The Best Return Isn’t Always Money

A Medicare plan that worked last year might cost you more next year. Let chapter check your options for free. Ask chapter.org/ramzie. Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm George Campbell, joined by Dr. John Deloney and we're taking your calls from the next couple of hours. You can call this number, triple eight, eight, two, five, two, two, five. You jump into the conversation. David is an Indianapolis to kick us off. What's going on, David? How can we help? First off, big fans, John Deloneyapolis is so much of your stuff. George, love you, YouTube channel, it's great. Thank you. So yeah, so I have an interesting situation. So me and my wife fall in the baby steps paid off approximately $60,000 in the past seven months or so. Wow. Well, I guess I'm sorry. I really last two years if you include everything. And it's been great. On the flip side, my brother has not done that and they got themselves into some financial trouble and my parents have ended up giving them $80,000. And so it kind of feels like every time they get in trouble, they are using my parents to try to get out of it. And my parents keep letting them do this. And meanwhile, it feels like we're being punished because we're over here doing our own thing, paying off our debt and doing it the right way. Can I rephrase this and you tell me if I'm right? Okay. Go ahead. My brother is the prodigal son and dad threw him a party and said, here's a big old check. But even though you've been misbehaving and you're out here doing your homework and eating your vegetables, getting Jack squat and there's a little bit of resentment bubbling up. That's that's exactly right. That's very similar. How are you being punished? Well, I guess at the end of the day, it feels like we aren't receiving the same kind of treatment that you're 100% not. No question. Like no question about it. You're not getting $80,000 checks in the mail, no question. But how are you being punished? I guess we wouldn't, it's just call it a punishment is not right. It would just be unequal treatment. So let me take a one step deeper. How are you a victim here? Because here's what I'm hearing. I'm hearing a man who looked himself in the mirror, got on board, his wife got together and you all conquered a really seemingly impossible thing together for two years. And you've changed the life of you and your wife. You've changed the life of any kids that will come along the way. Yeah. Like, how are you being wronged here? You're right. And we're stoked about that. And I think in that perspective, we don't feel wronged. We feel some resentment towards my brother for continuing to take advantage of my parents. It's not your brother. Your brother's going to brother. He's doing his thing. You're mad at your mom and your dad. Yeah. Direct that word. You've been mad at your brother for years. This isn't new. You're upset that your parents are contributing to him not making wise financial choices. But here's the problem. Yes. They didn't call and ask you. And so you projecting yourself into their heart and mind, into their money, into their decisions is it, it, it sounds crazy. It's a choice that you're making on a minute by minute basis to be miserable in your own skin. Right? And dude, listen, I completely understand the frustration. Like you're not, you're not out to lunch. Your frustration is right. I get it. And I'm not going to let that into my home because the home that me and my wife are building is full of laughter and warmth and freedom and joy and all the making out we want to do. Like we've created this thing. Right? And I'm not going to, I'm not going to, I'm not going to, I'm not going to let something. I'm just not going to, it's going to stop at the door like a vampire. I'm not going to welcome it in. And have you sat down with your folks? I have had many conversations with them. Okay. Do you have, have you had the conversation where you feel at peace? Something said what you like believe. Yes and no, it just feels like they don't listen a lot of the times. Okay. Are they ever, are they ever going to change their mind? Are there, is your ever a conversation you can have and they're going to go, God, dude, you know what? You're right. We're not helping. And by the way, here's 50,000. No, you think that's ever going to happen? I hope so. No, no, no. I don't think that's going to happen. Okay. But again, you're right to be frustrated, you're right to be upset and it may even be contributing to like a, I can tell you, it's probably going to continue to negatively impact your brother because he's not going to develop the skills and the muscle that you and your wife have developed, right? Yeah. And you've exercised like a person to character, you've looked at people in the eye, you've come to them, you've said, here's the problem, here's what I'm frustrated with. And they've looked at you through their actions and said, I don't really care what you say. What we're going to do, we're going to do. And so then to pick that center block up every day and keep carrying it to the point of resentment, man, at some point that choice becomes yours. And I would, I would suggest, man, you've worked so freaking hard to bring peace into your home. Leave that center block out in the street, man. Don't bring that inside. And here's the thing, what you don't know is, and again, I'm making this up, you, at the end of the day, we all make up stories, okay? We're storytellers. That's who we are. The story you're making up is, they're going to drain themselves. Your brother's a bottomless pit of bad choices and you're going to end up with nothing. That's a story you're making up. It could be true. It might probably be true. You could also wake up every day, telling yourself the story, they've put my money aside, my inheritance aside. And they're going to do right by us later. And I'm going to live in that kind of freedom and peace. Yeah. That makes sense. The stories that you make up will kill you and one of those stories will give you life. Yeah. Do you believe your parents love you? I do. Absolutely. Okay. If that's the case, then love is not a finite pie where he got 90% and you got less now. It just looks different for different people. And they see a guy hurting out here and they're giving a hungry guy a sandwich. And you're like, I got to go to the grocery store and make my own sandwiches. And you're like, you're right. They lowered the hoop for him while you've been training in the backyard shooting hoops. And you're thinking, that's not fair. But the truth is you're a better basketball player. That's great. You've earned it. You've got the blood sweat and tears to prove it and you're going to be just fine without any help from your parents. And that's one of the most powerful gifts you've given yourselves is not needing other people not relying on other people financially. But it does stay. Here we say it does stay. And you're right to feel that way. And I would feel the exact same way if I was in your shoes. I would be calling this show complaining to John. So in case you feel it, David, George and I are so on your team, we're talking to ourselves as we talk to you. Okay? Well, I appreciate that. I really do. And it makes sense. Everything you guys have said has made sense. I think we're just going to, we're just going to try to leave it up the door. We're going to keep doing our thing and, yeah, we'll just, here's what I want you to do. Okay. I want you to write your parents a letter. And I want your wife to write your parents a letter. God help you never send this letter. I want you all to read each other the letter. Okay. And have that moment of grief and sadness. And then let's agree. We've set our peace to ourselves to each other. We've shared what's on our hearts and minds together. We've told my parents to their face what we think is right and wrong. And they have said we don't care where the parents and it's our money. And we're going to go about having the greatest life we can have. That would be my path, man. That's you controlling what you can control, which is you. This brings it back to one of the greatest life conundrums that life isn't fair. In our minds, we think it should be, if I do XYZ, I should get XYZ. And it's not a clean formula. It should. It just isn't. It's just not. Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance. Now and most people are surprised by how affordable term life really is. Even if you're not in perfect health, look, I understand the hesitation since most insurance companies make it more of a hassle than it needs to be, not as Xander insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for you. family. For almost 30 years, I've recommended Zander for straight answers, competitive rates, and coverage that actually protects your family. Call 800-356-4282 or go to zander.com for a quick and easy quote. That's zander.com. Welcome back to the Ramsey Show. I'm here with Dr. John Deloney taking your calls. Robert is up next in Baluxi, Mississippi. What's going on, Robert? Yes, sir. I had a female son run an auto restoration shop. We build classic cars. Cool. Yeah, he kind of used to be. We were behind right now by about, I guess, 25, 30,000. What do you mean by behind? Let me think. I guess you could say we started out for not fogging enough, and then it, I guess, turned into robbing Peter to pay ball. But I mean, are you 30 grand? You all are in the hole to repair the cars already in your bay, or are you all losing that much money like a month? Or did you take out a loan for 30 grand? No, we're behind to finish the cars that are already in the shop. Wow. Okay. And what it's costing you versus what you're charging, there's a net loss of 30 grand. Yes, sir. Got it. We're from a position. I guess we're fighting from a behind position right now. Yeah, started out is not charging enough, but that problem has been corrected. But it feels like we're never going to catch up. Has that negatively impacted future business deals? Yes, because now they're taking too long. So obviously the calls have slowed down because they're like, many times my car, you know, wow, you know, is it just you two doing all of this work? No, sir, we do have three full time people. Okay. So what is the, what's the monthly hemorrhage on top of this? So we're bringing, I guess right now we're bringing in about 12, 12, two and it's costing us around 10, 10, 7 to do that 12, two nights. Do you have any debt? It's going to take forever to catch that up. No, sir. So there's no debt attached to the business or in your personal life. Yes, sir, can I throw a couple of things at you as a complete idiot when it comes to the stuff? What does it look like? Like, so I can imagine like the only, the only corollary I have is guitars. I like, I like fancy guitars and I don't have super fancy ones, but I like guys who work on super fancy guitars. There's a couple of guys in the building here that are legends in that world. And like, I understand that once you position yourself as we are classic car restorers, I would imagine, same as I only work on high end guitars. If that market dried up, it would feel like I was losing something to then go change pickups and cheap guitars. But I know this, I know that I, there's a guy here in town that will come to the office and pick my truck up and drive it back to his shop and change the oil on it and bring it back here. And I pay him well to do that because it, it lets me be with my daughter more, right? Are there things like that that y'all could scramble for the next six months and do conch ears, oil changes, go fix tires, go do beyond call 24/7 that would allow you all to play catch up while you do the, while the heartbeat of what y'all love to do, which is restore classic cars, which by the way, I love, but that business isn't, isn't holding water right now. I'm afraid in an effort to hang onto your dream, you're going to have to close the whole thing. Yes, sir. You know, I'm saying, is that possible? Do y'all have a way to scratch and claw and do other things? I'm sure, I'm sure we probably do, which I did. I guess, didn't get, I guess, to my complete question too, if you don't mind. I got to, I do have, I guess my retirement, me and my wife have been putting money into for years. I have the money there to repair it. And I didn't know if one, I should take that money out to get it caught up. And then, you know, potentially pay that back one day, even though it's paying myself back, but I would have to dip into my retirement fund, but I could, I could fix it doing that. How old are you? 50. Oh, boy. So you're basically going to take a loan out for 35% interest is what you're doing by doing that. After penalties and taxes, you'll be taken at 35% loans. While unplugging all that growth, so the stock market has doubled in the last five years. So if you had a hundred grand sitting in there and you took it all out, you would have had 200 grand. Now you have zero. And so that's the, the two main concerns is it's a really expensive loan. Plus you're unplugging all the future growth. And now you're going to retire broke. So it's not worth the shortcut in the, in this, at this juncture. So here's what I would do is look at the timeline. When do you actually need to make up the gap? Is this two months, six months, I would say by the end of the year. So that puts us at what, three, three months. So now we have some facts. We have three months to come up with 25 or 30 grand. And that can come from liquid savings that can come from future income that can come from selling things. So I would sit down. Do you, do you do all the books in the business or do some control of the finances? My son does. Okay. In the business and he kind of handles that. So let's have a come to Jesus creative meeting where we go, these are the options we have. We can liquidate things that are easily liquidated like assets, vehicles, whatever it may be. We can use cash and savings. We can sell other things or we can scratch up some new income. Based on all that, how do we do that within three months? That's the goal. Have you all done that yet? No, sir. Okay. I think that conversation will be sobering on either end of the barbell. Either you guys will have a fire lit under your butt and you'll be like, oh, we see a pre-clear path. Or you're going to realize this, the business as y'all dreamt it is no longer exists. And you all need to make some other harder decisions. So you get, you know what I'm saying? Yes, sir. And going by this, my only other question, I feel like I'll probably order another answer to now was I just, but I have it right now. So I'm going to say it is we are in a bad location. And would it be worth going into a retirement to get a better location with a larger building to try to further build a business once this has handled. You're saying, dip into retirement to move locations. And to a larger one that would give us more, I guess, eye traffic. We have absolutely no traffic where we are now. We just, we just do word of mouth, which actually was doing well so they started taking too long. But anyway, that's a larger, larger building and better location. Yes. Obviously, we would tell you the same answer is, don't take a 35% loan from yourself, plus minus future growth for a business. The bigger issue is, your business as you describe it is failing. Y'all make $1800 a month in net profit. And the failure will just be worse in a newer, nicer location that has more expenses. Yeah. It's not going to speed up your like your return rate on your cars. It's not, I mean, like you haven't solved any of your business problems. Once you're thriving and you've got a handle on all this and you can cash flow the move, absolutely do it. But right now you're trying to solve one problem with a bad solution, which is if we move, everything will be fixed. I don't think that's the case. And my, I'll tell you this, the mechanic that I trust and use on all my cars is in a way out of the way location. But that dude's reputation is so stirred, I could care less where he is, man. Like you see, it seems like it seems like that kind of work is like a 10 minute oil change. I can imagine you need to catch somebody's eye on the on a street corner, but I mean, they're dropping the car once and picking it up once, right? You're doing this destination work. Yeah. Okay. Is there anything you can back out of that would free up some of this money you're behind on? That's it. I was wondering, can you go have a really, I don't have to look at that. That's a very good question. And I don't honestly don't have the answer to now. So I don't, I don't want to allow to you. Do they sign an agreement when they drop the car with you? Most of the time, not, I'm in a small southern town, and most everything is done on just good old boy handshakes. It might be, it might be that you end up with some egg on your face, but you have to go talk to two or three gentlemen whose cars been sitting in your shop untouched for four or five months and say, I'm not going to get to it. I can't do it. I'm sorry. And they may get upset with you and whatever, but that's just you, that may solve all of this problem for you. But I think, I think you and your son need to have a bigger conversation about the systemic challenges in your business because it's, it, even if all cylinders are firing, you're making 12 grand and spending 10 and a half. That's just not a sustainable business. Do you guys have any savings right now in the business or personal? No, sir. Okay. Do you have one thing I will say? Yes, sir. Should she work outside the home? I think goodness she does. Yes, sir. Okay. Well, we might need to look at some other sources of income and maybe you even go out and do something you're really good at and make really good hourly money doing it in the meantime, even if it means letting go of some clients to try to climb out of this. We're hoping for the best for you, man. 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But if you've already hit a wall and you need real help, Guardian delivers. Their attorneys have settled over $600 million in debt for more than 55,000 people. So go check it out for yourself. GuardianLit.com/ramzie. John, there was a in the dark corner of the personal finance YouTube internet where you live, there was a firestorm. And here's why Graham Stefan, who I love, real estate investor, personal finance YouTube, but we've been friends for a while. Yeah, he's a great. I love him. We've collabed a lot. A lot of Graham fans out there and some people found Ramsey through him and found Graham through us. And he recently posted this video one day ago, million views. I paid off my 2.875% mortgage dot, dot, dot Dave Ramsey was right, which is a great title. And it's famously, while Graham agrees with a lot of our teachings and he's one of the most frugal people I know, he makes me look like a real big spender. I always dreamed of having a segment on my show called The Spendoff between you versus Graham. It would have been awesome. It's still time. So Graham posted this video and it was 16 minutes of him basically saying, what I have been telling him every time I've been hanging out with him, what Dave Ramsey told him, which is, yeah, but you kind of just paid off because the peace of mind is worth it. To wait off your shoulders, life isn't about arbitrage and the spread. You're not taking into account risk. And it was 16 minutes of just, it sounded like he had, we had infiltrated it, it was inception. All right, maybe. Well, you know, why don't we roll the, we'll roll a 60 second version, a little montage if you will. Okay. So you can get a taste for what happened in this video. All right. After years of telling people not to pay off low interest rate debt and arbitrage your money in the markets to make more money instead, starting to think that maybe I was wrong. I never thought I would say this, but for the first time ever, kind of started to think that maybe Dave Ramsey has a point, even though everything was on auto payment, I never accounted for the fact that every single mortgage became its own mini ecosystem of thinking. Honestly, I didn't even think this would be a thing until I started selling off my real estate. I'm talking the ones with 2.875% mortgages fixed for 30 years. And once those were sold, it just felt like an odd sigh of relief. It was as though something was taking up mental space in my head that I didn't even know existed until it was gone. That is why when it comes to the final piece of paying off your loan, it really just comes down to freedom. I'm just going to slow clap that one. No, hold on. I have to say this. That's the first time I've seen this, and you're telling me about this, I cannot do it. I bet you didn't say this coming. I'm getting choked up. Here's why. Graham is somebody who I just love hanging out with, but also I have high respect for. But also Graham has a whole bunch, like people follow him because he's brilliant and he's smart and he's got very clear ideas on how, and he lives what he's, he's preaches, which is rare these days. The world will shift, and the world that my kids are inheriting, that your kids are inheriting, will change when people have the courage to say, I was doing this. I had a lived experience, magic words, I was wrong, and here's what I'm doing now, and dude, just like I applaud Graham for that level of character is, that gives me a little sliver of hope in this world on fire we live in for the world my kids are growing up in, like Bravo, brother. That's awesome. Well, I got a real treat for you, John, because we have Graham on the line right now, on video. Graham. What's going on, Graham? No. What's up, brother? It's good. I wouldn't have said nice things if I knew I was on, yeah, I knew I'm on the entire time. You're like talking to me. I wasn't going to say nice things. It's my year and I'm like, man. How are you, man? I'm doing good. Good. I got to know, this was not an April Fool's prank. You actually paid off your primary mortgage. So this started with some rental properties that I had, and I kept them for years, because all of them were locked at like 2.8% to 3.3, I don't know, I kept them, because I didn't want to give up that mortgage, because to me, the mortgage was everything. If inflation is, you know, 3 to 5%, assuming they're not lying about those numbers, if you weigh higher than that, you know, it's free money. And I started selling off these properties, and oh my gosh, it never hit me until I looked at debt categories, just go down, and I was like, wait a second. This is just a weird, weight off my chest. Even though they were all cash flowing, they all did fine. It was just something for me that was just a bit of a sigh of relief, that it just felt good to see that number go down. Then I asked on Twitter, and I sent you this link, that I asked if anyone regretted paying off their mortgage early, even the people with low interest, and I want to say 98% of people, not a single one, was like, yeah, I have regrets. Everybody was like, yeah, I know I could have made more money in the markets, but just the feeling of having a paid off home, it just gave me a little more confidence, a little pep in the step. Maybe a couple inches taller. Yeah, man, that's huge. We've argued about this for years, I feel like. Waiting time I've been on ice coffee hour, you've been on our show. We usually get into a debate about arbitrage and spreads, and I'm always like, man, it's more than about a spreadsheet. It's about living your life and risk and peace. And you guys are, we're such like, math logic people that I felt like I couldn't get through to you. So what finally did it? It wasn't me. Is it Dave Ramsey himself? No, it was really just paying off the, paying off those rental robberies. The feeling. Yeah. It was the feeling of doing that and then realizing, oh my gosh, it's just like, I've gone to this arbitrage my entire life to like, not nickel and dime, but like, oh, if I could make an extra dollar over here, and I could do this and move this or like, I would do it because I always just look at the numbers, I'm like, the numbers make sense. But when I started to get that piece of mind of just like, eh, you know, maybe I'm not going to make as much money, but you know what? It's simpler. I don't have to think about it. It frees up some space for me to focus on something else, I'm not so stressed out all the time. It's just that's a feeling that I never really appreciated until I want to say this last year. And it all started oddly enough because I had this rental property where it made sense for, it's so dumb, but I calculated that I could take a pledge to asset line at like four points, something percent and build out this basically guest house. And I was able to make like a 15% cash on cash return on none of my own money. And I thought, well, man, this makes sense. I should do this. And it was the worst nine months of my life, feeling with construction and Los Angeles. And then I realized, what, oh my god, for what, for what, I get the borrow of this money over here and do this over here to make an extra, it was like 14 grand a year that I thought was, oh, that's going to be free. It was awful. The amount of stress and headache that went into, I lost so much more money than I ever would have gained in years just from lost opportunity cost because my mind was not fully present. And that's when I realized, you know what, I've taken this too far. And I think there's a value to simplicity and peace line that I never calculated until that experience. Beautiful. So what would you tell someone, cause we get these calls often on the show of, I'm confused, why should I pay this off when I can make more in the market? What would you tell those people out there who are hanging on to those low interest rate mortgages going, I could pay it off. I could pay extra, but I just feel like there's better opportunities. The thing is mathematically, I do think that there are better opportunities that I mean, again, when you look at the numbers, it doesn't make sense on primary residents, low interest rate mortgage. If you're taking the deduction on top of that, like my gosh, that mathematically pencils out. I would say for me, there is a quality of life improvement, but that doesn't also mean [BLANK_AUDIO] you should be building also up an emergency fund. You should be maxing out retirement accounts. You should be investing. I don't, like, I wouldn't take down the emergency fund and not invest for the sake of paying it out of mortgage. But I do think there's a value of peace of mind that comes with just having it paid off, as long as it's not done at the detriment to everything else. And when I cited these surveys, by the way, it said that one of the biggest quality of life improvements was also cash on hand. And so not having like zero emergency fund, but you have a paid off house. It's having cash on the side led to more peace of mind. Didn't even having a paid off property. So I think there's something to be said about that. - Yeah, beautiful. - And otherwise, I think, you know, peace of mind you got to calculate that. - Hey, Bravo brother. - Thanks for hanging out with us. - Not because you follow the Ramsey plan, but Bravo for choosing peace. That's awesome, man. And like respect, man, big time respect. - We'll see you Graham. All right, I'm gonna end with this comment. I left on the video, John, which is my work on this earth is done. I've done it. I've evangelized the Ramsey plan successfully, even if it's subconsciously. - I love that. - And glad Graham's a friend, and way to go be in debt-free, man. (upbeat music) - This show is sponsored by BetterHealth. A lot of you are just trying to keep it together all the time. You show up to work, you pay the bills mostly on time, you smile at all the right times, but no one sees you when you're exhausted. No one sees you snap at your spouse or sit awake at 2 a.m. running through everything you wish you'd done and said differently during the day. Just because you're functioning doesn't mean you're okay. Talking to someone else is a great way to process what's happening in your life. And get to the root of what you're experiencing. That's where BetterHealth comes in. BetterHealth matches you with one of their 30,000 licensed therapists. 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You can start every dollar for free by downloading it in the App Store or Google Play. John is in DC up next. What's going on, John? Welcome to the show. Hi, thank you guys very much. I appreciate you taking my call. I have a bit of a weird situation for you guys. So about this time last year, I was wrongfully terminated for my union job. My union is fighting it on my behalf, but they've also advised to, for me, to take legal action. I do have concrete evidence that proves the termination was wrongful, but going into debt to retain a lawyer is something I'm very skeptical about, considering I just got out of debt recently and going back in it seems scary and daunting. Yeah, I've got some ideas. What happened? What happened in your job, man? I was long story short. I was off duty on my own, on my day off, on my personal time. I went out to a, to check out a, a museum that interested, like a museum placed outdoor museum that interests me. And I was about a week later. I get called into the bosses office to find out I was accused of something that I didn't do and there was no proof of it. And yeah, that's the, that's the short of it. Or is, I don't know, DC's laws, is it a right to work state? Awesome. I don't. It's not a state, obviously, but a right to work territory. Right. Right, but I'm also a union number. So it's a contractual violation as well. Why is it? Well, I don't know enough about unions. Why isn't the union? I would think part of the dues you pay in is that they represent you in wrongful termination. They are to the extent that they can. But I work in a unique industry that has laws different, different sets of laws governing how this kind of stuff is handled. But so it makes it a little bit like the union can, the union is helping me fight it from their perspective. But from a legal perspective, that's not something that they can. What? I guess call me ignorant. I don't understand what's the point of a union. I thought there was for this exact moment was collective bargaining in to help you like fight the man. And they're like, right. The man picks a fight with you. And they're like, all right, man. Good luck. Get a journey like that. Well, so I'm trying without trying to, without getting into too much specifics. I work for the railroad. And that's kind of governed under the railway labor act. Which kind of dictates that employment matters, have to be dealt with to binding arbitration. But you can still, you know, sue, sue and certain cases. Okay. I have one of those cases to sue that I can sue. What's the ideal outcome? Is it a big check or reinstatement in your job? Re-instatement went back pay in a big check. How many years are you in? Eight. Okay. So you've already paid in a lot. Why do you need to pay a lawyer or retainer? Why aren't you hiring a contingency lawyer? If this is a strong case, they'll take that and take part of the settlement. I haven't found one that's willing to take it on a contingency basis yet. Is that because they don't think you have a strong case or because you haven't found an attorney that works on contingency? Because like personal injury, it's usually contingency. So you're not going to pay the lawyer upfront if they think you have a case. They'll go, cool. And they'll take 40% of whatever the settlement is. Right. And I haven't found that in this situation yet. I'm still looking. But one law office was like, yeah, we think, you know, they were like, yeah, you were railroaded. There's no doubt about it. But we don't see a way forward for us to take this case right now without, you know, you paying a $30,000 retainer. No. We're not doing that. You know, three, three, three hundred something an hour. It's going to add insult to injury if you pay these lawyers and nothing comes of it. And it's been two years. Right. Now you're 60 grand in the hole. So please do not go into debt for this. Do you have any savings right now? Yes, I do. As a matter of fact, I have a rainy day fund of about $60,000 in my checking account. I do work part time. So I do have some money coming in. But with the what I was quoted. By the firm that's not taking my case. It seems like that's my because they said, no one's going to take this on contingency. Well, of course they're going to tell you that because they want your retainer. Right. But but but listen, you got to understand like, they're in business. And if they're looking at what you laid out in front of them and they don't think they can make money off of it on the back end, they're going to demand it on the front end. Right. It's kind of what people call the show. And they want they have questions about like, hey, my bank won't loan me this money. So I want to go somewhere else. And it's like, hold on. The bank is in the business of loaning money. If they have said, I can't give you anymore, that's like you need to look in the mirror because you've got some challenges there because that's their whole business, right? And so I'm wondering if the rage and the anger and the way you were treated, all that stuff is right and good. But that your case isn't as strong as you think it is. Or maybe it's not as strong as you want it to be. And that very well could be. And maybe I've been asking the lawyers, the wrong questions are explaining it the wrong way because I have other things on top of the wrongful termination. So maybe there maybe I was just explaining myself wrong. But I would reach out to a couple of other ones. Here's the overall fear, John. I don't want this vengeance to cost you your peace and your emergency fund because you can go broke, trying to prove you were wronged and you will lose either way. And so I would much rather you let the union fight, you do what you can do to move on and go, that really was awful. And learn a lesson from it, whatever comes of that. And then move on. And not let this live in your head, rent free on top of draining your emergency fund because we got a lot of calls in the show, John, where people, they hire the lawyers and it's been years now. And it was over, you know, divorce. And now they are 60 grand in, over two years. And they're like, when do I throw in the towel? Right. And that becomes a hard sunk cost fallacy. And if they want that kind of retainer, which is a significant retainer, plus an hourly rate, which, fair, they can do their business however they want to, you're going up against like a monster in a railroad company. They've got deep pockets. And so you're, it's David vs. Goliath here. And if you have, Again, if you've got a law firm that sees a clear path towards, "Oh my gosh, we're going to get a big check at the back into this, they'll line up for you." I hate to say this because I like, I don't like injustice, drives me bananas, and I don't like disempowerment, it makes me, that's why I do this job. And also, I've learned a hard way through lots of scars, lots of hurt relationships, lots of sleepless nights, that sometimes the bravest, most powerful thing I can do is quietly walk away. And so for whatever that's worth, man, have your heart broken, be upset with injustice, learn any lesson you can take from this, and go get a job where you can sleep on a regular schedule, what you can't do, or you can have holidays on a regular schedule, what you can't do. And you're in your old job, and that may be my recommendation, man. If someone won't take this on contingency, and the union won't do their, like, won't fight for you on your behalf, man, that's a hard to row a boat upstream with, you're the only rower, right? And this, I just don't want this legal problem to also turn into a financial problem, and that's what often happens when we finance our way through it, and now you've got all this injustice plus the sunk cost fallacy, and now you're like, I got to see this through, and that can just burn you up. And so that's the scariest part, John. So I'm so sorry you're going through this. I know a lot of people are getting laid off right now, and there's a similar feeling of that level of, you know, betrayal of hurt of, I jumped on a Zoom call with 200 people, and the CEO to said, yeah, you're all done today, and jumps off the phone. So you have every right to be angry, to feel hurt, but don't let that cause you to make terrible financial decisions that you're going to have to clean up for years to come. And don't let blind rage or this phrase that, like, man, it's become part of our culture, you owe me. They might, they might actually might, but don't let that carrot dangle out in front of you and keep you from reality, which is, I got to go get two jobs today, because I don't have an income anymore. I got to go throw boxes at this place and then go make coffee at night, because I need a paycheck coming in. And by the way, Bravo to you for setting yourself up paying all your debts off, having a killer emergency fund. And I hate to say it like this for just this moment when life happens to times such as this man, while working part time, you're in the driver's seat. Yeah, way to go, John. Running a business is hard enough. The tools you use to run it should make your job easier. Too many business owners spend more time fighting their software than selling their products. You didn't sign up to become a web developer. You signed up to build a business you're proud of and Shopify gets that with Shopify, you can design and launch a professional storefront fast without the headaches. Everything you need to start selling is built in and when your customers are ready to buy, Shopify's purple shop pay button is one of the best converting checkouts in the world, which means fewer abandoned carts and more sales. And when questions come up because they always do sidekick, Shopify's built in AI assistant is there to help you keep moving. All you need is the idea. Shopify handles the rest. Start your free trial at Shopify dot com slash Ramsey. That's Shopify dot com slash Ramsey Shopify dot com slash Ramsey. Welcome back to the Ramsey show and the fair winds credit Union studio. I'm George here with Dr. John Deloney taking your calls at Tribal 8 825 5225. George is in Kansas City up next. Love the name. What's going on, man? Hey, good to talk to you guys. I'm looking for some good counsel here. I'm hoping that can get some guys out of the council. But I started my job about a year ago and it's motivated me to fail fall on debt and now I'm in baby step three. And the job that I'm at is very overtime dependent, which means I've only been able to take four days off in the last year. And every time I take time off, unless it's coincides with the holiday, which I have to work holidays, then then I can't really take time off. Otherwise, I'll take a big hit in my paycheck. Whoa, what do you do? What's the job, brother? I'm a trash truck driver. Okay. And it's 361 days a year. I think you probably like Thanksgiving and Christmas off that's about it by like Labor Day had to work Labor Day, you know, New Year's Eve got to work New Year's Eve, you know, do you have to do this or is this like you have a regular schedule and then you work overtime because you're trying to pay stuff off and get ahead financially. Over time, it's kind of like mandatory like it's not it's an unspoken rule like if you don't do it, you'll probably get canned or they'll find a reason they can do. What do you make doing this? What's your normal pay and then what's the overtime pay? So my normal pay is $23 an hour, which comes out to I don't know like $980 I can't remember exactly, but overtime is $35.50 and I work anywhere from anywhere from 10 to 15 hours of overtime, which probably 10 to 30 hours overtime in a month. Okay, so that's banking you an extra like couple grand. Yeah, I mean, I'm making good money more money than I've made in a long time, you know, and I'm moving forward, but I don't want to stop even if even if at the cost of me, you know, let's the end game. Let's say you get through baby step three, you've got a fully funded emergency fund and now you're just a guy working 361 days a year. Okay, so this is all for the family like I want it. We've been living in the same apartment for like the last 10 to 11 years and the wife has been dreaming of a house and I really want to be able to do that for and for me and the family. So that's our goal is to be in a house and, you know, follow the steps so we can be baby step billionaires, you know. Yeah, and dude, we obviously we support you 100% and also I don't want your kids at your early funeral reading off your your debt pay off spreadsheet. I want them to own stories about funny silly things and times they have with their dad. Right. Yeah, today is the first day I've taken off in like months and I only took a day off because it coincided with a holiday so I would hurt my pay less and we just got done fishing. We're about to eat some lunch. So like this is so like how close are you to these goals? How much debt do you have? All right, so I have no debt and I have about four grand saved and I need about 17 grand to make this emergency six month emergency fun and I'm the only one working. So I followed your your AI and it said I needed six months instead of three months and then I need to save the down payment, which is going to try to be like within a 25% which is about. Forget what this is. I think it's like seven grand maybe I can't remember that can't be right not seven grand. You mean like 70 probably not 70 grand for down payment. Yeah, what's the house going to cost? Oh, we're trying to stay within 25% of my paycheck. Oh, okay, you're talking seven grand is your take home pay? Because the down payment for that as for the house, okay, because like yeah, if a house cost 200,000 dollars 10% down would be 20 grand. Oh, yeah, we're not we're not going anywhere that okay, so what is a house cost you? It's way cheaper. So for us, we were looking at a house a little bit and it was like a hundred grand and it needed some work and 25. It would come up to about seven hundred dollars for a month. Yeah, we're really trying to stay even lower than that if we can and you know build it up over time versus. Get into this housing and get through a sticky financial we'd rather put some work into it and make it worth something. Okay, but you you can't put any work into it. Yeah, we don't want to be a house for you that I get that but I want you to be honest with yourself. Are you going to do it on the four days off a year you get you're going to fix the roof and the air conditioner in the chimney? I don't know because my I'd like to think I'm like my parents, my parents were corners and they were go getters. I'd like to think some of that rubbed out for me, but it clearly has bro, you're you're working hard. You got the work ethic down. We just don't want you to sign up for something that you think is a blessing and it turns out to be a burden. I'd rather you I'd rather you save up some money and buy a hundred fifty thousand dollar house that doesn't need as much work on it. And put a little bit more down and that's more realistic and then you and your wife be about asking what kind of job can I have where I can also be a husband and a father because the job you have doesn't allow for that. And I think there's a season and it's pretty amazing what you're doing like I'm going to sacrifice these few years to give my family a different life. That's noble brother. It's just not can't be indefinite. So right now what you're telling me is you make about let's say 47 48 K and then with over time it's another 10 grand or so. Man, I'm less of misled you guys badly. No, in my in my numbers, I make about 70 thousand a year with over time. Good, so 70 grand a year and you want to be doing this in the long run. I do know. not want to be doing this because I can't find a way to get out over time. So that's what I'm trying to get at is I want to build you a great life, not just get you out of baby step three. So that's what I would also be looking at is yes, let's get to baby step three and maybe the down payment, but I don't see you doing this two years from now. So what baby steps allow you to do is have the freedom and margin to actually go pursue the thing you want to do and the brain power and financial ability to do it. So I would start dreaming of what is that next career for you? If it's not in waste management, but you can still make 70, 80, 90 grand. I feel so torn because, oh man, like literally, I don't hate to do this, but me and the wife both felt led by the Lord to do this and everything worked out. And I don't know if this is the time to move or if I'm supposed to stay here too, because I've been put here and I've been using as an opportunity to do the gospel to give the word of God to people too, but it pays the bills and I get to reach people too. And I get to do that too, in our jobs. So I don't want you to have the fallacy that this is it. And the Lord said I can never do anything else. I found that this is just me personally that the Lord often works when I'm working, when I'm doing something active, when I'm searching for that thing versus just sitting around going, well, if something falls in my lap, maybe I'll pursue it. And so I don't want you to stop dreaming either, because this is a grind. And like John said, I don't want you to have an early funeral. That's what the Lord intended. It also is a pretty a pretty cool moment for your kids to see their dad hustle and grind to change their future. And it's pretty cool to see like your husband, I mean, your wife gets to see you say, I'm going to put it all in the line for three years so that you can have we can have the life that you've been dreaming of. That's that's awesome. That's amazing. And it might be that your dream job comes along and you're going to have to take a pay cut for it for a season. But yeah, but if you don't only buddy any money and you have a fully funded emergency fund and you have a $700 a month house payment, you've set yourself up for exactly that moment. You say, no, I'm good. I don't need the overtime. They go, well, you're fired and you go, okay, have a good day, guys. We'll miss you. Yeah, it's that simple. That's what we want you to get to is to have that kind of freedom instead of being in this, this prison that we've created for you. Here's something that keeps a lot of parents up at night. Kids are growing up with more access to information than ever before in history. But most of the content is calculated to keep them distracted, make them mad, and keep them scrolling, not help them think for themselves. Worldwatch exists to be the antidote to the algorithms. Worldwatch is a video new service built specifically for pre-teens and teens. They're daily 10 minute videos that explain what's happening in the world through a factual Christian worldview. No outrage, no noise, just clear reporting you can watch together and that your kids can actually understand so they can come to the dinner table engaged and curious instead of worked up or zoned out. And I love that Worldwatch doesn't talk at kids. It gives family something to talk about. Because when my kids are older, I want them to be able to think for themselves and separate news from noise. And right now you can try Worldwatch free for 30 days. Click the link in the description or go to worldwatch.news/ramsy and use promo code Ramsey to get started. The Ramsey offer includes your first full month free on top of the standard 7-day trial. That's worldwatch.news/ramsy. Roy is up next and bend or again. What's going on, Roy? Hey guys, how you guys doing this afternoon? Doing well. How can we help? Well, I'm about $320,000 in debt. I'm a small business owner. And I'm struggling to pay my estimated quarterly taxes and I'm still spending when I shouldn't be and this could use some advice and use some help. And well, at least we're self-aware here. Is it $320 all business debt or is it other consumer debt? Only about $37,000, $38,000 of that is on equipment loan. The rest is actually all personal with I've used personal debt for the business since it's open. But the only thing actually in the business name is equipment loan for about $37,000 in the rest is all personal. Okay, breakdown some of the other loans for me. So we have roughly about $4,000 by now pay later type of accounts. We have about $58,000 in vehicle loans, about $99,000 in tax debt, $24,000 in personal loans, tax consumer loans, $52,000 in credit cards, about $5,000 in the medical and I owe my parents about 15,000 between the two of them. Good and all gracious. It'd be a shorter list of who you don't. And a $20,000 student loan on our name as well. Okay, wow. So you're saying we, who's the accomplice to these crimes? Well, 95% me, about 5% my wife. She doesn't really contribute to the bet besides things from from from before we were married. There's a her student loan she has in her name. Okay, on a scale of one to 11, how badly are you guys actually wanting to get out of debt? Because that helps me navigate how to walk you through this. So badly that yesterday had an hour and a half complication with a bankruptcy attorney. And all my, my stomach was not thinking this is not the way out. Like this is just a band-aid for this, for this problem we're having. Well, I'm glad you called us because I'm going to steer you away from bankruptcy. I think you guys can get out of this and it's not going to be fun, but it'll be more fun than dealing with bankruptcy for the next decade of your life. I agree. I totally agree. So tell me about these cars. What are they actually worth? One car, it's, we have a suburban, it's a 2021 suburban. It's worth about 45, 46, we sold it private party. We owe about 55 on it. Your 10 grand under one? Yeah, we've been a little negative equity over for a few years and we finally landed on that one. And then we have an older Mazda that I, I got rid of a $37,000 auto loan earlier this year and got a way smaller loan, which I know I shouldn't have, but I got to enjoy like a $4,000 little Mazda pickup. So we owe about about $3,000 left on that. Okay, so that one's pretty much a wash. So the suburban is the one that's killing you right now. You said you had $58,000. So you owe $55 plus a three. Yes, sir. Okay, man, well, what's your income right now? I do pretty well. I know after my business expenses and everything, we met between $175 and $200 a year. Good. And that's all through the business? Yeah, all through the business. It's all one income. Okay, so is the business thriving? You just weren't paying taxes or is the business having its own struggles? It's a trucking business. So I, and I'm coming up on three years in business and it was doing pretty well. I mean, I did pretty well in 24 had no tax bill 25 running off 24. I didn't realize that I thought I'd be, you know, a few grand here or there, but I owed about 50 grand last year and that kind of hit my pocket. And I've already had higher taxes from 23 else paying on two. So that tax set this was almost doubled last year. And then I mean, the business is doing well. I mean, I know fuel prices aren't the greatest right now. And it's a little tough right here, but you know, I'm still we're still rolling. We're still making money. Could you guys live without the suburban right now and go down to one car? Are you going to need something else? We're definitely going to need something else. We have three kids at home. Okay, because I think getting rid of that car will give you some breathing room. Because what's the payment on that thing? About 850. All right. So that frees up a nice chunk of the budget and brings you down to 265 in debt. Now, we're going to need the amount you're under water on plus enough to get you another car to get from A to B with the kids. Yes, sir. So that might be your A1 to clear one of the biggest debts followed by the IRS debt. You want to get rid of that one ASAP? Are you have you talked to them or do you want a payment plan with them? Yeah, it's both the state the state I live in. It's both the state of Oregon and federal. Yeah, I'm on a payment plan with Oregon and I'm trying to figure trying to put finalizing with the federal IRS to get on a payment plan. But since it's over that $50,000 threshold, it's a little bit more paperwork to do. It sounds like yeah. Well, if your is your wife on board fully that we're going to have a couple years of deep sacrifice and life is going to look different and we're going to say no to every single thing. I think so. I'm still struggling with spending. We just came back from a vacation that we couldn't afford. How are you spending like on credit card? No, pretty much cash low and you know, we cash. I put about $1,000 on a firm count for our hotel and we cash well the rest of our at a state of cash for our vacation. Well, here's one thing I want you to do. Cut all access to anything that could cause you to make a bad financial decision, which means I'm deleting my account with a firm. I'm cutting up my credit cards and closing the accounts. I'm going to change the login and give it to a trusted friend to Amazon Prime. Wherever you see yourself spending that you definitely don't need to be spending, it's gone. And even switch to cash envelopes for a while for your physical and person shopping. Okay. If you're willing to do that, it tells me you're willing to get out of of this debt and you'll actually do it. 'Cause if you can make 175 and live off of 100 and throw 75 at the debt, we can be done with this thing in under four years. That's an napkin math. Now, can you scale this business at all? What does it look like to make $250,000 in the line of work you're in? - Once I'm done with my, I think once I'm done with this equivalent alone, I'll be able to, you know, be able to save a little bit more. Now I was paying a gentleman, I was paying a gentleman the first couple of months this year at really high dollar a month in payments. I finally refining the equipment into my name and I started saving about $4,000 of it. I created that extra $4,000 a month I've been saving and have been going right back into my maintenance on this vehicle, but, you know, right now we're doing about $7,000 a month in debt payments is what we have on our name. - Goodness gracious. - On our name. Yes sir. - Well, and here's my concern brother. You've got a job that you're making good top line on. But if you're bringing in 175, are you an independent, right? - Yes sir. - So take 35% off the top. So if you bring in 175, you're only making 113. And then you put in fuel costs and you put in maintenance costs. - And just minimum payments are 84 grand a year of your net income to service your debts. - Like so, you've got a business that you're running that makes a good big number at the top, but you're living above that number. But I just want it to be sobering because you could go make $65,000 at a hardware store as a manager, right? And so once you do the true honest to goodness math on your business and what it costs to run this business, I don't think you're making near 175. I think it probably feels really, really good to tell people you're making 175, 200. I mean, that would light me up too, but man, that's not what you're bringing home every month. - Well, I know in the last six months, we've grossed right about in 196. We had about 111 expenses and we've met it about 84,000. - Okay. - But all business expenses so. - Does that include your tax? Withdrawing 35% for tax? - That's not paying my estimated $4,000 a month in tax. - Okay, then you have to start thinking about that differently 'cause you have not made 84,000 bucks because the problem is you and your wife together, imagine we could go ahead and spend a hundred. - Yeah. - And you haven't made 84, you've made closer to 55. - Yeah. - Right? And you can't pay $7,000 in debt payments on $55,000 a year. - No, not even close. - That's tough to raise three kids on $55,000 a year as a sole provider. - Yes sir, it is. - So why are you wanting to get out of debt now? What was the impetus for this? - I'm almost 32 years old. I started this debt journey right out of high school pretty much 19 years old by my first pick up. And I mean, this debt's been eating me alive for years. I've been a follower of the show for a few years. I've tried different budgets and different apps and- - How old are your kids? - Save books, two, five and 10. - Wow. Man, if I were you, I would have a come to Jesus conversation on my wife tonight and I would get really angry 'cause I don't think you're angry enough yet. I want you out of debt more than you do right now. I'm willing to go scorched earth and sell everything in sight. And so if you're willing to do that, you can climb out of this. Please do not pursue bankruptcy. We're gonna hang on the line. We're gonna give you our every dollar premium budgeting app tonight's the night. You lay it all on the table and you and your wife, you're gonna go, we're in this thing together. The next four years is gonna be hell, but we're gonna get through it. (upbeat music) (upbeat music) - Hey, what's up guys, it's Jade Warshot. Now I know a little something about saving money while my husband and I were paying off over $460,000 in debt, we went over every expense in our budget to find ways to cut back. Nothing got a free pass, including our phones. And you need to be doing the same thing. And now with Boost Mobile, one of the easiest places for you to save money is your phone bill. Your unlimited plan is just $25 a month forever. With a price that nice, why would you ever go back to your old carrier? And with Boost Mobile, there's no contracts, no hidden fees and no surprises, which makes this a no brainer when it comes to saving money. Best part, you can keep your phone and your number when you switch. So it's not like you're making some huge lifestyle change. Listen, you need a phone, but you don't need to be overpaying every month. So whether you're paying off debt or building wealth or you just want to keep more of your money in your pocket, this is a win. Go to boostmobile.com/ramzzie and make the switch today. That's boostmobile.com/ramzzie. $25 forever requires customers to remain active on Boost Mobile and Limited Plan. If you haven't heard the news, Ramsey is taking over an entire cruise ship next year. So join us for the live like no one else cruise happening March 14th through the 21st, 2027. We're going to spend seven nights in the Western Caribbean, Bahamas, Jamaica, Grand Cayman, Cosmell, full Ramsey takeover of the ship, which means the nicest, most generous people you will ever meet. It's the entire cruise with Dave, all the Ramsey personalities myself, included Dr. John Deloney. John, we had a great time doing a comedy night last year. I don't know if they're going to let us do it again. It kind of was off the rails. It was awesome. It was a pack theater late at night. It was the blast. Yeah, they'll let us run it back. You get all the fun Ramsey content, which we make sure to make it fun and nerdy, because for some reason people still want like deep dive investing content. Like guys, you're multi-millionaires, relax. You're out of time, but they want it. We're going to do the world's largest debt free scream, new wealth building teachings from Dave. We're going to have live tapings of your favorite Ramsey shows and so much more. So check it out if your baby step four and up, meaning you're debt free, you've got an emergency fund, you're budgeting and paying cash for this thing. We'd love for you to join us to celebrate the hard work you've done on this wealth building journey. Click the link in the show notes or go to ramseyslutions.com/events to book your cabin. Already working on my base, Tangon. I'll get there. - I don't know what that means. - Mike is in Los Angeles up next. What's going on, Mike? - Hey, how's it going guys? - So I have a question, I have about $170,000 in my 401k with my company. I'm planning to stop working and retire from that company in about nine years and they just switched or I should say they just began to offer a Roth portion of the plan. So basically I can start contributing now moving forward to a Roth IRA or a Roth IRA. - Roth 401k? - It's a Roth 401k and so I'm wondering without killing myself tax-wise because obviously this is a tax deferred what I've been doing, how much should I contribute to the Roth portion? - How much do you make? - Which do you make? - I make about, say, for that job about $60,000. - Okay, I would just go all Roth and you don't need to worry about the traditional money right now unless you have a paid for home and you're in baby step seven. Are you there? - No. - Okay. - No, not there. - So once you hit baby step seven, you can start to do some conversions from the traditional side to the Roth side and pay taxes on that money so that it grows tax-free for the rest of your life. But we call that a baby step seven item because the money you would spend on that taxes is far better off being used to fund college education savings and the home pay off extra on the mortgage. So what I would do is just start all the future contributions to the Roth side. So you're not gonna get the tax deduction for it but that money's gonna grow tax-free and you'll basically just have two piles in nine years when you retire and then you can decide how much to convert and when from the traditional side over to Roth. - Okay, so what does that convert me? - Converting just means to move the traditional since you haven't paid taxes on it. The government says, hey, if you wanna move this to a tax-free version, you're gonna have to pay the taxes on that amount of money. So it's basically gonna add to your taxable income for that year. So let's say your effective tax rate is, I don't know, 15% and you move over 100,000 from traditional to Roth then that would be $15,000 added to your taxable income for that year. - Right, so it's really the same as if I'm saying I'm drawing on it in retirement. I'm gonna pay taxes on it when I withdraw it. - Exactly. - So the big debate is, well, what's the tax rate gonna be nine years from now or 20 years from now when you retire? And the truth is nobody knows. So I like to control the variables now instead of, some people say, well, do traditional now 'cause what if tax rates go down and it's actually a better bet for me? I think it's a lot of rain calories to burn. You're gonna pay the tax man either way and so the best time to pay it is when you have low income years, gap years, retirement years, or you're in baby step seven and you have that extra cash on the side to pay the taxes. The key is you don't wanna pay the taxes from the account itself. You wanna use money outside of the account to pay the taxes. You don't wanna unplug all that growth. - Mm-hmm, okay. - So the strategy we have around here, Mike, to make it clear, this helped me focus in on the filter to use when investing any amount of money. match beats Roth. beats traditional. So do you have a match through your employer? They do match is not dollar for dollar and there's profit sharing. So I'm not sure exactly how it works. Is it like 50% up to a certain amount or one of those? I'm not really sure what it is. I can just know it's not dollar for dollar but they do match and they do profit sharing. But I'm contributing 12% of my salary to my retirement. Okay, I would bump that up to 15% if you're debt-free with an emergency fund. Okay. So that's going to be nine grand a year. Split up across everyone on your paychecks. So I would just dial that up to 15% so that nine years from now you had that extra three percent going for you from then to nine years from now plus to all the future growth. And we found 15% is not a magic number per se but it's enough to get you going to build a serious nest egg while having enough to live your life safe for vacations upgrade the car, you know, save for college for the kids, pay off the house early, all of that. So it's a good balance. Thanks for the question. I just had a question, George. I don't know if I'll have an answer. What do you got? So let's say that gentleman, he's making 60 grand now. Let's say in nine years he's making 250 and he's moves tax brackets. Would he pay, when he converts, would he pay all of that conversion tax under his current tax rate or would he be able to go back and say I was only making, I was only making this much money. So I pay 15% on this conversion. It's where you convert it. Whatever your income is when you file in your taxes. Okay. So if you're married filing jointly and the government says, hey, you made 200 grand. So you're at, you're in a, I don't know, it's adding to that number. Okay. And so now the good thing to note is your marginal tax rate is very different from your effective tax rate because people get spooked by this. They go, well, I don't want to make more money because it's going to bump me up in tax brackets. No, you pay this, you know, 12% up to this amount. 50% up to this amount. What's the cut off? I'm making it up, completely making it up. If it's 250 and suddenly you make 261 year, all 260 is not taxed at that bracket. Just whatever's over the two, the 10,000 would be taxed at that bracket. Exactly. So it's a graduated tax bracket. So I don't want people to get spooked by this and generally your effective tax rate is so much lower than the marginal. So if you're in the 37% bracket, you know, you get spooked by that. Your actual effective tax rate was probably more like 28 to 30%. And so that's a good thing to note. Don't get too spooked by the taxes on this, but it is a baby step seven item in general to do any kind of conversions from to traditional to Roth. But man, Roth is a game changer because then you're going, the government never have to take taxes. You don't have the required minimum distributions because with traditional, the government says, hey, you haven't paid taxes yet. So when you turn 73, they start knocking on your door going, hey, bud, we're going to need some of that money. And so you have to start withdrawing so that they can get their taxes out with Roth. You already paid him. So they got nothing on you. And it's a great feeling to go that two million in a Roth 401k is like net income. Yeah. That's a game changer. So if you really want to beat inflation and think about inheriting, your kids get to inherit tax free money instead of going, man, we love John, but he left us with a hefty tax bill with that inheritance. Thanks dad. Thanks dad. So it's a great sort of baby step seven goal to get as much in Roth as you can as you get older. But it's a good thing to work with a smart investor pro on. If you want to connect with one at Ramsey Solutions dot com, they can walk you through the timing of that. What the best strategy is so that we can at least keep your tax bills low as possible. I don't want to give you know, Caesar more than I need to. Yeah, yeah, yeah. And make no mistake whether you're in baby step seven or not like writing that check for the conversion. It'll hurt. It'll sting. You won't like it. It won't feel good. Just prepare yourself for that. It's not going to be like, all right, all my money's in Roth. You're going to be like, do you want to check? I just wrote to convert. Oh, well, my wife did this because she worked at Ramsey for nine years. So when she left, we rolled it over to roll over IRAs and a big chunk was in traditional because she had the employer match was on traditional side. And because there's something called the super nerdy called the pro rata rule, you can't do a backdoor Roth IRA. If you have any money sitting in the traditional side. So we had to convert the whole thing all at once. And boy, oh boy, I got to pay Uncle Sam a nice chunk of change for the pleasure. But now it's yours. It's all sitting on a Roth IRA. Yeah. It's all yours. You know, a couple hundred grand from her, her hard earned money here at Ramsey. So way to go. And that employer match, I just looked at my countch on 30% of my entire balance was just the employer match. So you may think, well, that's only a couple of percentage points at a time as a compound. So thanks, Dave Ramsey. Appreciate J.R., they don't get a shout out very often. If you're shopping online and these days, everybody does data brokers are out there right now buying and selling your personal information, your phone number, your home address, your email, without your knowledge or consent. 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Ask Ramsey is our free AI tool that is built and trained on proven Ramsey principles and today we're going to break down one of the questions we got this week. Here it is. When you guys say eat rice and beans, do you literally mean to only eat that? No, it's a metaphor, guys. I was going to say yes. You can and people do it. I love burritos. And I enjoy getting those post people send me like they've like dolled it up and it actually looks amazing. Or add some protein to it if you're John because you know, you don't get those muscles eating just rice. I have a beans. Beans have a good source protein. All right. All right. Doc, thank you for that. Well, here's here's some ways you can do that. What we're talking about here is cutting your lifestyle down to the absolute bare minimum and being very frugal to create as much margin as possible, freeing up every possible dollar to throw at your dead snowball or build your emergency fund. So here's what rice and beans really looks like. This could mean cancelling all of your subscriptions, which could free up 200 bucks a month for some of you eating at home instead of restaurants. That's the main thing it means, which is we're not going to go out to fancy restaurants. We're not going to be door dashing. We're going to be meal prepping rice and beans every day for lunch so that we can free up a couple hundred bucks a week just doing that alone, driving an older paid off car. We're not going to upgrade. We're not going to have all these luxuries like vacations. We're skipping those. We're selling things we don't need. We're going to pick up extra work or side gigs. So the spirit is temporary and tense sacrifice, not permanent lifestyle cutting. We want you to live like no one else. So later you can live like no one else. So get your questions answered. It's crushing it to the point where I'm nervous that we're out of a job, John, because it is giving people really good answers. It's conversational. It'll actually fire back questions at you to go deeper and get into your specific number. So check it out ramsysolutions.com. It's called Ask Ramsey or click the link in the description if you're on podcast or YouTube. I want to point out one thing. We have a like for the last few years during the summer, we have college kids that will live with us and at the house and who are working in town here at Nashville. The young man is living with us this summer. On Sunday, the first Sunday he was there. He's like, hey, can I take the kitchen over for a few hours in the afternoon? Of course. I did. That dude put on headphones and got an old school cookbook and made this amazing meal and then had these glass pyrex things and made meals the whole day. And I was like, what are you doing? And he's like meal prep, man. And he said it as though like I'm, I'm washing my clothes. And every week and then a few times in the summer, some of his buddies came over and they all just hung out and they were laughing and being goofy, but they're all meal prepping. And I thought, hey, this kid's turned it into an art project and it's fun. And also, I can't imagine how healthy the food he was making. It was astonishing. But he knows what's going into it. Yes. And how much money that kid saved. And it was, I was like, oh, that's how easy it is. It's literally that easy. Took a few hours on a Sunday afternoon, made some, made, I made it a fun thing with him as friends. And then they had healthy meals all week. And it was, it was like, it was inspiring to me, the old man, like, oh, that's how simple meal prep actually is just to put on the calendar and just go do it. And I can make it as fun or as miserable as I wish. But man, so it's a thing people, I can't do that. You can't you absolutely. And even if you don't like enjoy like, I'm not a cook. You know what's fun having money. Not being broke forever, wondering where it went. And I check your bank statement. I'm like, a lot of door dash and Chipotle on here. So it's a great thing to do. It inspired me to eat a home more. I just love that young people are getting back into meal prepping. They're acting like it's some like little house on the prairie thing that's brand new that you can do and I'm fine Whatever trend you want to make it. It was all about it. It was awesome fantastic. All right chase in Chicago up next What's going on Jay? How can we help today? Hey, my question was just Very simple and to the point. Should I be contributing more to my household or are we okay where we are a little summary of it is I've been a stay at home mom for about 11 years During a very small period of that I did find a full-time job But it required family to come and watch my children at like 5 a.m. To get them to school because I had to be there at six And not only lasted over a couple years The family ended up having some health issues and so I ended up quitting my job and going to studying at a local school district But my husband has held it down and he's never complained one way or another He thinks it's awesome that I say home and that I said that the school I'm involved in the school and our children's lives and just make it work We make about $90,000 annually like gross income and we're on baby steps 3 My only hesitation honestly and I guess What I want to know is are like contributing more is We're making the steps work. It's just a slow process So you want to get through baby step 3 faster? Is that the ultimate goal? I'm just worried like are we behind in retirement or are we behind in baby step 3? Should we be making it there quicker? Should we be concerned with him working and me not working like my kids are in school But I don't have before school care or after school care Got it. So how long is it taking you to get through baby step 3? We're right around the two month mark and I want to say that we started this right around like March maybe And you have two months of expenses saved Yes, okay, and it's that's taken or I mean we're We're already in September here as we record this. So it's taking you a good bit to get that two months You're telling me to get to six months. We need two more chunks of this which could be another year Well now that we don't have like the diet And we once like we got down with baby step 2 we have put like money into like other things We had some like car expenses come up so like we just cash flow that so like not all of our money was going towards like savings So there's been a couple of setbacks, but generally here's the parameter We generally see people do baby step 3 and get that fully funded emergency fund in about six to 12 months max So if it's taking longer than that That's just it's not a you're behind your terrible person It's just alright if that's the average how do we get closer to that number versus it taking 18 months after already getting out of debt to get the emergency fund So the question then becomes well, what can we do to get there making more might be part of the plan But it might also be can we cut 300 bucks of expenses because we're getting a little bit lazy now that we're out of debt We got a little too comfortable. We got to keep our our foot on the pedal So I would be looking at the whole picture and as part of that Hey, if we could get this done and by in three months or six months, what would that take it would take a thousand dollars more per month Who's willing to do what? How do we get there in the best way? I can I challenge you on something Jay Yeah, I don't want you you can do what you want right? I don't want you It pains me to hear you say the words ask the question, should I contribute more? Because I want you when you say it like that when you ask it like that you're you've put a dollar amount on the word contribute You're contributing an extraordinary amount to your household And I would even go farther to say you're probably the anchor point that allows your husband to Repel off the side and go earn the money that he earns and So if you if you and him decide hey, we want to expedite this like George was saying It's a less about should I contribute more? I want you to change the language to Should I contribute or could I contribute differently for a finite period of time? Yeah, that's true. I definitely think George is correct in that way that We definitely took our foot off the gas pedal once baby step two was done And I mean some of it really was like we did have some things that came up that Instead of like going back into that we just started cash flowing like from month to month Um, but I think we did kind of get lazy in that aspect and it is hard though like I don't know It's so hard. It's so hard. I can trip you to the household because I don't have a problem doing inside work or outside work I don't have a problem scheduling the things or paying the things or doing any of it. It's just I don't know like sometimes you wish you could help more financially and you kind of overlook even the small things You do in households totally totally in in in the year in what I call the American mom guilt factory. There's no way you can win, right? If you've got young kids, you should be staying at home more and or you should be working more and there's really no way to win And so the the path forward is is almost always opt out of the what should I be doing? Like what is this Instagram account sad should be doing what is this Mom of a friend's grandma's kids saying I should be doing and you and your husband say what kind of life do we want to build together and how Quickly do you want to get these things done and then y'all get to decide which levers you pull moving forward Sounds like you got some fun home archaic. We're gonna sit down tonight look at the budget and go Okay, what are all the levers we can pull and then what is my part of that and you might find there is a part You might be working a couple more hours a week, but don't do it out of guilt do it because we agreed This is the best path forward You Welcome back to the Ramsey show in the fair winds credit union studio Sam is in Halifax Canada. What's going on Sam? Hey, I'm a 24 years old. I have a 78,000 and change in debt. I've been budgeting since 2025 since I got my first job off of graduation but But it's my self she tells me that I'm supposed to have a money left over at the end of the month But I'm just not finding anything and I'm I'm just a lot of debt and that's daunting on me. Yeah, what kind of debt is the 78? 52,000 out of that even I just checked today our student loans and the 1400 is a car loan. All right. What do you do for work? The project manager for construction great. What do you make? Take home 41,000 and change Okay, so that's after taxes. So you're bringing home a little under four grand a month Exactly What is the sort of career path look like in this world? Are you wanting to be in construction? Are you just wanting to be in project management? Project management has been my passion and construction. I kind of just got into it with high school jobs and stuff like that So that kind of merged together This is my first job after her university. So I'm just Starting off. I know that salary is quite low in my area from what anybody else makes But everybody wants at least five to six years of experience before you can make it to that 90,000 or 110,000 dollar range that everyone's posting about Yeah, I'm glad you got your foot in the door and I'm glad you're doing a budget. That's fantastic But you're saying based on what should be on paper It's not there and that's largely due to some spending happening outside of what's on the paper I bet that's correct So I would be looking at your bank statement as this source of truth to go. Okay. Where were the leaks this month was I You know eating out too much or some of my bills higher than I actually have budgeted for and need to adjust them because Electricity is not $40 a month like I hoped it would be that's where I would start to reconcile what you budgeted for and what the actual numbers are And that will help you at least get some control over the controllables See um So I did that exact thing for last month just before I don the call here um my expected or projected left over was supposed to be $543.89 since last month and I actually ended up with three $187 left over. Okay, so I know I'm saving money. I know I'm putting the actual versus a projected versus actual in my sheet I've been doing that at a monthly basis because I don't go in weekly Then when I'm trying to put in like you know every time I travel for work I get a little bit of a bonus for travel that goes directly into a car payment or the next oil change or whatever sure doing that periodically I'm just like with these monthly payments here and the debt that I've got is just I don't know I'm not sure how to kind of put all the money together and set us wasting it somewhere else Into where I should pay and I know I've tried the snowball calculator AL online, but I'm just not sure how to tackle that really Well, I what I don't want you to do is focus on the nickel Because you stepped over the dollar. So let's let's focus on some big wins versus Hey, I'm focused on trying to dial in this hundred dollars that I'm trying to figure out where it went I would rather you go and be going how do I create enough side hustle income that I'm bringing in an extra thousand dollars a month or I'm getting a roommate to cut my rent and utilities in half Which is going to add an extra five hundred dollars towards my debt snowball Those are the big moves I want you to make because even putting two three hundred dollars towards your debts every month. It's going to take forever to pay the this off. Yeah. And you're, I can tell you're a math guy. You're real sharp. So you know the math of if I can put a thousand a month towards this, we might have some traction. So that's the question mark is how do we bring in more? For me, 24, I was in your exact shoes. I had 40 grand in debt instead of 78, but I was making what less than what you were making. And I just took on about five side hustles. And then whatever one was the most lucrative, I doubled down on that and tried to use my time more wisely. You may tell you something wild Sam, my wife and I for maybe nine months, rented a room from a woman in our community. That helped to save rent. I was married, dude. We lived in a 900 square foot like one bedroom. I mean, it was a tiniest little place. We sold our house and moved into a dorm one time. And this is before living expenses exploded like they have. And so at 24, the more the more sacrifice you're willing to take on now. I mean, that's kind of my next point. I did end up getting a roommate about two years ago. Just before I got this job, obviously I came out of school pretty much broke with a huge debt. I started off at 64. And just and I get about in Canada, we get about six months of, I guess, grace. So just from October to September now, I've paid off $14,000 into that because I'll make an extra payments before all of my other loans went up. Good for you. Good for you. What's your car worth? Well, if I were to sell it today, going to a dealership, I've been told $14, 13 to $14,000. Well, the dealerships going to give you the lowest price known to man. If you sold this thing, private party took some good photos. What do you think you could get for it? Looking online, probably $1,000, $2,000 more than that. Just off of Facebook Marketplace. I'm seeing. Okay. So you might be underwater by a couple of grand. I'm just wondering, this car, it's not quite half your income, which is kind of our parameter. No more than half your income tied up with things of wheels and motors. But man, in your entry level stage of life, getting rid of a $20,000 car and freeing up that payment would give you some breathing room. What's the payment on that? Yeah. A month, $5.51. Okay. So you told me that you have about, if you're lucky, $500 to your name at the end of the month. Right. So we get rid of this car, we can double that margin instantly. But that means we got to save up the difference that we owe. Let's say, you owe $19,000 and it's worth $16,000. You need to come up with three grand just to clear the title and sell it. Plus enough to get you a used car, something to get you from A to B. Yeah, just just to work really because, you know, project management, I don't have a company truck yet. That's been in the talks, but that just keeps getting pushed. How would change your life? I mean, that's honestly, when I first, the reason I took this job was because it was keeping me in the same, I guess, a little city that I went to school in. And it was in my industries and the truck was promised, but some reshuffling with the fleet happened. And that's my name wasn't actually in that draw because I hadn't spent the whole year at this company yet. So now I got to wait for that next round where every other project manager gets a truck. Yeah. Well, in the meantime, you might be driving the worst looking car in the entire parking lot at work. And I'm okay with that because in construction, who really cares? Nobody. The dude with the lifted truck is usually the most insecure. So you'll be just fine getting one with a little rust on it. I have a lifted truck, George. Exactly. I was, I was trying to side-eye John secretly. He does have a big scary truck. But Sam, the, the key here is if you're willing to live like no one else right now, you'll be living like no one else so much earlier than your peers. And I know at your age, it's easy to compare. The guy, the next cube over is also 24 and he already has a house. And you're like, dude, I am so far behind. Yeah. I want to, I want to live this lifestyle, but I also want to pay off the debt. So if you can just focus on one thing, which is your debt right now and just do that debt snowball and create as much margin as possible and keep that up consistently, you're going to be in good shape. I would love to see you out of this entire debt in two years, which you know that 40 grand a year here. That's more than that. That's as much as you're taking home in a year. So it sounds like you need a side hustle working an extra 20, 30 hours a week making an extra 40 grand take home in order to knock this out. And if you get rid of that car, it will help you tremendously. So those are some practical things. I'm going to send you a copy of my book Breaking Free From Broke. It'll walk you through this whole thing. It's a whole chapter called Margin is Breathing Room that I want you to read specifically. So hang on the line. We will send it all the way over to the border. I hope it gets to you. I don't know what the border is like these days. 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So go to ramsysolutions.com/coverage to find the type of insurance you're looking for and connect with a ramsys trusted agent. Marisol is in Sacramento up next. What's going on? Hi, thank you so much for taking my call. I was calling in. Yes, I was calling in for some advice. I'm in a different stage in my life. I'm about to graduate dental hygiene school in about two months. I'll have about $90,000 in student loans, but I'm also engaged. Me and my fiance want to plan our wedding and get a house. We've been saving, but we're trying to figure out what to prioritize. Priority for me would be to get married before we move in together, but we don't know if we should rent until we pay off our loans or buy a house. So just wanting some advice. You have 90,000 in dental hygienic school. Yes, so I had to move to the town where I'm going to school. So I had to pull out extra loans for housing and bills and all of that plus the school itself. Oh, wow, cheese. Okay, what are you going to be making? Yeah, what's a dental hygienic to make in Sacramento? So in my area, between 65 and hour to 80, an hour, just depending on being a first $80 in an hour, you're talking a dental hygienic in Sacramento is making $165,000 a year. Yes. That is insane. Dude, see if there are any openings where you work. Yeah, I mean, I'm going to take you at your word. You seem like a very honest person, but my mind is blown, because what I know of dental hygienic is you probably make 50, 60 grand, maybe 70 over time. Oh, yeah, no. So it's a, it's actually really in demand at the moment. And there's a lot to it, to it, to the career, but it's a really good profession. Wow. Okay. Well, I hope you're making that much. What is your fiance make? So my fiance is a charge manager at a hospital. He makes about 85,000 right now. Great. Well, I love the idea of you guys getting married before you move in together. I would not buy a house. We've got a mess to clean up with the student loans and any other debts you guys have. Does he have debts as well? So he has about 9,000 left of his student loans. But interest rate for him isn't too bad. I'm more worried about the interest rate on my loan, because it's about 16%. Ouch. Are these private student loans? It is a private student loan. Man. Well, you might, I'm not sure that you're going to be able to refinance those into a cheaper interest, but the good news is with your incomes combined once you're married, you're going to knock these debts out so fast the interest won't have time to even ding you. Yeah, that was the plan to hopefully refinance and pay it off aggressively. But we also want to have a nice wedding. I've kind of come to terms with the fact that I don't think we're going to be able to have like a big traditional wedding and I have to be something small. Not if you're paying for it. Is family involved? Are they willing to chip in? Not really. We don't really come from a lot of wealth, so it'd be mostly us. Okay. Because something you could do that we we often encourage is you go down to the courthouse, you get married officially, you move in, you start your life together, combine your incomes, rent for a while, knock out all of your debts, you can do the debt snowball method together, which means it's going to get down a lot faster. And then later on down the road, maybe a year or two for from now, we budget for an awesome party. That's one way to do it. I want you to check out our friends at yrefi.com. It's the letter Y-R-E-F-Y.com and they specialize in walking through private student loan messes like you're in and looking at potential. Can you refinance this mess? Can I say something to you that's gonna sound harsh, what I'm on your team? - Yes, please. - Okay. Getting $90,000 in private student loans to fund apartments and a dental hygienist degree was a pretty, you dug yourself a pretty messy hole. Okay? And what I don't want you to do is to say, okay, I don't want you to look at this projected amount of money that somebody told you you're gonna make upon graduation. Start counting that as earned income already and then buy an apartment, buy a house, plan a wedding based on imaginary. 'Cause the one real thing you have in your life is a $90,000 hole. Okay? And so let's approach this completely the other way, which is there's a possibility that me and my new husband combined are gonna make what, two and a quarter, almost a quarter million dollars. If we get a one bedroom apartment as cheap as possible and we put every bit of extra money we have, we can owe nobody any money by the end of the first year being married. We can go scorched earth and never owe anybody anything ever again. And then we make a quarter million dollars together and we can do whatever we want whenever we want. But that would take you saying, I have this vision of this life I wanna live and it sounds like I don't wanna put words in your mouth, but you're coming from a tough background and you see this character at the end that says $150,000, $60,000 a year is gonna be awesome. Like don't spin that until you have it in an account and make sure you clean up the past messes before you start creating new ones. You know what I'm saying? Like you have a chance to change your entire family tree. If you'll buckle down for one year. - Yeah, and I think that was one of the biggest things I had to come to terms with is not following what everyone's doing, having these huge weddings, having so much debt, but just really attacking my loan. I do also wanna ask, I have about $11,000 saved 'cause we were planning for the wedding. Should I put all that into my loan after I graduate? - All but $1,000 could go towards those debts and free up a couple of payments. 'Cause I'm guessing you have some smaller student loans in there or is it all one giant big loan? It's one giant big loan, but it gets split into two 'cause it's per academic year. - Got it. Okay, so you have like $2,000, $45,000 loans essentially. - Exactly, yeah. - Yeah. I think if you do that, it'll put a stake in the ground saying I'm serious about this. I think if you don't, you guys will be comfortable for a while and you go, "Well, I'd rather," you know what, we could, we could probably need some emergency savings, right? We'd probably need to upgrade the car. There's always gonna be something you'd rather spend that money on than paying off debt. - Amy, you both did not come from money, is that right? - Yeah, exactly. We'd be in the first one in the family, you know, that went to college, graduated, or getting like actual careers. - So I want you to expect this, okay? People will come out of the woodwork, asking you for things. People will expect you to go above and beyond because you're the one who made it. And I honor that and I actually love being able to take care of people. But you have to, you've dug yourself a hole in the greatest way you can love everyone else who's gonna reach out to you over the next five, 10, 15, 25, 30 years is to make sure you and your husband are anchored into like you all have taken care of yourself so that you can take care of other folks. And that means you're gonna have just several years of saying no a lot to yourself, to old friends, to cousins you haven't talked to in years, to his family, like y'all gonna have that. But why are you driving that car? Are you told me you were making this much money? Yeah, I'm playing a different game. Why are y'all living in this tiny one bedroom apartment? You told me you're making this one? Yep, we are playing a totally different game. Like it's gonna have to be a, like almost a, it's just psychological and emotional shift, but it's almost a spiritual shift. Y'all have to decide we are opting out of the game that everybody else is playing because we want to have this thing called freedom forever. Yeah, yeah, and I think I'm okay with not worrying about too much what other people think. It's just, you know, when you've seen, you know, you see people get their careers, they buy their house right away, they get married, it's just a very different vision than I had originally envisioned. What you don't see is those people are broke. And they can't breathe at night. Or they had a ton of family help and you didn't know that. And so you gotta run your own race. 'Cause otherwise running someone else's race, the finish line will always move. So put the blinders on, get rid of this debt within a year, save up the emergency fund, and you'll have so much more peace when you finally buy that house. (upbeat music) Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers, built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey Today. That's RamseySolutions.com. (upbeat music) The Ramsey Show question of the day is sponsored by YRIFI. If your private student loan payments are out of control, you may feel like you're out of options. YRIFI was built for borrowers and difficult situations and helps explore refinancing options that fit real life budgets. Visit YRIFI.com/ramsey. May not be available in all states. Today's question comes from Carl in Missouri. Carl writes, "I am retired with a yearly income of approximately $20,000 from Social Security. Is it okay that my emergency fund only has 500 bucks and it's so I can pay off my debt quicker? I currently only have $2,000 left on my credit cards." Oh my gosh. I just, I'm so sad for Carl right now. It's tired with a yearly income of 20 grand. So the average Social Security payment, John, is about $2,000 right now. So he's making below average and this is all of his income. Sounds like he has nothing in retirement, no savings. He's got an emergency fund of 500 bucks. He's saying is this okay to not even bring it up to a thousand so I can get my debt paid off quicker. He's got two grand left. I don't know how he even has any margin to pay off that credit card debt based on the interest rate on those cards and how much he can throw at. I hope he can knock it out. You can keep it at 500. I would still bump it up to a thousand because what I don't want is for you to have a $700 car repair then I would deplete your emergency fund and you go back into debt. You can't, you can't really sneeze for $500 anymore. Exactly. So $1,000 is our bare minimum. And this is a tough question because Carl, I don't know if you're 63 and you just retired or I don't know if you're 93. And so if you're 63, if you're 73, man, I would, I'd recommend you get a side hustle and see if you could go crank out that $2,000 over the next few months and it might be delivering, that might be, I don't know what your abilities are and your capabilities aren't this point. But is there a way you could earn a little bit of extra money just in all of it goes to paying off these credit cards? I'm just worried, Carl. I mean, the 1,000 emergency fund is so thin as it is. I mean, it's designed to like, to be of scary. So light a fire under it. Yeah. 500 bucks, man, it's just, I mean, you can't walk into a dentist for $500. You can't do anything for $500. And so that makes me nervous for you. I've got two parents who are recently retired. Like, that would make me very nervous for them. They only have $500 in cash if they needed something. That's just a recipe for having to go back in debt. So even if it takes you an extra month or two to pay off the credit cards, having that extra 500 bucks and that emergency fund will give you a whole lot of peace along the way. Corey is in Tampa, Florida, up next. Corey, welcome to the Ramsey show. Hey, guys, thanks for having me. The question revolves around me and my wife trying to be part of the eating too much out problem. We want to open up a restaurant. That'll solve it. That'll definitely solve it. We've spent the last 20 months getting out of baby step two and we will be finished up with baby step two by the end of this month. Awesome. And looking to be finished with baby step three Bye. this year. Okay so we're really just trying to see what would be the best way to go about potentially opening up a restaurant following the baby steps with the the reality being that the restaurant's going to cost a lot of money to open. Yeah well my gut says you don't have the money and probably won't have the money to cashflow this thing. Not for a number of years without selling the house and using the equity from the house. Dear Lord please don't do that. Can you promise me you're not going to do that? More than likely we'll not do that. So when it comes to business it goes beyond the baby steps. Obviously we want you to be debt-free with an emergency fund and be investing for your future to build wealth for your family. When it comes to business we have a I'll send you Dave's book about how to build a business you love. That's going to really walk you through the process but the main tenant of Dave Ramsey and businesses is do it with cash. Move at the speed of cash which is so hard for entrepreneurs because all they want to do is move forward get it done scale it and often that means they're taking on a whole bunch of debt and risk to do it and restaurants are one of the riskiest industries to start a business in and you probably know that the failure rate on these things is pretty high. How old are you Corey? I'm 33. So dude you and I are both we're six years removed. I mean just six years ago people were lawfully prohibited from entering into restaurant. Right and you know what I mean and if you have the the build out debt payment plus the rental payment plus the staff I mean it's just you have a lived experience of this going sideways in a pretty big way and that's that's that's different than the regular fail rate of just somebody opening up a restaurant. What kind of restaurant is this? We haven't nailed down the exact concept completely. This this plan would not be taking life for another you know three to five years we don't want to do it haphazardly we we had a man if I was on shark tank right now I would send you out of the room. That was the worst pitch for a guy who's like I have this big vision for a restaurant. What do you guys sell? Food mostly like all right great. I do I do have the concept. It's primarily going to be a local seafood and meat retail with a counter live fire. There we go dining experience. See now I'm picture in this thing. I'm excited. Yeah. I want to go visit a place and that sounds awesome. Okay so question number one. Are you in the hospitality field already? Yes both me and my wife is managed restaurants for a decade plus each. Okay and you know this rolls okay because I'm wondering if you can work from the inside out versus starting one can you work your way up to the point where they want to hand you the business because you're the best person to take it over or you buy them out? Not with the concept that I have in mind but there's really not anything a hundred percent like it. I am kind of capped out on my growth currently at my current position as is my wife. What do you guys make? I'm currently making 65 or 60 sorry 76 five plus bonuses a year that Hillary and my wife make 69 plus bonuses as well. Awesome. We're averaging about a hundred and 55 total pre taxes. Fantastic. So my question for y'all is it's going to sound like a high school football coach but it really comes down to how bad y'all want this. What do I willing to sacrifice for this dream three years from now five years from now? Is it one of y'all stepping out of the the job you have to go make more money maybe doing something you don't love that might be adjacent so that we can earn money faster? Is it like y'all just have to ask you do we work more hours? You have to ask yourselves what how big of a how much do we want this dream? How bad do we want it in three years five years ten years? The problem that we have with that is we do have two small children five and seven and we have sacrificed very hard over the last 20 months to pay off the 110K and and death that we were at. I don't want to put this burden on my children as well through their entire childhood. Got it got it. So you're going to have to pick your burden. Yeah. Do you want your kids growing up in a household that owns that owes seven hundred thousand dollars in construction and remodeling debt on a restaurant with two parents that are chronically stressed for the health in those margins are and there's one storm there in Tampa there's one beef issue and the price is up like like do you want that that burden or the burden of we worked really we kept working more hours so that we could do the thing with as least risk as possible or the burden of mom and dad have this dream and it's going to it's it might not even happen to y'all out of the house it might be 20 years from now. Yeah for sure I mean that's definitely something that we considered and I apologize if I came off incorrectly it was never my intention to take on seven hundred oh no no I'm just bro I'm making up numbers. I'm making up numbers. I'm I'm I'm being sensational for the radio. No I understand I understand. Oh yeah I but also George and I talk to guys you do that all the time. If I'm in your shoes my plan would be how do I get into local farmers markets how do I then step it up into a food truck then that becomes so popular so successful people are clamoring for a brick and mortar location that's the right way to do it that's how you go slow that's you make it sustainable so hang on the line I'm going to gift you Dave's book how to build a business you love so that you don't fall flat on your face because I love this idea and I hope John and I can one day visit and get some free seafood on the house for our great advice people ask me all the time George what's your number one money saving hack I'm glad you asked nothing makes me happier than helping another frugal friend so here's the hack get on a budget seriously how are you supposed to save money if you don't know how much you're spending in the first place and that's what makes the every dollar budgeting app a game changer with every dollar you'll get a clear picture of your spending and from there it's easy to see where you can get more intentional cut back and save more money how much money are we talking well the average every dollar budgeter frees up $395 in their very first budget and if you ask me I think you're way above average so why are you still listening to me go download every dollar for free and start saving more money right now our script for the day Philippians 412 I know what it is to be in need and I know what it is to have plenty I've learned the secret of being content in any and every situation whether well fed or hungry whether living in plenty or in want Bob Marley said money is numbers and numbers never end if it takes money to be happy your search for happiness will never end Heather is in Portland organ up next what's going on Heather hi yeah thanks for having me sure what's your question today yeah my husband and I are considering me becoming a stay at home mom however I am the higher earner between the two of us so that would be just quite the cash crunch for our family so I just want to call and get your guys's perspective into the situation what are the two numbers as far as our income I make about 105 and he makes about 85 okay so is it I mean the higher earner thing if you were making like 600 he was making 60 I would be like oh this is very lopsided so the real question is can you guys live on 85 thousand dollars yeah have you done the budget yes we know it would be tight have you pretended to do this in real life where you go all right my income I'm not we're not even gonna we're gonna move it out of checking and we're just gonna live off of his paychecks this month that's a great way to test it out yeah we haven't done that just with because we're paying for childcare right now and that's a big portion of you know where my income goes so that's something we should probably give a try and maybe just maybe just pay your childcare out of your check and keep keep that as simple as possible and you can subtract it on paper knowing the childcare expense won't be there but all other things considered did his let's call it five thousand dollar take home a month cover all the bills with enough margin to still breathe and eat and upgrade the cars and go on vacation and yeah it's it's easy for me to make this a math problem like it's just a math problem but also if you are like have it deep in your spirit I want to stay at home then that that's it that's a different reorienting question for you and your husband because it might mean like hey I want this to be a priority this is a big deal to me and he might say okay then I'm gonna go get a new job where I can make more money right but it's being honest about all the things going on in your heart well we need we need to move some more cheaper which means it's not as nice the schools aren't as great whatever it may be there's gonna be compromises here to make if you're saying hey this is it's gonna be tight but we can't can do it. So, are you guys debt-free with an emergency fund? Yes. Awesome. Okay. So, that's your homework. I would budget tonight based off of his income. You can take out the child care and then try that out for a month. And if it feels good, you guys think you can do it, then go for it. And here's what I found. People who their value is, I want to stay home no matter what, they figure it out. They make the sacrifices needed. But you can't have the cake and eat it too. That's where people mess up where they go. I want to stay home, but also I still want all of our lifestyle as well. That's where you go south. So, if you guys are committed to remaining debt-free, making any sacrifices needed knowing me being at home is the priority, then everything else can fall by the wayside. You cover your four walls, you go in less vacations, you upgrade the cars less frequently, and you stop caring what people think. Would you guys ever consider lowering retirement contributions? I'll we're trying to work it out. You're saying go from 15% down to 10%. For example, I wouldn't, if it requires that, that tells me that it's too tight right now and other levers need to move. But I would not sacrifice the retirement in baby step four in order to make this happen. So, as long as you can, the goal is, if you can continue the baby steps with the income that you have, you can definitely stay home. You have the green light for me. And again, you can do what you want. You can stay home and not do any retirement and go into debt. But I want the best for you guys on your wealth building journey to have peace and a nice nest egg and to change your family trip. Do you want to stay home, Heather? Or do you like your jobs? Well, yeah, I do want to stay home. Yeah, that's the rub here. I would do it. And this is something that my wife and I dealt with when she retired here from Ramsey after nine years. She was making great money at the top of her game and it still was worth it. And not once that she say, man, it would have been nice to still have that income. And for some people grieving all the work you put into that career and the money were making, it's really hard to let that go. So I don't forget the money part of the identity. I'm a, I'm an accomplished professional. The social life alone, getting to share adults. Yeah. Exactly. Oh, man. Well, wishing you the best, Heather, it sounds like this is definitely possible. We just got to crunch some numbers and try it out. And I think you're going to find that is well worth it. Alexis is in Los Angeles up next. What's going on, Alexis? Hi, how are you? Good. My question is I was, I just got married about two and a half years ago. But the last year and a half, it's been very, very rocky. To the point now where my husband has told, he just put a deposit on a place to rent. He told me he's going to file for divorce. But he said he will give us a chance if I make my primary beneficiary to my trust to my retirement account and put him on the house, which is in my name as my soul and separate property. Just a quick backstory. We came into this marriage for a blended family, but we don't have children together. This is, you know, our second, my third marriage. And I came in with a lot of assets. And now, you know, with everything going on, he's telling me he'll stay because it shows unity. If I put him on everything and make him the primary beneficiary of all of my assets, currently everything is, you know, in a trust that my daughter would one day inherit as a 14 year old daughter. I'm not working anymore. I left my job a couple of months ago with his agreement when we were doing okay. You know, we agree to that. And now that he is filing for a divorce, he also said that once he moves out, which is in a few weeks, he's also not going to help me pay any of the bills at the house that I have to take care of all of it on my own. And I can just pull money from my retirement. Okay. But this is a huge mess and we're not going to solve all of it. Okay. But the way you painted the picture for me is I have all this stuff. I'm not putting his name on any of it. This is mine. This is mine before. This is mine now. And I'm putting, I'm moving the trust for your daughter to the side. Okay. That's a different, it's a whole different issue. Okay. In my house, my life, we're getting married. We're going to have two separate lives here that you're not going to be a part of. He got that message. And then he's like, fine, I'm going to go live my life then. And then you're like, well, you still have to, you say you're going to pay for stuff. So it sounds like he finally said, I get it. We're never going to come together and say, this is our home. This is our cars. This is our retirement. This is our future together. I'm going to always be living in your world. And so I'm going to go back to the way it was before and have my own world again, because it's basically how I live anyway. And you see what I'm saying? And so the trust is a whole other issue. If he's trying to hold you hostage for a trust for your daughter, that's a whole separate issue. Well, that's the thing that we are already married. We got married already. I know y'all are legally married. I'm saying y'all have, you should have put him on your house when he moved in because it's y'all's house now. Right. And that part, I actually told him, you know, I don't have an issue doing that. I can put him on the house. But when it came to like the retirement and the retirement is actually written out. I don't know how you put the terminology, but it is part of my trust, which my daughter is set to inherit one day. But I don't think you want to be mean the beneficiary and to be able to distribute how he says that I need to be able to trust him to, if anything, what happened to me to distribute everything amongst my daughter and his children, you know, the way that he finds fit. I think you've both weaponized money in this relationship. I think money is the alarm system here. It's not the true issue. It's all about trust and control underneath. And he doesn't feel like he's a part of this. And now he's using that against you in a hostage negotiation. And so all of it is toxic. If I was the referee, I'm going flags all around on both teams, ten yard penalties. None of this is healthy. And I think this is going to require some deep marriage counseling if you both are actually wanting to solve it. And if it, yeah, figuring out a way that we are going to build our life together. And we do have to take precautions and blended families to make sure previous assets are for our kids. That's all that is right and good. But I promise this is playing out in 50 other areas of your marriage, not just in the money. Thanks for the call, Lexus. That puts this hour of the Randy 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.