Don't Stay Trapped In Payments

Brought to you by the EveryDollar app, start budgeting for free today. Normal is broken, common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm George Campbell joined by Jade Warshaw this hour. The show is all about you, it's for you, you are the show, in fact. So give us a call at AAA8255225, join the conversation. Taylor is in St. Louis to kick us off. What's going on, Taylor? I am. We're not here and you're great. Can you speak directly in the phone? Oh, yep, I am. Here we go. Yeah, you sounded like an alien for a second. I got scared. Sorry. What's going on? So my husband and I are facing two months ago, we had our main vehicle repossessed and we are in a lot of debt and so we're trying to figure out how to combat that. We actually downloaded the EveryDollar app a couple weeks ago and has been following that. I actually read Dave's book when my oldest was a toddler about 12, well, probably 13 years ago, I was like, yeah, so it was a long time ago. So we just have a lot going on and so we're trying to find our way back from car repossession and credit card debt currently. Okay. Do you have reliable transportation right now? So we do, they're kind of very rundown vehicles and that's what's kind of kicking us in the rear. What cost you to not be able to make your car payment to the point where the repo man showed up? So we got a little big for our bridges and we weren't very good stewards with the money that God blessed us with. So we had a car loan that was way too expensive for us and then I had two jobs and then also another side job and then my husband had a job and he's also a farmer. So we can't really rely on his farm income because most of it goes back to expenses at this point where he's at farming. So then I lost one of my jobs and then my main job cut my pay in half. Listen, this is the tail that we all need to hear because it happens all the time and that's one of the main reasons that asking how much per month is the activity of broke folks because when you ask how much a month you go, I can afford it and then one thing happens with your job as you guys have experienced and it's like the house of cards starts to cave in. So they came and picked up the vehicle, have they auctioned it and came to you for the difference yet? So they did. They actually picked it up probably in the most traumatic way at one o'clock in the morning while we were sleeping and we had to take our kids to school the next morning so we had to flag them down to get everything out of it. Get the car seat down. That is terrible. How much are they coming after you for the difference? So the difference was $38,000. They haven't contacted us about that yet. The difference was $38,000? Yeah. How much was this car? So the car was we owed $82,000 on it. Goodness gracious. Which is also more than we owe on our house. Yeah, we're pretty. What car was this? America needs to know. Yeah, it was a Yukon. Oh my goodness. And it's more than you owed on your house. So now I'm curious. What do you owe on your house? 60 something. So right now we owe $76,000 on our house. OK, well, that is a silver lining in this whole thing. So we've got this debt for $38,000 for the repo. How about the credit cards that you mentioned? The credit cards, we are about $22,000 in credit cards. The smallest is about $480 and the largest is about $10,200. OK, love that. Because we're going to knock out the 481 really quickly. So what are you guys bringing home every month? What is it that you're putting on your every dollar budget for income? So we make about give or take $90, $200 a month. I have about three jobs now. And then my husband, like I said, he has two jobs. He got a better paying job after my last month. Are either of you investing right now? We are putting money into our 401Ks. I'm begging you to stop. Please. Did you say you had the book and you were doing the-- did you say you had told him what he make over? Open the book. So if nothing else, from every dollar from the book, here's what we need to do. We need to focus all of our efforts toward these debts. Would you agree? Yes. So for putting effort towards the 401K, we need to shift that toward the debt temporarily. Now, I believe if you guys follow the plan, as it is written, in the book, you will be OK. You will retire with dignity. But right now, we've got a mess to clean up. And right now, we're trying to do three good things at once, and we're doing all of them poorly. Would you agree? Yes. Yes. So if you were to look at the '92, as it is, we know we're going to add back your investing, as it is, how much is your margin? Margin is after minimum payments, after just the basics of your budget are fulfilled. The margin is the money that's left over that we can decide what we're going to do with. So that's kind of where we're struggling right now, because so we didn't have a margin until recently. And I think this was kind of my question. One of my main questions was, the minimum payments on some of those credit cards, or the pay later loan things that you can do online, those were astronomical. Like, we were paying $300 a month just on one credit card. OK. Because they balanced what they wanted. So what's the credit totals? Yeah, what's the credit totals? Of all the debts. So the current total of all the debts is-- Per month. 44,304. What you're paying per month? How much is going out and just minimum payments to keep them all float? We're probably paying minimum payments to keep them all afloat before I decreased them, was about probably $3,500. OK. $3,500 going out a month. Those have some crazy high interest rates. And then I know your mortgage is low, but what's the mortgage payment? 840. 840. So that's not the problem. Where's the rest of this money going? Do you have kids in daycare? So we do. So we're paying $424 a month for that. OK. Here's what I think is going to happen. Unless there's another major expense that you're leaving out. But we've covered the debt. We've covered rent, or in your case, a mortgage in daycare, which are the big ticket items. Are you self-employed that you're paying your own insurance? I am not. OK. Then those are usually the bigger ticket items, which lets me know, if we get into every dollar, do you already have it? Yeah, we just started the monthly subscription a couple of weeks ago. OK. But have you gotten in there and actually made that detailed budget, Taylor? We have. And we're trying to tweak it because it was saying that we were at high risk of overspending. OK. I love that. That's meaning that it's just helping you decide when you can spend the money. The first part of the budgeting-- and this goes for everybody listening-- the first part of budgeting is deciding what I'm going to spend my money on. And a lot of people stop there. But the second part of budgeting is deciding when I can actually spend the dollars. Because we get paid at different times of the month. Some people get paid once a month. Some people get twice. Some people get paid every week. And so knowing, hey, when I get this sum of money, these are the bills that I can pay before I run out. And then the next sum of money-- now I have to pay the bills that are left, right? So every dollar will help you do that. But here's the thing. Taylor, you guys have got to go through this budget with a fine tooth comb. Because I know out of $9,200 a month, after what you've given me, there is money. And you're going to have to find it in groceries. You're going to have to find it in DoorDash. It's in subscriptions. It's in your kids, what you're spending on entertainment, what you're putting aside in sinking funds. You need to wrap all that up and get that margin and put it towards the smallest debt work in the debt snowball listed smallest to largest by balance. Not interest rate. Make minimum payments, then put all the extra margin on the smallest debt, knock it out, and that's how you do the debt snowball. If you hate traveling for the holidays because your sleep gets absolutely wrecked, I need you to hear this. Just don't go. Don't travel. Seriously, I love the holidays. But sometimes the best way to enjoy them is in your own home, right? So here's my holiday hack. I put Helix mattresses in every bedroom in my house, especially the guest bedroom. And I invite people to come stay with me. And I kid you not. My house is now the house to go to for the holidays because of how comfortable the beds are. Here's what I love about Helix. They have mattresses for every kind of sleeper, side sleeper, back sleeper, hot sleeper, holiday sleepers, you name it. So if you've been thinking about getting a new mattress for yourself or for your holiday guests, I want you to get online and take the Helix sleep quiz. It takes like two minutes and will help you find the perfect mattress for you. They even offer 365 night sleep trials to make sure you're getting exactly the mattress that you want. And now through December 6th, you can get up to 30% off your entire order. with the help of the audience. The Helix Better Sleep starts right now. Go to helixleep.com/ramz to take the sleep quiz or click the link in the description. Thank you for having me. I feel like I've heard my family financially becoming a stay at home mom and I'm trying to figure out am I hurting them financially or is it just guilt? Wow, that's tough. Tell us what's going on. That makes you feel that you're hurting them. Yeah, so we have a fully funded emergency fund. I left a pretty high-paying job in mortgage industry and so I'm used to this kind of paycheck coming home and supporting my family. But I've realized over the last year, with a two-year-old, I didn't feel very present in my daughter's childhood. I was just mentally deported every day and we have a 15-year mortgage. It was 25% under for our income when we both were making money. So I'm trying to see is it a bad decision that I've made now when we have that emergency fund, but I haven't stopped contributing to 401K just to have a little extra income coming in each month. So trying to get the numbers and seeing if this is a wise decision. Okay, so how much is the mortgage? At 1730. Okay, 1730 and how much are you guys bringing home together? So he makes 81,000 gross and he also gets a pretty big bonus every beginning of the year for about 17 grand after tax. Okay. So that's another thing is like how do we just use some of that bonus each month to help supplement some of that income? Yes. Okay. And what's he bringing home before the bonus? What's he actually taking home? Taking home about 2400 by weekly. Okay. 24 by weekly. Okay. So yeah, the mortgage is high, but it's not. I think that you can make this work if you add the 1,400 in there. When you factor in his bonus, you guys are going to be okay and his income will go up over time, right? Sure. Yeah. Okay. So all things considered, you guys are debt-free with an emergency fund. I would love to see him begin investing again at 15% and still have a little cushion for saving up for a vacation or a car upgrade or putting away money for the kids college fund. So that's the ideal scenario financially. Now, are you hurting your family? No. Do you regret it personally making that decision? No. I think it's just the stigma around it. And I've been. my personality was wrapped up in work. So finding that meaning, I think, has been a little bit of a struggle coming back from that. Well, what I heard you say about, you know, I'm afraid that I'm hurting my family. Something that I've found is that when there's kind of fear circulating in your head, something that really helps in John Deloney would say this is to, you know, fax to your friends. So let's put fax around that. I think you've done that calling into the show before it was kind of just this idea that I think I'm hurting them. But now when we look at the numbers, 4800 a month plus the 1400 from the bonus, now you're looking about 6200 a month. And a mortgage that's 1550 would be 25% of that, right? But yours is about 1700. It's a minuscule difference. And so when you look at the numbers, the truth is you're not hurting your family. That's the truth. Now, we can look at the opportunity costs and say, gosh, could you do some things faster financially if you did have some extra money coming in or if you were working to some degree? Sure. But now it's a values question, right? Well, what do you value more bringing in more money or being present, you know, with your kids? Absolutely. And that's the thing. I think I have to get my head around because I was putting work first. And I was just second half of that, obviously. I feel like we had this goal of paying off our mortgage really quickly because it's unheard of to have like a 2% 15-year mortgage free rate or 25% income, right? So feeling like I'm kind of slowing us down in that regard. Well, you made a new plan. Your goals change, your values change, your life change. So it's okay to call that out and say, all right, we had a plan to pay it off in eight years is going to take 12 now. That's all right. Life will go on. And like I said, you know, we've had this call before and you know, when you look out at the landscape, most folks have a 30-year mortgage and they're swapping it for another 30-year mortgage or they're borrowing against it with a HELOC or a line of credit, that sort of thing. And it's taking most folks longer than 30 years to pay off alone. So if you look up and it takes you 12 or 15, you do a 15-year fixed rate, you're already so far ahead of that curve and the lifestyle that you guys have chosen to live, which is a non-det lifestyle, having an emergency, but all these things, that's going to compile. Those really good money choices are going to compile and you are going to look up and you will have this mortgage paid off probably sooner than you thought because you're an intentional person. I can tell that just by you calling in here asking the questions you're asking. Well, thank you. I appreciate that. Do you think it like is it wise to use some of the bonus to help pay off the mortgage or just use all of it for each month in the bonus? I would budget the money monthly. If you're especially since you're getting it at the beginning of the year, it's a great way to just it's almost like a peaks and valleys account for you guys. You're just pulling from it what you need to supplement your your budget and so that you kind of have that. Just the same number every month it kind of helps to work off the same number every month and then from that you can go, okay, what actually is our margin once we've paid for the things that, you know, we need to pay for how much is left over and I'm curious if you kind of have a sense of what that might be and we can kind of talk you through that. Sure, I just actually started so this is kind of my first month fully realizing like how much will have at the end of the month, but just on my every dollar budget app looking at how much like the minimums would be would be about 3200 a month with like no fun money, no nothing. That's usually what we'd be spending I think. Okay, and I mean, if you guys don't have any consumer debt when you're paying off the mortgage, you don't have to go that bear bones, you know, we're really are talking about whatever that intentional extra payment is. And this year might be one or two extra payments next year might be three as the income goes up as you get a handle on this, but I would be focusing on investing first that's baby step four that would come before the mortgage pay off. So maybe you go, you know what, we're going to fully fund a Roth IRA every January for him. So that's 7500 bucks right there, and then he's going to be also. Ratching up his 401k and putting some money in there as well to get to that 15% mark, which for you guys would be close to 15 grand a year when you factor in the bonus. And so if you do that, I think you'll feel a lot better that you're not short of short changing one other area of your life to get there. But right now, nothing's on fire. I think this is a lot of it is just you changing your identity from I'm a career woman to I'm a mom. I'm taking care of the kids. My wife made that decision after nine years here at Ramsey and it was really hard for her. She loved her job and one of the hardest parts is unwrapping your identity from who am I? I'm a title. I'm a role instead. You're your mother. You're a wife. And so that's a huge, huge job in and of itself. Just because there's no paycheck attached to it doesn't mean that you're not providing just as much value if not more. That's a really good point. And just to tag on to that, not just for you, Collette, but for anybody listening, around here we really teach financial peace and the idea of like live like no one else so later you can live like no one else getting in control of your money so that your money is not controlling you. All of those things and a lot of times we think about it as just a dollar amount, but there's more to it than that when you do the things that we practice because everybody's not going to have the same pile of cash when it's all over. Some people have a million bucks, some people have five million, some people have 600,000 right wherever you are in this, but what comes from doing this is being able to look out and go, I've worked really hard and I've done the things with my money that make me a financially responsible adult. And when you can say that, then you have peace. It's not always about the chunk of money that's sitting there and all of the investments. It's to go, hey, I brought in $4,800 a month and I did all the responsible things with that money that I could. That's where the peace comes and it's like, okay, I did write. I did not borrow. I made sure there were some savings. I invested a little. I took care of my family. That's what people want to feel. And I think that that's what you'll feel, collect making this choice and just remind yourself of that you're a financially responsible adult and you're certainly not hurting your family, you're helping them in multiple ways. Congratulations. You made an awesome decision and I've never, currently I've never met someone who was like, wish I didn't stay at home, wish I kept that job could have paid off two years earlier. I think in the grand scheme of life, you're going to look back and say what a special season that was to be able to be home with my kids. And maybe once they're, you know, in elementary school, you decide, all right, going back to work. Now you were speeding up your financial goals again. You're still going to be okay. So the key is, can you still continue on with the baby steps and have a state home spouse? That's right. If the answer is yes, then go for it. If the answer is no, it is a math equation. It's a luxury to have a state home spouse. And you can create that luxury by following this plan, by getting out of debt, not only other people money, staying on a budget, having an emergency fund. All of that is what gets you to those options. (upbeat music) (upbeat music) You know what I love most about Thanksgiving? It's not just the sweater weather and the pumpkin everything. It's that I get to spend quality time with my family without the constant interruption of spam calls and emails. And you probably feel this too, because when you fill out a form online, your info like your name, phone number, even your home address gets sold to data brokers. And the next thing you know, someone named Olivia is calling about a personal loan inquiry that you never inquired about. So tip number one, don't answer the call that only leads to more spam. Second tip, let delete me handle it for you. They cut back on spam and scams by removing your personal info from hundreds of data broker websites. And it's not just one time. They stay on top of it and keep removing it, which is why I'm so grateful. And hey, listen, I like to shop. So protecting my privacy and family time is priceless. And you can have that too. Go to joindeleteMe.com/ramsy to get 20% off all plans or click the link in the description. (upbeat music) - Singles Day is 11/11. That's November 11th, and I realized today, I was today years old when I realized it's not just about being single as in not in a relationship. It's these single numbers, one, one, one, one. So there you go. If you're like me, you're a little slow to the punch. I just saved you some embarrassment. But on Singles Day, we've got an awesome deal going. We got our best-selling books and products on sale for just, you guessed it, $11. That includes best sellers like the Total Money Makeover, baby steps millionaires, building a non-anxious life, get clear career assessment, questions for humans decks, and more. Do not wait, these deals are only here on 11/11. So go to ramsyslutions.com/store, or if you're watching on YouTube or podcast, click the link in the description, get some of your holiday and Christmas shopping done early, why don't you? Todd is in Little Rock Up Next. Todd, welcome to the show. - Hey. - How you doing? - Hi, I'm good, how are you? - Good, how can we help? - Yes, I have a question. I've been invested in a Roth R8 for about three years, and it's with fidelity. And I use the robot, either, 'cause I didn't understand what the peak and how to pick. Is that a good choice? Or should I try to move it into something else where it's more self-directed? - Great question. I mean, the fact that you're even asking this tells me, you've done some studying and digging of your own, right? - Well, I watched a lot of you shows, I watched other people on YouTube and things, and a lot of people are saying it's better to manage yourself, it's yourself, but I'm just trying to find a solution of, where do you get the information? How do you learn what you're picking and things like that? Me and my wife are not in debt. We currently are maxing out both of our 401(k)s. - Wow. So what's your total portfolio right now that you have invested? - Now that's a question that I'm trying to understand myself. - Is it hundreds of thousands of dollars, or is it $10,000? - Give me an account card in RRA. - Sure. - I'll be 14 grand in it right now. - Okay. - And a good question to ask yourself is, if I were to ask you, which I will, what are you invested in? If you're not able to explain that back to me, I would think I would say that that's a good indicator that you don't understand what you've chosen. And around here, whether you're working with an individual, whether you're talking to us, whether you're talking to a Robo Advisor, you need to understand what it is that you're invested in. That's kind of like the baseline. That way you can approve, yes, this is what I want, and this is what I think is a good investment for me, or no, I don't want to do that versus kind of one individual, or in this case, AI, having the final say, because it's your hard earned money, right? - Well, that's the reason why I call it in is because, I mean, it just makes sense to understand what you're investing in. I know it's a large cap, a small cap and a mid cap, but what, and it's also with bond, it got it bond, but what is actually doing, I mean, I try to sit down to look at it, to understand, I'd like to calculate things, but what is actually doing, I don't know, and even when I call them, I ask so many questions and they really can't answer it. - Well, let's see if we-- - They probably want to push you to actually working with one of their advisors at that point, which is kind of this, if you look at a spectrum from DIY, I'm doing everything on my own to someone else does it all for me, right? Robo advising is somewhere in the middle, where it's really not a bad option, it's better than DIY for people who are scared, they're going to screw it up, and it's not as good as human interaction, where they're looking at your entire picture, your goals, your risk tolerance, they're using basically a quick quiz to say, "Hey, what's Todd's risk tolerance?" And all of a sudden, you wake up and you've been in bonds for three years, wondering what happened and why you're not getting a great return. So that's the part Jade's getting at is understanding what you're invested in, is more important than, is it DIY or is it a Robo advisor? Well, let's see if we can give you kind of a quick crash course to help you, and again, this is gonna be a baseline of understanding, and I'm gonna tell you right now, Todd, when you hear this stuff, especially when it's brand new, a lot of times it doesn't sink in the first time, and you have to hear it again, and then you maybe have to hear somebody else explain it, and then you have to read it to understand, like you have to have several hits to your system before you're like, "Oh, I get it, okay, now I know." So I'm just kind of laying that course for you, but you're on with George Campbell, and he's an investing extraordinaire, and some say an even better teacher, so. - Well, I'm all hit 'em. - I'm just so boring and simple that I don't really excite anybody when I talk about investing, so I apologize Todd if I put you to sleep, but the Ramsey philosophy around investing is this, always understand what you're investing in, stay in the driver's seat, invest 15% of your household income until you're in baby step seven with a paid for house, then you can increase that to your heart's delight, and then split it across four types of mutual funds. Now, mutual funds and index funds are very similar. They're just giant groups of stocks, 90 to 200 plus companies in each, and we recommend diversifying across, basically, what you mentioned, you mentioned large cap. That would be like a growth and income. Mid cap, a similar thing would be a growth fund, then you've got your small cap, which is more of the aggressive growth type companies, the wild childs, and then we also recommend international in the mix to help buffer against the US market, taking a dip. So if you're diversified across those four evenly, we have found that you're gonna build some serious wealth with a whole lot of peace. - I have all of those. I got the large cap, the mid cap, international, and the bond. - How much are in bonds, do you know? - It's like a small percent, it's not a big percent, but most of it is in the market. Like what are your returns so far this year? Have you looked at that inside of that Roth IRA? - I looked at something yesterday, and if it comes like step and percent, it was green and second percent, but how do I know? - Well, an easy way to check. Like I just Googled S&P 500 return, it's about 10% year to date. So the S&P 500 is the benchmark. So if you're not at least getting what the market's getting, then you're doing something's off here. - My guess is it's the bond funds. We don't know how much of your portfolio is invested in that. If it's an even 25% split, I would just sub out the bonds for an international fund, 'cause I don't think you mentioned that, but knowing how much is allocated in each one is gonna be helpful to you. And you can look at the perspectives, you can look at the sheet and find out you can say how well has this fund done for the past 10 years, for the past 20 years? What have the annualized rates of return been over that course of time? And that'll give you a good indicator if you think that it's gonna do well for you. And I would just say, continue to look into this. I think the more that you dig in to information like you've done calling into the show, the more you study it for yourself, when you actually sit with a professional, we actually sit with a RoboAdvisor, you're gonna understand just even the lingo a little bit better, right? - There's so much jargon out there, and so we try to simplify it here on this show because it does get heavy if you're just starting googling. - And it's not necessary. I hate when people make things unnecessarily complicated. - Once you got a couple of degrees and letters by your name, you feel like you gotta use some $10 words to go with it. But we've got a great network of investment professionals. They don't work for Ramsey, but we can connect you to them. If you jump on RamseySolutions.com, click on Smart Vester, this is where I go, okay, you may want to pro in your corner if you're not just looking for a fun picker. Yes, they can help you select some funds, but it goes way beyond that. We're talking about holistic financial planning, insurance planning, tax planning, cash flow planning, college and education planning, we're tirement planning. There's so much that goes into it beyond just, well, I don't want to pay and it percentage to an advisor. Who's gonna help pick some funds I can do it myself. Great, if you feel comfortable and confident, you can go do that or you might decide, I want to use a Robo investor for now until I build enough wealth to where I'm beyond my skis. That's okay. - And it's helpful when you are looking at funds, look at it and see what are the actual companies that's invested in and that'll start to help you see Todd, what we mean when we say large cap or mid cap, you'll start to identify some of those names So you'll go, "Oh, okay, this makes a little bit more sense, I understand." What's going on here? I actually see where my money is going and I just think the whole thing is a big unlock for folks Once they really understand what it is that they're doing when they invest But the part they gave me the most confidence Todd was not that you're choosing the perfect funds It's that you're investing consistently on a regular basis. You're investing in Retirement accounts raw fire rays that are tax-advantaged. It's gonna grow tax-free You're doing you're sick you're maxing out your 401k's That's what tells me you're gonna retire with dignity and we found in our millionaire study jade The actual millionaires out there were mediocre investors Yeah, they just did it. They weren't prodigies choosing the right funds They just over time kept on putting money aside from every paycheck into that retirement plan And that's they said the number one factor was their employer-sponsored retirement plan because it said it and forget it That money disappeared. They learned to live off the rest and one day they had some money thanks to compound growth So hang on the line. We'll get you our investing guide or anyone else listen You can go to ramseysolutions.com/guide. We've got a free guide on investing that will walk you through all of this With all the crud and negativity in movies and TV right now It's rare to hear a story about someone actually doing something good Which makes angels newest movie the rare exception out there It's called Hershey as in Hershey chocolate and if you've never heard the backstory of Milton Hershey It's pretty incredible. I mean he got knocked down over and over trying to get the business going even went bankrupt But he ended up leaving a really cool legacy of outrageous generosity in his community It's really inspiring stuff you can see it in theaters for free by getting an angel-guild premium membership When you sign up, you also get angels entire streaming library plus free tickets to every angel movie that comes to theaters Hershey is in theaters on November 25th Get your free tickets by signing up for the membership at angel.com/ramsey or click the link in the description Limited time offer visit angel.com/ramsey for details If you're newer to the Ramsey show, you'll hear us talk about the baby steps a lot That's because they're the framework of how we answer every money question on the show So if you want to learn more about that we'll drop a link in the description of this episode Alvaro is in Tucson, Arizona up next. What's going on? Hello. How's it going? Good. How can we help today? So I have around $30,000 in consumer debt and the interest rates are just super high and I'm making the payments on them, but just can't seem to find my way to get out of it. What kind of debts are they? Some of them are payday loans and then one of them's the title loans. Oh gosh. Yeah, that's I mean you you're experiencing it, but that's the worst of the worst when it comes to interest rates. I mean some of them are over In the hundreds of percent right when you actually look at the what the interest rate amounts to it could be like 300% APR Yeah, the one on the title loan is 380. Oh goodness. Yeah. Okay. So tell us the amount. How much do you owe? On the title loan, specifically I'm just curious since your car is wrapped up in that 49 49 hundred Yes, and the monthly payment on that is 500 so okay. Oh gosh. And then the payday loan or loans. What's the total on that? The total on that that's around 20,000. Okay, and then what's the rest? Because you wrote it me 30 that's 25 of it. The rest is just my bills monthly expenses. Okay, so it's not debt. No. Okay, what about a car? Do you have car credit cards? Credit card I have one credit card. What's the balance? A thousand. Okay, and what about your car? Do you have a loan on that? Yeah, the title loan. Okay, but there's no other loan associated with it. No. Okay. Alrighty then. So how much are you bringing home a month, Alvaro? I'm bringing mostly home around 7,000. Is it just you or do you have a family, kids? It is currently just me. So I'm making seven grand a month. That's a great income. What drove you to go take out loans from basically Satan himself? Just before I acquired this month a month, I was just always struggling like thinking I needed more money in my account than what I was bringing home. So it's just as of like the past three months, I've been bringing home 7,000 a month. But you've been spending it all and then some it sounds like you haven't been talking this away. Do you have money in savings? No, I have no money in savings. But with my main job, I do, I am putting in the 401k. Okay. Pause that immediately. How much is going into the 401k? It's they have a match. So necessarily it was 10 percent plus the match. If you so if you invest 10 percent, they'll match up to 10 percent? Correct. So you're investing at least 10 percent of your gross income right now. Correct. Okay. So you could get back enough to pay off these loans just by pausing investing. You realize that? No, I did not. You could pay off the title loan by pausing investing that you're going to get some serious coin back because you're making seven grand a month. What's your gross annual income? It was at 65 because like I said the last three months, I just got to the 7,000 a month. Okay, because 65 is not adding up to your bringing home seven grand a month if you make 65k a year. Yeah, because just the last few months with my side business that I have, oh great. Can you scale that up? Can you do even more of the side business? Yeah, and that was my other question because the side business is really taking a toll on my time with my main job. I was waiting until my bonus hits for my main job in February to see if I should quit and just focus on the side business. I wouldn't quit until you got some financial footing with this debt paid off and a full emergency fund and a clear path to make this business work. How much of the 7,000 that you quoted is the side business of 45 of that. Oh, so like half. So are you investing around 400 bucks a month? Yes. Okay, so we'll stop that. We'll add that to what you're making. So now you're bringing in 7,400 a month and I would not stop the side hustle. It's a huge amount. I mean it's half your income. You need it. And for right now, you need as much income as you have. And that's a lucrative side hustle. So I would keep it going the 7,400 a month. How much are you paying in rent? Or do you own a house? I'm paying 16 hundred a month. That's including like utilities. Okay, so that's not bad. So I've got the 1600 and rent. I've got the 500 that you're paying off for the title loan. And what are you paying every month to these tight these payday loans? Roughly 1150. Okay. I was making minimal payments and I do currently have one that went into collections. Okay, so right now you're spending 41, uh, 4,150 on those debts and they were the only debts you said you had. Where's the rest of that $3,000 going? It's my question. And I think we can find it. If we start you on an every dollar budget, are you currently doing a budget? Or are you just kind of do a napkin math? I've kind of just been 10 in paper. Okay, so let's get you started on every dollar. There's it's just going to find all of the money that kind of I'll use George's fall through the couch cushions, right? It's going to find all those dollars for you. And I think if you plug these numbers in, you're going to go, Oh gosh, I've been overspending in small little areas, but it's added up to around $3,000 a month that if I can get a hold on that and I can give you a clue Alvaro, it's probably going to be subscriptions. You've probably got several several. Most people have eight 10. So they're floating around out there. It's probably going to be in the way that you're eating food. So you're probably going to be going to the grocery store more and doing delivery a lot less. And just getting you started, I'm sure you're thinking of a couple of other things in your mind that you can probably cut back on. But that's the name of the game here is finding that margin so you can put it towards the debt. You mentioned one of the debts has already gone to collections. How much is that one? That one, the total amount for that one was of 4,000. Okay. So my next order of business, if I'm you, I'm going to try to settle that thing for 1,000. When I have the cash, I'm going to call them up and say, I got a thousand dollars. Will you settle? And can I get that in writing? Okay. So speaking of napkin math, Alvaro, I want to just show you how quickly you could pay this off because you have a great income and a great work ethic. You never have to go near these places again if you do what we teach. At 3,000 a month going towards your debts, what Jay just showed you, you can find that out of 7,500 bucks, right? 3,000 a month going to where the debts you're done in about 10 months. Ooh, let's think about that. By next Christmas, you're going to be completely debt-free with some savings in the bank. How good would that feel? Like stress relief. Exactly. But in the meantime, it's going to take some work to get there. So you need to go through an every dollar budget, not pen and paper and then decide, is this a want or a need? Do I need this for survival? Yes, you need to pay your insurance bills, the light bills, all of that. The minimum is on the debts. Anything else can go. Can we agree? Because your freedom and your peace, your lack of stress, is more important than having some stuff right now. And I'll just level set for you. This is the time of year that folks don't like to lock in. This is the time of year that people like to coast out. It's like, ah, it's November. This is the time for getting sloppy and eating too much and spending too much. Not for you, Alvaro. OK, for you, January 1st starts today. OK, so that's the mindset that you need to have to tackle this, especially if you want to get it done in 10 months, like George said, we'll give you every dollar for free, we'll give you the first year, and we want you to get going on this. We'll also give you the total money makeover, throw that in there, because I think that's going to explain in depth what George and I told you to do, not just what we told you to do, but why it works. And I think if you do this, you're going to be calling us back and I hope you do in 10 months to do a debt free screen, even if it's just over the phone. OK, thank you guys. Yeah. Thanks for the call, Alvaro. Oh, man, there's a lot going on here. Number one, if you are ever tempted to go into one of those old pizza huts, they turn into a title on place, just keep driving. Keep driving. Nothing is worth that. These people are scum, and they exist to give you a nice little $5,000 alone at 388% APR. And if you can't pay, oh, we own your car. We own your transportation that gets you from A to B, that gets you to work, which produces your only source of income. That is frightening. Same thing with payday lenders. There is a reason these places exist in low income areas. They are predatory. They prey on people who are desperate, who need a way out. Don't do it. When I hear the words open enrollment, I'm immediately stressed out. And the same goes when I hear deductible and premium. You probably feel this way, too. Choosing the best, most affordable healthcare for your family can be overwhelming. Will my premiums go up? Is the doctor I want even in my network? Can I even afford this? Well, the good news is there's a different option. Christian healthcare ministries. CHM isn't insurance. It's a health-cost sharing ministry where members share each other's eligible medical bills. So instead of premiums, you make a monthly contribution with programs starting at just $115 a month. And here's something you don't hear often. They're not raising their prices this year. Guys, this is huge. And you also get to choose your own healthcare provider, no network limits. And unlike traditional insurance, you can join at any time. There's no enrollment window. And best of all, you don't have to choose between your health and saving money. With CHM, you can have both. It's why Ramsey has trusted them for over 15 years. Visit CHministries.org/budget and use promo code Ramsey to get a 50% credit towards your first month of membership. Welcome back to the Ramsey show in the Fairwinds Credit Union studio. I'm George Campbell, joined by Jade Warshaw, and we're taking your calls at AAA8255225. Jennifer is in Fort Wayne, Indiana up next. Jennifer, welcome to the show. Hi. Thank you for taking my call. Absolutely. How can Jade and I help? I'm calling because I've gotten myself into a difficult financial situation and trying very hard not to make it worse, I'm already just barely keeping my head above water. But I have a card that I'm still paying on that recently developed a major engine problem that is estimated to be around $5,000 to repair it. I still owe $6,000 on it and three years' worth of payment. My only form of transportation, I live by myself, I have to go to work. My job is the only thing that's keeping me going from kind of in a crossroads of what do I do now? I don't have savings, I don't have much debt outside of the car. I went to my apartment, I kind of feel like now it's just a matter of do I find a dealership or a lender that will make it of equity into a new loan for a car. We don't want to go to debt because debt is going to increase your payment, therefore make things tighter, right? So debt is not going to solve the solution, it will make it tough for you. Let's see what we can do with the income you have coming in, how much do you have coming in every month? My net income is about $2,600. Okay, $2,600 and how much of that after you've paid rent and the bear bones budget, how much is left at the end of that? With my current car payment, I'm left with about $250 a month. 250 in margin. What other debts do you have? Just utilities, my car payment, insurance, just the debts. What's that? Any other debts? No, no. Okay, so only the cars debt. What are you doing for work? I work for a credit union. Okay. There you have it. So, obviously you need the car to get back and forth and you're working at the credit union. How old are you? I'm 53. Okay. When I'm looking at this, I'm seeing sometimes debt and paycheck to paycheck living can come of different results. Sometimes it's you're making fine money, but you're just overspending. Sometimes the issue is the core income is just too low to really support a lifestyle. And even when you cut back the budget, there's just not a whole lot of margin there. In your case, that's where we're at, I mean, at $2,600 a month, you can make all the cuts in the world, but just those basic things that we all have to pay for. My guess is your rent is half of your income, am I right? You are correct. Okay. So that lets us know, which, yeah, very suspiciously close. So that lets me know that we've got to do something to get some money coming in. The biggest, more, even more so, even than the car, the biggest problem that we need to solve is how can we get more money, an infusion of cash into this budget very, very quickly. So if I'm in your shoes, I'm looking around going, okay, for the rest of this week, in this weekend, I've got to brainstorm things that I can do that is going to bring in money because $250 and I've got a car that needs a repair or needs to get sold or something that I can pick up a $3,000 cash car, right? I need something that I can drive in order to solve this fair enough. There. Okay. So tell me about the engine. Is this something that they can do something to kind of buy you a little bit of time in the meantime? Can they band-aid it? Right now, or is this like, hey, it's five grand and I've checked three places and everyone said the same thing? Yeah. Well, it's a timing chain. They haven't gone in to see if there was any damage to the engine which would actually be more than the $5,000. So the timing chain alone is $5,000? Yes, because the amount of work that have to go into it, I have. I did spend the quote to another repair shop who agreed with the estimate. Unfortunately, the car is not horrible right now. So how are you getting to work right now? I rented a car for a couple of days and my daughter and son-in-law just helped out when they came. Okay. So I think that's going to be something that you're going to have to continue to rely on because the truth is there's no nest egg of savings here that you can dip from. So the plan has to be I'm looking around. I'm seeing if there's anything that I can sell and in the meantime, I'm hopping on tonight and I'm looking for the first job that I can lock in, that I can work weekends and that I can work nights. And my goal, my number one goal is I need to save, can I find $3,000? And if I can get $3,000, then I can get myself a junker until I can save $5,000. And then I trade that one in and I get the $5,000 car. You put two with it, take the $3,000 car. So this is going to be you pulling yourself out of this mud, like literally one hand over hand at a time. But the way that we're doing this is going to keep you from going into debt. And I mean, I'm going to tell you right now, the thing that's going to tempt you is I could just go get alone. I could just go right down there. But then you're going to have a payment and then you're going to be right back in the cycle, right? So we've got to do this really That's a really tough thing. going to break that cycle. Okay. All right. And I have started looking for that second site hustle for evenings and weekends, which I have no problem doing. I don't have much of life anyway. So that would that would be definitely an option for me. Are you making about 20 bucks an hour at the credit union? Yeah. 22 an hour. Okay. I'm just trying to think long-term how we get out of this, how we can get you to a point where you never need to look at debt. You have a fully funded emergency fund. You're building wealth of the future. So I'm trying to think if there's is there any sort of upward trajectory at the credit union or would you just need to look elsewhere to be making 25 an hour, 30 an hour to get you to closer, you know, 60 grand a year. Right. So that's, you know, that's the goal of mine. I've only been at this credit union for six months. What were you doing before? And I was actually at work for Home Depot for three years. Is that interior specialist? Okay. I wonder. Before that, did you leave the home deed? I'm sorry. Did you leave the Home Depot job? Yes. Because I got this job. Okay. I wonder if you could roll back over to Home Depot and look for part-time work there since you've already done a great job for them. I'm sure you know some of the folks there because proximity and getting a job quickly is really, really important. I'm sure credit union hours. Anytime that you're not working at the credit union, you can hop over to Home Depot and go make an extra 20 bucks an hour and start doubling how much you can put away. Because anything extra is just gravy to get you some reliable transportation for now to then upgrade later. But that's the only way out of the cycle borrowing you set at the beginning of the call. I don't want to do anything that's going to make the situation worse. And rolling over negative equity is one of the hardest things to get out of. Because there really is no way out other than saving up the difference. Which someone in your shoes, that's going to be a really difficult task. So you're stuck between a rock and a hard place. But this is your best option. It's to save up aggressively and get a cash car for now. Yeah, and call us back if you need help. We want to hear from you. If your business is making seven figures or more, you should be proud of that. But that growth probably brought a mess with it. Systems that don't talk to each other. It's impossible to track down your numbers because they're scattered everywhere. That's a visibility problem. And net suite has solved that problem for more than 44,000 businesses like yours. Net suite brings financials, inventory, CRM, and more into one place. And their AI tool, net suite next builds AI into everything, automating busy work like forecasting demand and chasing down overdue accounts. It's not complicated to use. You just ask it questions like you're talking to a person. And you're not starting from scratch because net suite is built on leading practices from thousands of businesses pre-loaded and ready to go. Ramsey solution switched to net suite years ago. It helped us know our numbers. And we've never looked back. If your revenue is at least seven figures, try net suite next for free at net suite dot com slash Ramsey. That's net suite dot com slash Ramsey. Or click the link in the description. Ashley's in Boise up next. Ashley, welcome to the show. Hi, thank you. Absolutely. So I've left an abusive marriage while pregnant and my attorney said I could leave the state before the babies born for our safety. But financially, I'm very established here making about 8,000 a month between social security and my business. So moving means completely starting over. My question is, is it worth giving up financial stability to give my children a fresh start or am I risking our financial future? Wow. That's a pretty serious situation. When you say leave the state, would you be going next door or is this across the country? How far do you need to go to be safe? Probably pretty far. I want to be as far away as possible. I've been looking into 10 of your Arizona. What kind of business do you have? I have a cleaning business. Okay. And tell us about the social security income. Yeah, it's survivor benefits. So it's 3,000 a month. Okay. Do you have, when you go across the country, is there going to be family there, friends there, or you're just going to a place unknown with nobody that you know? No, we would be completely starting over and we're kind of on our own here too, but I'm just worried about finding work or rebuilding a business somewhere else. Does this person have a history of coming after you? Have you tried to leave before and they found you? Yeah, I have a protection order. Okay. So the good thing about a cleaning business is it's one of the easier ones to kick up in a new location and you're not going to lose the social security, right? You'll keep the 3K. Yeah. So that gives you a nice base. So let's say you found rent for 1,500 bucks. You had another 1,500 to help cover the other bills. That's a good foundation. Then you can start the cleaning business. Maybe you're bringing in 500 bucks a month to start 1,000 bucks a month and you're scaling up from there and getting it back to 5K a month. Would that be reasonable? That would be. I just felt like here it was really hard to get business. There's a lot of competition. So I'm worried about trying to do that elsewhere. Are you a good house cleaner? Do you have a team or is it just you solo? It's just me, but I am a good cleaner. Yes. Okay. I think you would thrive here in Tennessee. I'm just saying we're in Williamson County, which is one of the wealthiest counties in the country, let alone obviously the state. So I think if you choose the right location, obviously the fancier of the area, the more it's going to cost to rent. So that's something to look at is the cost of living. There's no state income tax in a place like Tennessee. So I'm not trying to get you to move here, but I'm just saying I think if you did a budget with what it would actually take to move, obviously the move is going to cost you, right? Yes. I would probably be able to, I don't have much time to save up an emergency fund. I've been through a lot of emergencies lately, but I probably could save up, you know, like 10,000 in the next couple months before I leave, but the problem is I would have to have that on hand for if you did pursue custody and I need to get a lawyer out of state. So I wouldn't be able to use that for other emergencies. Were you guys married or this was just a child that you had together? We were married. Is there going to, is anything going to come from the divorce financially on your end? No. Okay. Any debts? Anything negative? Anything negative, roll your way? The only thing I have right now is my car loan which I owe $32,000 on. Okay. Do you know what that car is worth? That might be a way that we can get a quick influx of cash. Yeah, I got screwed over on this car to know what I was doing. It's only worth about 15,000. Okay. Got you. Okay. We can solve that. The first thing to solve is figuring out where do we want to go live. And then from there, let's get this cleaning business, get that first client, start getting a little traction. And then we can start looking at ways to offload this $32,000 vehicle because I think getting out of that, I don't know what are you paying per month? 688. Yeah. Getting out of that is also going to give you some breathing room as you get this started. But I think that that's on down the list of things to take care of. I'm with George. I think you do your research and you go, okay, I'm what parts of the country are going to benefit me best. You know, there's a really tough part of this which is you're having to leave the state for your safety. And that is, I mean, you can say it with your mouth, but that's really a tough pill to swallow. But the beauty of this is you get a completely fresh start and you could literally like spin that globe and put your finger on it and go, that's where I want to go. I mean, within the United States, there's so many possibilities. I'd just be doing my research and I'd say, what's the best place for what I know how to do and for the cost of living and for, you know, whatever the things that are values to you and try to find a way to kind of make this the positive that it can be for you. And I think that it's it's going to be okay. Thank goodness for this $3,000 social security. Okay, yeah, I definitely want to leave. It's just a heavy decision because I was just worried that we wouldn't make it somewhere else. I mean, there are some things that I mean, let's talk, let's talk other options because we kind of went one way. You've got the protective order. Where are you living right now? I'm an Idaho. Okay, you're an Idaho right now, but I mean like, are you in an apartment by yourself or you with your parents? Where are you? I'm in an apartment. Okay, so there's part of this where you go, okay, do you have the margin if you need to have some kind of extra security while you save up some money? You know, can we put a timeline on this and go, hey, in six months, I could save up the cushion that I feel good to make this move. And in the meantime, here are the things that I need to feel security. I need ADT to come by the house. I need some cameras installed. I need this or that is, can we put a plan together to give you some runway? Would that make you feel better? Yeah, I do have a short timeline. My attorney said I need to leave before the baby's born, which I would need to to leave in February, and it's mostly just protecting a child from later, you know, custody issues and like allowing the abuser around the child is why I need to move. - Okay, did you say you had friends and family in a different state? - No, we really don't have anyone anywhere, so. - So you're on your own, 'cause the other part of this I'm wondering is, you're not gonna be able to be clean in houses if you're, you know, eight and a half months pregnant. - Yeah, that's good. - That's gonna be tough. - So how long can you reasonably do this work? - Well, I'm planning, I was planning to clean right until I give birth and then take like two months off. And then here it would be easier 'cause I already have childcare established and an apartment and a little bit of funds going somewhere else. It would be completely starting over, trying to get childcare in apartment. - What's the childcare situation right now? - We go to daycare, but I'm very affordable here. I don't know what it is in other states. - How much is it? - Right now I'm only paying 500 for my one child to go. And other states I've looked at it's closer to like 3,000. - 500 a month for basically weekday care? - Yes. - Okay. - So yeah, I think these are the numbers that you're gonna have to run out and see. And I would also, I'd go, okay, if I decide my go date is February 1st, then how much money can I save up between now and then? And then that's gonna be a little bit of cushion for me as I make the move 'cause it's, you know, there's a cost in moving in and of itself. You've got, you know, first and last month's rent and things like that. So my goal would be to do this thing with no debt, save up as much as I can, but my biggest debt, or my biggest priority out of all this is not the debt. My biggest priority is what do I have to do to keep myself and my baby safe? That's the number one thing that you need to be thinking about. - 'Cause you're a hard worker. You're gonna figure out the money side on the other end. I'm not worried about that. So right now it's more, I think it's more just the fear of you're, you're having to uproot your entire life. And not for fun, not for an opportunity, but just for literal safety for you and that baby. And so it's okay to call that out and say this is scary. And we also know that facts are your friends. So the more homework you can do to say, I found an apartment that's $1,200 and I already put an application in. I found a daycare that I applied to, and it's yes, a thousand bucks a month, it's more than I want to pay, but I can reasonably do all of this within my budget, even with just social security or maybe one or two cleaning clients that I can spin up by the time I move. - Who knows you're going through this? Are your parents supportive? - No, my family is not really in the picture. We don't have really a good support system. - Okay, any friends that are supportive? - We just started going to church and built good community here with that, but I'm not worried about starting not over somewhere else. It's mostly just, can I try to make a difference? - But it's about having some folks, it's about having some folks that know who are what you're going through that you can talk to and lean on, and they know so that they can do what they can do around you to support you. Because if I was your friend and you told me this was gone on, I'd be like, what can I do to help? - I'll drop the moving track. - Let's go, let's go. Actually, we are praying for you, wishing you the best. I'm glad you have a church community. I would try to lean on them as much as you can, get some support until you can make this move safely and sustainably. (upbeat music) - If you've ever thought, I don't even know where to start with life insurance. You're not alone. And that's exactly why I recommend Zander Insurance, because the insurance world will throw everything at you, confusing words and add-ons like writers, whole life crap called an investment, return of premium, and it's all total junk. And most of that confusion you feel is by design. When you're confused, you make bad decisions, expensive decisions, but Zander doesn't play that game. They cut through the noise and help you get simple, affordable term life insurance that actually does what it's supposed to do. Protect your family. They shop the top term life companies to compare your options on the coverage that your family needs no more, no less, no pressure and no upsells. Just clear answers and the protection you need. If you've been putting off getting term life because it feels overwhelming, stop worrying and get it handled the right way. Call 800-356-4282 or go to zander.com. That's zander.com. (upbeat music) Our question of the day is brought to you by Ask Grams at your free AI money tool that provides personalized money and answers based on Ramsey principles. Visit RamseySolutions.com/AskRamsey. - Oki Doki, today's question comes from Leanne in Connecticut. She says, "What is the responsible way to divide a husband's assets and life insurance between his wife and mother?" We have a two-year-old daughter and my 70-year-old mother-in-law lives with us. My husband has a trust which provides for his assets to be divided equally between his mother and me. They also have joint bank accounts. Oh, and she has a $200,000 life insurance policy on him and is the sole beneficiary. I requested that he get an additional $2 million life insurance policy with me as the sole beneficiary to maintain our home and provide for our daughter if my husband were to pass away. My husband believes his mother should receive 25% of this policy as well. How would you approach the situation? - Ooh. - Let me tell you something. - I can feel her resentment right now towards that. - Can you feel mine? - Mother-in-law. - Oh, gosh, listen. - She's like, "Who did you marry? How come?" - How come? - Let's choose. - Something's going on. And okay, let me first say, Leanne, yes. If you're feeling a type of way, you are well within your bounds because the boundary lines here are all at a whack. And let's just be reminded. A good man leaves an inheritance to his children's children. It's not generally the other way around. So let's start there. Really, she should be the one leaving the inheritance. The grandmother should really be the one. - Doesn't look like there's much to inherit this one. - Right, but it doesn't look like there's much to inherit. But let's start that as the basis. And then anything from that, we can consider just pure generosity, right? You are not, you do not have to do all of these behaviors anything you want to do would just be generosity. And I don't think, I think there's a couple of things that I would call out with your husband right away. The first one is the joint bank accounts. Now, if it's a joint bank account because she's not in her right mind and he's kind of the power of attorney deal, that's okay. I'm fine with that, but if it's a joint bank account because we're just- - Counts messy. - Buddy, buddy, like that. - What if she decides mother and law decides to drain it? - Oh my gosh, yes. - I don't mean she can do that. It's her bank account too. Absolutely. And then the second thing that is bothersome, but I can understand it is the life insurance policy. So the purpose of life insurance is anybody who depends on your income. You want to protect them if you're the pass away. So obviously the mother and law is dependent on his income because she lives with you. So there's part of me that understands that. But if he has the two million on you, which you requested, that is for the household. So if mother and law is living with you guys, she's covered really under that. But I think that she's probably like, I want to make sure, because if you leave, I don't think daughter and law's got my back. - It sounds like she doesn't trust his own wife to take care of the mother and law of something where to happen. - And you want to know what? - Which is just adding insult to injury. - It is, but if that's the way it is, so be it, because the wife might be like, "Hey, I really don't want your mother and law. "I don't want to take care of her "if you're not part of the picture." So I'm gonna say, I actually, I would not, of all the things to put the kebash on, that one probably wouldn't be my biggest one. It's probably costing you hardly anything to have that $200,000 policy. And honestly, I'm like, what's that gonna do for her? It's not gonna extend her, how long can she really live off the $200,000? - So we're also assuming the husband's gonna croak before anybody. There's a lot of assumptions being made here. - There's a lot. And then the other part is, I don't know, I don't think, let me skim back through. It never says that the mother and law has nothing. Right, has no money to her name, no nest egg. So if the mother and law has a nest egg, has money and we're just not using it, then no, we don't need this life insurance policy. I would absorb that life insurance policy with the $2 million that you're gonna have. And then you and your husband decide, hey, what happens to mom if you pass early? What do we wanna do? And you guys can have that discussion. But the biggest problem here that I see, George, is Papa is going off and making a bunch of decisions without his own life's input. - That's right, and prioritizing his own mother over his own household with his wife and daughter at the front. So I think a lot needs to be readjusted here. - A lot. - But just look at how much it would actually take to cover the bills for each of them, for your own household, for your wife and daughter, and for mom. Separate the two, create a different policy for the two and be done, and that way no one's fighting here. [BLANK_AUDIO] I think that's fair, and if you do that, then no, the mother-in-law does not have to be on 25% of the other policy. Keep it separate, I like what George said. - She's getting half the assets. That's the crazy on top of the life insurance. That's where I just, I don't understand it all, but you know what, we all have our things. - And yeah, she's got a pill battle to climb. - Good luck, Liam. - Good luck, Liam. You're right though, Liam, by the way. - This is strange. - Michael is in Seattle, up next, what's going on, Michael. - Hello, thank you guys so much for taking my call. This means absolutely the world to me. - Absolutely, what's going on? - So you're in some change ago in my wife, and I had to start completely over in our baby steps. We're finally past step three again, and in two, four, five, and six. Five and six, I understand, are unique to every household, and we've got a handle on that. My question is on baby step four, and the 15% retirement rule. When I have four revenue streams, and I would like to know which of those four do and don't count toward that 15% that we should be saving. - All of it, why wouldn't you, 'cause all of those revenue streams are informing your lifestyle, correct? - More or less, yes, one of those income streams is the interest that we make off of our high yield savings count that we keep our emergency fund in, and the number of income from the downstairs half of our duplex we live in. - Understood. - Which is that per month? - For the rent? - Yes. - We charge $2,000 a month, and it's all inclusive rent, so we net about $300 in profits. - Okay, so if I were going to, it would be off the $300, I think, because it's a rental, and I probably would include. - We're talking about $500 a year, just to make it clear. Of should I invest this extra $500 or not? So it's not, it's a nothing burger in the grand scheme of your investment life. What do you want to do with that $500? - The reason I, I would really like to invest 15% of it. Part of the reason I was calling was, for exactly what you just said, I didn't realize that you would count the net profits as opposed to the gross rental income, 'cause Dave specifies the gross annual income multiplied by 15%. - Where your gross annual income isn't gross rental income. Those are two different things, right? Your net profit is what you're actually taking home. That's what we're counting as gross income. Then you're paying taxes on that, correct? - Understood, and yes you're correct. - So that's what I'd be looking at is what, on your tax return, what does it show that you guys made in that year, and then take 15% of that number? That would be the simplest way to think about it. - Okay, that makes much more sense. - So what do you guys make a year? What do you think will be on that tax return when you guys file? So I gross about 146, and she grosses about 49, as far as the rental income, it would be 3600. - Okay, so we're talking about, let's see, 15%, around $28,000 invested. That's about 2300 bucks a month that should be going towards some type of retirement account. So if you're doing that, I wouldn't split hairs over it. I would just go, all right, we're on track. Are you guys on track to retire multi-millionaires? Yes, we are, at least I feel that we are. - My guess is, with the way that you're crunching these numbers, you guys are gonna be all right. You seem like a details guy. - You're asking the right questions. Very much so, and I appreciate that guys. Thank you very much. - Absolutely. - Great call, and that is a good reminder. We talk about the baby steps. We don't tell you to invest a dime until you hit baby step four, which is you're out of consumer debt completely. You got the fully funded emergency fund, and it's 15% of your gross household income going into tax advantage retirement accounts. - That's right. - That's that simple. So the easy strategy here is match beats Roth beats traditional. So if you have an employer match, we'll take that first. You have Roth options, we'll take that next. If you run out of options, you still haven't hit 15% of that gross household income, then we go to traditional options. If you then max out all traditional options, then you can go outside of retirement into a taxable brokerage account. If you so choose, maybe even want to get into real estate, but even then, we recommend paying cash for any investment real estate, which I know sounds crazy, but I think it's crazier to live without that kind of piece in your life. (upbeat music) (upbeat music) - If you're waiting for rates to drop before you buy a home, here's what nobody tells you. When rates fall, every buyer who's been sitting on the sidelines makes their move at the same time you do. That means more competition, higher prices, bidding wars, all that. I tell people to talk to Churchill mortgage before they do anything else. Churchill gives you a strategy so you're not at the mercy of the market. They can show you what you can afford, not just what the bank will approve, and with their certified home buyer program, your financing is completely secured before you shop, which means when rates drop and everyone rushes in, you're already ahead of the crowd. You're not scrambling for pre-approval while the house goes to someone else. My husband and I bought both of our homes with Churchill, and having a real strategy, not just a rate we were waiting for, made us ready when it really mattered. So start your search with Churchill. Click the link in the description or go to ChurchillMorgage.com/RamseyOffer for an exclusive Ramsey audience offer. ChurchillMorgage.com/RamseyOffer. (upbeat music) - Molly is in Knoxville up next. What's going on Molly? - Oh, hi, can you hear me? - Absolutely. How can Jaden and I help? - I was calling because prior to moving, which we had done a couple of months ago, I felt like my husband and I were in a great financial position. He was making good money. I was making good money. I had a state pension, which I had over 10 years into, and he lost his job in January and after applying for months and months and months and getting no callbacks for any interviews that were anything worthwhile. We decided that maybe we should try moving. So sort of family. And we also wanted some better schools for our kids. And so we decided to move. And of course, we, home prices are very expensive. We had the home that we had. We were a little under five years away from paying off. So we're in our mid-30s, and we were going to be out of that home debt before we were 40, which was huge deal. I had been paying extra on our principle for years. And so we're looking at all. - So we're in, see now, we had moved from South Carolina. - Okay, and you took on more house or? - We haven't bought a house. We have been unable to sell our house. And we have not bought a new house one because we haven't sold our house and two things just got even more crazy in the housing market just recently. - So are you living with family while you're floating that mortgage? - Yes, we are living with family. - Okay, how long has it been on the market in South Carolina? - Since July. - Okay. - And Art, do you like being in Tennessee? I mean, did it have the opportunity you hoped it would have or did you feel like you were kind of just running away from your problems in South Carolina? That's the question. - It was a bit of both. We wanted better schools for our kids. That was something that I did want. Not that schools were terrible, but I think they could have been better. - Okay. - So is he working now? - Yes, he got a good job. He actually really likes his job. - Okay, that's one point for team stay in Knoxville, okay. - Is it enough to, I mean, is it comparable to what he was making before? - It's a little bit less than it has great potential. - Okay, I'll take that. - $10,000 less a year, but great potential. - So what's your current household income? - So he makes 86. I make about 65. - Okay, that's a great income in Knoxville. - Yeah, yeah, he was making 95 before and I was averaging around 70, 75, depending on the year. - Okay, so you're making 150. And when the house does sell, how much do you think you'll net? - Well, we were hoping to net around 400,000. - Okay. - But it's not selling, so we're considering doing a cash offer on it, or. - Why are you getting so desperate? - My husband's getting desperate. - What's the payment every month? - It's only 1,700, including taxes and escrow and everything. - And what would a cash offer be? Are you saying you'd like take one of those? Hey, we'll take it for 350? - They're talking about giving us around 350, 40. - Why not just do price cuts down to 380? - Well, we have done some price cuts and just the area we were in, it's country. It's just not what people are looking for, I guess. Unfortunately. - What's the realtor saying? Why are they saying the reason? She says nothing is really selling in the area right now. It's the rates. They're high. Nothing she says there's there's a couple houses that are on the market similar houses and nothing's really selling and it's because it's in the country. Yeah, and it's hard to get a nice comp because things are more spread out a lot around it. It's not in a big neighborhood. Is it a lot of acreage? It's two acres, but it's surrounded by a lot like just open Openness like we okay about a hundred acres. So it feels bigger than it really is understood. Okay, so once you get a buyer You'll have a big chunk of cash and you guys are debt-free with an emergency fund Yeah, we have about $50,000 in our savings right now The part of that is the emergency fund. So at this point, why would you move? Let's say the house is going to sell Why would you move at that point? Well, I have a really great retirement plan with my job. I'm all at least right now and I have a pension plan with my job My job that I left where I can retire at 54 And I would take in with just my pension plan probably around $1,000 a month. I also have a Roth IRA that I contribute to So say you would move back and restart that pension plan? Yes, if you leave now you get nothing If I leave now I get about a thousand dollars a month Okay, are you guys investing 15%? I mean you're obviously in baby step three or are you investing? Had had you been and are you currently investing 15% of your income? We're putting money into our retirement. We don't have a financial advisor But we do put money into retirement. Okay, so here's where I follow this I mean, I love a pension. I think it's a great thing But I would not Shape my life around the pension that an employer is offering. I would go, hey, you know The way to do this is to make sure I'm investing 15% of my income you guys said you're in your mid 30s So if you invest 15% of what you guys are taking home between the two of you You're forming your own retirement at that point So instead of kind of arbitrarily picking at a mountain doing it start with the 15% off of your gross The way we teach across the four different types of mutual funds and if you can you know each of you can Max out a Roth IRA or if you can get really close to matching out a 401k that that should be the thing that you build your lifestyle around Not the pension that the employer is offering So if that's the sole reason that you want to go back I would not go back for that you guys have plenty of time to build a nest egg. I would not go back for that reason alone Yeah, it was between the pension and you know having her house pay off because I think okay Our house is paid off in four years I was like that is money that I can put away from my kids. I can maybe get them a head start maybe like Have the opportunity to give them a down payment for a home so they don't But you told us the schools are an issue if you move back. Yes, so There's gonna be pros and cons you can create your own little pension fund with a nest egg So you can recreate that. I know it's not as much fun But about a half million would get you there in perpetuity where you could peel off that $3,000 gap a month that you're talking about and so that might look like all right We're gonna invest a little more work a little bit longer, but we also get our quality of life. We get great schools We get a different kind of life. We have family nearby so all of these things are factors to consider But nothing right now is screaming to me you guys need to move back. I mean if I just take this real quick Let's take the pension off the table and I'm just in our our retirement calculator You can find on ramsysolutions.com. I think I heard you say you're in your mid 30s So 35 let's put retirement age 65. I just like the round number of 30 years There's probably something in your retirement savings But let's just say zero and if you start putting away 15% of your income So about 1800 bucks a month will do an 11% return. You know what let's do 10% just to live on the wild side I mean, that's 4.2 million bucks, right? So we can see how the pension It's it's nice, but in the grand scheme of things if you're doing the things that make you a financially responsible adult It's kind of a nothing burger. It's just a cherry on top of the Sunday if you have it and so I think you're still gonna get something You're still gonna get something. I think that this is a values conversation It's not a numbers conversation. There's something that's pulling you back there. I'm not quite sure what it is I don't know if you don't like the way that you left or But you guys have to come to an agreement on what do we value the most? Is it is it dad's job is the most important thing? Is it the schools are the most important thing? I think we can check the pension off the list of important things So if that was kind of in the lineup we can clear that out of the mix and I think the thing that I hear as the two Kind of pillars are what's more important school system because if if we go for school system Then we might be sacrificing an $86,000 good job with with a good upside or do we go? Hey, surely there's some good schools in South Carolina somewhere We got this far and our kids are fine You see what I'm saying. So I think that's the thing you guys have to weigh out But making $150,000 completely debt-free you guys have options. You've granted yourself that so I would personally just wait until this house sells Then see how you feel with that pile of cash. Do you want to buy something nearby? Do you want to rent for a year and just sit and wait and make a decision out of confidence and strength? Instead of just sort of like panic and fear and desperation because you don't have to be desperate Yeah, there's no there's no need to be desperate Yes, it stinks the housing arc. It's a little slow right now But someone's gonna want that sweet house with all that land looking. I mean looking out at that I will want it right now Jay Listen and I set him up for the winter because you know it might be even slower around the winter months So don't get scared and desperate If you're looking for extra cash in your budget to knock out the baby steps faster start with your bills That are on auto pay like your phone plan if you haven't looked at your phone bill in a while You're probably paying a hundred bucks or more every month when you could be paying just 25 That's why I want you to switch to boost mobile you get unlimited wireless for $25 a month and that price is locked in forever With no contracts and no hidden fees. How much would that save you every month? How much faster could you get through your next baby step plus with boost mobile you get to keep your phone and Your number so nothing else has to change except how much you're paying switching to boost mobile is a no-brainer Because it's one of the easiest ways to free up money in your budget go to boostmobile.com/ramsie and make the switch today That's boostmobile.com/ramsie or click the link in the description $25 forever requires customers to remain active on boost mobile unlimited plan Welcome back to the Ramsey show in the fair winds credit union studio. I'm George Camel joined by Jade Warsaw this hour It's a free call at AAA 825 5225 you guys are the show your questions your stories is what Makes it so we appreciate your calls James is in Boise up next James. Welcome to the show Hi, thank you so much for taking my call absolutely. I just yeah, I have a question about my Basically about bankruptcy my my wife has made a series of financial Decisions that have been highly unwise and she's hidden a lot of them from me recently came clean About a lot of these things which she views bankruptcy the Resolution to get out of the mess she's made and I believe her sincerity in all this as well But I'm trying to understand why bankruptcy Why you guys discourage it and how it's going to ruin my life Well, I mean, it is an atom bomb that you are will fully welcoming into your financial life Can you tell us a little bit more about the numbers so that we can kind of get on the same page with you and then we can Explain why or why not it's it's a good choice Yeah, so there's That why I think you know a little bit between us. We've got roughly $70 to $80,000 in debt and it's Cards and in cars and I think she's got a couple personal loans Can you sparse it out for us because that does matter if it's 80,000 a credit card debt That's something, but if you say well, we've got two 30,000 dollar vehicles that makes things a little bit easier, right? So can you tell us what types of debt you have and how much they are? Yeah, I want to say it's about Probably a little bit over 20,000 in two different different vehicles maybe like 25,000 in two different vehicles Okay, I Know if she's got a couple personal loans that are about 15,000 together And the rest of that is going to be Card credit cards. Okay. Yeah, okay, so about half 40K and credit cards now what happened exactly where did this money go? You know a lot of it's just been been her kind of behind my back It isn't we've been we've been struggling with for years as you can imagine So how long has this been going on? Probably like seven years. Have you pulled her credit report and yours? Not recently, okay, I would do that tonight jump on annual credit report calm pull both of your questions credit reports, that's what's going to give you an accurate picture of what's going on because it's hard to clean up the mess when we don't even know how big the mess is. And there could be more whether it's she forgot to tell you or didn't tell you and what caused her to come clean all of a sudden after seven years of this. I think what she's described is she sees her mother who's struggling financially with her stepfather and to some of the discussion that she has with her mother talking about their circumstances and what's you know compromising their marriage and she's she came to me she's like I don't want this for us and I recognize my part in this is it's kind of getting laid off down this route and so I want to come clean. So you thought you guys were completely debt free or what or did you just know about the car loan what how much did you know versus found out if if I would have guessed before before she came through on all this I would I would have guessed we would have had somewhere I knew about the car loans but I would have guessed we would have somewhere around 20,000 in card debt credit card debt together okay and you guys have separate finances. So you do share bank accounts because I was going to ask how much of this is I'm meaningfully trying to hide things from you and how much of this is we're just not clued into what each other is doing period I'm just curious but it sounds like no she was meaningfully trying to hide debt from you and you were trying to know what's going on do I have that right yeah okay and still the core of it I mean I know you talked about her and her mom but what was the core of that spending because that's a lot of money to go on credit cards was the core of it I'm trying to keep up with the Joneses is the core of it I was depressed and I went through something but now I'm good what when she says what contributed to that spending what is she saying I mean it's been it's been years that like I think I think they're multifactorial and that she's got maybe you a little bit of wanting to keep up with you know people that she sees online or whatever but then also there's got to be some behavioral component just yeah is there any addiction involved here I'm not in any the fariest way but I could see how an addiction to spending would not be a I mean if you looked at the credit card statements of $40,000 what would I see mostly just a bunch of junk lots of like kids clothes lots of toys lots of clothes for her now are you people who are you the types of people who let's put it on the credit card and then when we get paid we pay off the credit cards and it's just easy to kind of go over a month over a month or are you the type of people who are like no we have a budget and we have a debit card that we spend and this was literally something that was just a complete side quest we do not have a meticulous budget that we adhere to but I mean are you like we put the are you we put the the monthly stuff on credit cards and we paid off later type people no not typically okay I'm just trying to get a sense of like how you guys operate so I can understand how this happened and then figure out how to go forward and I think that overall there was some sloppiness going on but I do think that there was something that she's got an issue and my question is has she said okay like let's do it let's let's put our hands together you know let's Ramsey plan it like what is she saying going forward aside from bankruptcy because bankruptcy I don't think is the answer here although we didn't ask for your incomes what are your incomes um together we're probably around like netting 110 120 okay so about 10k a month coming in what's stopping you guys from just getting really serious hand in hand saying hey I get it there was a lot of mess here I wasn't great handling the finances you were doing all the stuff on the side can we just put all that behind us and just make a plan to knock this out yeah I mean that's kind of in part the the question you know because in her mind she thinks that the the easy solution of this is to go to bankruptcy right and easy is what got us easy is so she is the thing I don't want to change any of my behavior I just want someone to clean up the mess for me and then I can just go back into it see how does it doesn't change anything it also implores your financial life your credits whack do you got to check off the boxes as I filed bankruptcy for the rest of your lives this is not a clean slate and it costs thousands of dollars by the way yeah so here's what I would recommend I would recommend you called us and I'm glad that you did because this is our forte what George and I would recommend is for you guys to roll up your sleeves we'll send you an every dollar budget so you can get meticulous on this and use your margin your margin is your greatest wealth building tool and it's your greatest debt cleaning tool so use your margin use the debt snowball will give you the total money makeover so that you have everything you need to get this started but that's what it is guys it's cutting everything back it's working extra we're going to list the debts from smallest to largest make minimum payments on everything but all of that margin that you find needs to go to the smallest debt you don't need bankruptcy you guys need teamwork and margin to make this happen our singles day sale is happening now with best selling hard covers to help you get better with money for just eleven bucks also eleven bucks questions for humans decks to get some good conversations going or the get clear career assessment if you're trying to figure out your next career move eleven bucks you can barely get lunch for that anymore and married people relax you can get the deal to eleven eleven lot of singles so in today ends so does the sale head to ramsysolutions.com/store and stock up maddy is in the st. Louis up next maddy welcome to the ramsyshow how can jayden i help hi thanks for taking my call absolutely what's that I finished that I'm wondering should I finish the degree I started or switch to a new career path sounds like you don't like this degree what happened really well I dropped out years ago and I just started setting public health but I really want to go to nursing school but yeah I just don't know if it's worth the money to so you said switch to a new career path you're still going to have to just go to nursing school so you're just switching your education path more so correct is it going to cost you more I mean the credits you did before were they very specific or were they more the gen ed side more the gen ed side okay so it doesn't seem like it's going to cost you anything time wise is it I messed up my GK a little bit so I would have to retake some classes okay are you in a spot where you can do all of this financially and cash flow without debt yeah I think so at a community college nice are you single yes how old are you 33 okay so 33 and are you working at all right now yeah I work to 10 jobs wow and you can continue that while in nursing school no I plan to quit I'm just with them with my dad right now but I'm trying to cash flow this public health degree that I'm currently doing so you're saving up a lump sum yes okay trying to but I just don't know if it's worth going through another year of school well let's run the numbers so if you do this degree what are you making right now right now you said you're working you're working two jobs and what are you bringing home and what kind of work is it a restaurant and retail okay so my guess is you don't want to continue that forever so you've said hey I want to do my nursing degree what's going to cost you to do the nursing degree probably 50 60,000 and how quickly can you cash flow that because you're stacking up money now right yes well I would probably do a program where they would pay back my loans like a three-year program but I was so you were thinking I'll take loans and then do a yeah I don't like that for you no is there was there another pathway that was less than 50 or 60 that you've considered there are some two-year online programs I'm just ready to do like an accelerated program and I mean there's grants and stuff but I don't know if I'll be able to get scholarships because of my GPA so I was just going to borrow but then just pay it back right away but it's not right away it's three years with a lot of fine print uh-huh locked in and so it has to all be done perfectly and you're stuck you're going to lose out on some opportunities and options and so I don't love the path of well I'll take on debt and hopefully it'll all work out the non-two-year program was it a four-year program the first one that you suggested the 50 to 60 how long would that take Um, that would take two years. Okay. Um, and so like a community college, so be a little cheaper. How much do you have saved right now? Um, just about 4,000. Okay, where's all the money going if you're living at home when you say you're making four grand a month? I'm full time at the college I'm at right now for my bachelor's, so I'm paying cash for that. Perfect. Okay. So all the margin is going to cash low the current degree. So you don't have any debt right now? No. Great. That's a good start. That is a good start. So if you stop this program and switched over, could you just reallocate that money and cash flow the nursing program? You get pretty close. How much more is that I'm just worried because I don't want because nursing is just, um, nursing school is pretty demanding. So I wouldn't want to work as much as I am now. So you wouldn't bring in four grand. Therefore you couldn't cash flow it. Understood. Can I ask what caused you to choose nursing? Um, I just think it's a stable, um, stable job to have. I'll always have work to do. And I can like go part time full time. I just wonder for the money. I'd want to have more certainty that like this is the career. I know I want to do it. I've been around it. This feels right for me. Um, have you had any experience inside of a hospital? Yes. I've worked in a half the test for about a year. Okay. Um, I might do a little more research before I sink that money into this career path. Because if what happens if you get into it and you're like, man, this is too much for me. I'm, and I've sunk $60,000 into it. So I might do a little bit more research in the meantime. And as long as you're cash flowing, whichever path you choose, I think that's good. But any path you choose, I'd want to research it. I'd want to spend some time around it. I'd want to get some hands and feet on it to make sure like this is truly what I want to do. Cause nursing, that's a different, that's a different life right there. I have a crazy idea, Maddie. What if you stop this program all together and just work full time for a year and banked all of that money? 12 months from now, you got 50 grand in the bank. That's, that's a great idea. Then you can start the program without stress without having to work as much as you're working now. And you can still live at home in the meantime and finish the program out. Is that a compromise? Yeah, that's not a bad idea. So we're going slow so that we can go fast and graduate debt free with a whole lot of peace. And then you can choose where you work instead of trying to find the right employer who will hopefully pay back your loans. If you follow the book, I would rather you have all the options in the world. And you have the year to see like what grants are out there, what student, uh, what scholarships are out there. Do I really love this program? Do I really want to do nursing? You have that time to kind of do all that research and get your ducks in a row. I like that George. Great question. Angie's up next and Charlotte. What's going on, Angie? Hi, I wanted to talk to you about, is it better to start investing for the time and to for one case or do I start funding my kids by 29 fund first? Oh, okay. How much are you investing right now? Uh, I met six percent and my company matches four, so around 10 to 5. Okay. So you're investing 6% is it just you or are you married? I'm divorced. Okay. So six percent of your income, we recommend 15% once you're in baby step four, meaning you're out of consumer debt. You've got an emergency fund. Are you there? Or do you still have some debt? Uh, I'm nearly there. I need to build on my emergency fund a little bit, but, um, no debt. Okay. No debt working on the emergency fund. So what we would say is you invest 15% for your retirement first. When you get to that point, then any leftover money can start going into college funds because here's the problem. There is a 100% chance you will need to retire one day. Correct. There's a 50, 50 chance your kid goes to college and probably even less of a chance they graduate with a four year degree. I'm sure your kid is not going to be that. But all that to say, we know you're going to need to retire. Let's put your own mask on first because what we find on the show, Angie is that parents end up becoming a burden to their children because they didn't prepare for their own retirement. Instead, they thought they were being so selfless by putting money away for their kids while not preparing for their own futures. Got it. So you'd say for 15% to your retirement and whatever company matches is different. That's just gravy on top. So you would ratchet your 401K investing up to 15%. If you've got some good funds in there, if there's a Roth version of the 401K, that's even better. And then if you have margin left over, would you have margin left over, by the way? I would. Okay. Then you can start setting that aside into a 529 plan for your child. How old your kid and what does that hit three? Oh, fantastic. You got a 15 year runway and then some. So yeah, there's no percentage for 529 plans. It really depends on your margin and your goals for education. And as the child gets older, you'll have a much better picture of what that might look like. But right now, I would just set as much as you can aside, that might be an intentional goal of, let's say, 300 bucks a month, 500 bucks a month. And if it's invested, well, you'd have a six figure pile ready to go for college 15 years from now. And Lord only knows what college is going to cost. There's some projectors out there where you can look and see, but because I've got a three or two Angie. So I'm in the same boat going, okay, 15. All right, we're talking 2041. Based on inflation, college is going to be half a million dollars a year for a degree that is worth less than the paper it was printed on. That's scary. So that's a real situation. But, you know, education is still always going to be worth it. The value of a four year degree from a fancy university, I think the jury's out on that one. But I'm saving either way. Medicare is confusing for everyone. Doesn't matter whether you're a teacher, rocket scientist, or one of the politicians who came up with it. This stuff is complicated. And nobody should have to untangle it by themselves. And that's why we created a webinar with our Ramsey trusted partner, chapter co-founder, Ari Parker, and myself answer your toughest questions about Medicare so you can tackle the process confidently and get the right plan. So go to ramseysolutions.com/chapter to learn more. That's ramseysolutions.com/chapter. Welcome back to the Ramsey show. Jay and I just got out of a meeting this week talking about the live like no one else crews. And it got me so stoked because truthfully I didn't know what was going on. I know the last to find out. And they laid out the schedule for me and they're like, okay, Tuesday or Wednesday. And I was just getting stoked because every single day was jam packed with so much fun stuff. It's going to be all of us Ramsey personalities, including Dave Ramsey, all new wealth building teachings, the world's largest debt free screen, live tapings of the Ramsey show. Smart money, happy hour. And then I found out you and I are hosting some special things together. Karaoke multiple multiple nights of karaoke. That's going to be a blast. We're also hosting a solo social. So there's some solo travelers on the cruise, not necessarily single. A lot of them are, but some are just solo travelers. And there's over 140 of them. So we're going to be hosting like just a fun mixer. So you have some buddies all week on the cruise. So it's nice. We're going to kick off with that, which will be so much fun. Of course, we have main stage talks from all of us personalities and investing essentials. I'll be doing that with Dave Ramsey as well. And Jade's got a lot of fun stuff happening too. So I'm really pumped for this. It's happened. It's coming up. It's sneaking up on a March 14 through the 21st. It's almost full. We have some cabins left for a limited time, third and fourth passenger sale free. Plus you can unlock a free cabin upgrade with code sale with Dave. No spaces sale with Dave. So book your cabin, get the offer details go to ramsey solutions dot com slash events. I'm just going to float this out of there. Okay, you and me. I've had the time of my life. Oh, that's a good one. Dirty dancing. You know what I'm talking about? Are you going to lift me? Yeah. I'm Patrick Swayze and you're Jennifer Gray. I mean, I'm not opposed to that. I love to practice. You work out more than so if you try to do the lift, you're going down. I think that's going to be at that's worth the price of admission. Right there, go check it out. We're going to have a great time sailing around the Caribbean. It's going to be awesome. All inclusive. Good times. Matt is in Las Vegas up next. What's going on, Matt? Hey, guys, I am 33 years old. I currently earn about a hundred nine K year and I just paid off my house. So that is wild. Are you single? Yeah. I know. I have a girlfriend that lives with me. That's awesome. Good for you. Yeah, thanks. I have no debt at any kind and my job is really stressful. I'm on call pretty much 24/7. So what kind of work do they have? No, I'm a clinical director at a health clinic. Okay, so, yeah. So whenever they're open, whenever there's issues, I'm the one they kind of reach out to. We're open 70s a week. So here they go. Yeah, it's always busy and exactly. So there is an opportunity. I have a pharmacy background and there's an option. to just go back to being a pharmacist for three days a week and earn about 80K a year. And I've been seriously thinking about it now that I don't have that monthly payment anymore. Yeah, live like no one else, so later you can live like no one else. So what's stopping you? So yeah, I mean my partner and I like we have like a rough timeline of like engagement in the next year, marriage and the year after that, kids shortly after, maybe a bigger house eventually. So I think there's like a little bit of concern about if it's like a short-sighted move to step down the part time. So yeah, just kind of a little bit of advice. Could you always go make more money eventually? I could go back to full-time exactly and then I could go back to managing a pharmacy or something like that. So that is definitely an option. Yeah, I mean you've earned the right to regroup and take on something a little less stressful for now. And as life gets busier again and you get more responsibilities and more bills to pay, more mouths to feed, you also can just ramp it back up and go full-time. I mean you're a young guy, you're highly skilled, we're always gonna need people like you. And so I think it's a good move to go three days a week if that's what you want to do right now. What would you do with the extra time you think? I would volunteer. I do a little bit of work with with the faculty and then I golf in the summers a few days a week and yeah, just try to relax, get back to work and out and just kind of enjoy enjoying life a little bit instead of just always always feel like I'm grinding. Is your girlfriend working part full-time part-time? Yeah, she's part-time or sorry, she's working full-time at the moment and she's a physician assistant so she makes a good living as well. Okay, is she gonna be you know a little bitter that you're out here just golfing, having a good time and she's hustling 60 hours a week? Yeah, yeah, it was out of a curiosity. Yeah, more than a point. Every time I mention it, she does she does say that half joking but kind of half-series as well. That's funny, when's the wedding? So we're non-gauge yet but our general timeline is like we're we're in shop and and okay cool. We get engaged in the next year or so and and Mary and a couple. Congratulations, congratulations on the paid-off house and what's the house worth? About 500. Wow and how much do you have an investments? I have about 700K saved up. Oh look at that. Messed around and became a millionaire just like that. 33. Okay, so that tells me you're you're gonna be okay in the retirement side. I was just curious your other financial goals but it sounds like if you're happy where you're at and you got a paid-for house you're not planning on moving anytime soon or upgrading. You're in a good spot and again you can always jump at they're always gonna need a clinical director somewhere to hustle like that. Thanks for the call. To do that at 33 years old that's a person who is focused from the the jump. Sounds like he's been grindin for a decade plus for him. Alissa is in New York up next. What's going on Alissa? How can we help? Hey thanks for taking my call. I have I have a a little bit of an opportunity. My my husband and I just got married about seven months ago and we just found out that we were pregnant three months ago. So yeah. It's exciting. So it's so it's yes it's exciting. It was welcome however it's we didn't get a chance to kind of save for it or do anything like that. So my grandparents have told me that we are like they would be able to take us in. We could sell our house or rent it and move in with them. Why? I wanted to know. What why? What are you saving for? To try to save for the future. I feel like everything is so I'm like I'm so afraid of not having the money going forward for the future for the schools that I want to put my child in like private school to maintain a private school. Yeah. Let's talk through this. Let's talk through this and put some numbers around this and make sure this is not just something floating in your brain. You live now you haven't you have a place now that you would sell what do you have? Yes. I have a townhouse. The one next door just sold last month for around 700. I have a mortgage of about 215. Okay. When you say you that's you and your you and your husband together. Yes. Okay. And then you guys were you paying the mortgage just fine? Was there margin left over? Yes. We're paying everything just fine. How much margin do you guys have? We're putting away about we're being really good. So we're putting away about 10,000 a month. What? In savings? I am and I don't know if I'm overreacting. I'm going to go with yes, but let's run the number so that you know why. So let's let's go back a little bit. What do you what do you and your spouse bring home together combined every single month? It I have a steady income. He works in the service industry. So his paycheck is very variable. Okay. On a good month because you put around 10 grand away. So on a good month. Right. On a good month, we're bringing home about 15,000 a month and you're living off five. It sounds like how much is the mortgage? Really good. Mortgage is around 1100 a month. Love that. A great one. It's a living on way less than you may have. Yeah. And so do you have a nest egg saved? Do you have any money in savings? I have a 401k. I have my I rolled over my 401k into a raw. Okay. How much is liquid in savings right now? Liquid in savings like in in those I'm not sure what you just an emergency. Just an emergency. I use accounts from like that. That I don't that we don't have. So that's the next step. What you guys are going to do is you're going to take this margin that you have and you're going to save up three to six months of expenses. And that's exactly what you should be doing when there's a baby on the way. And then from then keep then on keep investing. Invest 15% of your income into you guys's retirement. And you guys have the cash flow that you can start to stack up for private school, even if you wanted to. You can start to stack up on a 529 now for private school. No need to move in with grandma. You guys are just fine. It's the holiday season. So here comes all the excuses for not sticking to a budget. It's just this one time. It was on sale. And how about this one? I'll start fresh in January. Yeah, right. Money's not a math problem. It's a plan problem. And without one, your paycheck will disappear on you so fast. That's why we built every dollar. It helps you give every dollar a job before it's spent. So you're telling your money where to go instead of wondering where it went. Every dollar is backed by the same proven plan that millions of everyday people have used for over 30 years to beat debt and build wealth. Get on a money plan now so you can get into the new year already making progress, not excuses. Start every dollar for free. Download it in the App Store or Google Play Our scripture in quote of the day, "Proverbs 11-1, the Lord to test dishonest scales but accurate weights find favor with him." Albert Einstein said, "Life is like riding a bicycle to keep your balance. You must keep moving." Like that. Jean is in Stanford, Connecticut up next. What's going on, Jean? Hello, thank you so much for taking my call. Absolutely. I'm calling because my husband and I are both 56 years old. We both work full-time. Combined, we make about $130,000. We haven't made the best decisions in our 23 years of marriage and we racked up quite a bit of debt and it's been extremely stressful and we are at about $340,000 in debt. Does that include a mortgage? No. $307,000 of it is my student loan debt. When did you graduate? 1998. Has this just been accruing? Yes. We went through some hard times. My husband had some health issues. He had job losses, so I kept deferring and then finally in like 2016, I just basically gave up. I defaulted on the loan and kind of has been living like a fugitive looking over my shoulder. I bet. But garnish meant to come. But the good news is, I finally was sick and tired of feeling this way and decided I was going to do something. I went and got side gigs. I began working 70s, week, week, week, three things during over time. Managed to save $8,000 in a very short time. Paid off some little debts we had and stuff like that. And then literally just was holding that money in a savings account just because, after living this way for so long, I was like terrified of what might happen, a car breakdown or something like that. - So there's 8,000 in an account somewhere now. - Yes, there's 8,000 in the debt still at 340 total. - 340 total because we have other, obviously debt. We have cars. We have an IRS. We got stock. - Tell us about the cars. Let's go one by one. Tell us what you have in cars, one by one. - Car, so we have three cars. One is about to be paid off next month. We have another car. Probably I'd say 7,000. - Okay, and then the second car? - Second car will be paid off in about six months. - What do you owe? - We owe, I think, 2,500 left on that. - Okay. - I think. And then the last car is the one we owe the most on. It's around 11,600. It's a car we finance for our daughter, who's a senior, she's 18. She actually is making the car payments, but it's in our name. - It's 11,000, okay, what's it worth? - I'm not sure, it's a Volkswagen convertible, 2014. - Okay, what else do you have? - We have the IRS debt, which is at 15,000. - Okay. - And we have a credit card debt, which is 4,000. - And that's all included in the 340? - Yes. - Okay. All right, so you have 8,000 saved right now. 340 in consumer debt. How aligned are you to on getting out of this debt within your lifetime? - Oh, I, last year is when I had had it. I said, this is it, I kind of resigned myself thinking I'm gonna die with a student loan debt, but at least, like, let's take care of this other debt and get it out. But this is the big question, about two weeks ago, my father-in-law passed away. And my brother-in-law, who's the executor of the estate, informed my husband that himself and the two other, his two brothers are each going to inherit around $275 to $300,000. - Wow. Wow, that's a lifeline. - It is. And I said that to, I said, it's a miracle blessing. This is a second chance. And I do not want to, I just, I don't want to ruin it. I want to do things smart for once. - Yeah. And I think you recognizing that is a huge part of this because there was a pattern, right? There was this pattern of going into debt and there was a pattern of kind of running from it. And it feels like you started to break that pattern. Did you start breaking that pattern before or after you found out about the inheritance? - Oh, before, a year ago. - Okay, and what was the catalyst for that? Just I'm tired of running. I'm tired of feeling like I'm a fugitive. - Exactly, that is, yeah. My husband had actually lost his job. He works in car sales. He had lost his job again. And I was like, what are we going to do? We are like one thing away from catastrophe. I can't, can't live like this anymore. - Yeah, not at 56. What's left on your mortgage? - We don't have a mortgage, we rent. - Okay, okay. - That's why my question is what to do with the money? - Yeah, off the debt. - You got to pay off the debt, off the debt. - So much of this, I asked what I asked because this is a blessing, but if you don't take two, and I say two long hard looks in the mirror 'cause you and your spouse need to both just stand there and stare yourselves down because what happened here, I mean, you know it, it was a mess. And there's just gotta be this internal check that goes never again. And here, it's an identity shift that has to take place. And that's the thing that I want you guys to spend a lot of time talking about and reinforcing is who we're gonna be once this $300,000 of debt is cleared. And what that needs to look like is we are people who, number one, operate our finances together. We are people who are proactive. We don't just let problems sit, investor, and persist. We are people who no longer borrow money. And perhaps I should have put that at the top of the list, but that gene has gotta be the number one threshold that you both agree you never cross again. For any reason. - Like I would be signing contracts and get it notarized at the bank saying, I will never borrow money again. - Make a ceremony out of it. (laughing) - My husband and I need to be on the same page because he literally was like, oh, a new car. - No. - Out of your mind, no. - Is he on board that this is all going to go toward the consumer debt, not a down payment, not a new car? - Oh, I've already, yeah, I told them. - So it's gonna go smallest to largest balance and just throw the 300 at it. That's exactly what I would do. You'll be left with 40 grand. In fact, you have eight saved. So seven of that gets knocked out. Do you understand you'd be, I mean, think about that. You're down to $33,000 left to pay off, making 130 grand. - So I know you're probably gonna like, scream it where you say this. My thought process was with the student loans. Like, I shouldn't be putting part of that money into potentially buying like a very cheap, cheap, cheap, small, tiny house that's paid off and then be paying the student loans. - Not unless you wanna die with the student loans. - Okay. - I don't think you guys are gonna pay off the student loans without this loan. - 'Cause you're still working. As long as you're still working, you're 56 years old. You can work for the next 10 years. Can you do that? - No, I plan on continuing, doing all the side gate from doing work in seven days. - Yes, and so now you're doing what everybody else out here is doing, you're starting to save for a down payment for a house and it's gonna be something really, really modest. - Yes, absolutely. - You know, and it never wanna feel this way again. - Yes, and then we're gonna start investing 15%. Like, you're gonna just walk the baby steps. So first things first and truly just focus on this. We're paying off the debt. The $33,000, that's what's gonna be left to your name. We're grinding to get it done and we're getting it done as quickly as possible. Then we're saving three to six months because if you thought it felt great to have 8,000 saved, man, it's gonna feel amazing to have 12 or whatever six months of expenses is for you. And then from there, we're investing 15% of those incomes that you guys are bringing in to start saving a nest egg for retirement. And then from then, now we can start thinking about what does it look like to do a down payment? What is our next best option? Is it a condo? Is it a townhouse? But it's gotta be something that you can afford because to your point, Gene, the idea is, when you go into retirement, you don't wanna be making mortgage payments. I mean, that's the ideal. If you are, there are worse things that could happen in your life, but just know that when you start walking the baby steps, there's always a greater level of peace that can be attained, right? Obviously, the baby steps work best. The earlier you start them, and we love people start these at age 18, right? But if you're 70, if you're 56, there's always a greater measure of peace that you can acquire by walking the baby steps. So keep walking them, don't let whether or not you'll have a million bucks deter you from doing this. Yeah, okay. So you can do this. We're gonna hook you up with some resources. Number one is Jade's book. What no one told you about money. That's gonna give you the motivation. And then to put it into practice, our every dollar budgeting app. We'll give you that as well. But I mean, you guys, with this inheritance, if you throw it at the debt, one year from now, you're debt free. That's a worst case scenario. Six months later, you got the emergency fund. Two and a half years later, you got a down payment. By your 60th birthday, you guys could be in your own house and building wealth of the future. I love that. That puts this hour of the Ramsey show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.