Behavior Matters More Than Math

[MUSIC] Brought to you by the EveryDollar app, start budgeting for free today. [MUSIC] Normal is broken, common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm Dave Ramsey, your host Rachel Cruz, Ramsey Personality Number One, best selling all their co-hosts in the smart money happy hour. I'm Ramsey Networks, and my daughter is my co-host today. Open phones, a triple eight, eight, two, five, five, two, two, five. Andies and Indianapolis, hi, Andy, how are you? >> Good, how are you? >> Better than I deserve, what's up? >> Yeah, well, I'm 50 years old, married, two kids. I've just been going off to college here just now, and we're in a situation we're leading into last year, had corporate buyouts, cap my pay, and really cut my pay, significantly. And in the process of trying to make up that income, my wife became severely ill, and we're heading towards disability. So she's definitely disabled now, we're looking at, she basically, she should have been on disability years ago, but we've had trouble getting her there, do the various reasons with her sickness and diagnosis and whatnot. So we've kind of made it this far, trying to put bandages on everything. Two credit cards maxed out. We sort of foolishly took the opportunity to take mortgage forbearance. We were kind of doing it at three months at a time. And through the end of the mortgage forbearance here this year, they will not differ our payments. So they're asking for $13,000 to keep us out of foreclosure. We weren't aware that after six months, they can't differ payments, but we're in a situation where we're going to file chapter 13 bankruptcy and restructure, but I wanted to talk to you first. And I'm so sorry, that's a lot. So you have $13,000 that you're behind on your home today. And they want it by the end of the year. They want it by the end of this month. Okay. So that's a train that's been coming down the track for a while. You've seen it coming for a while though. Absolutely. Yeah. Okay. We thought it was going to be temporary. What is your home worth? 350, 350, 350. Correct. Okay. And what is the mortgage balance? What's it take to pay it off today? 150,000. Okay. All right. And what do you make now? So I just started a new job a year and a half ago. I used to be on commission, so that was always another thing too, with trying to manage cash flow, but I'm on salary now at 90,000 a year. Okay. That's good news. All right. And you have two credit cards and the balance is on those are the balances on those are what? 18,000 total total. Okay. All right. And how much on your cars, how much do you own your cars? One car is paid off, one car, we owe 8,000 on pin two, 78 a month for it. Okay. All right. And what are the debts? We have 2,000 in medical bills. Usually, and that's kind of a standing number, it seems to the road, we have, I have an 8,000 dollar deductible right now, in previous years, we had a 15,000 dollar deductible that we would max out, and then I refide the house twice in the last handful of years. Why? To pay off credit cards that we had used for medical expenses, I know it's truly foolish. Okay. But we keep thinking, we thought it was temporary, you know, I kept thinking she was going to get better, you know. Okay. Well, the reason I'm asking all these questions is, it's the only way I can get to your answer. A chapter 13 bankruptcy takes the balances that you have, and you have to pay the minimum normal payment, plus something on the arrearage, on the car, and on the house, for 60 months, for five years. Okay. Your unsecured debt can be paid back on a formula that they use when they're calculating it, some percentage of the 18,000 would be reduced. So pretend like they gave up half of it, so you had $9,000 that would be in the five-year plan as well. Okay. So you're going to be in there for five years, and you're going to pay every dime that you owe on the house. It just spreads it out, it's all it does. Okay. There's no deal, there's no back of the mortgage. So that 13,000 is going to be spread out over 60 months, plus your regular house payment. So in chapter 7 bankruptcy, you're going to have your regular house payment, plus something on this 13,000, whatever 13,000 divided by 60 is, okay. So here's what happens, that 78% of the chapter 13's in America fail. People don't make it through the 60 months because they can't make the payments, and we already knew that, because they couldn't make the payments, and that's what put them here. You follow me? Okay. So it's like when you refinance the house and didn't change anything, and now you've got new credit card debt after that, okay? So because you didn't change anything, you didn't fix what the actual problem was, you just treated the symptom, and that's what the bankruptcy does. So I always try to figure out a way if there's anything we can do to not file chapter 13, because it is a bankruptcy, and then for the rest of your life, if you're filling out any form anywhere, this is if you ever file bankruptcy, yes, I have. I filed a chapter 7 in 1988, and for the rest of my life, I get to answer, yes, I have file bankruptcy. So I don't recommend bankruptcy, I try to figure out a way to avoid it where I can, if it all possible. So, let's pretend that you paid the car payment. You got on beans and rice, rice and beans, and you work two jobs or three jobs more. And yeah, Andy, you didn't pay a dime on the credit cards, and you stacked up cash. I bet you could scrape together the 13,000 before the foreclosure actually occurs. Which would be how long? Probably six months. All right. I see. Get current on that, and then go work on your credit cards. Your credit is going to be damaged, but not damaged as much as if you filed bankruptcy. And Andy, I'm assuming you have nothing in retirement, right? No 401Ks. We emptied that years ago with our diagnosis. Yeah. What's our diagnosis? Chronic Neural Lyme Disease? Oh, wow. Okay. It's been controversial in the past previous years. I've got insurance to be covered. Yeah. We lost a team member to the disability we didn't lose his life, but he lost his, lost him to disability, and exactly the same thing a few years back. Oh, man. That's harsh. Well, you remember the stimulus we received way back when the Biden stimulus, we spent that on a $3,000 test just to confirm whether treatments were working or not. For example, you know, out of pocket. So we're hoping that changes. We're hoping insurance gets better, but here's what not having insurance right now either. When I filed, I heard my attorney say something loud and clear, and I always say it to folks is after you filed bankruptcy, you're still in the exact same position you were except for the death. So all the things that are draining your emotions, all the whole of this medical, all the exhaustion of fighting and fighting and fighting against the system is all still there. Bankruptcy didn't fix any of that. And really, that's kind of what caused you to get here. So what I would do is find out how long it takes for an attorney to do a foreclosure in your state and see if I can't scrape together the 13 by going all hands on deck before the foreclosure and avoid the bankruptcy. That's what my first goal would be. As your business grows, everything becomes more complex. There was a time when Ramsey Solutions had too many disconnected systems and not enough visibility across the business. We wasted too much time chasing information instead of making decisions. That's why we got NetSuite. 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I've been wanting to put it towards the credit card because it's a higher interest rate. What say you? Well, you know what we say. We say pay it off small. We pay pay it off small as to largest. You knew that, right? Yes, I knew that. My husband just wants to do that credit card, so bad. Well, I would not do that. I would pay off the car. Can I be smart, I like for a minute? If we used his plan, we'd be where you are. Exactly. Okay, so I don't need his advice. His opinion is invalid based on the pattern of his life. No, thank you. So now my smart eye's done. Okay. Well, first one, Kerry. You win the argument, Kerry. Yes, well, the top win for me is that he wants to pay off debt. We have so many people that call and they can't even get their spouse on board. So arguing about which debt to pay off to good argument to have. But the umbrella, it's a positive. I'm glad that you guys are on this page with that. Agreed. Agreed. Now that I got my smart eye like out, I completely agree. So anyway, the, yeah, I would pay off the car. And actually, here's the weird thing. I've done this a bunch of times because his angst is that the interest rate on the credit card is so much higher than the interest rate on the car. Correct. Yep. That's what is, that's the burn his saddle. And so if you said, do you have any idea what these two interest rates are? Do you happen to know? The car is like five, five point something in the credit card is 18 something. Okay. So it's a 15 swing or 13 swing. Okay. So if we do round numbers and just to make it real easy, say, let's say it's a 10 swing. It's a little more than that, but not much. It's $1,700 a year is the difference 10% on $17,000. Okay. Okay. So it's costing you to do it my way, $1,700 for the year. However, you don't have a car payment anymore. And your car payment is what? About 500 over 500. Okay. And your household income is what? Well, he brings home about $12,000 a month. Okay. And $50,000 means that if we don't have a car payment, we should pay it. And we make that kind of $12,000 a month. We should pay off $50,000 in about 10 or 11 months. Oh, okay. Okay. So it won't even be a full year. Yeah. So it won't even be $1,700 difference. And the other difference is that you cannot calculate the sense that we have traction, the sense that we've done something big with this money. And what that does to the momentum towards paying off the rest of the debt, that's hard to put into simple mathematics. And all we're doing is simple mathematics. How much is the credit card payment every month? I'm just curious, I'm 50,000. Well, the interest would come up to almost 600 a month if we just paid the minimum. Yeah. So you're going to put, I mean, you need to put, you need to put $5,000 a car payment. Yeah, without a car payment, you need to put $5,000 a month on the credit card and be done within about 10 months, give or take. And so it's going to cost you about $1,700. So $1,700 was around down so we can actually be correct now. And yet, it's also got the highest probability of actually succeeding. And so having taught people this for 30 years, having done it myself, having literally gotten tens of millions of people out of debt, I'm going to encourage you to do it that way. Yeah, Carrie, have you guys started the process? You said that this is going to be a tax refund check of 17,000. How much are you guys throwing in debt right now, the car and the credit card? How much are we, what? How much are you throwing at the car right now? I mean, are you guys paying off debt right now? Are you all waiting on that check? Well, I wouldn't say we're actively, like, like, life and beans paying off debt right now. So we're kind of waiting on that check. But this check has gotten me motivated to do the life and beans and rights thing. You know, like, let's get it done because it's the momentum. I see something can happen. Yeah, totally, totally. Yeah. Yeah, so 500 plus the 600 that you're already paying is 1100. So I'm asking you to come up with another 3900 out of your budget. And you'll be done in 10 lousy months. And of course, you've cut up the credit card or you will tonight. And the two of you are on the same page and everything else. So overall, let's give him an 8 out of 10 because he's under the umbrella of husband that wants to get out of debt. Like Rachel said, that's a big win, that's a huge breakthrough. So at that point, then we're only arguing about concepts, which is a fun thing to argue about, which play to call to win the Super Bowl. These are good arguments, right? That we get to have this question. And so it's a good thing. But I would and we would tell you to pay off your smallest largest. Smallest to largest. So Rachel, here's the interesting thing. Okay, let's go ahead and throw out the rest of it because everybody out there, all the crap we get on, tick-tack and read it and all the other stuff, that the debt snowball is not mathematically correct. And that the avalanche method that some people talk about, where you pay off highest interest rate to smallest interest rate, is mathematically correct and you will get out of debt faster. The answer to that is that you're wrong because your math formula is incomplete. If you learn how to do sophisticated mathematics, you have to include probability of completion. The number of people that complete the debt snowball, because it gives them a positive feedback loop, is over 10X, the number of people that actually complete the avalanche, because the avalanche is emotionally, relationally hard to do, because you don't get traction. You don't have something saying way to go, way to go, way to go. And every time you pay off that little debt, you get a way to go feedback loop. And that way to go feedback loop keeps you in and increases your chance of actually finishing the freaking program and getting out of debt instead of having some kind of mathematical theory that you do nothing with and you get paralysis of the analysis. And so when you add in probability of completion, the debt snowball is far superior to the avalanche, mathematically. But now we've actually done some sophisticated mathematics instead of sixth grade math, which is how most people do their math and that's what gets them broke. So in her case, it actually is more expensive. What I just told her to do is going to cost them more money. It's going to cost them about $1,500 more, maybe $1,700 more somewhere in there, to do it the way I just outlined if she does exactly what we just told her to do. And if he does exactly what we just told him to do, that normally is not the case though. Normally when you run the math out, it's like a month and a half, two months difference on how fast you get out of debt. If you work the avalanche precisely and you completed it, which almost no one does. Well, people do, I mean, they do, but the probability is much lower. Yeah, yeah, yeah, yeah. And so, and that's why when MIT did a study, they figured out that personal finance and they came back and said on the front page of time magazine, Ramsey's right. You know, because the debt snowball works because of the behavior aspects of personal finance. You're modifying behavior, you're not fixing math. Well, not always the joke is, if you're $50,000 in credit card debt, you wouldn't be there if you were doing math in the first place with your bank account, you know. Which is kind of what I just did that little minute ago. Yes, yes, yes. If your math was so good, you wouldn't be here. So, that's the thing. The debt snowball is superior because you understand that personal finance, including saving, including investing, is more behavior based than it is actual math based. Another example of that is in our millionaire study, when we studied 10,000 millionaires, we found they weren't that great at picking mutual funds. Their mutual funds were good to OK. They weren't bad, but they weren't the best. The difference was that they actually freaking put money in them. Instead of talking about it, that's the difference. So the behavior matters more than the math. (upbeat music) Hey George Camel here, a few years ago someone stole my identity. And let me tell you that is not a quick fix. It takes hours on the phone, piles of paperwork, and a whole lot of stress trying to untangle the mess. And after that, there's this nagging paranoia because your information is already out there. And the truth is you can do all the right things and still become a victim. That's how common identity theft is. 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Dave, I'm doing well, but I got myself in a financial predicament with my father and I just can't figure out how to get out of prior to my wife and I getting married. He purchased us a house for a million dollars cash. And he pulled ahead $200,000 of our inheritance, leaving $800,000 balance for us to pay off in a mortgage, that he said he would help us out by just only charging us a 3% interest rate until the balance is paid off on a 15 year mortgage. So that's a lot of money, but I have no documented equity or ownership in the house for which I pay a majority of the mortgage, the maintenance, the repairs, the upgrades, and I find myself just digging myself every month into this deeper hole that I possibly, one day, if something bad happens, I will just have no equity in. Have you talked to him about it, Matt? I have to which he said to trust him and everything will work out. No thank you. Yeah. Mm-hmm. Okay. So, how old is he? He's 70. Okay. Let's pretend that his heart skips a beat as he's driving down the road, which could easily happen to a 70 year old. And he loses consciousness and goes across the lane and hits someone head on. And they die. He's going to get sued for millions and millions of dollars and it's going to be a lien on the property that he owns. You're screwed. And he has put it in a trust in order to- Doesn't protect it. It does not protect it from that. Okay. This is absolutely bogus. This is controlling beyond belief. No. No, I'm not going forward with this. Would it be what it now? I'll see that protected in that case? There's nothing that'll protect it. I mean, LLC is owned by the guy. You can go after the LLC shares. So the property, if you're going to pay payments on it, needs to be in your name. There's no excuse for it not being. Trust me is not an answer. Mm-hmm. And he's worried that I would take the property potentially from his daughter and I haven't nearly paid my half or a fair share of it. So how can we- How long have you been married? You've been married over one year. Okay. So here's what I'm going to do. I mean, you guys do what you want to do, but this is not tenable for me. Okay. I'm not going to live like this. So I'm sorry I shouldn't have done this deal. It's turned out to be a really, really bad idea and I wished I hadn't done it. And so we're going to undo it. We're going to let you have your house. And we're going to go buy a house or we're going to refinance this and we're going to put the $800,000 mortgage in our name at six percent and five and a half percent right now. And we're going to pay you off and you're going to put the house in our name. But we are not going to continue forward with the house only in your name, period. How will your wife handle that, Matt? She's not going to be too thrilled because that's going to increase the interest rate inadvertently for us that wasn't necessary in her eyes. It's necessary because you don't own a house. And you're so freaking vulnerable that it's ridiculous. Your father-in-law says, trust me, but he doesn't trust you. Mm-hmm. Yeah. It needs to go both ways. This is not cool. Yeah, and my fear, Matt, is that a three percent interest rate is going to rattle your one-year marriage. You know what I mean? If your wife is already taking his side in a level of logic, right, of just just math, just like, oh, I just want to save money and not looking at the relational equity of what this is doing. And then the potential risk of your home, yeah, it's probably going to cause some waves. But I would say it's probably necessary. I'm going to call some waves. Yeah, I think it's good. I'm going to start out, gentlemen. I'm going to turn it up. Yeah. Start out kind and honoring and say, I appreciate this. I know you've got good intentions. I love you and I appreciate this, but I simply, I'm not going to go forward with this. It's not going to happen. Okay. And you and your, it's not worth the three percent savings. Your risk that you're taking is astronomical. It's ridiculous. It's a horrible deal for you. And I asked my wife if she was in the opposite role, if my family had purchased us the house and she was paying a majority of it, would she become comfortable in this deal? And she said she wouldn't become comfortable. Well, then we have to decide, are we going to leave our father and mother and cleave to our husband and cleave to our wife? It's an old fashioned saying, you leave the father and cleave. It's old English from the old English Bible, but yeah, you, you know, but we have to set up. Okay. I heard bad or you guys. And again, this, to me, I'm like, this is a totally, I don't like the idea of people using family as a bank, right? People do this with student loans. They do it with mortgages. And it just always, it's always a little icky and weird. It just kind of changes, it changes the relationship. But the thing on top of it for Matt, for me, is like, if you guys start having kids and you're building a family, the place that you call home that is supposed to be your home. That's why it doesn't make sense to me of his, his logic. This is your home and her home, his daughter's home. And why he doesn't give you all the dignity of putting your name on the title, of following through with the plan that's already agreed to is odd to me and his fear, I'm like, I'm a little offended. If you're going to do this deal with me, be my banker and be the husband to your wife. And you can't trust me with it with a million dollar house. Like, oh, it just adds, adds to the relational dynamic. Yeah. Yes, it does indeed. And that's why I kind of lose sleep over it. And I see as everyone goes on, it's harder to bring up this conversation. Yeah. I think the two of you, you and your wife need to sit down with a good therapist, a good financial counselor. I mean, a good marriage counselor and maybe your pastor, if you have one. And you guys need to talk it through and then you need to decide what you're going to do. And then, um, as a unified front, you've got to present it to him. And so, you know, either going to, we're either going to refinance this and get it out of your name and put it into our name or we're going to hand you the keys and we're going to move. And so, because we're not going forward and listen, don't accept a mortgage from him either. If he says, okay, I'll put it in your name and I'll just put a mortgage on it. No, I do not want to owe this man money. This has got a bad vibe on it. The best thing you can do for your wife and your marriage is for this guy not to be between you anymore. When I think his intentions are good. - I don't think his intentions are bad. I just think he's emotionally immature. I would never look at Winston Cruz and say, "I can't put this in your name because I don't trust you." After I handed my daughter's hand to him. - That's what I'm saying. It's so, it's so odd. - I gave him the most precious thing I have on the planet. - I trust you. - One of my daughters. - My daughter, I don't trust you with-- - But I don't trust you with a stupid house. - Oh, it's backwards. - No, thank you. - It's backwards. - That's just emotionally-- - Oh, Matt, I'm sorry. - Matt. - And your wife, I'm like-- - It's gonna be a hard process, but dude. - It's gonna be good for you guys. If you guys get through this. - Choose the conflict today because the one that's laying out there 10 years from now is much bigger. (upbeat music) If you're shopping online and these days, everybody does. Data brokers are out there right now buying and selling your personal information. Your phone number, your home address, your email, without your knowledge or consent. And that puts you at risk for spam calls, scam texts, and fraud. 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The vast majority of it was written by Solomon, which those of us that are Christians or Jewish believe Solomon to be one of the wisest men to ever live. And he wrote Wisdom in the book of Proverbs. And then we fast forward and it becomes our Bible, or in the case of Jewish person, their Bible, the Talmud, what Christians would call the Talmud, what the Jewish person calls the Bible. And the Wisdom Literature is most of us in evangelical Christianity or Orthodox Judaism, believe it to be literal. And so that gives people trouble in some cases, but that's okay. The borrower, Proverbs 22-7 says, the borrower is slave to the lender. Now everybody that's listening, think about this for a second. How many times have we had payments to some organization, a car company, a credit card, a bank, and we resent that organization? We signed up for it, but by the time we finished paying off the truck, we hate Chevrolet, or at least Chevrolet, you know, General Motors finance. By the time we finished paying off the Toyota, we can't stand Toyota finance. By the time we finished off paying off city bank, we hate city bank. Make fun of the mortgage company name that you pay payments to. It's because slaves seldom love their masters. Now it's not literal slavery in the sense of you gave up ownership, but it is mathematical and legal slavery. And if you don't believe it is slavery, try not having it. - Yeah, financial. - Well, try not to having it when you pay off, when you pay off your mortgage and you pay off all your cars and you pay off all your student loans, you don't have a single people, they stand differently. - Well, it's a spiritual freedom, because money is so tied to so much of our lives. And when you hand that part of your life over to someone else, it is a form of bondage. - You've given them ownership. - Yeah, that there's not full autonomy over the work that you have created in the paycheck that you've created through your work. - So when Sharon and I went broke and we discovered that scripture among others, we decided not that debt is a sin, but that it's really dumb. And so we decided under no circumstances are we borrowing money, but we also have observed in 30 or almost 40 years of doing this now that there is zero case that I'm going to loan money to one of my children. I'm going to loan money to another relative. I'm going to loan money to a friend because it instantaneously, whether you want it to or not, you don't have a choice in the matter. The law of gravity is the law of gravity, whether you like it or agree with it, it changes your relationship with your friend to two good friends to master servant. And the old joke is if you loan your brother-in-law $100 and he never speaks to you again, was it worth it? Yeah, haha, okay. 'Cause it severs relationships. It ruins relationships. And some of you try all kinds of ways to twist it up and make it okay and figure out that the math works and all those other bull crap and it doesn't work. It doesn't work. It doesn't work. So if you have a friend that needs some money and you want to give them some money, give them some money. Period. Don't loan them money. If you want to help your kids get a million dollar house, give them a million dollar house. I got some questions about that, but before you loan them a million dollars, give it to him. See, what that does is it changes your decision then. Or my mom is 69 and she has no money saved and she's paying rent and I'm gonna buy a house and let her rent it from me. No. You just changed your relationship. Your mother is now your freaking renter. How dumb is that? That's just dumb. Think about it. It's relationally inept. No. If you have the money to buy a house and pay cash for it and your mother live there until she dies free, fine. Or you pay her rent somewhere. If you want a writer or some check to give her some money every month to help her with her rent, fine. But don't make her your renter. Good Lord. When you say that out loud, it just sounds dumb y'all. And yet some of you have figured out, well, intellectually this is the best I can, I'll have the investment and at least I know the tenant. What? Yeah, she changed your diaper you butt. And now you're charging a rent, unbelievable. Yeah, you know your renter. Kya, Lee. And if you have to have the rent in order to pay the mortgage payment, you shouldn't buy the house. Exactly. You can't afford the house. You're doing crap, you can't do. If you have to have the return on investment, you can't afford it. Don't do it. Buy a rental property and put a renter in it. If that's what you want to do. But don't do this to your parents. Don't do this to your kids. Don't do this to your cousin. Don't do this to your friend. Expect them to be a friend. The number of families that are split up and never speak to each other again, over a couple of thousand dollars that was handed to somebody. And no deal was really made. Just pay me back when you can. And then four months later you're like, hey, I need that money back. The borrower is slave to the lender. Stop it. Stop it. And another version of that's co-signing for them. Proverbs 17, 18. New King James says, one lacking in sense co-signs for another. The contemporary English version says, if you co-sign for someone else, you're stupid. That's what the Bible said. So you guess what? The bank doesn't want to loan the money 'cause they don't think they're gonna pay them. But I'll sign up for it 'cause I think they're gonna pay, even though the bank who eats lives and breathes debt more than anything, once you're to be in debt, doesn't want to give this guy money but you're gonna co-sign for him. How ridiculously stupid is this whole thing? And yet it's very commonplace and it's why most people are broke. And it's why relational breakdown in the marriage is everywhere. So moms and dads, if you want to help your kids when you have the money, give it to 'em. If you wanna put some stipulations on it, like I don't want you to borrow money, I don't want you to borrow money on this house if I give you a free house. That's a reasonable stipulation. I want you to stay out of debt 'cause that's how we got here. That's a good stipulation, you should do that. But then you don't go over there every week and go, are you about to borrow money? Are you about to borrow money? You don't go, you don't have a weekly check-in. No, stop it, you control freaks. And boys and girls, when you leave your mommy and daddy's house, leave. - Checking out all the adults to move back in. - Period, leave, leave emotionally. Set up your own household to where you and your husband, you and your wife are a family unit and these other people are separate from you. You don't stay on your mother's cell phone plan. What are you, 14? Get your own Netflix account for God's sakes. - Hold on. - This is one I just ripped our own family on. - Hip regret to go, I pay my own. - I know. - I pay my own Netflix. - We have found out other Ramsey children. I just just remembered that my wife gave our code to one of the other people in our family and I had a duck fit. I'm like, you're a grown human being. Get your own freaking Netflix account. You don't need to suck off that to keep it. - That's okay, okay, that's okay, I know. - No, get your own, pay your own insurance. Have a life. - The worst I think is people sharing Amazon prime accounts with their parents. - I'm like, oh, oh, I don't want it. - Well, now I know exactly what all you're spending time is. - I know, I know. - Stay out of my life. - I don't want to know when you order a toilet paper. - I got a new mushroom, son. I don't want you to know about it. - Okay. - I wouldn't have known anyway, but your mother might have, yeah. - No, but for real though, there is a separation to happen. It's very important. - And the problem is, well we're gonna pay the grandkids. - No, you're broke. Stop it. - Be grown up. - But if you have the money, be generous and give without strings attached. - That's wonderful. - And be generous. - Be generous. - But then there's no strings attached. - That's right. - The borrower is slaved to the lender and you're not the freaking exception. (upbeat music) - Date nights are supposed to be fun. 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Limited time offer, visit angel.com/ramsy for details. (upbeat music) Welcome back to the Ramsey Show in the Fair Winds Credit Union studio. I'm Dave Ramsey, Rachel Cruz, Ramsey Personality. My daughter is my co-host today. Jason's in Pensacola. Hi, Jason, how are you? - I'm fine. How are you? - Better than I deserve. What's up? - Well, I have some serious questions based on some serious debt. Basically, I got sick about five years ago and I've been in remission for quite a few years now. I was released to go back to work. But in that time, it was a month after we bought our house. But I found out I was sick. So I was a firefighter for 30 years and I was medically retired. Of course, I had to wait on the government to pay me for what was copied, except me for being getting cancer on the job. And then once they paid me, of course, I used my credit cards to pay, keep my house afloat that we had just bought. And medical bills and other things. And so basically, I have zero retirement. I'm 51 years old, married, all my kids are grown. And we own a house and about, not counting my truck payment about 40,000 in credit cards. And I don't know what to do. I just know that I'm tired of living like this. - But you beat cancer? - Yes, sir. - You beat cancer, right? - Yes, sir. - Wow. - Well, that's the number one victory, Jason. You're still here. It's amazing. - That's a big deal. - It's amazing. - Yeah, congratulations, Simon. - Yeah, it's a hard road. - Yeah, way to go. So, what's the truck, what are you all on the truck? - About 40,000. - What's it worth? - I'm upside down under water about eight to 10,000. So, you looked it up and you can sell it for 30. - Yes, sir. I've been offered 30 from. - The dealer. - Kelly Blue, but they, the dealer called me and asked me that much. - That means you probably can get 35 for it. Okay. 'Cause that's a wholesale offer, which is not evil. It's just a low offer 'cause they're trying to turn it and make money on it. Now, then, and your credit card debt is how much? - About 40. - So you got 80,000. - Between the, between the end of life. - Yeah, but so that, but you have 40 in addition to your, so 80 total. - Yes, sir. - Okay, got you. And you are retired medically from the fire department and you are paid what a month from that. - I bring home about 900 after all my health insurance and everything comes out. - $900 a month. - And then, 900 a month. And then I went, once I was released to go back to work, I went and got a full-time job. And I make that much, I bring home every bi-weekly. And then. - Sorry, how much do you bring home from that job? - About 900 bi-weekly. - Oh, I see. - 1800. - 1800. - 1800. And then my wife brings home about 1400 and something bi-weekly. And I've never done, I just started, I was a pastor named via the church. So I started listening to your podcasts about two weeks ago. And I know, well, I said I'm the first, 'cause I went and got a second. I went and got a third and fourth job. So I'm side hustling about 1,000 to 1,200 a month. - Yeah, so we got about $5,000 or $6,000 coming in total then. - Yes, sir. We went from making $99, basically $99,000 a year. And then I'm bringing home about 1,000 a month. Between me and my wife, we're bringing home about 1,000 a month with side hustle. - Yeah, okay. - So about 6,800 with the side hustle. - Yeah. - That's great, Jason. - Great, you're not afraid of work. So it sounds like your health has recovered pretty well. - Yes, sir, I just had a section of each kidney cut out. - Okay. - But you're back. - Back in work, and I'm not afraid of work. Your new job is your new career, the 1,800 is what? - I deliver a nuclear medicine. - Okay, it's a delivery job. - Okay. - Yes, sir. - Deliver a nuclear medicine to hospital. So that's the way I figured I could still help. - Yeah, sure. - Once I was, they helped me, so now I'm helping them. - I just wonder, Jason, if you're able to sell this truck, take out a small loan of maybe 14, go get a $4,000 car, have the difference of the 10, put all that together, and then your credit card. If you guys can throw 2000 a month at this debt, you could be out in two years. - Okay. - And then you'll be in a position to rebuild your return. - Yeah, yeah. - Now, the other piece that goes with this is, you made a lot more than this when you worked for the fire department, didn't you? - Yes, sir. I worked at, I was a federal firefighter, so I worked on the base. - Oh, wow, okay. - I wasn't, I was a civil service. - Yeah, but you were making, - You were making a lot more than 1,800 a month, yeah. Okay, so. - Oh, yeah, we were making about nine, I was making about 90 before, not even counting the life, and then we dropped it. Now I make about one with my retirement, about 27. - Okay, so, yes, I would sell the truck and get a $4,000 car, and start working on the credit card debt and work eight jobs. That's what you're doing. Every bit of that makes sense to me. I also would tell you that you're in chapter two. Chapter one was a $90,000 firefighter. Chapter two is not an $1,800 delivery driver. That's a temporary stop. - Yes, sir. - So we got to figure out what chapter two is that's 90 or 120,000 a year. 'Cause you're only 51. - Yes, sir. - So you've got lots of time to do lots of things, And you know a lot about, you know, things in and around emergency care, first responder stuff. There's a lot of options and things that you may be able to do there. And I would explore every bit of that and say, okay, what do I want to be when I grow up? I'm starting fresh. And what you did is you landed on your feet, got anything you could get. So you could get back to work. And this enables you to get back to work and help people, which is good. But you're not making any money. And so I want you to, I want you to go help people and make a lot of money. And because it cleans up your life and it's part, it's the final step of your rebound is to get your income back up to where it was, not just your debt or your finances back where they were. - Yeah, 'cause if you can, Jason-- - That kind of money, you can get out of this mess fast. - Yeah, absolutely. And then, you know, you just think you got you working, you know, 10, let's say, 10, 15 years. And if you invested three grand a month, just through a ton at retirement every single month, it'd be about $640,000. - To retirement. - Is what it comes out to be. - You can retire a millionaire. - Yeah, and that's just that, at that, at 10%. So I mean, even if there were some great months going on, and if you went a little bit, you know, more and worked a little more on me, all of it. Like the numbers really can work in your favor. But part of this is you have to emotionally recover from thinking you're gonna die and from recovering. You recover mentally, I mean, you have to recover mentally and emotionally and then start to see, you know, the possibilities again in your income. - And the frustration of cancer, like what it's taken from your health. - Oh, yeah, stole from it. - And then your money, you know, your retirement, everything, like it's so defeating, so defeating. - So demanding. - But the fact that you are here, Jason-- - Amen. - And you and your wife on the same page? - Amen. - You really can make a great second chapter of your life. - So we're trying to-- - So I'm gonna change your copy of finding the work you're wired to do by Ken Coleman. I hope it'll help you. 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(upbeat music) Our question today is brought to you by why REFI missed private student loan payments can leave you feeling like your goals are on hold 'cause you're stuck. Why REFI helps borrowers explore low, fix straight refinancing options that'll fit your budget and make you not stuck? Visit whyrefy.com/ramsey. Might not be in all states. - Today's question comes from Evan in South Dakota. I hear you talk frequently to callers who have high car payments and are living beyond their means. I travel a lot for work and I need dependable transportation. Anytime I bought a beater car, I ended up paying for it and repair bills. Where do you recommend finding a $4,000 to $5,000 vehicle? That is reliable. That's a good question. Well, I mean, honestly finding an individual who's selling is gonna be your best bet and we usually find this is funny, but it's true. Usually an elderly person, a lot of people's grandparents who have a car that's literally been sitting in the driveway, it's probably older, but the mileage is so low 'cause they're not using it a ton. - Got a lot of life left in it. - Yes, yes. And if you go, honestly, if you look on Craigslist, Facebook, Marketplace, you can do some research and find, and again, you're gonna be in this car for maybe nine months and then you'll move again. Like, it's not like you're gonna be in it long term. There may be moving up slowly, slowly, slowly out of it, out of that price range, but the, I mean, we see it a lot that people have it. And you wanna make sure you have an inspection, right? You go to a mechanic, make sure they look over it, and there's obviously wrong with it that's gonna cost you a lot. Then don't do it, but. - Yeah, and part of that is research the type of car, an old Chevy's of Chavette is not good 'cause they weren't good when they were new. So, I mean, an old Dodge Neon is not good 'cause it wasn't good when it was new. So, get a car that has some life to it. You know, the Toyota Camry, the Honda Accord, those kinds of things, they're very seldom sexy cars, but they're cars that just are workhorses, and they go, and they go, and they go, they're ever ready bunnies, they go, and they go, and they go, and they go. Okay, and that is, it's not a forever thing. It's you drive like no one else, so later you can drive like no one else. Now, let's go ahead and parlay this into, mention one thing here that I wanna add to this, I travel a lot for work. Now, I don't know what that means in your case, Evan, but I will tell you this, there's a mistake that a lot of people make that are literally on the road every day. Now, if you travel a lot for work, and it means you drive out of town, and you're there all week, and you drive back, that's different. But if you're putting 50,000 miles a year on a car, you're destroying whatever you drive. Because you put 50,000 miles on a car, you've destroyed its value. And so the value is gonna not only go down normally, it's gonna go off a cliff. You're gonna lose value like crazy. And so when you're a road warrior, 'cause you're in sales or you're in whatever, whatever you're driving is an expense. That's all it is, it's not luxury. I drive 12 minutes to work. That's a luxury. I can drive whatever I want, and I'm not destroying it, okay? But if you're driving 50,000 miles a year, you're turning, and you drive a 50,000-dollar car, you're turning into a $5,000-dollar car, $10,000-dollar car. - And I do wonder for your work, 'cause a lot of, I mean, one of my good friends, I mean, she goes, we're in Nashville, but she goes to Chattanooga, Birmingham, Huntsport, I mean, she's doing day trips. - Yeah, if you're doing that, the $4,500-dollar car is probably not what you want. - No, but work furnishes for a lot of people. - Some people, or gives them money. - Money, yes, I'm curious what that reimbursement looks like. I mean, if you've got a reimbursement-- - Not for you, Evan, yeah. - But reimbursement does not require you being dead. - Yeah. - It just requires, in some cases, that you have a car of a certain age. So, here's the thing. If you're putting that kind of miles on a car, I wouldn't drive more than a $20,000-dollar car, but I wouldn't drive a $5,000-dollar car either, 'cause it's not gonna be reliable. So, you need to drive the least vehicle that will end quotes, get the job done, and let me tell you what that means. It means it's reasonably comfortable because you're in it all the time. So, again, we're not putting you in a smart car for 12 hours a day. You being a chiropractor, okay? So, it has to be reasonably comfortable, and it has to be reliable. So, again, I'm back in a Honda Accord, I'm back in a Toyota Camry, I'm-- - I have four, you know what I mean? - I'm back in a Chevy pickup, a Ford pickup. You know, any of that, depending on your gas mileage and what you're doing and what you're hauling, what you're selling, all that kind of stuff. So, but you want something that's dependable and comfortable, but you don't drive an expensive car, or truck, when you're doing this, 'cause you're destroying the freaking thing, value wise. So, quit going and, you know, and, you know, that goes for my friends that are real estate agents. Quit buying $200,000 cars to show houses in. We all know you can't drive. If you drive over the edge of a curb, run into a mailbox to hit something, because you're always paying attention to something else, oh look, there's a house for sale, and you're whipping around, and at real estate agents, I'm one of 'em, we're ADD, and you're just all over the place. So, quit buying expensive cars, by a reasonably nice car to show houses in. But no one buys a car, because you had a-- buys a house, 'cause you had $200,000 car, versus you had a $50,000 car. Nobody does. That's just bull crap. That's in your head, and you're just fine buying something you can't afford. Stop it. So, all of that to say, Rachel's right, when you're doing the four to five thousand, there's plenty of good ones, but they're usually not cool. They're not cool. Well, they're not, and it's not long-term. It's gonna stop, like, and go woo-hoo. One, it might be seven months, and you're gonna have to trade out again, which is a pain, but if it's the thing that gets you out of debt the fastest, that's the inconvenience, that's worth it. We did it. We drove a borrowed car that had 400,000 miles on it, and I drove it for $400,000. 400,000. a month. No. It did. It did. It was an old Cadillac. It had predominant color, was Bondo. The vinyl roof was torn loose. We drove it for three months. I told people we drove it for ten years or one three month period. It felt like ten years. But I didn't have a car payment and I saved up a thousand dollars because I wanted to get rid of this. And I took it back to my friend and gave it back to him. He loaned it to me because he knew how broke I was. And then I got a thousand dollar car. And that thousand dollar car, believe it or not, got totaled. I left it in a parking lot. And some people beat it up. And I actually for some stupid reason put insurance on it. And I got two thousand dollars from the insurance company. So I put twelve hundred dollars with it. It went about a thirty two hundred dollar car. And then we sold that about a year later for thirty two hundred dollars. It didn't go down. It was already, you know, and then we bought a ten thousand dollar car. And so on. And so that's how we did it. And you can do it too. But your friends are not impressed. The brown car. That's the thirty two hundred one. Yeah. You remember it. The front wheel drive old mobile is pretty ugly. Well, in the vinyl route, the roof, yeah, was detached. So every time we would stop it would just bubble up. Yeah. Yeah. I do remember that. Yeah. But I'm not spending money to impress you at a stoplight. I don't even know you. I'm just trying to feed my kids. You know, I'm just trying to eat. I'm just trying to get out of this mess and never come back. I'd drove like no one else. So now what I drive is anything I want. And I don't buy cars for what other people think I buy cars now because I like them. And that's kind of a problem because I like a lot of them. But it's, you know, you can get there if you live like no one else later, you can live and give like no one else. So road warriors quit wasting your money. And those of you that are driving hoopties, they're not all bad. And Rachel's point is really valid. You're probably not doing this for even a year. That car only needs to last you a year. Yeah. Some people think the car buying and I can get in this mindset where it's a permanent. Yeah, it feels like I'm going to have to drive this to the wheels. Like I have to drive this forever. Never. And it's like no, no, no, it's okay. I can just get another one. You're fine. It's not a house. It's not a house. You could just sell. Yes. You could be about different on every week. I mean, other than the tax problem and the registration, it's, you know, but it's not a long term thing. No, no. Yeah. So you don't feel so permanent. And so here's the thing. If you don't have a car payment for 12 months and your car payment was $1,000, that's $12,000. So then you can sell that $5,000 car. By the way, it'd be about like my 3,200 one. It doesn't go down in value. So you can sell it for $5,000 and put your $12,000 with it and get a $17,000 car. And do that for 12 more months. And then you could get a $29,000 car if you just save your own car payment. Stop it with the car payments. One of the biggest mistakes home buyers make is talking to a realtor and shopping for houses before understanding their real budget. And that's how you end up falling in love with a house you can't afford and trapping yourself in a bigger payment than you can handle. That's why you should talk to Churchill Mortgage first. Churchill shows you what you can actually afford, not just what a bank will approve. And with their certified home buyer program, your financing is completely secured before you shop. So you won't miss out on your dream home while you're waiting for pre-approval. I've recommended Churchill for 30 years because they help you buy a home the Ramsey way. So here's your plan. Contact Churchill, know your numbers, and then when you find the perfect house, you're ready. Go to Churchill Mortgage.com/ramseyoffer for a special offer only for Ramsey fans. That's Churchill Mortgage.com/ramseyoffer or click the link in the description. Allen is in Indianapolis. Hey, Allen, how are you? I'm all right. How are you? What's up? So I'm looking for help getting my fiance on board with sticking to a budget. Okay, how long have you been engaged? We've been engaged for about a year. Okay, and when will you be getting married? Well, we haven't said a solid day on it yet. We've got a one-year-old so between taking care of him and I'd like to be a little bit better out of that before we get married. Why, you're yet a baby. Yeah. What's the point? Might as well get married. Yeah. Okay, anyway, side subject. All right, now the, how old are you guys, Allen? I'm 26 and she's 25. Okay, great. And what's the conversation's been like about budgeting together? You're not married. You technically should still be on separate budgets with separate incomes and everything until you're legally married just to protect. She needs that protection for her and you need that protection for you. But, um, well, she won't be entirely honest about how much that she has. I know it's excess of 15,000. Why would she be honest? You know, I don't think she wants to tell me how much and I know she hasn't been paying a lot of it. She moved away from her home town to move down with me and I've been a primary source of income for both of us. That's what happened. Do you think she has 15,000 dollars in debt or savings? Yes. Debt. Okay. And why would she not want to be honest with you? I think she's embarrassed about it. Because of the way you've presented it? I mean, that could be some of it. I think she just, she doesn't like where she's at and she, she doesn't want to open up to me about it entirely because it's a vulnerable thing for her and that's something that she kind of struggles with being vulnerable, especially about stuff like that. Okay. So I think that's probably more of the root issue is that you guys are living together. You have a baby together. You're engaged to be married and from a relational IQ stance, you guys don't have the relational equity to hold each other's situations. And does that feel like a red flag to you that you guys can't be fully honest? How about what's going on? Yeah, it definitely does. Yeah. So I would work on having that conversation and the way you present it, Alan, is really, really important because if she feels like crap when it comes to money, if she feels dumb, if she regrets all of this and you're like, well, you need to be doing this and this and this and you've got to, you know, sometimes people can come hard on someone that's already down. And so I would say to love her really well in that and to have a lot of humility, a lot of grace. And your desire is to know her and to know her situation and not to shame her, but for you guys to start working together to have a plan for your future because your future I'm hoping is together, right? And to be a married couple. And so to make some forward some progress forward, what are you making? Some steps. So last year I made about 96,000. Okay, what do you do? I'm a law enforcement officer. Okay, good. Okay. Well, if the way I answer questions and the way we always have on the Ramsey Show is what I do if I woke up in your shoes, knowing what I know about the data that's out there and what it takes to win in a marriage and what the data that's on that and the data that's what it takes to win to build wealth. And by the way, they're pretty similar, which is interesting. So the single people that are 30 that are living together have a net worth is somewhere around 14 times smaller than the married people that are 30 that are living together. And so the data tells us that marriage tends towards a much better financial situation versus being and being in a shacked up. Okay, that's what the data tells us. So now that I know that I'm getting married this weekend, I already not for the money, but I have a child and I'm taking this lady, this is, I'm already taking care of her. You're basically married, Alan. I mean, you guys will be. Yeah, I mean, and so go ahead and get that done. And there's no like, I have to get out of debt first. I didn't have to, you know, I didn't have to wait to have a baby. So no, I mean, that's a lot bigger deal than get out of debt. So let's, you know, that's what I would do. I get married this weekend and then to Rachel's point, I would would begin to say, "Okay, we are gonna work on all of our prosperity and all of our bright future together, and we together are gonna make decisions that cause that to happen. And so, and I'm gonna help, and you're gonna help, and we're both gonna have a vote. And we need to sit down and say, "Okay, what's blocking that?" And so whatever debt you got, we're gonna clean it up right quick, that's our first thing. And then we're gonna start saving money for retirement, I mean, saving money for an emergency fund, then we're gonna save money for a down payment, then we're gonna save money for retirement, then we're gonna save money for junior's college fund, and then we're gonna pay off the house, and we're gonna become millionaires in the next 12 years. And we are gonna sit down together, and we're gonna look at that, and we're both gonna tell each other everything about everything, and I'm gonna help, and you're gonna help. And that's what Rachel's talking about, building relational equity, and there's no shaming in that. It's like, you did what? You know, unless, unless, unless, after we agree to doing something, you go back into something else. Sure, yeah, but, but the power dynamic in the situation, I mean, is she home with the baby, Alan? Because she said she's not bringing it, she's not bringing him an income, right? She is, she works part-time, because she feels like she needs time out of the house, and I'm not gonna be going to argue with that. Okay, yeah, yeah, no, it's great, it's great. Yeah, so that's what I would do, and you say we're gonna, I want us to be aligned on saving money, I want us to be aligned on getting out of debt, I want us to be aligned on what we're spending, and both of us talking about it, and both of us having a vote in this as a husband and wife team, and let's go see the pastor or the justice of the pieces we can, and let's get, and then let's go build our whole life together. Yes. And, because you're, you're trying to run around with one foot on the boat and one on the dock, and the boat keeps rocking, and you're going up in the lake, and so you just, you need to get all in to the boat or back off on the dock, one of the two. And, and remember Alan, money is, it's not the end goal, right, of marriage for you guys. It's the working together thing. Exactly, it is, it's what it produces, what the money represents when you guys are on the same page. You both have a voice, you're both being heard, both of your opinions matter, like all of that is a practice to every other part when you're talking about parenting and when you're talking about in law, right, like all, you're all the same person. And so when you can kind of work on one area of your life like that, to get on the same page together, it's huge and to know her and to serve her well. I mean, honestly, um, yeah, Alan, I mean, I would be like, you're a police officer, you know what to do, step up, you know, step up and take care of her. Yeah, you see the families every day that things aren't going well with. Yeah. And so, um, yeah, you can just, you know, all you gotta do is look at that, you know, it's my anti mentor, I'm going to go the other direction of those things. And, um, and none of the things you write on, I've been talking about, yeah, the life you can create, Alan, as a husband, as a father, like all of that is incredible, like men that step up to serve and protect and take care of yes, it is literally part of your DNA in your job. And when men do that and, and their wife again, I'm so big on this, but they have an equal say, they have the ability to, to have an opinion and they're hurt like all of that together is beautiful. It is. I mean, I almost every man I know, and we also see it works, and it works, it's very practical. Yes. You know, it absolutely works. What ends up happening is you have a high quality marriage and she feels secure, she feels secure. Yeah. You feel like you are doing your part and stepping up like all of that is in this conversation. So I think there's a quality of marriage element there that's so big that you get to step into Alan and not to shame her, but you get to walk beside and help and it's a really, it's a beautiful thing and thank God for that, for two parents like that with this baby, you know. Good for this kid. Yeah, absolutely. Get married this weekend. A lot of banks are happy to hold your money, but Fairwind's Credit Union helps you make progress. Those people spend years focusing on their financial goals and never stop to ask whether their bank is helping them get there or just holding on to their money. The real goal is building an emergency fund, paying cash for your next car, saving for a home, looking at your finances and actually feeling some peace. That's why I love Fairwind's. Their smart bundle gives you up to 10 free high yield savings accounts to help you stay organized as you say for different goals, plus early direct deposit and no monthly fees. You get support from real people who want to help you win with money. You can even get the Ramsey debt is normal B Weird debit card, which is linked to your free Fairwind spend smart checking account. To tell the world, you think differently about money. So look, if you're working the baby steps, your bank should be helping you move toward financial freedom, not just park your cash. Go to Fairwinds.org/Ramsey to open your smart bundle and start making progress today. That's Fairwinds.org/Ramsey. Ensured by the NCUA. Devon is with us in Denver. Hi, Devon. How are you? Good. Are you today? What's up? I was a minority owner in electrical business, and I had to sell it, well, I sold out, and I'm going to get my payout, and I'm trying to decide if I invested in a mutual fund or pay off my mortgage, which is at 2 and 7/8% on a 30-year mortgage, or a 25-years-left. What's the balance on your mortgage? 422,000. Wow. Nice payout. What's your payout? What's your payout? $335. Oh. So you don't have enough to pay off the mortgage? No. No. You don't have the other hundred. I have about 90,000 in savings right now, but I was going to use that to start my business back up, and keep that aside for our three to six months emergency fund. Okay. All right. Well, let's go back to the original premise, and then let's figure out what to do with your particular situation. The original premise is I don't want to pay off my 2 and 7/8, and I'd rather invest it instead. I would not go with that theory. The theory doesn't hold up when we study the actual data of people who become millionaires. When we studied 10,000 millionaires, the number of them that said I borrowed on my home so that I could invest, and that made me a millionaire, was precisely zero. We didn't find a single millionaire that did that, and that's the essence of what you're doing. You're saying, when you don't pay off your house, it's the same as borrowing on it, right? So, no, I'm always going to lead you to getting out of debt completely as fast as we can, but you've got some competing goals, and you don't have enough money to do this whole thing here. There's something to think about. How long have you been away from that business? I'm still employed. I have to work here till the end of the year. Oh, okay. All right. And what do you make? Right now, I make 150. Good. 150,000. I'm going to go in. I assume you've got a non-compete, so you're going into a different business. The non-compete is not all of the existing customers that some of them, but I had my own business for seven years, and I partnered with the first week. But you can go into the same industry again, but just not take the customers. Yes, I can. Yeah. Okay. Wow, that's unusual. Good. Good. Okay. And so you're going to go open up a new shop. Okay. I had my own shop. My shop is still alive. I never turned it off. It just, for the past three and a half years, it hasn't done any real business. Okay. So why does it take so much money to turn it back on? I guess I was saving out of the leftover money. I know. But I'm saying, you said you needed 90 grand to turn it back on. Why does it take 90 grand to turn it back on? It doesn't. Okay. Okay. A thousand of it is our six months of emergency fund. What is? Six months. 60,000? 50,000. 50,000. So you have a $4,000 a month burn rate on your house. Okay. Okay. Okay. So 50,000 is that. So we've got 40,000 there to start the business and/or put towards the house. And we're getting 300 and something thousand towards 400 and something thousand on the mortgage. So what I would do in your shoes is, is I would just take the buyout and the 40,000 and separate the, not set the 50 a side of your emergency fund. We're not touching that for anything. Okay. Do you have any debt other than the house? - My wife's car has a 9,000 in change. - Okay, pay that. - And we're on track to, okay. - Pay that off today. - Okay. - Just try to check and pay it off, okay? So now we got 30,000 to start the business and 50,000 in emergency fund, but you don't have any payments but a house payment. Am I right? - Correct. - Okay, now then what I'm gonna do is I'm gonna take your 30,000 in park it with your buy out money in just a high yield savings account for six months and let it just sit there while you get your business started. When you get your business started and you're back to making 100,000 a year again and which will be pretty quick, I suspect, 'cause you're gonna start working on it between now and then the year to kind of get it restarted. It's not gonna be a cold start in January. Then when you get back to making 100K again, then I'm gonna take that money and throw it at the mortgage and be mostly done with the mortgage. And then your mortgage will be paid off in about three years or two years, if you do that. And when you don't have a house payment, it changes the way you do business. Your business will prosper when you don't have a house payment. It changes everything and people do not grasp it until they don't have a house payment. And then you take that huge cash flow that you've got without a house payment and you go become a multi-millionaire. And really what this buy out has done is it sets you free from all this debt and took me a minute to kind of wander around through our system to get you to where I would go. That's what I would do. I would not keep the mortgage like it's a pet just because it only eats a little. - Just requires a little bit. - Yeah. - Still there. - Two and seven H. - Yeah. - Little bowl of dog food. - It's exciting, Devon, though. It makes him big headway. - You did great. - For some of this, yeah. - It's a great deal. - Well done. - Very good. Stacey's in Boise, Idaho. Hi, Stacey, how are you? - Hey, thanks for taking my call. - Sure, what's up? - So we have maybe a unusual problem. My husband and I have been on the same page for 27 of our 30 plus years of savings, cramping, savings, cramping, that's spending money. And we are now at a, I think a very good safe place. And I am comfortable starting to spend some of that money. - Good. - And. - What's the site place? What you're not worth? - Almost 12 million. - Well, yes, you should be able to enjoy some of your money now, for sure. - That's how I feel. And my husband is, you would think we're one month away from losing our house when I talked to him about things. And it's very hard for someone who has held so tightly to savings, particularly his nature as he's a saver, to loosen up and enjoy life. But that's why God sent him you. - It's just though, I feel like, you know, even on little things I was telling your screener, just we both from home, we have one car when I was in college. - You need a car. - I mean, that's weird, isn't it? - Yes, that's weird. You have 11 million, 12 million dollars. You need to go buy a car, yeah, for sure. - It's like the parable of bigger barns. - That's a classic to me. You're just building and building and building, and building and building. For what? - For what? - For what? - Just for another barn. - Yes. - No, that's not why you do it. - How do I break through? Because I don't know. - I don't see, you're not gonna be able to change him. It's gonna have to be his work. That's deeply ingrained. If you got 12 million dollars sitting there and you don't want to buy a car. - For your wife. - He's got some issues, Stacy. God love him. - That's right. - And that's what I-- - How did he grow up with money? What's his story? - For. - Yeah, he grew up poor, but I'll tell you. I grew up more poor. I mean, I was the driving force here in our household of like, you know, coupon code. - This is not a financial thing. It's not even a relational thing. It's a spiritual thing. - It is for him, yeah. - Godliness with contentment is great gain. And if you gain only from your money, the fear of losing it, you didn't gain anything. And that's the parable of the bigger barns that Rachel's talking about in the Bible. And so enjoy some of it, be generous with some of it and continue to save with some of it. And you should always be doing all three. I will tell you this, sometimes the way to get someone to loosen up on spending is first get them to loosen up on generosity, helping others with some of this money. - I can't end up, yeah. I'm going to allocate $100,000 a year to give away. That's going to blow your mind because you've never given that kind of money away. All you've done is save. - Now to force yourself, you say see, to give away $8,000 a month, you have to. And it can be in tips, it can be to an art like, but to do that, you'll hear of something going on and you'll write that check to help. I mean, there is some amazing things that happen in the world. And when you start to participate in that, your money's making a million dollars a year. - It opens that hands and that freedom is what that does. It gives you freedom for money. - And then it allows you to, gives you an excuse to enjoy some of it. (upbeat music) - When you're trying to hire, you don't have time to dig through stacks of resumes, hoping someone halfway decent floats to the top. That's the world's least fun game of where's Waldo. What you do need are qualified candidates who won't waste your time because you can be sure they actually want your job. Which is why I love the way Zippercruder is helping small business owners right now. Zippercruder has a new feature that finds the kind of people who will go the extra mile for you. Candidates can now tell you why they're interested and they passionate about your role. In Zippercruder Smart Matching Technology, automatically puts the most qualified, most interested candidates at the top of your list. So instead of sorting through a pile of just okay, you're seeing the right people faster. In fact, four out of five employers who post on Zippercruder get a quality candidate within the first day. That's not a coincidence. It's because Zippercruder goes the extra mile for you just like the candidates you want to hire. Try Zippercruder for free today at zippercruder.com/ramsy. That's zippercruder.com/ramsy. Meet your match on Zippercruder. (upbeat music) (upbeat music) - Welcome back to the Ramsey Show in the Fair Winds Credit Union studio. Stephanie is with us in New Haven, Connecticut. Hi, Stephanie, how are you? - Good, and you? What's up? - So my question is, I have an issue. I'm currently six months pregnant. - Yay. - My husband and I, yes, with my second child. My husband and I are trying to get ready for this maternity leave, but we don't really have a solution. I am the breadwinner. I am an entrepreneur, so I won't be having really any income during my three month maternity leave. My husband doesn't know what to do. I don't really know what to do. We don't have any savings. We had a blow through. Most of our savings recently to get a heating and cooling system in our home, which was absolutely required because I just don't want you space heaters anymore. And we're really trying to figure out what we're gonna do. My husband thinks that he can't handle this. He doesn't want to get a part-time job. He thinks that we should just sell the house. And even though we have a 2.65% interest rate on our mortgage, you think we should just sell it and just live off of his income and go back into a monthly apartment. - What do you make? - So I bring home about roughly $6,000 a month. - Okay. - We're doing what? - I'm a consultant. - Oh, to what kind of consultant? - I help businesses with rent-writing and strategic plans. - So again, we help-- - Strategic plans. - Strategic plans. - What does he do, Stephanie? - He'll process and check mission. - And how much does he bring in? - He brings home, this is an income. So he brings home about $3,500 a month. - Okay, and how much do you guys need? - How much is your house payment? - So we have two. We have one mortgage, which is $800. That's not escrowed. And then we have a second mortgage is at $180. - So that's what you guys are short. You're short $1,600 a month, basically. It's what you're needing him to bring in for three months. - No, we have other expenses that we have not alone. We have student loans. - Okay, so how much extra does he need to bring in a month for you guys to keep your situation? - I would say comfortably, it would be great if he could bring in an extra $3,000 because grocery is household expenses and then upcoming with daycare. - Mm-hmm. - Okay, and. All right, how much is the car payment? - Our payment is $350. - Okay, all right. Yes, he should pick up a part-time job and you should keep your home. And you should, you're self-employed. You don't, when we're self-employed, we don't get the same benefits as employees. - Right. - And so there's no reason for you to be off from work for 90 days. - Oh, man. - You're self-employed? - Nope, I'm self-employed. strategic planning. I don't disagree with that. You push a baby out and try to be somewhat normal 60 days later. So nope, husband. This is what y'all, this is what y'all signed up for. Nope. Husband, get to work. Nope. Nope. You didn't want to get a poor family job. Well, that's the problem. That's the problem. To me. That's the problem. Go get a job, dude. Go get a job. Don't make your wife after you've been through what you've been through. You should have seen me 60 days after a bit. No. No. Yeah. Well, it's a difference between what you have to to keep your house or not, you know. I guess so. It just sucks. You just decide. You both signed up for this. You're self-employed and you plan to have a child and you have no money. And instead of keeping the space heaters, you decided you had to have heat and air. Now you're going to sell the heat and air with the house, I guess. So you've made some choices here that it painted yourself in the corner and you're going to get paint on your feet. That's fair. I hear that. I hear that. You're going to get paint on your feet. So you're going to have to decide. We have to choose our pain. Pain is coming. Okay. And the pain I would choose if I was in your old shoes is heat. I'm with Rachel. He needs to go get six jobs and take care of his family and do all that if he can. Yeah. But if you could do something a little bit from her. Or if you can do a little bit of work from home that you're, you know, gradually re-entering faster than the 90-day swing because you're not an employee. You took on running a business and so, you know, you don't have choice. You get to go back to work. That's it. If you want to keep the house, really both of you should be willing to do some of this or make the decision to sell the house. But I don't agree with him that he just gets to bail and do nothing. I'm with Rachel on that. No. That's crazy. No, he needs to step up. But I also think both of you made this mess. And so the thing I want to take away from this more than this particular situation is fixing how we got here, which is, you know, no savings, lots of debt, sell a car for a cell of house. 100%. It doesn't fix the problem. If you told me $1,200, that car had been gone about about a minute and a half ago. But it's not. It's $350. So it doesn't fix the problem mathematically to get rid of it. But yeah, I think there's going to be pain. Now the two of you look at it because of where we are. Now we have to decide what the number of pain is. And gosh, it would be, so the house, the house, the conversation is always, we're getting more and more of these calls. And the housing market, people are frustrated. They're sometimes frustrated with our advice because we're very conservative on the numbers and what you can buy. But this is why. Like if you're house payment and $1,600 and everything, yeah, it gets true, it's not that bad. Yeah. It's not. It's just, they just had no money. But when you buy a home and you're a home owner, you're stuck in this. You're stuck. And to get rid of that, yeah, to have to move out. And then go back and re-enter into the housing market. Yeah. So what I would say to you and your husband then is we love you and we want you to win 10 years from today. You'll be glad if he takes extra jobs and you take on work as you are able reasonably after the baby. Snaped. Okay. Got three kids. I was like, I know. But you know, again, when you're self-employed, there's a lot of problems. I hear that. I've come to work sick for years and I don't have a choice, you know, I mean, I don't have a choice. If I blow out my knee, I'm, you know, I put it in the cast to come work. I don't have a choice. Do you understand that? It's very different than growing a human being. I know. I'm not. I'm not the baby. I had it. I was sneezing a lot, but I came to work such a hero, such a hero. Oh, brother. Anyway. Now, I'm telling you, the deal is this, if you have a major medical event, it's not unusual for people that are self-employed to be back at work a lot faster than an employee would be. Okay. That's a fair statement. That's all I'm saying. I know. Listen. It's not sneezing. But I was like, that was cute. That was good. I had an earache. One time. I'm an owner. I'm an owner. That came. Well. I have. Yeah. I'll tell you, you know, the other thing is, okay, let's just, let's just, if we're going to continue the fun, you know, who comes to work in Tennessee when it's snowing, the people that own the business, not the employees, not many of them, only the hearty of hearty employees should work. That's all trucks come in. Well, that's it. Listen, the Tesla doesn't have four-wheel drive. I ain't going to get on the piece of ice. I wouldn't get on anything with that Tesla. You don't even get in the Tesla. Hey, George Campbell here, we often talk about how being normal sucks when it comes to your money, but guess what, normal isn't so great when it comes to your job either. Normal is staying in a job you hate, dreading Mondays and working for people you don't even like. Sound familiar? Well, the good news is you can break free from normal because Ramsey Solutions is hiring, and we refuse to settle for the ordinary. In fact, we are anything but normal and we are proud of it. And right now, we're hiring for technology, sales, marketing, writing, copy editing, and creative roles. So head over to RamseySolutions.com/Careers and apply today. Rebecca is in Tampa. Hi, Rebecca, how are you? I am great. How about yourself? What's up? Absolutely. So, thank you for what you do, I am a single Christian mother to teenage boys, love them with all my heart. I have been blessed financially by God. I've been going through my healing journey as a Christian, and money is this step of the sanctification process I'm currently going through. My business is in an engineering field. There is a tragedy in Florida, which allowed my business to earn almost a million dollars. But then the state mandate stopped, and now my income is back to around 200 to 250. In my excitement, I paid off everything, paid off a car, student loans, all my credit cards tied about 50,000 to my church, basically just spent it like it was going out of style. You didn't spend it, you paid off that. I did, and then I incurred more debt than I could imagine. I said, "You know what? I need a stable home for my kids," so I went from renting to purchasing a home. When I bought the house, I bought an older house because they said, "We'll just tie in a construction mortgage," or a construction loan with that, which they did not do. So I applied for one, got denied, applied for another, got approved, and I later got approved for the other one. So bought a house for $5.50, put a percentage down, got two construction loans, and then I bought a truck because my son does motor cross. It's just been a lot. I got to the point where I was physically ill with how much I was spending. I'm bringing in about 15 to 20,000 a month, but my bills are $11,000 without including gas food and everything else. So I'm making myself sick with how God has blessed me that I've been brought to tears humbled. So when it comes to that humbling process, I've done it myself. He bless you with the income. He didn't bless you with the house of the truck. Absolutely. Because the house and the truck don't have the blessings of the Lord have no sorrow added to them. And so the money didn't bring the sorrow, the income was wonderful, but the purchases did bring sorrow because of the debt. And so or the lost money or whatever. Is the truck paid for? I had an escalade that I paid off. It was worth 22. So of course I went and bought a $62,000 pickup truck with my son doing motor cross. I don't care about your son's motor cross anymore, I'm already tired of it. Yeah. Okay. It's $62,000 to ride a bicycle. Give me a break. All right. So no, we're going to sell the truck. CEO on the truck. I owe about $31,000. Great. Get rid of it. You hated it. And he wasn't doing motor cross with that pickup before if he was to go back to doing it the way he was doing it before you had the pickup. It didn't bring you joy or it didn't bring you joy. Yeah. Okay. So what about the house we're going to sell yet? No, I just bought it, I put 70 grand into renovation. So I have the house. I don't know. - How much is your payment? - How much is your payment a month? - Yeah, I love the house. So my mortgage is $4,000, $68, but when I was bringing in 20 grand, I'm like, well, that's peanuts, but the construction loans is what got me. So I have one for 1,600 and another one for 2,400. - On top of the mortgage? - Correct. So another, so it's 9,000 going to the house. - Is the house, is the construction completed? - Yes. - If you refinance the house and got a new mortgage that took out your first mortgage and the two construction loans, could you afford the payment? - We've had it downed because I bring in about 20, it's just a- - Then refinance the mortgage. Then refinance the house. - Okay. - Refinance the house and sell the truck. Now we've got a mortgage we can afford when we don't have a truck payment. 'Cause the other thing about that truck is every time you look at it, you feel dumb. I bought stuff when I did something dumb and the thing just kept reminding me, I did something dumb. And you're not dumb. You make a lot of money, you're smart. But you did a couple dumb things. That's okay, we've all done dumb things. I got a PhD into UMB. - It's been a lot, I've made 150 to 200 a year. And my lights have always been turned out in my home. Even when my home was 1,500 a month, how? - Yep. - I've told my kids are amazing. I said, guys, we need to change because they're dead as a multi-millionaire. He's retired at 48. But he doesn't do anything for the kid or with the kid. - Are you married? - No, she said she's single. - Oh, you're single. I'm sorry, okay, I got you, got you, got you. - Well, that's him. So I think-- - I love doing things with them because I feel like-- - Yeah, but you can't do that. You can't do that and put it in the foolish column. - Yeah. - Yeah. - Because the things you outlined for us, the things that you did that you were ashamed of. That were bothering you. That you were regretting, right? And so let's just undo those things or restructure them to where they work in your world. And your peace comes back and then we clean up the dead. So would you be debt-free if the truck was gone and you refinanced the house, except for the house? - Yeah, I have no credit card, no student loan. I have nothing else. - 'Cause you cleaned all that up in that first blush. - Yeah, and you need to be and do a monthly budget. You need some control. It feels a little bit just from-- - Yes, just talking to you. - I do reserve studies for high right. That's literally what I do. I do budget for other people and it makes me barf. That I keep-- - No, it's a BMX and motor cross. It's so hard because we have-- I've spent thousands every month traveling, saying in hotels for racing. So I go, how do I do a budget? And I don't know what my expenses are. The bike breaks, he needs clip shoes. That's a thousand bucks. - Okay. I've made that an excuse because I could still budget without that I could leave. - Well, you need to figure out, on average, here's how much I spend on my son's motor cross, right? - Yeah, and can I afford it? - And it's-- - But you just described it and sounded like you could afford it. - Well, I believe I could if I just stopped getting Chipotle and DoorDash every week. - Well, okay. - Well, maybe. - I don't think that's the thing. - Yeah. - I kind of think this motor cross things out of control. It sounds like it's way-- - It did make me hear the word no. - Yeah, it's probably-- - No, it's probably a word he needs to be introduced to. - And don't feel guilty about that Rebecca sometimes. - By the way, he's not going to make a living. It's 48 years old doing motor cross. - Yeah, but as in we hear this with a lot of divorce situations that there is this overcompensating-- - Disney mom. - Of it. And I get why you want your kids to have great experiences and a great all of it. - But you can't go broke doing it. - Yeah. - And there is a limit. You're not in Congress. - So I would figure out how much on average are you spending a month on motor cross? And make that a line, I don't. - I'll set a budget up and say we're not spending more than that. - Yeah, exactly. But then you got to, you know what I mean? Like that's the great thing about a budget is you get to put your money where you value. So Rebecca, if you really do value this for your son and out to eat, it has not much in it in order for you to make that happen. You get to decide that, everybody. You're an adult. That's what the budget is. You get to make that decision on where you want your money to go. But it has to be purposeful. Or you're going to feel out of control constantly. And always asking, can I do this? Can I do that? - The budget is permission to spend. It's where your values are. And so yeah, I think that's going to be a big change for you in a really positive direction when you sell this truck. - 100% sure you need to spend less on motor cross. And I'm 100% sure that you need to put a limit on it. Because right now you spend whatever comes up and never ask a question. And then look back later and go, oh, those clip-ons were a thousand bucks. You know, you couldn't afford it this month. And depending on the age of the kid, maybe he gets a job and pays for half of it, too. - Well, maybe he needs to win a race and get some prize money. I don't know. - I don't know how that world works. - I don't know. Hey folks, changing gears here for a second. George and I will be doing the investing essentials virtual event next Tuesday and Wednesday. Anyone can become a millionaire. It's not that complicated. We've shown a whole lot of millions of people how to do it. This is the only place. We've only done this a couple of times. I think the third time we've done one of these is the only place I unpacked my playbook for investing in wealth planning and we'll cover the basics of investing for mutual funds all the way into real estate. And even some of the nerdy stuff as well. New content on reducing taxes on wealth, on wills and so forth. Tuesday, Wednesday, next week. Join us from the comfort of your own home. Tickets start at 199. You can get them at RamseySolutions.com/events. That's September 1st and 2nd. (upbeat rock music) Dave Ramsey here for more than 30 years I've been talking to folks on the air and I can tell you that most people are broke. Not because they don't make enough money but because they don't have a plan. You need to give every dollar you earn a job because when you do that, something changes. You stop guessing, you stop worrying, you stop stressing. Our every dollar budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck. Keep hoping things will change without making a change. It's time to say enough is enough. It's time to take control of your money. It's time to start your every dollar budget for free today. Go download it in the App Store or Google Play. (upbeat rock music) In the lobby of Ramsey Solutions is the debt free stage. On the debt free stage, Colton and Allie join us, which means they're debt free. Congratulations, you too, how are you? Good. Thank you for doing good. Excellent, where do you guys live? I'm from Hillman, Michigan. Which is near what? Alopina, Michigan. Which is near what? Northern, Northeast, Michigan. Ah, okay. So you got the glove. Thank you, I had to get something on it. Way to go, well thank you for coming all the way to Tennessee. Where did you guys, how much debt have you paid off? Paid off 140,000. Wow, how long did that take? 22 months. Good for you. And your range of income during that two years? I'm around 150,000 to 170,000. Wow. What do you guys do for a living? I'm an electrician. And I work in mergers and acquisitions. Ah, very good. And you're killing it. Way to go, y'all. What kind of debt was your 140,000? It was our mortgage. You paid off your house. Wow. You guys were so weird. How old were you, too? I'm 24. I'm 23. But you can't buy a house in America today. We have an affordability crisis. But you two not only bought one at 24 and 24 and 22? 23. 23. And you paid off it. What's the house worth? About 250, 250,000. Oh, it's a good looking house, too. I love your planters. Thank you. Love the hanging planters. I think it's on the cut. That's a great starter house. Well done, y'all. So how long y'all been married? About three years. OK. Just over three years. So a little bit into the marriage. Like a year into the marriage. Will we buy the house at that point? Yeah. And then you went, we're tearing into this thing. We're going to knock it out. Yeah. We were around the same page. Basically, right when we got married. OK. So how did all these ramsy stuff infect you guys? I actually basically grew up with it. And then kind of infected her once we started to hang out and get married. There's no vaccine. Did you guys have-- Did you guys have any student loan debt or anything going into the marriage? Like you guys went in debt free. We were actually high school sweethearts. So we actually started dating when we were 14. And he showed me the day ramsy podcasts. We actually worked at a Barry farm together. And so like in the summers. And so we actually listened to the podcast while we're picking strawberries and raspberries. OK. It's again through school. Did you guys do school? So yes. So we paid our way through school. We wrote on the same page. No student loans. We paid with our wedding. We paid through our wedding. So we didn't want to have any debt going into the marriage. You guys are like unicorns in a box. You're amazing. So what's your degree in? Financial planning. Of course. And I just had a certificate-- Electrical certificate. Oh, yeah, yeah. That's true. Yes. Did your apprenticeship and all that. And you're both killing it, boy, to go. And what'd you pay for the house? I was one. I was two. - 225. - Yeah, 225. - Okay. - Wow. - Amazing, you guys. And within three years, right? Two years, two years, you said. - Two years, yeah, two years and. - Okay, so what did light look like? 'Cause you guys are newlyweds. What did you do lifestyle-wise? To put, yeah, to pay this off? Was it just like, we're gonna cut everything and go intense? Or do you feel like you kind of did what you wanted still and threw extra, like how did you do it? - Yeah, we didn't feel like, we were still doing what we wanted to do. We still went on multiple vacations. We actually did some house renovations. Mostly what we did was we lived on his income and then anything I made, we just threw at the house. We just basically lived on one income and yeah, threw my income at the house. - And did it. - I just figured it out. So you know these guys on TikTok that say, they Ramsey bought his first house for a box of strawberries. That's what they did. They picked berries. That's how they did. - For college. - That's what they picked for. - That's it. - For a bucket of strawberries. (laughing) Oh my gosh, you guys amazing. - Wow. - What do your parents say? - They gotta be dancing. - Yeah, I think they're proud. - Yeah, they're pretty sure you're not gonna be in their basement. - No, they didn't think we were too crazy. So it was good. - Well, they both taught you to work. They taught you to live like this. Both of you, you know, you had, that's hard work. - Yeah, I mean, you're, you're-- - Yeah, I'm glad we're not doing it now. - Yeah, and you know, yeah, if you do that, you're pretty sure you want to get an education. You're pretty sure you want to get a trade, right? - Yeah. - So you don't end up there for a lot. - How much was your mortgage every month? - It was 12.36. - Okay. That's amazing. I mean, it's crazy. And if you, not that you have to live in this house forever, right, if you guys can upgrade eventually if you want, but if you just invested your house payment at your age of 26 all the way to 67, you'd have 16.5 million dollars just investing your house payment from here on out. - Yep. - That's insane y'all. Is that crazy? (laughing) - It's crazy. - I have a financial calculator, so I do a lot of those. - Oh, so she knows. - She knows. - And now we have this fancy studio of phone, I was like, "I want to plug in those numbers." - Yeah, I'm definitely the nerd. - Oh my gosh. Okay, so does it feel different? I mean, you guys didn't have it for too long, but how does it feel? - It feels good. - It feels awesome. It feels free, like, we don't have, literally just felt like a deep breath. Like, we can breathe if anything happens. If I were to lose my job, if he were to lose his job, like, we're okay. - Yeah, and on top of that, you're gonna be really, really, really okay. - Yeah, that's right, it's generous. - Yes, it's generous, that's right. - Absolutely. - So what do you tell the young people listening? We have a lot of younger listeners now. A lot of Gen Z, what would you tell them if they're sitting there at 24.25, and they wanna be you all eventually one day? - I would say, I know a lot of people say to be on the same page before you get married. I mean, that's definitely just be on the same page as each other. - Yeah, and it's possible. I think a lot of times it's like, we get so caught up in this victim mentality almost where it's like, yeah, I mean, expenses, groceries are expensive, gas is expensive, like we're feeling it too, but you don't have to let that be everything. Like you can, yeah, whatever you want your reality to be, you can go and fight for it, 100% and there's power too. Like when you get married and you guys are on the same page, working for the same goals and you're on the same track, there's a power in them. It was a huge power. Yeah, I'm like $170,000 worth of bones. (laughing) That was pretty stinkin' incredible. - That's amazing. - So, I mean, you guys, you were not in debt or not been married long enough to really have felt that just the grotesque weight, it was kind of a brush with it. So instead of that feeling the relief from that, I'm guessing you just really feel accomplished. - Yeah. - Like you really realize how sharp you are and how we really did this and I'm just gonna kind of walk around with my shoulders, throw 'em back a little bit and be proud. You should. I'm proud of you. I know your parents are proud of you and you're an example where we all we hear is that you can't buy a house, you can't buy a house, you can't buy a house and not only did you buy a house, but at 23 freaking years old, you paid it off. So, I mean, shut up, hold my beer, right? - We've actually bought the house, our goal is to pay it off and hopefully less than five years. And it just kept kind of snowballing and then we're like, oh, maybe three years and then actually, then it was kind of a dig. - Yeah, it's a dig thing to see the number go down. - It's a game of five. It's what it is, that's exactly what it is. That's hilarious. - Well, cold out, y'all are great. - Powerful and so proud. - You're gonna have so stinkin' much money. It's kind of ridiculous and you're gonna be able to be generous and change your family tree and then send your grandkids to pick strawberries later. - Yeah, that's good, that's gonna be a good thing. - Hopefully for fun and not for work. - That's right, that's right, that's right. - I know, I don't think it's a, it was good money. - It's not the end of the world for three months. You can do a lot of stuff for three months. And yeah, you can pull a lot of things together. Man, I'm so proud of y'all, very cool. Your work ethic, your character, everything. - Thank you. - Stellar, Stellar, wow. Wow. Anytime someone wants to tell me that Gen Z is a bunch of losers, I'll tell them I have seen otherwise. - Colton and Allie. - I have seen the Colton Allies of the world. They come in here and they stand on this stage. They work on our team and they're absolutely incredible. We love Gen Z. Not all of them, but we love them. That's right, we love the good ones. Yeah, they're good ones are there. That's amazing. All right, Colton and Allie from Michigan. 23 and 24 years old. 140,000 paid off, mortgage and everything in 22 months, making 150 to 170. Count it down, let's hear a debt-free scream. - Three, two, one. - We're debt-free. - Yeah. (audience applauds) - Yeah. Okay, moms and dads, I have a goal for you. Create another Colton and Allie for us. Some of you that are raising these little characters, turn them into Colton and Allie. They can pick strawberries and pay off their house by the time they're 23. - Well, and all you parents with little kids on the debt-free journey, your kids are gonna be that. - That's what they're gonna be. - They grew up with this stuff. He grew up with it. (upbeat music) (upbeat music) - All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey trusted agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey trusted agent near you at RamseySolutions.com/Agent. That's RamseySolutions.com/Agent. (upbeat music) - Our scripture of the day, first Peter 315, but in your hearts, Revere Christ is Lord. Always be prepared to give an answer to everyone who asks you to give the reason for the hope that you have. But do this with gentleness and respect. John Wooden said, "If you don't have time to do it right, when will you have time to do it over?" Folks, we wish we could get to every call and every question here on the show. We can't. If you have a money question and you want an answer for your situation, head over to the website. Use Ask Ramsey. Ask Ramsey is our free AI tool that is built and trained only on Ramsey Answers and Ramsey Principles, three years of the show, all the books we've written, all the articles we've written, 2,000 plus over the years, all dumped into the Ask Ramsey app. And it gives you an answer the same way we'd answer it right here on the show. Ask your question today at RamseySolutions.com or just click the link in the description if you're listening on podcast or YouTube. Wesley is with us in Montgomery, Alabama. Hi, Wesley, how are you? - I'm doing great, Dave, how are you? - Better than I deserve, what's up? - All right, so I'm 21 years old. Me and my girlfriend have been dating for some time now and I am thinking about getting engaged. She gets to Auburn. She has about five years left in school. She's in pharmacy school. And I close on my house next Friday. And so I'm just trying to decide if it'd be wiser to wait and getting engaged to her later on in school, maybe like the year before she gets done with everything or go ahead and do it next year because next year will like be her senior year. But anyways, she has like four years post-grad that she has to do. - So are you going to be the house is near where she's going to do her post-grad work, I assume? - So it's about 45 minutes from it. - Okay. And so if you were married while she's doing post-grad work, she's gonna do a 45 minute commute. - Yeah, so that's when she has said that she's totally fine with that. And she said that even as, like it wasn't like if we weren't engaged or if we were married by then she would live with her parents and make that drive and it's also 45 minutes. Okay so on your you've graduated? Okay so I'm a I'm a I never went to college I'm a real state agent and a firefighter so I work 2448 and then I do real estate full-time I guess. So this year I'll do six figures. I'm on track for six figures. That's both of them combined. Is that like a hundred grandwesley or when you say six figures is that 150? 100 grand. Right out of 100. Okay perfect. Okay and what do you make? How much of that's the firefighter? So firefighter salary I take home without any overtime or anything around $63,000. Who's paying for her college? Who's paying for her postgraduate work? So her grandparents would pay for that. Regardless of if you're married? Correct just her. Okay. All right. Well I wouldn't I wouldn't base a marriage decision on a 45-minute commute. So I would say if you love her and she's the one and you guys want to get married? Do it. I mean get married and you know so many stories I still had some school left when Winston I got married and it was for a short amount of time but I think there is something dad my dad might roll his eyes at this but there is something kind of I think sweets when you start off and you guys are just hustling you know like you'll look back on these years and be like these were the simplest times you know she was okay okay okay sometimes it's like oh my life was so much better when you're doing well financially but yeah so there's I don't know something about that that's I think great and again it's all if if you guys feel like you're in a good spot relationally and spiritually and all of it I mean I was I got married super young so I'm if she's the one I'm definitely not against it and I think she can make that 45 minute commute and I think that's fine yeah she's gonna be making a 45 commute anyway because she's with with her parents is 45 yeah but I wouldn't I wouldn't what but I wouldn't wait five years to get married no when I wouldn't make it yeah that's the thing that's the thing for me is you know I you know we encouraged our kids to get out of school before they got married Rachel obviously chose to do that so she came in said that you always said this but we really want to get married in December and I'll graduate in May and and we really really really really really want to get married and I'm like okay that's cool so we worked it out so can't believe y'all got let us get married that young it worked out fine I mean it was we liked Winston a lot and so that's simple and he's a stud so you know that that that's kind of the thing and so if you're if you've if you've got if you two have your act together as Rachel's point yes then it won't interfere with her completing school and it won't and and it you know you're not holding each other back there's no desperation in this and I wouldn't sit around wait five years to get married I mean no I mean well we just had a couple on the stage she's 23 they've been married two three years they got married young and paid off their house and you know made some big adult strides so just because you're young doesn't mean that it can't be done so yeah you just but you need to do it from a healthy spot both of you being in a healthy spot yes and it sounds like you are I didn't hear anything in this discussion it's like needing us on her part or your part or something like that right right your only question was timing and it's what I heard yeah anyway so if I were in your shoes I would be engaged and be married as soon as possible within you know within reason so I would not wait two years and three years and four years and that kind of stuff I didn't and I don't I don't tell people to do that all right Sarah is in Baton Rouge hi Sarah how are you good thanks for taking my call sure what's up I attended financial peace university and I try to follow the baby step principles I'm get free except for my mortgage and I'll pay that off next year I am single yeah I'm single for the first time in my life I'm self-employed I was contributing 15% to a Roth floor a 1k when I was employed I want to continue to stay 15% for a time it but I don't know if I should deduct the self-employment tax from our gross income first and then figure the 15% you are just look at the gross income and take 15% of that we we teach people we teach people to say 15% of their gross that baby stepped forward and that's where you are so 15% of your gross it's same thing on your if you're a W2 employee before taxes are taken out we figure 15% of that gross it's the same thing okay and you you've just got with self-employment tax you've got when you're a W2 you've got half of that you pay 762 plus your 7.62% and you've got the whole 13 you know the whole 13% so and Medicare and everything so yeah so it's 50 it ends up being 15% plus your income tax so that's what the government does to us so there's a lot coming out but but that's you know the only difference in you in a W2 is you've got an extra 7% coming out because I mean Washington's here to help the small business person so they double tax them so that's how that works but yeah yeah so yeah yeah job Sara though well done way to go way to go you're killing it kiddo very well done Evan is in Corpus Christi hi Evan how are you hey Dave and Rachel I'm honored to talk to you today you too a little short on time go straight to your question all right I'm looking for permission to spend some money on a truck just all our house and my wife and I have never been sitting on this much cash before we've been in a little bit of a mess and so we're they're crawling out of it and praying that's kind of how much debt do you have and pause and pull in the trigger how much debt do you have no debt no debt what's your net worth we have 210 in retirement for both 29 years old and we're sitting on about 150 thousand cash okay and how much of a trucker you talking about I'm just struggling to pull the trigger somewhere 20 to 30 thousand dollars I make 120 okay what's the other car worth she got an expedition probably about 22 okay all right yeah we if you've listened to show you know that we tell people not to buy cars and things with motors and wheels totaling more than half your annual income it doesn't sound like it is and you're paying cash and so that's the two things we tell people to do 20 to 30 fine obviously you're using part of your down payment money towards the house when you do that trade it off for a truck but pay cash for it and make sure it's in that 20 25 range and you should be okay that puts us out of the ramsy show in the books we'll be back with you before you know it 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