100,000 of mutual funds. That's good. Was that your, was that you, Christina, saying that? No, no.

Starting point is 00:19:22 That was, yeah, that was his advice. And that's great. So it's those types of accounts of diversification that you want, Christina. You always want to stay away from anything, single stocks or something new like crypto or something like that. You want to something that is very diverse. So index funds, you know, ETFs, good mutual funds, anything in that category is really going to be a safe bet overall. Just gets you some good growth stock type mutual funds, but learn about the fund that you're putting the money in. Like has it been open since 1932 and in the last 27 years, it had two down years and 25 up years?

Starting point is 00:19:57 That gives me a lot of comfort. Oh, okay, that's a track record I can relax with. If you run a business, you already know this. bad information leads to bad decisions. And right now, AI is everywhere. But AI is only as good as the data behind it. The best AI is built on the best data. That's why I recommend NetSuite. NetSuite is the number one AI cloud ERP and more than 43,000 businesses run on it, including us here at Ramsey Solutions. Their AI isn't bolted on, it's built in, and it connects everything that runs your business, accounting, inventory, customer data all in one place.

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Starting point is 00:22:21 listening to this show. So check it out. Don't live normal. Normal sucks. Go start every dollar for free in the app store or Google Play. Stephanie is in Olympia. Washington. Hi, Stephanie. How are you? Good. How about yourself? Better than I deserve. What's up? I am calling to ask your advice on if I should keep working my part-time job in order to pay off our debt faster,

Starting point is 00:22:49 or if I should stick to my plan of quitting my job probably in the next month so that I can focus on being a stay-at-home mom and homeschooling our kids. Was this the original plan? Is this what you were working towards? Are you already homeschooling? I was homeschooling. This year we put our kids in because we moved at the end of August. So it was a bit too chaotic and we stopped homeschooling and put them in school. I work remote so I'm at home. But yeah, the original plan has always been that. I'm sorry, if you work remote and you're at home and it's part time, how many hours do you work at home? Probably 12-ish a week. And I'm on salary. Why does that prevent you? from homeschooling. It doesn't. It doesn't. I just, well, I'm pregnant right now. I'm 17 weeks pregnant with our fourth child. So it's more managing the home, homeschooling, being able to focus on that. I kind of hit a point where I felt like I'm being pulled too many different directions, which is partly my own doing. I do a lot. But this is the first time my husband just got a new job.

Starting point is 00:23:58 So this is the first time that his income is like pretty settled, like he's in his career, it feels really good. Good. And I feel like I'm working. Right now he makes about 47 an hour. So I think our take home, we don't know. He just got the job. But I think our typical take home is going to be around 83 to 85,000.

Starting point is 00:24:20 Yeah, that sounds right. Okay. Good. Yeah. And how much debt do you guys have? What was the question? How much debt? How much debt?

Starting point is 00:24:29 We have about 28,500, not including, our home. On what? We have a personal loan for $14,500 that we used to buy him a car. This is about a month ago and to pay off a little bit of credit card debt. And then we have one credit card that has about $12,400 and the other one that has about $300 on it. And then we own a rental home as well. So we owe about $257 on that. If you sold that, what is that worth? Probably worth around 360, depending on what the market does over the summer. If I had three kids with one on the way and I don't have time to work three hours a day, I don't have time to manage rental property. I'm going to sell that property and use that money to clean up everything.

Starting point is 00:25:25 Okay, off the debt, yeah. And, Stephanie, could you work through this? That's been my husband's plan. Yeah, I'm on board with him. I would do that because that'll take stress. off you guys. And then that gives you the ability to stay home with no bills. And here's the other thing. And I would work for this. You also have to stop being inconsistent in your approach. Okay. Here's what I mean. Dave, we've been working hard to get out of debt.

Starting point is 00:25:45 Two weeks ago, my husband bought a car on a loan. Yeah. And then he last weekend. Hello, that doesn't come out of the same mouth, does it? Yeah. And then he also went and bought a mower this last weekend for like 1,200. So I forgot that one. We also have that. Okay. The stupidity has to stop. Otherwise it's going to bleed out. Yeah, I think my struggle is that I feel like with our income, he thinks, well, we'll just sell the rental and we'll get out of debt, but I've just watched a sort of pendulum. Like, we'll do the first three.

Starting point is 00:26:12 Selling the rental and getting out of debt is only smart if you stop borrowing money and buying crap you can't afford. Yeah. So it does not justify him buying a mower and a car. Yeah. So you guys have other issues that aren't just debt issues here. The two of you need to get aligned on where we're going to spend our money and that we're not borrowing money anymore, period.

Starting point is 00:26:36 Yeah, and I think that I'm more on that side. I know, I can tell. Well, eventually we'll get there. No, no, you're not either. I'm a spender, too. Honey, you're not going to eventually get there. She's saying that's what her husband is saying. Yeah, so Stephanie, what I would do tonight is I would have you two sit down,

Starting point is 00:26:53 put the kids down, and just say, hey, where do we want to be in two years? What's a perfect world for us in two years? Okay. Perfect world is we have no debt. we have very little stress financially because he's making a great income. We're budgeting it together. We have goals. Your home, homeschooling your kids. You got a two-year-old at that point running around. Like you guys need to paint a picture of where you guys want to go because here's the thing. Here's what the red flag, honestly, during this whole call that got me that I'm like, well, crap, it's the $1, the $1,200 mower. So to me, that's saying that this isn't a big expense like we need, not that a car loan is justified. But I can see how people like, my car broke down and I panicked and it was in crisis and we needed a new car. that was a flip-it $1,200 purchase that was just kind of made. That's the mindset that has to change between you guys, that we have to be so focused and so buckled down

Starting point is 00:27:42 that we know exactly where every single dollar is going. And if we pay off this rental, we are agreeing for the rest of our lives, that we are not going back in debt. Because you're exactly right, Stephanie. If your habits don't change and you guys just have a little fairy wand that sweeps this debt off, which is the equity of the home or the rental, 100%.

Starting point is 00:28:00 And I don't want all that hard work to go back. courts. So there's a agreement. The agreement is we never borrow money again. And so when we sell this rental and we pay off this and yeah, that's the end of it. And then, Stephanie, if I were you, what else I would do is since you're only working 12 hours a week, I probably would work up until baby comes because you're not going to be homeschooling the kids in the summer. We're in April now. And so, you know, May's coming. Kids will be out of school. Like I just know it's hectic with kids in May. It's just nuts. So get done with the school year. Continue to work. Work through the a few hours a day, and then when baby comes and starting in August, then say, I'm not going to be, you know, if you guys choose to not work in August, then do that. But I would, I would keep your job personally through the summer if I were you. Okay. What did you want to say, Dave? Okay.

Starting point is 00:28:47 So another way of, it's okay. Another way of looking at this is the reason you're having to ask a question about whether or not you need to work while you're pregnant and your home. homeschooling is not because of the income, it's because you continue to buy lawnmowers and cars you can't afford. Yeah. So you're actually working for those things. Yeah, and I don't want to work for those things. And so if you don't want to work, those things have to stop permanently. And so that's the two of you saying, Sharon and I had this meeting and, you know, zigzagger

Starting point is 00:29:32 used to say that if you want a good marriage, you've got to figure out that you're both on the same side. And so, yeah, we're both on the same side. And the side is we want to be where Rachel painted two years from now. And in order to get there, we have to be an agreement on what the path to get there looks like. And it's no more borrowing. If we, if we're going to sell this rental house and wave the ferry wand and clean this up, then there's no more borrowing. Because I'm not going to be sitting here thinking about I need to work part time while homeschooling. because we can't control our spending. And that's exactly what's going on.

Starting point is 00:30:08 And that's what has to stop. And you know what? That's the part of debt that is so frustrating when you talk to people is that they're working. And they're working for crap. They're working for stuff, not for the value system at which they want to live. You know? I mean, the number of times I've talked to a lady who wants to quit and go home and be with your kids. Yes.

Starting point is 00:30:26 And I'm like, how much, you know, we work with the math all the way down. It's $400 is all it is. and the van payments $400. You'll sell the stupid van. The only reason you're working is for the van. Just to pay the van. Right. It's all you're doing.

Starting point is 00:30:37 You sell a stupid van and go home with your kids. Yes. Yep. You know, and so it's, well, I need the van. Well, you can't have it both. Okay, you got to decide which one you want. You want the van or you want to work. And work for your values, people.

Starting point is 00:30:49 Do that. Let that be the driver and not stuff and all this crap. Set that desired future out there two years like she was talking about and paint that in detail and then work to get there. Yes. At Ramsey, we don't partner with companies chasing trends or pushing gimmicks. Trust is earned, and that's why we send people to Fairwind's credit union. See, a lot of banks rely on teaser rates, marketing hype, and fine print. But that's not how Fair Winds operates.

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Starting point is 00:32:54 Better than we deserve. What's up? So I wanted to know what kind of student loans I should be pulling out for school, and how should I be financing for school. How old are you? I just turned 20. Okay. Are you in school? Yes, I'm in school currently. I'm finishing out my prerequisites for nursing.

Starting point is 00:33:18 You're finishing out your what? My prerequisite for nursing school. Okay. Okay. Yeah. And then you've got a long, you've got four years left after that, right? Yep, yep. How are you paying for it now, just the prerex? It's a lot of it.

Starting point is 00:33:34 I'm going to community college to save money. Yeah. And a lot of almost all of it is covered by like pass for financial aid. Okay. So I was just got done with talking to an advisor. And she told me I could do like the bridge to BSN program at a local university. And it only took like two years to get my BSN. And that might be a lot cheaper instead of just transferring, just transferring straight in to university.

Starting point is 00:34:06 How much would that program be, do you know? For that program, it's around 8 to 15,000. A semester or year? Or total for two years. For per semester. And it's four semesters? Yes. Okay.

Starting point is 00:34:23 All right. Are you working at all? Yes. I'm currently a pharmacy technician. I make about $22 an hour. Right now I'm working 20 hours a week only because I'm working. the classes are used pretty hard. So I'm just kind of

Starting point is 00:34:40 trying to balancing out with the like homework and stuff that I have. Yeah. How are you able to live on 20 hours a week? Are you living at home? So I just actually moved back in with my dad. He was closer to the schools. And we kind of came to an agreement that like, you know, nothing is going to get in my way.

Starting point is 00:35:01 And like, you know, he's going to be chilling everything so I can just finish school. and then save up to move out. Okay, so you're going to be able to live there for free while you go to school? Yes. That's good. As right now, but he has brought up rent, so that's been kind of an issue as well. Okay.

Starting point is 00:35:21 Well, I mean, that, you know, first thing we have to do is be able to eat and have shelter. Okay. Then the second thing we have to be able to pay for school. And so what I would do, I think your counselor is probably giving you pretty good advice. I'm going to look for a lot of different ways to get that degree and any possible grants. But we're not going to tell you here at Ramsey to get a student loan of any kind. We're going to tell you to avoid that at all costs, okay? Because even if you don't graduate, because something happens and you're not able to graduate, you still have the student loan.

Starting point is 00:35:58 Student loans are forever. You cannot get rid of them. They're a pain in the butt. I will tell you that your career choice of nursing is incredible as far as upside potential, lots of flexibility. You're going to be able to do a lot of different things. You'll be able to take a 40-hour work week plus ER on the weekends and make $150,000 a year if you'll watch what you're doing as you grow this career over time.

Starting point is 00:36:22 So you've got a great field that you've chosen for a lot of reasons. So I want to encourage you to do that. The other thing is, if you can get any kind of nursing certification the cheapest possible way and get employed at a hospital or a large medical practice, they'll probably pay for your tuition to continue. Yes, yeah, absolutely. I know some people that work in the local hospitals in the area, and I've already been offered positions as a pharmacy tech. Only issue is that they're not really flexible on scheduling. I don't care.

Starting point is 00:37:02 If you're a pharmacy tech at the hospital and they're paying your tuition, you make the schedule work, kiddo. Yeah. You go do it. That's a $15,000 raise per semester. Right? So you suck it up and make the schedule work. That's great money.

Starting point is 00:37:20 Yeah, for two years, Lucy. You can do anything. You can be working nights and go, I mean, you can do anything for just two years. You know what I mean? Like, that's how I would look at it is, I mean, how quickly, two years goes. You know, you think about we're in 2026. 2024 was just like for just a snap. I mean, it was just so fast.

Starting point is 00:37:36 So do that. But, but if you have to cash flow any level of it, I mean, on the low wind, I know eight grand is what you said per semester, but oh my gosh, if you could make, which I wouldn't want you to do this, but I'm saying you could make two grand door dashing. You know what I mean? Like you could find the cash to be able to cash flow and just talk to the financial aid office and say, hey, can I pay per semester, right? And look at it. But when you can get a job, what you're saying, in your field, working, in any level of institution that is in there that's going to help pay for school. Like that's a one for me.

Starting point is 00:38:05 Dive in. And then get that degree and then get the next degree, you know, go LP, go RN, go all the way through the whole process. And, you know, keep moving up and keep moving up, keep adding to your education as long as they're paying for it and you're just work. And you're going to be able to do so well as you do this. And so my point is you're making the least money you're ever going to make right now if you'll stay on this track. But roll up your sleeves and do what it takes to get this for free. Yes, take that pharmacy tech over there at the hospital and they pick up your tuition to be a nurse. Absolutely.

Starting point is 00:38:42 All day long. And, oh, I can't go to happy hour. Well, you need to be at a happy hour anyway. You need to be doing this stuff. So this is good. Yeah, absolutely. And, you know, if your dad wants to charge too much rent, then go get you a roommate and move out. But if he's giving you something reasonable, it's 50 bucks or something just to,

Starting point is 00:39:00 whatever. But if you're hustling like that and he's able to help you by just providing housing, that's a big help. And you just take every one of these little tidbits and you put them all together and it keeps you from borrowing. But no student loans. No student loans. You've got to figure out a way to work around that.

Starting point is 00:39:20 You have to slow down your process or you have to change your number of hours you're working or you have to change where you're working or how you're working or something. But no student loans. You can do this. You can figure it out. And when you do, you're going to look back and the 27-year-old version of you is going to really like this 20-year-old version of you. Because we talk to the 27-year-olds with $100,000 of student loan debt every single day. And they don't like their old self.

Starting point is 00:39:46 They're pretty pissed at their 20-year-old self. And you don't want to do that. So good question. Really good. I'm excited for you, Lucy. Jane is in Phoenix. Hi, Jane. How are you?

Starting point is 00:39:58 I'm doing well, Dave and Rachel. Thanks for taking my call. Sure. What's up? All right. So we are on baby step two. We have about 36K left in consumer debt. My husband makes about 6K a month, and I'm a stay-at-home, homeschool mom. We have had just kind of a crazy series of events happening, and our emergency fund is drained due to our fridge, range, dishwasher, both vehicles, all breaking within the last two months. And my husband got a new job, which, praise God, you know, has brought in money to help with some of those things. his stepdad passed away and the funeral is out of state and just for him to get there it will take about $500

Starting point is 00:40:38 due to flights and then a hotel. So I'm calling to see, I want to honor our parents. He wasn't extremely close with his stepdad, but we want to honor our parents and I don't want to, you know, encourage him to go or not go if that is not wise financially. And then, yeah, and he's also just kind of wrestling with it too. We're really trying to stay on track to get this paid off. I would go. I would go.

Starting point is 00:41:02 You got the 500 bucks, right? We can sell one of our Dieter cars, is what we can do. Yeah. Yeah. I would do that. I would go. Man, you guys made it so easy. All right.

Starting point is 00:41:14 You never regret going to a funeral. Well, especially something like that. It's not $5,000, and we're not flying 16 people to Italy. I mean, it's $500, and you're sending just him to be really, near his mom, near his mom, because his stepdaddy wasn't that close to to start with. And he's not going to be there very long. But, yeah, I hear you. I think it's just, I wanted to make sure, because we, like, the emergency is gone.

Starting point is 00:41:43 And we have, like, my dish, my whole kitchen is torn apart still. So just, we wanted to be wise and not say, oh, emotionally. Yeah, but in four months, your kitchen will be fixed. You guys will be on the track, you'll be on track, paying it off. And you don't want to look back and think, golly, what we could have done. You can't unring this bell. Yeah. So, yeah, you've got to do that one.

Starting point is 00:42:03 It's a good question. I appreciate the dedication, Jane. Yeah. The way you're framed up the question and the amount and the situation is why we gave the answer we gave. Running a business is hard work. You're the CEO, the accountant, and the sales team. You don't have time to moonlight as your own benefits department. That's where health trust financial helps.

Starting point is 00:42:47 In fact, health insurance is where health insurance is where, one of the biggest and most confusing line items in your budget. And most of you are overpaying because you're stuck figuring it out alone. You don't have time to figure out all the fine print about networks and deductibles. My friends at Health Trust Financial have been helping Ramsey listeners for over 20 years. Their focus is simplifying health insurance and serving people with empathy. No pressure, no games. They give you clear, unbiased, advice that fits your life and your budget. Most of their clients save hundreds of dollars every month. That's real money you can put back in your business or into the baby steps. So stop wasting your time,

Starting point is 00:43:33 your energy, and your money. You run the business. Let Health Trust Financial handle finding the right health insurance. Go to health trustfinancial.com today. That's health trustfinancial.com. Welcome back to the Ramsey Show in the Fair Wins Credit Union Studio. I'm Dave Ramsey, Rachel Cruz. Ramsey personality. My daughter is my co-host. Sadie is in Rochester, New York. Hey, Sadie, what's up?

Starting point is 00:44:12 Hi. Hi. So I am currently about three quarters of the way done with baby stuff number two. I've kind of worked my way out of a little over $150,000 worth of debt. Wow. Good for you. I have a job. I have a job and a half.

Starting point is 00:44:30 Good for you. I like to say I do have a full-time and a part-time job. I'm ready to move. I'm ready to get out of New York. I would like to move south. With the sale of my home, I could finish off baby step number two and number three. My question is, though, after that, I mean, I do have a lump sum after both of those items are completed of about 75,000. $1,000. I could either buy a house and have that comfort, but have it be gone, really, the 20%,

Starting point is 00:45:08 or I could rent and invest in a rental property. The location that I would like to head is tourist nation. So an Airbnb or a rental or even an apartment home would not go on rent. My problem is I feel like I'm a bit of a control freak, and I want that comfort of having something that's mine. But I am also losing that half job. My full-time job is a remote job, so I'm able to take that. Okay, so what do you make at your full-time job? So I'm at 67-ish. And what do you make at the part-time job?

Starting point is 00:45:52 Roughly 25,000. Doing what? So I'm admin. admin for a church office, actually. Okay. And you're talking about moving. Where's your ideal place? If you bought a home and settled in, not Airbnb, but you just bought a home, what would

Starting point is 00:46:09 be your ideal location in the south? I really want to be on the beach somewhere in South Carolina. I mean, we have joked Myrtle Beach, just outside of Myrtle Beach, though, I mean, somewhere like Conway or somewhere like that would be my ideal living situation. Okay, I like that. You said we, who's we? So I do have a little bit muddy situation. I have been married for a year and a half, but we've never combined finances, not for lack of trying on my part.

Starting point is 00:46:48 There just is that hindrance, and we've had the discussion of perhaps we just, you know, we continue on. I mean, the relationship is great. You know, we don't have any questions. I carry the financial, the household finances. He is on the road a lot. He's got his own business. He's got, you know, a lot of debt of his own that he handles. So when I say we, I do mean my husband and I and his two girls both will be college age here fairly soon.

Starting point is 00:47:21 He does have college accounts set up for both of us. of them already. So that is not something that out of the proceeds of this house, I... Do you guys... I don't know. You're probably making a face at me. I'm not taking into consideration combining that income. Do you guys both own that home? No. It is mine premarital. It's yours. Okay. So when you buy the home in South Carolina, is the plan that you are just going to be buying it and he'll just be living in there under your name? I believe at that point I have kind of given a smidge of an ultimatum to say there will be a combined account, there will be a combined finance, you know, home account. I mean, it can't just be, especially because I am losing income with the move.

Starting point is 00:48:14 I'm not saying I'm losing the income to be able to adequately care of the house. He's not got any money to add to the down payment then. No, no, he does not. Okay. All right. Yeah, I think I'm selling it and I'm buying a home in South Carolina. And I think you already know that what's best for you is for the two of you to combine your finances and have full transparency and full weight together. You know, and whether his name is on the title or not in most states, a married couple that buys a home. The spouse has marital interest in the house anyway. in the event of a divorce. And so, you know, you're probably putting that $75,000 at risk, so to speak, potentially. Yeah.

Starting point is 00:49:03 And you could show a paper trail that you brought it from, that you brought that money to the table from the thing in the event of a divorce and probably work it out. But I don't know. But anyway, I think the better answer is to combine and go buy your house, kiddo. And I think you'll also pick up some side work because I don't think you're going to, you know, It's not like there's no churches in South Carolina that need some admin help. Like there's a church on every corner in South Carolina. I'm open to gig work. You know, I did a lot of Uber and, you know, door dast and things when I was first starting out of baby stuff.

Starting point is 00:49:40 And we actually have a Ramsey approved realtor that we're talking to down in South Carolina already. So, I mean, I think we're taking the right steps. Yeah, but I would put. Pay off all your debt. Use whatever's left for your baby step two and three. and then use the balance for your down payment. And, yeah, take all your proceeds and do that and combine your finances. And I think you're setting up a good life.

Starting point is 00:50:04 Yeah. And ideally with what he's making a year, right, in a perfect world, as you combine, that's the power of working together financially. Not only do you get the relational benefits of, we really do think your marriage gets better when you become one in every area of your life, including your money, but also the financial, because, yes, he does have debt, you said. but if you guys together combine both incomes worked to pay off debt, your fund and retirement together, you're just going to get ahead financially so much faster when you're working together,

Starting point is 00:50:33 even if he does have some debt and you guys may have to pay some of it off. But gosh, both of those incomes working in one household and looking at it as a household income is going to be so helpful. Yeah, that's incredible. So guys, we keep telling you this over and over, and she's obviously heard of say this too, so we're not talking to her anymore at this point. But just to remind everybody out there that when we did the largest study of millionaires ever done in North America, airtight research,

Starting point is 00:51:02 what we found over and over and over again is that 82% of the millionaires say that one of the reasons they became millionaires is working together in tandem, full disclosure, full transparency, pulling the wagon together with her spouse. that means that only a handful of millionaires become millionaires in spite of their spouse. And so, as I said earlier, Zig Zigler used to say, marriage is best if you understand we're both on the same side. And so we're on the same side. The enemy's not in the house. The enemy's outside the house.

Starting point is 00:51:41 If we're going to have a fight with something, it's outside of here. And we together are going to go conquer that land, that territory. And we together are going to expand. and we together are going to grow and we're going to set a vision of what we want the next five years to look like and then take the steps to get there, the desired future, and what must be true to get to that desired future together. That alignment is not only so healthy for your relationship, it also is the highest data point for you to become wealthy. Home is one of the biggest financial decisions you'll ever make, but too many people base the

Starting point is 00:52:48 decision on opinions or what the market is doing that week. Churchill mortgage has been our trusted partner for over 30 years because they do things the Ramsey way. A lot of people think buying a home starts with going to a bunch of open houses. But if you're buying a home the right way, you start with a budget and a trusted guide like Churchill before you even think about house shopping. Churchill will show you the real numbers, not what a bank will approve. Buying before being ready is how people end up house poor and stressed out. Churchill will tell you the truth and they won't push you into more house than you need. And once you understand what you can actually afford, you can move forward with clarity and confidence.

Starting point is 00:53:31 So if you're ready to buy a home, choose the right guide and stick to a plan. Go to Churchillmortgage.com and get started. That's Churchillmorgage.com. This is a paid advertisement in MLSI.D 1591, NMLS ConsumerExist.org, Eagle Housing Lender. Buying or selling a home is a big deal with all the clickbait headlines and TikTok discussions out there. You get a lot of bad info. It's hard to know what's really happening. Well, we're here to make the latest trends easy to understand.

Starting point is 00:54:05 Median house prices went up a little to $403,000 last month, which is typical as we head into the spring season. Mortgage rates are down a little bit more, down to 5.43, down from 6.1 that we saw last February. to learn more about the housing market trends and to get free tools to help you buy or sell with confidence, go to ramsysolutions.com slash market or click the link in the show notes. Sarah's in Seattle. Hi, Sarah. How are you? I'm great.

Starting point is 00:54:34 Thanks for having me. Sure. I'm recently in a divorce. I've been divorced for about a year now and have three kids all going to college next year. I'm financially, I'm doing pretty good. I own my home outright. It's a million-dollar house. I have about $8,000 in the bank.

Starting point is 00:54:57 I make $85,000 a year. And I'm kind of nervous about college. Each kid has a college account with about $60,000 in it. But, you know, even though they're all three are going to a state college, that's $120,000 for four years. And I'm responsible for half of half. So a quarter of that is $90,000 for all three. And I just, I really don't know how many do that.

Starting point is 00:55:23 I'm sorry, you're responsible for half of half, not counting the college funds? No, including, I mean, yes, yes. Because you're responsible for 90, but you have 60? No, I'm responsible for 90 because, you know, it's 30,000 a year for each kid. And they're going to each be there for four years, right? So that's 120 each. And then we have 60 for each. So that leaves them 60 for their dad to pay half and me to pay half.

Starting point is 00:55:55 That's 30. And so they're not planning on doing anything. The kids aren't? Well, I mean. Like working? Oh, well, of course they work. They all work. They pay for all of their activities, all of their, we pay for their tuition and their food.

Starting point is 00:56:15 And of course, where they live. That is more than tuition nowadays. So it's kind of putting me in a rough spot because I thought we did good planning financially for their college. And come to find out, it's not even really half. It's almost half. Well, Sarah, there's a little bit of me that's like, well, if we can't afford the college, then I don't know if that's where they can go. So maybe they go to a community college for two years and then transfer. And that cuts it in half or more than half, you know.

Starting point is 00:56:48 And academic scholarships. I mean, I don't know what else to do. Well, I mean, they can work while they're in school, was my point. Yeah, they definitely can. And that will pay for a part of it. It will. Yeah. You're right.

Starting point is 00:57:01 It will. My question is, because I own my house and would you ever think about, should I refinance and just pull a little bit of money out and just pay for it? No. Okay. We need to work this out. We need to buy a cost. college that we can afford between what you can put in, your ex-husband can put in,

Starting point is 00:57:23 the college funds can put in, and the kids can put in while working while they're there. Those are your form numbers that you can enter into the equation, and then that will tell you where we can afford to go to school. Oh, and by the way, where they live, are you talking about the dorm or getting off-campus apartments? Oh, a dorm. We're going the cheapest droughts of the dorms. Okay, good.

Starting point is 00:57:45 I mean, that's, yeah, $15,000 a semester, including food. Yeah, that sounds right. Or, no, $7,500 the semester. So what school are we talking about? Washington State, the cheapest school, one of the cheapest schools in the state. Yeah. That's in-state tuition. No, I didn't think it.

Starting point is 00:58:03 The numbers you were giving me weren't some kind of crazy numbers. They're very reasonable. But it's just it adds up because, as you said, the tuition, I mean, the dorm and the food is as much as the And that's normal. Yeah. Yeah. Okay. And so they're not within driving range of either one of you are.

Starting point is 00:58:22 They're where they could live with y'all. No, unfortunately, no. It's like five hours away. Yeah. But would you ever, like if I were to get married again and, you know, move out of my home into another home, would renting out my house and using that be something? I mean, because I'm kind of, I am dating somebody pretty seriously now, and I mean, that was another option. Well, I could do that.

Starting point is 00:58:49 I don't think a million dollar house is a rental house usually. Well, in Seattle it is. It's a small house. I mean, you'd be shocked at what a million dollar house looks like in Seattle. No, I'm not shocked at all. I'm just saying that's a fairly expensive rental property even in Seattle. Okay. I'm not unaware of the Seattle prices are very expensive.

Starting point is 00:59:10 Right. But, you know, you have a million dollars on that. the table there. If you had a million dollars sitting in the middle of your table, kitchen table, and you were getting married, and you had kids going to college, and you were thinking about buying another home, you wouldn't say, oh, I'm going to use this money to buy a rental. You would say, I'm going to use this money for the next home and the kids going to college. Rental wouldn't even be on the list of options. The only reason rentals on the option is by default because you already own it, it makes you think about that.

Starting point is 00:59:44 Correct. Yeah, and Sarah, I would say, too, when you break it down per semester, what extra they're going to need, because they're going to be able to get through the 60 for the first two years. So you're saving some money and that, you know, you don't have to have that money tomorrow, right? It's in two years. So I understand, you know, you make 85 a year, but what can you set aside for two years, right,

Starting point is 01:00:08 to contribute? And what can they set aside for you? And then your husband, right? So your ex-husband. And so as you guys all kind of form this together, the good news is, again, you have some time on your side. This is not 60 grand that you have to have tomorrow. It's really in two years is when it's all going to be due. Yeah. So and all of that is reduced by the 60,000 being used up is reduced by they don't need as much because they are working. Right, that they don't even use it all. Yeah. Yeah. Hey, Sarah, you got a four-year degree? I do not Okay Now my ex did Yeah okay

Starting point is 01:00:44 I have one my wife has one And everyone that I know just about in my personal life That is successful That has a four year degree Worked while they were in school Right It's like a normal It's a normal thing

Starting point is 01:00:59 And my kids My kids do work all three of them do they work Not suggesting they're lazy I'm suggesting there's actual mathematics That are going to help you that they're able to help this solution, help you with this solution. And so, and it's really good for their character. And Rachel, we found when we were doing a bunch of the studies and some of the research

Starting point is 01:01:18 when we're putting together the borrowed future, the student loan debacle, which she's not talking about student loans, but the borrowed future documentary that we got all the awards on, one of the things we found was that kids that work actually end up with higher grades. Yeah, higher GPAs. Yeah, and Sarah, I would be asking them at Washington State, what can they be doing? Could they, because by the time they're a junior, and again, this is when the money kind of starts to like, okay, by junior years, when we're going to need some cash, can they, you know, be an RA in the dorm, right? And part of their housing is paid for because of that. Like, what creative things in the next two years while they're on campus can they figure out that they can plug into the university to help pay for some of this for the last two years of their school? So there's some ways around it to get creative. I just ran into a family member the other day that I hadn't talked to in years and reminded me that he went to college. free because he was a janitor.

Starting point is 01:02:10 They hired him as a janitor and employees got free tuition. Yep. There you go. I mean, that's so simple. The RA thing, a lot of people did, right? Yeah, the resident assistant, right? A lot of people did that. And, you know.

Starting point is 01:02:25 And even scholarships, I don't know, like just getting creative. Your brother worked in a mattress store, selling mattresses. He's currently our family. Talk about a conspiracy. All these years later, all these years later, he's still our family. advisor on mattress purchases. I know. And I need a corner on you know the conspiracy about

Starting point is 01:02:43 mattress stores. About mattress stores? Yeah, like the whole thing is like, who literally goes to a store to buy a mattress? Most people don't, but they're everywhere. So it's like, what's really happening? Oh. What's really happening?

Starting point is 01:02:57 Oh, now. It's a Rachel conspiracy theory. That's a good conspiracy. That's a good black call to go down. They're all laundering mafia money. You never know. No, I don't. I don't think so.

Starting point is 01:03:08 But they're everywhere. That's the weird thing. How many people you see going into a mattress store? Not a lot. I've gone in there and purchased mattresses myself. That's what I'm saying. Your mother ball took a couple of the days. Daniel works and he's a great source with my conspiracy.

Starting point is 01:03:21 I need to corner him. He'll never, he's a member of the Luminati. He'll never tell you. You know, one of the first things I discovered working in the financial world is how absolutely devastating it is when the breadwinner of a family dies. And there's too little life insurance. or none at all. Grieving families are suddenly left behind,

Starting point is 01:04:04 scrambling to pay bills and trying to make ends meet. I also discovered that there are a lot of rip-offs in the life insurance world, like that whole-life crap posing as an investment opportunity. What you need is level-term life insurance, usually 10 to 12 times your income, which is the smartest, most affordable way to protect your family. The key is finding an independent broker who represents a ton of companies and works for you, not for the insurance,

Starting point is 01:04:30 company. This is exactly what my friend Jeff Zander and his team at Zander Insurance are all about. They shopped the term life companies to find you the best options, and they've been around for over 95 years. So you know they'll be there when you need them. Zander is the real deal, and that's why they've handled all my personal insurance for over 25 years. I trust them, and you can too. visit zander.com for instant online quotes or for a more personal touch give them a call at 800 3564282 the ramsay show question of the day is brought to you by why refi defaulted private student loans don't define you but dealing with them does why refi helps you refinance into a low fixed rate payment you can afford so you can take control of your money and get back to working the baby's steps. Go to y-refi.com slash Ramsey. That's the letter Y, reify.com slash Ramsey might not be in all states. Today's question comes from Dave in Massachusetts. My wife and I have two kids. Our oldest is

Starting point is 01:06:00 currently in college at a state school, so we are paying in state tuition. Our youngest is a senior and it's looking at colleges in a different state, which means higher tuition. We own a second home in that state, but it's not our residence. Should my wife and I get a divorce so we can change one of our permanent residences to that state and keep the other permanent residents in our state. Doing so would save us over $100,000 by paying in-state tuition for both kids. My wife and I love each other very much. And the paperwork wouldn't change our relationship. Wow. I don't know if I've ever heard this question before. I've heard it for different reasons that were similar. A legal divorce to pay.

Starting point is 01:06:45 pay for the out of state college tuition. Oh, Lordy. No, Dave. No, Dave. I think if you can't afford the out-of-state tuition, y'all can't afford the college. Oh, here's an idea. Tell your kid no. Oh, there's a shocking concept. Before you divorce your wife, maybe you just tell your kid no. Oh, my gosh. How about no? You can't go to school over there. No. No. that that settled i mean that's a lot easier no dude you're weird i mean who talks about divorcing their wife to get in-state tuition for a kid for four years because you can't tell your own spoiled kid no that's whacked oh man yeah dave i don't think that sorry dave in massachusetts not you dave that could get confusing quick no both of us are whacked but for different reasons oh my

Starting point is 01:07:45 Oh, yeah, Dave in Massachusetts. Nope. Nope. Nope. I would not go through a divorce. I wouldn't even tell your wife you had that thought. That would be dangerous. You could wake up dead.

Starting point is 01:07:59 Oh, my gosh. Oh, man. I wonder how many people do that, though, trying to scam the system and like. Well, people do it. I've heard of people like, they don't want to pay alim. They want to keep getting the alimony from the previous marriage. And if they get married, so they won't get married. They just act like they're married and never get married.

Starting point is 01:08:17 Sure. Sure. I hear that. Or if we get divorced, we get a, she, her disability insurance so double. So we're going to get divorced so that we get twice the money from disability. Okay. Whatever. I've heard the opposite. All these different things happen.

Starting point is 01:08:30 Like, we need to get married for military purposes, like to have whatever spousal. You know what I mean? Like I've heard that kind of stuff. Yeah, but never for a kid's college. Wow. You know, Dave, you never hear, you know. It's a new one. You have your priorities really screwed up.

Starting point is 01:08:45 And so let's just start with telling your spoiled brat child no. I don't think the spoiled brat 18-year-old's asking his parents get divorced. This is the dad. He's asking him to pay $100,000 to go across a state line. Yeah, but this is the dad's idea. Dad wrote it in. I know. Dad wrote in the divorce.

Starting point is 01:09:02 I blame him dad. I'm blaming dad. No. Yeah. Because an 18-year-old, I wanted to go out of state. I agree. The whole thing, the child's behavior is the father's fault. So let's just go with that.

Starting point is 01:09:12 A child wanting to go to an out-of-state school is a, $100,000? Is not, probably over the course of, probably over the course of four years. But I'm just saying, this is the, don't you blame this on that 18-year-old? This is the dad's idea. So no. I'm going to blame it on the whole dysfunctional family. Yeah.

Starting point is 01:09:34 All right. Wow. Hannah's in Rochester, New York. Hey, Hannah. What's up? Hi. I'm just calling me to ask a question about my student loans and what I should do. Okay.

Starting point is 01:09:47 So I'm currently a registered nurse, and my work actually pays $150 a month towards my loans. Uh-huh. What's the balance on your loans? $4,500. Oh, wow. I just have to pay the minimum for them to keep paying it, which is only $60, $62 a month. Mm-hmm. I didn't know if I should pay off, pay it off and not have the minimum, like, keep doing a minimum payment.

Starting point is 01:10:19 You have the $4,000 in the can? No, not right now. You're an RN. Why not? You make good money, don't you? Yeah, we have a house, we bought a house, and we are getting back to doing better budgeting. Okay, good. So your question really is, when I get back to better.

Starting point is 01:10:41 budgeting, do I put more on the student loan than the minimum payments given that the employer is paying some of it? Yeah. Yeah, I would put all I can. You know, I'm going to work, list all of my debts. Do you have other debts other than your home and the student loan? We just have about a thousand dollars. No car payments? No, no car payments. And our house. Okay. Okay. So I'm going to list the two debts, the thousand and the four thousand. First thing I'm going to do is pay minimum payments on a student loan and attack the $1,000 and get it gone in about a month. And then I'm going to attack the student loan aggressively. But during those several months that you're knocking the student loan out, you're still going to get some of the benefit. But no, I'm not going to keep the loan around

Starting point is 01:11:24 like a pet for four years. For an $1,800 a year benefit. Okay. Yeah. The biggest thing is you want to be clear of this thing. And you know, you want to be have a, you know, complete, fresh, clean start, okay? Oh, okay? Good for you. Thanks for asking the question. Open phones at AAA 825-5-2-2-25. Rogers in Branson, Missouri.

Starting point is 01:11:49 Hey, Roger, what's up? Good afternoon. I've got a question for you, Dave. Okay. I've got $750,000 in cash. I've got a million dollars in an IRA, and every year I've got to take money out of that. were from $43, $47,000.

Starting point is 01:12:09 You're required minimum distribution, so you're over 73. Yes, I'll be 76. Gotcha. I just paid $14,000 in income tax, which is fine. I have no debt. I have two credit cards. The only thing I get on there is gasoline, and I pay that off soon as the bill comes. Gotcha.

Starting point is 01:12:31 I never paid interest on a credit card. I got a house. About $900,000 that's worth that's paid for How much of your million? So you got a couple million dollar net worth? Way to go, man. About three million total. Yeah, congratulations.

Starting point is 01:12:48 How much of that did you inherit? None. So it's called... My mother passed away. I got $60,000 about four years ago. Wow. And I put that right in the bank. So you're one of the great American millionaires that did it

Starting point is 01:13:02 starting from nothing without inherited money. Congratulations, sir. Well, you're the fault for that. I listen to you. My question is, what do I do with the $750,000? I have no children. My newest car is a pickup truck. It's 10 years old.

Starting point is 01:13:21 My wife's car is 23 years old. We live very well on 32 acres of beautiful land. And I just don't trust banks because bail in, bail out, stock market to me is like Vegas. Well, what's your 401k in, honey? It's with an insurance company, a major insurance company. And you trust insurance companies more than banks? No, the financial part of it.

Starting point is 01:13:52 I put a million dollars in there 20 years ago, and I've been getting this money back and back, and there's still over a million dollars in it. Yeah. So it's worked out pretty well. But, I mean, insurance. companies are less stable than banks. Well, according to the report I get from the insurance company,

Starting point is 01:14:14 they're loaded with money, billions and trillions of dollars. Well, that would be true, but so are the banks. Anyway, the answer to your question, sir, is I do not have any money in insurance companies. All of my money is invested in mutual funds in the stock market and in banks, in high-yield savings accounts. And so if you're literally sitting with that money stacked in your bedroom, you need to do something with it. Hey guys, George Camel here.

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Starting point is 01:16:14 See website for full details. Aria is in Phoenix. Hi, Aria. How are you? Hi, how are you? Better than I deserve. Is it Aria? Is that correct? Yeah, it's Aria. Okay, cool. How can we help?

Starting point is 01:16:44 I just kind of had a question. So a couple years ago, I got into a car accident that wasn't my fault, and we should be settling here soon. I don't know the exact amount of money that I'll be getting, but I know it'll be close, if not over $100,000. Wow. I'm 22. Yeah. It was a pretty bad accident. Are you recovered? Are you okay? I didn't break anything, but I do have long-term damage, and I had a traumatic brain injury because of it. Okay.

Starting point is 01:17:15 So is it affecting your income potential or anything like that? Not anymore. I was out of work for about four months, but since then I've been back at work. So, like, I'm physically capable to work and, like, mentally capable to work, but I do have issues with, like, my long-term and short-term memory. And then I have some issues, like, with my spine and some, like, nerve damage around, like, my back and my neck. Do you think you're going to need any of this money to take care of you? Yes.

Starting point is 01:17:46 Okay. for in what regard? What would you use it for? Well, probably like more like chiropractic care. Because like I said, I'm pretty okay for the most part, but I do still have like chronic pain basically for the last three years. It's a bad wreck. After my accident, yeah, it was, so I got T-boned.

Starting point is 01:18:08 I got hit my driver's side. I was taking less on a green light. Like I was going about 40 miles an hour and he, and I was his brick wall and he hit right into my driver. boss. Oh. All right. So what's the chiropractic costing you?

Starting point is 01:18:23 Well, I'm not going there right now. Through my attorney, I was in care for about a year and a half. So this was back in 2023. I mean, if you're going forward, if you're going forward, if you need some chiropractic care, what's it going to cost you? I don't know because I can't afford it right now, like co-pays and stuff through my work. I don't even know if my work covers chiropractic care. I know I can do it independently for like probably $100 a month.

Starting point is 01:18:52 Okay. So, and you make what? I make $21 an hour. Okay. All right. So what I'm going to do is look at your budget, if I'm you, and find out about the chiropractic care, what it's going to cost you, what it's going to cost you out of pocket, because you're going to need some adjustments apparently as you go forward, right?

Starting point is 01:19:10 Yeah. Okay. If you can cover that out of your income, then that frees up the $100,000 or whatever to invest. If you can't, then as you invest that, you're going to have to consider that you're going to need some off of it for your care. Right. Best case scenario is you don't need this money and you can invest it,

Starting point is 01:19:30 leave your hands off of it, and let it grow. So my question with that is, after my accident, I was out of work for about four months and I didn't qualify for any disability or anything. And so I got into some debt. And then the car that I got after my accident, I had it for about a year, and the transmission went out on it. And so we got repossessed because I couldn't afford the car payment and fixing it. So I have about $18,000 in debt from the car because I didn't have it for very long. And then also having to take out personal loans and using credit cards just to survive.

Starting point is 01:20:07 So I know this. How much is the car repo of the 18? I owe, I think, just under 11,000 on it now. They'll probably settle that for around 3,000 cash. But you need to get that in writing, call and say, I can make you a cash offer to settle this. I can't pay the whole thing. Would you take 3,000?

Starting point is 01:20:30 And they're going to argue, and you're going to argue back, and you're going to come in, you know, back and forth, and then give them a check and be done with it. But it'll be pennies on the dollar, okay? And then your other stuff, you can clean up for how much? I mean, that would be like the remaining 8,000-ish. Now, some of it is in collections, though, so I don't know how that. I would just, I would call and get a payoff and pay it off.

Starting point is 01:20:54 When you get the money, okay? So somewhere around 12,000 of your 100,000 is going to go and you're going to be debt-free. Now, what are you driving now? I drive a 2,600, Hyundai, Tucson. Is it paid for? Yeah, I got it from a family friend. So it's in my name. It's paid for, and then, but it has some fixes that I need to do on it.

Starting point is 01:21:18 But I do want to get a new, like... You may need to move up a little in car, so you may want to take some of this money to move up in car. So if you sold that car and put $10,000 with it, then you'd have a pretty decent car, okay? And pay cash, no more debt, okay? But so now we've used 22,000 of your 100. Okay. And then you need to set an emergency fund aside that you don't touch except for rainy days. So you need probably $10,000 to do that.

Starting point is 01:21:54 So now we've used $32. All right. And so you're going to have somewhere around $70,000 or so to invest long term. But you'll have an emergency fund and upgraded car zero debt. And that, if you don't have anything hovering over you, you probably can cash flow your chiropractic. That makes sense? Yeah. One of my goals, like, just because of the money and I'll be able to with it, is I want to go back to school.

Starting point is 01:22:25 And I want to get my institution license, but I want to move back to my home state where all my family is. So I don't know if it's smart for me to use part of that money to move there. Well, a little bit, but keep it very, very conservative. This money's going to go away quickly because we've almost spent a lot of it already, just you and me talking, okay? Right. So you have to be very careful because it'll $4,000 and $5,000 itself away. How much is the school, do you know?

Starting point is 01:22:54 So I have a $12,000 school fund from my grandparents that I'm able to use. Okay. When I was looking online just at current prices, it's probably going to cost me. like total price because it's a two-year program on about $23,000. For all two years? For the two years. Okay, great. And then what does that career pay when you get that completed?

Starting point is 01:23:18 When I was looking at jobs in the area, it's anywhere from 25 to 32 an hour. Not much return on that. You get 25 to 32 an hour at Target without getting the degree. Not really because I have to get a certification. license and I have to... No, I said you can work at Target without getting the certification license and make as much as you will after you pay $23,000 for this license. So maybe you need to tool up and school up in something else that pays better.

Starting point is 01:23:54 Okay. Doesn't pay much. I mean, that was like starting, though, because what I would like to get my, like I said, license and laser hair removal, but once I get my advanced aesthetics license, I mean, there's other avenues I can go. That's kind of just like my pinpoint. You need to have a $40 an hour goal here. If you're going to spend money for education, it needs to take you to $40 pretty quick.

Starting point is 01:24:21 And I don't know if that, I don't know that world, so I don't know if that's possible. Yeah, I'm not sure I'd have to do. Yeah, I mean, you're going to have to really, because you can't just spend $25,000 on a certification and then make $25 an hour when you can make that without a certification at Target. That's what I'm saying. So don't, don't, that's, that's not a good investment. If it's $25 and it puts you into a program that in a few years you're making 40, okay, I'm with that, okay?

Starting point is 01:24:53 But you don't, you don't have to make 40 out of the gate, but you've got to be thinking this through long term as to where this is taking you. But yes, generally speaking, if you think through education and it's going to cause your income to increase substantially due to the education, education would be a good use of money. Yeah. And I think thinking long term to saying, okay, you know, a goal would be in five years to be making $60,000 or $70,000, you know, whatever that is. And then you back out from there. So yes, to your point, all right, you may be starting at a position that's 28, but you see a path forward that's very clear that after a year of this, I can step up to 32 an hour and then I step up to

Starting point is 01:25:32 35. And then I, you know, it may take you a year or two, but don't let the end goal be making 35 a year for the rest of your life. So you want to be making, you want to be making more. And again, for that certification purposes, make sure you get the ROI out of it. But yeah, my biggest word of caution is plan all this out because just like you said, Dave, I'm like,

Starting point is 01:25:52 you'll spend 10,000 here and there and within five, six, seven transactions, it's gone. So stretch it as far as possible with a really strict plan in place and put yourself on that strict plan. So if you're going to move, I'm only going to spend this much moving. So I'm moving

Starting point is 01:26:08 company that's going to help me has to stay within this this budget range. Welcome back to the Ramsey show in the Fair Winds Credit Union Studio. Rachel Cruz, Ramsey personality. My daughter is my co-host today. Elizabeth's in Wichita, Kansas. Hi, Elizabeth. How are you? Good.

Starting point is 01:26:46 How are you? Better than I deserve. What's up? Well, I'm talking about selling my house. Okay. $150, around $150,000. in equity. Mm-hmm.

Starting point is 01:27:05 And I'm thinking about finding a house to buy cash. For $150? Mm-hmm. Yeah. What's that look like in Wichita, Kansas? Well, around, you know, smaller towns around, it's not, it wouldn't be a shack. Mm-hmm. It would be, it would be nice enough.

Starting point is 01:27:30 Mm-hmm. Like a step up from a shack? You're like, is it like, it would be a shack that's nice enough? Is it good? Like a good house that you'd be happy in for the foreseeable future? Okay, good. Yeah. Yeah, something that we would be happy in.

Starting point is 01:27:44 We? Or I would. Okay. Oh, I. Is there a we or an I? There's a we. My husband and my four children. Okay.

Starting point is 01:27:57 Four kids and 150. Yeah. Wow. And what's the motivation for this, Elizabeth? What's the home you're currently in that you're not satisfied with? Well, we are very satisfied with our home. It's beautiful. It's big.

Starting point is 01:28:16 But I'm looking for ways to simplify. Okay. Yeah, that's great. How old are your kids? 14, 11, 6, and 2. And how many square feet is in the home that you currently live in? We've added a couple bedrooms, so as of right now, around like 3,200 square foot. And the $150,000 cash home will buy what kind of square footage?

Starting point is 01:28:46 I mean, I would say probably around 2,000 square foot. So it would be a big downside, but we can also, we're good at adding square footage. Your husband's in the construction business? He's not, but he works well. I mean, he can do those things. I grew up with parents who did rentals, so they know everything. This house, we added two bedrooms. We added egress windows.

Starting point is 01:29:16 And, yeah, so we can do those kinds of things. So I'm just curious, but why would you downgrade to add on if you're already have? I wouldn't necessarily, I mean, as long as we were comfortable, as long as we had enough bedrooms. Okay. I've got two girls and two boys, so, you know, we can share bedrooms and whatnot. What's your household income?

Starting point is 01:29:43 My husband makes 130, and that's gross. He's a UPS driver, so he works a lot. And the balance on your current mortgage is what? 205. And you guys are how old? He'll be 36, and I'll be 34. in June. Okay.

Starting point is 01:30:04 All right. Well, there's a lot of windows through which you could analyze this when someone says they want to simplify. Okay? Yes. If you want to be debt-free and have no mortgage and you're willing to give up the extra comfort that the 3200 versus the 2000 house has to get to that goal, that's one version of simplify. Another version of Simplify is more of our friends, the Minimalists. And you're just like, we want a simpler life in general. And one of the benefits of that is we don't have any debt.

Starting point is 01:30:41 That's fine. Because what you're describing your current life as is not anywhere near out of control. It's definitely very conservative. There's nothing here. Well, I'll say y'all can buckle down and pay this off in two and a half, three years if you wanted to, you know. What if you put $50,000 a year? on the debt and you were done in four years. Yeah.

Starting point is 01:31:02 Yeah. Yeah. And I think my motivation is that with four kids and my husband working so much, I really, I want to live more. I want to have more, I want to have more room to just spend time together and, you know, go to the lake, go fishing. And that means he doesn't have to work as much. Is that what you mean? So he could pull back on work hours. Yes.

Starting point is 01:31:29 And be home more if you do. Okay, that's starting to make sense. That's a piece of the, okay, I get that. Okay. Yeah. And I stay home and I homeschool the four kids. So we're always together, but he's not there. And it.

Starting point is 01:31:43 How many hours a week does he work? That's a good question. I mean, he doesn't get home before eight most nights. Most nights he's out. He's out driving until eight. Okay. Could he back off his hours, Elizabeth and you guys still financially be okay?

Starting point is 01:32:05 I'm sure that we could. It would just, you know, like for a season. It just sounds like it would probably, I would think, from a logistical standpoint, it probably would be easier to cut back on some hours for a few years and be present at home while there's the kids going and then maybe pick it back up. So he's working two jobs. He works UPS. Oh, you said that.

Starting point is 01:32:29 You said that. Okay. Yeah. So he doesn't have the option. He doesn't have the option of cutting back then. He's got to finish the truck. run. He's, yeah, he's working what he has to work.

Starting point is 01:32:38 So he's working 12 hours a day, five days a week? Approximately, yeah. So you've got Saturday and Sunday to go to the lake? Yeah, yep. You know, the house, I will say the house is a lot of upkeep. That's another, that's another con for it. I think that it just takes a lot of our time. So will the other one.

Starting point is 01:33:01 Right. The 2,000 square foot house is. going to have as much upkeep as the 3200 square foot house. I really thought I was going to call you guys and you were going to be on my side. I'm not against you. I'm not against you. I'm just still haven't found the root. I'm still looking for the root motivation.

Starting point is 01:33:18 For a minute there, I thought you were trading the 3,200 for the 2,000 to get your husband back. But he doesn't really have that option. He can't, unless he quits his job, he can't cut his hours. Yeah. I mean, you know, he can take a different route? Yeah, yeah, for sure. He could take, he cover drives most of the time. Okay, so he could take a different route and back his hours down.

Starting point is 01:33:48 Why don't we just do that? Do it for six months, Elizabeth, and just see how it feels. And if it's off and you guys are like, no, then he can ramp back up and then put the house for sale, and that's great. It just feels like a lot of work. If you want to do it, what you're proposing is not evil. I'm just trying to figure out if it's going to give you what you want or if you're out of the frying pan into the fire here. And so, you know, like, yeah, I got my husband back,

Starting point is 01:34:17 but now these kids are all crammed in the shoe box and I can't breathe. Right. You know, and now I'm... And I don't have a pantry. And I don't have all this. And I can't, you know, the stress level of four large teenagers in this house that's approximately half the size is different. I mean, I'm okay with it.

Starting point is 01:34:34 but I'm not sure if the trade-off is what you think it is. That's what I was trying to dig around and find out. We were not against your idea. We're just trying to figure out why. The debt-free show. She was like, Dave Ramsey's going to love this. I'm going to be debt-free. It's going to be an automatic yes.

Starting point is 01:34:49 And we took the whole segment for you, Elizabeth. There you go. Either way, you're great. Hey, guys, I've got big news. The Ramsey Show is going on tour, and this is your chance to be more than just a listener. You get to be part of the show. So here questions ask live and experience the kind of momentum that only comes from being in the room.

Starting point is 01:35:29 We'll be in Charlotte, Denver, Phoenix, and Anaheim with a limited number of seats in each city. So last fall, we completely sold out in 72 hours. So do not wait. Get your tickets at ramsysolutions.com slash events or by clicking the link in the show notes. One of the best things you can do for your finances is to have a really good tax pro in your corner that you trust. They'll help advise you the best moves to make your situation for your small business, especially if you've had some big life changes. Check it out. It's that time of year, folks.

Starting point is 01:36:14 Go to Ramsey Solutions.com slash tax pro to find CPAs and enrolled agents who are Ramsey trusted. They've been vetted by us. You'll love it. Ramsey Solutions.com slash tax pro. Pro and you can find a pro in your area to help you if you've got a complicated return. Scott's with us in Casper, Wyoming. Hi, Scott. How are you? I'm well, Dave. Thank you. Listen, my wife and I got married 45 years ago with 200 bucks in the bank and we owed about 15 grand. I just, we're 69 now. I just retired. I've got

Starting point is 01:36:50 about a little over 6 million in a traditional IRA. And I'm I'm not clear on exactly what I should do with it. I can defer it until in 73 and take smaller or just take normal distributions at that point. I could just cash out, cash it out and pay the taxes, or I could cash it out, I believe, and split into a Roth IRA. And my question is very simple. Which one of those might be the best for my situation? Well, as you know, at 73, you've got required minimum distributions, RMDs, okay, that they're going to require you to begin to pull down a certain percentage every year on your 401Ks,

Starting point is 01:37:39 and that's going to create a huge income for you because you've done so well. Congratulations. I mean, wow. Look at you, man. Well done. Very well done. Okay. So that we know is coming, unless we go some kind of scorched earth thing, which I'm not going to recommend.

Starting point is 01:37:56 So I would just brace yourself and get ready for that. Do you need any of the money in the meantime? We don't have any debt. Okay. Do you have any other money other than this $6,401K? Yes, sir. Probably around $14 million in U.S. equities and MTS and roughly 20, some, $25 million in real estate. All of that debt-free.

Starting point is 01:38:25 Good night. do for a living? That would be a story. Many different things. Okay. So, to be honest, what we did with, we just saved. Good for you. Congratulations. You have absolutely slayed the dragon. I mean, this is amazing. Beautifully done. So starting with, you know, $15,000 in debt and we got married 45 years ago, and this is where we are. So you're a classic, you're a classic American millionaire. I'm just so proud of you. Well done. Now, if you roll the $6 million, all to a Roth IRA, 100% of it you will pay taxes on that year, ordinary income. And that's going to make you puke, all right, when you see that tax bill, because it's going to be a $2 million tax bill.

Starting point is 01:39:13 Okay. Oh, yeah. And so sit down with your tax professional, and I'm sure you have one, and start unpacking how we can move some of the $6 million for a few years to some people. period of time to get it all to Roth. I don't care if it's 10 years, five years, 20 years, where you can stomach the tax bill. You can actually pay the tax bill and roll all of it, pay the tax bill out of your other assets. And that's what I would do. And so if you roll the $6 million, hmm, this is something to think about. Look at this with your tax guy. You might go scorched earth on this one. If you roll the whole thing over and pay $2 million out of your

Starting point is 01:39:54 equities and pull it out and pay your taxes. You now have six million growing for the rest of your life tax-free. And when you place a beneficiary on it and you and your wife die and you leave it to your kids, they don't pay taxes on it. And it's not an inherited IRA that has to be withdrawn. Like if they get a traditional, if your kids get a traditional IRA handed to them, they have to withdraw it over the next 10 years. And under the Biden's Secure Act. And so they're going to pay taxes on it within 10 years. I see.

Starting point is 01:40:33 If you roll it all to Roth and you pay the taxes now, the growth on it tax-free will cover the tax bill within just a little while. That's right. And so I have moved mine. I did it more gradually than that, but I've got all of mine in Roth. And I did it so that it grows for me tax-free, but I'll probably never use it, and you'll probably never use this. And so it will go to Rachel and her siblings when I die completely tax-free, and they have no required distribution on it. So they can let it grow tax-free.

Starting point is 01:41:11 It can just sit there, and it could get really awesome. Because that's $6 million in seven years. Your only $69 will be $12 million. and in seven more years, 14 years from now, which is statistically you're likely to live that long, that $6 million will be $24 million, all tax-free. So it might be worth having a little bit of throw up in the back of your mouth and writing a tax check out of your other assets right now and doing it all in one year. So visual.

Starting point is 01:41:46 Well, it makes me puke to think about giving the government $2 million because they're so freaking stupid. But, yeah, it's just, and it's my freaking money. It's not theirs. And then. That you've already paid taxes on, too. Pay taxes like the rich. Kiss my butt. And so, liberals.

Starting point is 01:42:06 And so, anyway, the, you know, it's just ridiculous. So anyway. We welcome everyone to this show. I do, too, because you need to be educated. But the, wow. So, yeah, I want you to sit down with your tax guy and look at that idea. Because when I move this stuff to Roth, I did it for the reason of it grows tax-free for me. But the actual huge benefit is that it's a great estate planning tool then to have your stuff in Roth because your kids don't get hammered with the required distributions either.

Starting point is 01:42:40 Do you still have to pay? What's the estate tax, though? Over $25 million, would they start to have to pay? Yeah, he's got estate tax problems that are different. Yeah, but that has nothing to do. But if a Roth moves over. Roth is taxable on estate tax also. estate tax.

Starting point is 01:42:53 Both of them are. That doesn't get, state tax is different. This is income tax that we're talking about. Yeah, but he's got an estate tax problem. I'm sure you've got an estate tax planner. And if you don't, you need to get one tomorrow because you're definitely over all your exemption

Starting point is 01:43:05 levels. So, but yeah, way to go, dude. That's amazing. Man, you have absolutely killed it. I love the like subtlety of,

Starting point is 01:43:14 I've got six million here. And you've got anything else? It's like, yeah. 25 million. Another 40 million. Another 14 in ETA. Casper, Wyoming.

Starting point is 01:43:24 There you go. Well done, Scott. But these are the millionaires. These are America's millionaires. And when you guys are watching political stuff and they say that the rich should be taxed, that's the guy you're talking about. And it's not your money. It's his money. He worked his whole life, starting from nothing, and invested wisely and built this.

Starting point is 01:43:46 And so taxing him on his death and taxing him on his growth and taxing him. tax him and tax him and tax him and tax him and tax him and tax him. And he didn't do anything to you. You know? But this guy right here is my hero. I mean, this is what we teach all of you to go be, but then you need to beware that there are forces in the marketplace that don't like that, don't like you to be successful.

Starting point is 01:44:12 So you have to fight against the estate tax problem. You have to fight against the income tax problem, and you have to fight against. You have to make all these decisions on your investments to keep the stinking government's hands off, thieving hands off your money. And so, but, Scott, I'm just mad for you right now because it's a $2 million bill you're getting ready to pay. I think you're going to want to do it all at once, though.

Starting point is 01:44:33 And it would be ordinary income. So what it would be, 35? What is that? 35%? Yeah. So it's going to be $2 million. I mean, it's going to be over a bit of it, I bet you. It's a lot.

Starting point is 01:44:45 But the thing is, I mean, if that $6 million grows, Oh, 100%. You know, 20%, like last year, the market was up 24%, right? So if it's sitting in just S&P 500, so that'd be $1.2 million next year that he got back, and it's all tax-free. And the sooner you get tax-free started, the sooner it benefits you. So I think I'm going to want to do it now. I got to crunch the numbers a little bit more, but I think I'm going to want to do it now. Hey, guys, Dave Ramsey here.

Starting point is 01:45:53 Every day on this show, we help people work. through real money problems and figure out what to do next. Now you can get that same kind of help any time with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey today. That's ramsysolutions.com.

Starting point is 01:46:43 Teresa is with us in Washington, D.C. Hi, Teresa. How are you? Hi, Rachel. Hi, Dave. So my husband and I are in Baby Step 3, and I want to spend $400 on a new kitchen appliance. And my husband and I talked about it. He's listening right now.

Starting point is 01:47:06 Hi, Lou Gehrie's husband. If it was a good idea or not. Okay, how much do you guys have saved? We have 1,800 right now in our savings account. And we have the cash in our checking account to cover it just fine. Okay. And what's the full, what's the goal for the three months? Emergency funds.

Starting point is 01:47:30 Like 1,800 to what? We were just saying that we needed to write down a number for that. We only just finished Baby Step 2. Okay. Probably around 20,000. And what's your household income? About 50,000. 50,000.

Starting point is 01:47:46 Okay. Yes. Hopefully that will be increasing soon. Like why? And how much? Changing jobs and changing career situations. Okay. Yeah.

Starting point is 01:48:00 So how much do you think it'll change? I don't know. We would have to start before we could predict that. Okay. All right. Um, what's the appliance? I'm just curious. It's a flour mill. Oh.

Starting point is 01:48:17 So, like, meled wheat into flour. Yeah, I got one I'll sell you used. Oh. I got a five-gallon bucket of that stuff in the, in the closet from two years ago when Sharon had this fad. I promise I'll use it. Yeah, that's what she said. I believe you will. I will.

Starting point is 01:48:38 I promise. It's all healthy, too. It's all healthy. It is. They don't let any of the little glutons in it. It is. There's no little glutons and no little COVID's. So, yeah, it's all COVID and gluten-free. What? Oh, my gosh.

Starting point is 01:48:53 Teresa, you should have called Sharon. Yeah, you should have been on your side. Put her on. Put her on. I know. I know. I'm going to represent her. I'm serious. I'm going to go home and get the thing before she gets home and send it to you. You should. That actually would be a great. That would be so funny. And Sharon wouldn't miss it because she hasn't.

Starting point is 01:49:10 She wouldn't even know what's gone. That would be funny when you get off. Eight months from now, she'll be going, hey, where's my little bread thing? Give your address to Kelly. Gave it to a lady in Washington, D.C. I'm going to their house for Easter. I'll go, I'll sneak it for you, Teresa. So here's the thing.

Starting point is 01:49:25 Here's the thing. The thing that we always have to manage when we're managing these decisions is not the actual little issue of $400. But what it represents in our behavior and our standards, and in who we are. Okay. And so, you know, what Sharon and I would have said when we were at your place is we would have said, if this isn't an emergency, we can't do it because we don't yet have an emergency fund. And it is very odd that I actually own one of those things.

Starting point is 01:50:04 How long did it take y'all to get out of debt, Teresa? How long are we all doing Baby Step two? four years. I know. See. Almost for the day, actually. So much sacrifice. I know.

Starting point is 01:50:15 But it's just, the point is that you have to have your filter system that says, Yes, you do. I'm going to make my decisions based on this set of, on this framework. Yes. And on this value system. And so, you know, you've been using the baby steps as your framework for making the decisions. And it would say that this is not an emergency.

Starting point is 01:50:35 Don't do it. Although mathematically, it's not that big a difference. deal. You guys could and you're going to be fine. You could do a lot of stuff that people could do. Yeah, but you don't want it to derail you is what you're saying. The thing is, I don't want to, I just don't, you've reset the way your brains work on money in a positive way and this, this messes it up.

Starting point is 01:50:57 I mean, this is falling off the wagon. So, you know, wow. No, really. You think it's falling off the wagon? Yeah, for sure. They're not going into debt for it, though. No, but I mean, they're not going to make the decision through that framework. I wouldn't do it.

Starting point is 01:51:08 I would not buy it because it's not an emergency. It's not an emergency, but it's something that she's going to be using in the kitchen. And so you should not be buying luxury items that aren't an emergency. For four, it's not $400,000. It's $400,000 either. It doesn't matter. But I'm saying for four years of their lives, they've been sacrificing to get out of debt, okay? And then we always say when you get out of debt, like.

Starting point is 01:51:31 So we have a tie. Rachel says buy it. What are you going to do? I say don't. And I think it's fine. Oh, no, there's, hold on. We have some audience. Who's a yes?

Starting point is 01:51:38 The audience is saying don't buy it. Oh, no. Oh, I got one. Oh, we got one thumbs up. We got a bunch of thumbs down. We got a lot of thumbs down. Audience participation. Rachel, you're losing.

Starting point is 01:51:47 Shoot. You're losing. You're so kind and gentle. It's not that I'm kind and gentle. It's that I, like, the hard work and the exhaustion of what they've gone through. Which means I need a homemade bread machine. Listen, I'm telling you. That's what all this hard work was for.

Starting point is 01:52:03 Listen, I don't do it, but people that do it. They don't. They put it in their. closet. They love it. I know. I know someone personally. Shoot. I wish this was something that. Whole grain pancakes and muffins galore for about 90 days. Hadn't seen them since. Oh, man. We lost the enthusiasm on the latest health fad.

Starting point is 01:52:32 Man. Tracy, it's fun. That's fun. We're not making fun of you. We're making fun of you. We're making but it's not a need. It's a want. So if your emergency fund was completed and you can put it in the budget, yes. Your emergency fund isn't completed. I wouldn't do it. I also wouldn't upgrade your couch for $400.

Starting point is 01:52:51 I wouldn't upgrade your anything else for $400. It's not an emergency until you get this done. We stay gazelle intense until we finish baby step three. And that's what will get you to where you want to be. You've lived like no one else so that later you can live like no one else and buy a, breadmaker by a mill it's a mill it's a mill it's a mill your own grain yeah i don't even want to ask questions i don't want to add it i'm so not in you're going to have to get your mom to get it out and show you i know i will on easter she might give it to you you never know and i'd give it to

Starting point is 01:53:23 teresa you might need it well you could get traces a dress and just ship it on over there get it just in case you know that's that's funny and the grain it's like a five-gallon bucket of paint it's a five-gallon bucket plastic bucket full of grain in the closet And the grain, it's not like... It's like grain. It's like grain. Like you went out in the field and picked the green. Yeah.

Starting point is 01:53:42 Like the stem? No, it's the seed. It's the seed of the grain. It's green. Yeah. It's real. I mean, and it's apparently pretty dormant because it's been sitting there a while. Oh, man.

Starting point is 01:53:56 You can't make this up. It's hard when it's like your first world problems on steroids right here. It's your thing when it is when people are very passionate about it. And it's like there. For a minute. For a minute they are. They're there. And then they're not.

Starting point is 01:54:10 This is what they do, you know. I don't know. We definitely got the fever for it for a minute. Because I bet she does sourdough. I bet she makes sourdough with it, right? Can you do that or is that different? No, no. No, that's a feeder.

Starting point is 01:54:20 Sourdough is a feeder. Yeah, shoot. Okay, I'm going to stop. I'm terrible at this stuff. Yeah. Oh, Teresa. It's fun. It's not going to kill you if you do it.

Starting point is 01:54:30 But I will say. But if you're calling us to break the tie between you and your husband, Rachel's on your husband's side and no one else is. I mean, Rachel's on your side and everybody else is on your husband's side. But we do say sometimes to families that have kind of been done a debt-free scream, we're like, well, what are you going to do now that you're debt-free? You know what I mean? Like, we do ask that.

Starting point is 01:54:48 Yeah, buy a breadman. Well, I'm just saying the idea of getting past baby step two is an event. It is a thing. And so if there's something that is reasonable, you can pay cash for that you're like, okay, yes, we're saving at the emergency on the sign. But in the checking account, we have this. And I could do a little splurge to, like, celebrate that we're debt-free. I don't know.

Starting point is 01:55:07 Yeah. You have a tie on the air and off the air you lose. The audience is not with you. I'm trying. Try and Teresa. Oh, Teresa, that's fun. I would have guessed wrong. I thought she was going to buy the $400 expensive blender, the Vitamix.

Starting point is 01:55:28 Oh, the Vitamix. I don't know if that's 400. That's about 400 bucks. I will say we got an air fryer. Okay. That's pretty life-changing. It wasn't $400. but it was pretty great.

Starting point is 01:55:37 Okay. Well, there you go. Wow, I don't have one of those. Yeah, the kitchen supply. I remember when I was a kid and we moved and we had a box that sat on the side of it, seldom used kitchen appliances. James, I bet you all have a mill? It's just a sign you need to be a minimalist.

Starting point is 01:55:53 James, do you have a mill? Not yet, but it's probably going to happen soon. Okay, yeah, I feel it. You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage. To protect your biggest assets, I recommend using Ramsey trusted pros. Whether you're looking for car, home, or any other type of insurance, Ramsey trusted providers have been coached and vetted to serve you like we would. Find what you need at ramsysolutions.com

Starting point is 01:57:00 slash insurance. Scripture of the day, Luke 11, 9 through 10, so I say to you, asking it'll be given to you, seek and you will find, knock, and the door will be open to you. For everyone who asks, receives, the one who seeks fines, and the one who knocks, the door will be open. Tony Robbins says, successful people ask better questions, and as a result, they get better answers. So, question, it's April Fool's Day when we're recording this. I was about to do a thing.

Starting point is 01:57:45 You were? Okay. And I'm just wondering if the breadmaking thing was an April first joke. Oh, no. I was going to be like, guys, during the break, Dave's something. how he loves taxes and he can he just wants to pay more i want to pay more in taxes yeah i'm a closet liberal or you show me your credit card or something you know what i mean that could be a good april fools aprilfuls yeah nobody believe that it's not it's not even it won't work i should have i should

Starting point is 01:58:11 have i should have i should have come up with something there's no telling what you there was such an opportunity today america that i missed out on so i apologize well i think the breadmaker thing was a complete i think that lady was to complete no it what no teresa wanted a breadmaker. She really did. I believe it. A meal? She wanted a mill. Okay. Lisa. Let's see if Lisa's any. I may have got punked there.

Starting point is 01:58:32 No. But I may have thrown my wife under the bus, which is something I don't do in the air, too, so that's not good. But, you know. I'll apologize later. That's a problem. Lisa in Springfield. Hey, Lisa, what's up? Hi. First, I want to say thank you, because if it hadn't been for me listening to you for the last, I don't know, decade or so, I would be in a much worse.

Starting point is 01:58:53 situation than I am now. I am trying to figure out where to start I'm a little overwhelmed with my finances. It's not bad. So my husband and I have listened to you for a long time.

Starting point is 01:59:14 We had Zander Insurance and the only thing I regret is that I didn't up it when his pay was upped because he probably doubled his pay by the time, by when we first signed up for it, and then he died on our vacation in an accident. Oh, wow. This next summer. I'm so sorry.

Starting point is 01:59:31 Oh, my. And so we are babysat millionaires. We're in good shape, so I had some life insurance. I have a business that started as a hobby. I homeschool my three kids, and I started my business while homeschooling my kids. And I am very good at what I do, but not necessarily good at all the stuff that comes with business that you don't, you know, know about until you're like in the middle of it. And then you're like, oh, you're supposed to do this.

Starting point is 01:59:57 Oh, you're supposed to do that. So I've been untangling that, but it was never a priority between homeschooling, running a farm, and my husband made a very good income. We have no debt. Our homes paid off. It didn't matter. Mine was like a lucrative side hustle. But now I lost his income, the insurance, health insurance.

Starting point is 02:00:18 And all I have is my side hustle. and I don't want to just burn through our life insurance money. How much life insurance money did you get? $800,000. Okay, and everything's paid for. Were there other investments? I paid off. I used some of that because I have an investment house that I owed $120 on,

Starting point is 02:00:38 which I totally regretted taking out that loan after I did it. We cash flowed it, total remodel of it. But I use some of that life insurance. So I have like $6,000 or $700,000, I think, in cash, and then a million in 401Ks, but I'm only 50, so I can't touch any of that. Okay. My business, like, I've been overwhelmed. I've not been doing a great job taking care of my business.

Starting point is 02:01:04 Luckily, I have some great employees. And I've always needed to get it a little more under control, but between homeschooling and everything else, it just was never a priority. It felt too overwhelming. Well, one of them. engaged to be married. She's going to be 21 in a few weeks. And then 17 and 14. They were, yeah, 17 and 14, boys. And so what happened to the 700,000? Where is it? So I got a smart vestor pro to help me put together all the investments. So right now he's got it in a mutual fund. There's like 600, I think,

Starting point is 02:01:47 and I have like $100,000 in my bank account, which I didn't realize how, And so what does it take you a month to live? What's your... That's my problem. I don't even know. Like, at first I was like, we're just going to breathe. We've got money. We're going to...

Starting point is 02:02:04 And now I'm starting out eight months in. I'm like, okay, we've got to figure it out. And I don't hardly even know where to begin. I know it sounds terrible, but I've never actually budgeted. I only did it in my head and kept a running total, and we've always lived so far below our means that it was fine. Well, let's start. What do you need? What do you need in food a month?

Starting point is 02:02:26 I don't even know. Oh, yeah, you do. Tell me what you need in food. In my mind, maybe $400. You've got two teenagers and you. No, $400 is not enough. You probably spend two to three a week, do you think, on groceries? Maybe.

Starting point is 02:02:44 Maybe. Yeah, I don't know. Okay, so you need $800, all right? And you don't have a house payment, and how much does your electric bill run? Well, when it's real high, it's about 1,400. Okay. And how much is your water bill? It's on well, right?

Starting point is 02:03:00 Yes, I don't have a water bill. Okay. Do you have a gas bill? No, only on the rental house and the rental property page. The rental house is a separate issue. I'm asking what it takes to operate your home. Okay. Okay.

Starting point is 02:03:14 Rental house has support itself. It's got a renter in it, doesn't it? Yeah, it's a short-term rental. Good. Okay. And so you just begin to ask questions like I was asking you, and you fill out the form on every dollar in the budgeting app, and you'll look up and see what much you've got. And so I think your $600,000 can create $60,000 a year pretty easy. And I think you might be able to live on that.

Starting point is 02:03:39 And then your business creates some more. How do I untangle my business? Because some of it, like my Venmo and my PayPal, that's how my clients pay me. Sometimes they use it for personal. You shouldn't. You need to completely see it. separate your business from your personal. Two separate accounts.

Starting point is 02:03:54 I have a personal account and a business account. Personal Venmo, business Venmo. Personal debit card, business debit card. And don't do anything in business with the personal and don't do anything in the personal with the business. Keep them completely separate. And then you get less confused. When you expect your home, it's like more confusing because the business is at my home.

Starting point is 02:04:17 It's not confusing at all. When something happens in your home that's business, you know what it is and you know what's not. Put it in the business account. If it's business, if it's not, do it out of the personal account. Where it's located doesn't matter. What kind of business is it, Lisa? I raised dogs. You what?

Starting point is 02:04:45 I raised dogs. You raised dogs? Yeah. Yeah, I raised dogs. You're a braider. I think I, yeah, I gross about $500,000. Okay. What kind of dog? That's not what I net.

Starting point is 02:04:57 Rode Asian Ridgebacks, Cavalier, King Charles Daniels, and capital food. Okay. Yeah, these are expensive pups. Okay. Yeah, we do all the health testing and all the... Yeah, and all of that is a business, and you have the cost of the breeding and the vet bills and the food and the cleanup and everything else and the cost of your staff. And you have the income created by the sale of the dogs. None of that is at home. It happens to be on your location there at the farm, but that's all.

Starting point is 02:05:27 So you can separate this out and run it separately, and you need to. Just make sure you're making a profit. Make sure you don't have this $500,000 hobby. No, it does make a profit. How do you know? You don't even have a set of books. Well, I do have QuickBooks. Okay.

Starting point is 02:05:46 But what's going into that? Are you putting personal stuff in QuickBooks? Not my, I have somebody that does all that for me. We started doing that about three years ago. She helped me untangle everything. Well, almost everything. I'm almost there. Yeah, I think you're close to me.

Starting point is 02:06:01 Yeah, okay. So here's the thing. Your stress level is going to go way down when you get this cleaned up, when you get the tangles combed out of this hair. But there's still a few tangles left, and they're tied into your grief story and into this tragedy. and they're adding to your pain. And so the cleanliness of organization, extreme organization,

Starting point is 02:06:26 is going to lower your anxiety level. Yeah, and stay on the line. Lisa, Kelly will pick up and we'll get you every dollar for a year to start doing just on your personal side of running your home. Yeah. To start putting in those numbers. That puts us out of The Ramsey Show in the books. We'll be back with you before you know it.

Starting point is 02:06:42 In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Thank you.

The Ramsey Show - Your Financial Stupidity Has To Stop Today!

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