Are You Ready To Break Out of Your Debt Cycle?
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From Ramsey Network, it's The Ramsey Show, where we help people build wealth through work that they love and create amazing relationships. I'm your host today, Jade Warshaw. Your other host today is Ken Coleman in the house. We're going to take calls all the time.

all afternoon long. We're going to talk about your life, your money, your career. If you want to chime in, you can give us a call. The number is 888-825-5225 and we'll chop it up with you. All right, let's go straight to the phone lines where we've got Violet from Grand Rapids, Michigan. What's going on, Violet?

A lot. Tell us. Definitely have a couple of questions for you. So my family and I live in southwest Michigan. We lost our townhouse completely leveled to a tornado on May 7th. Oh, she goodness.

We lost everything in it. We did have renter's insurance. However, it only covered about half of our belongings. So fast forward a couple of months, we have moved into a smaller place that is more expensive. And here's my line of questioning here. So we have, my husband and I have a total combined student loan debt of $150,000. Okay. We have a car that we owe $12,000 on. Our other car is paid off.

And we have total credit card debt of $10,000. We were steadily starting to pay everything off before this happened. We filed bankruptcy in 2020. We have a 100% on-time payment history since then. However, we had considered before the tornado moving to Florida because we have job offers and have had several down there where we would double our income.

Okay. We're in kind of a job desert where we're at right now. I have a Master of Business Administration. I'm one class away from a Master of Science, and I have 20 years in hospitality management. Okay. My husband has a Master in Theology, and he's an armed guard for an international company right now. However, the question is,

Because we have now, we did not send any credit cards through the tornado and all of the issues there. However, we had drained our savings, which was only about $8,000 to begin with. I bet you did. Yeah.

So our question is, do we next year when the lease is up where we're at, go ahead and move forward and move away to highly boost our income, but now go into more debt? Unfortunately, we are only going to be able this year to put away half of what it's going to cost to move. What would cause you to go into debt if you moved to Florida in a year?

The move in general, the U-Haul, the first insurance security deposit. Whoa, whoa, whoa. What's the cost? What's the estimated cost of moving? The estimated cost of moving is about $12,000. We gave ourselves a couple thousand dollar leeway. Yeah, that's about right. Okay. I want to go back a second. I'm not sure I understand why you're waiting a year to take these jobs that have been offered to you that double your income. I'm wondering too.

Yeah, the only reason is because we signed a lease here again because everything was such a mess and we don't want to, in order to break this lease, it would cost us almost $5,000. Yeah, yeah. And I agree with Ken, but I also feel like you're in storm mode, like you're in crisis mode. It could add a lot more confusion to make that move immediately. I got to dig some more. I don't want to leave this alone. How are these jobs going to still be available for you a year from now?

That doesn't sound normal. It's not that the exact jobs would be available. It's just that after two years of job hunting here and heavily researching the job market there, we know that if we continue to apply within six months of leaving, yeah, we would make a lot more money. All right. I'm sorry. I'm a dog on a bone here. Keep going, Kim. I'm going somewhere with this.

When were these two jobs offered to you in the hubs? How long ago? About two months ago. Have you officially turned them down? Is that thing still open or they've moved on?

We have been in contact with them as of right now. They have moved on. However, his company and the school system that I was going to work for, as well as the college I was going to teach for, have left the door open for me. Okay. Because they will always need teachers and they will always need colleges. All right. I don't want to get bogged down here, Jade, and I don't want to play armchair quarterback Violet. However, I think it's kind of important. Okay.

I would have taken the two opportunities two months ago and I would have negotiated and I would have found a way to get out of the lease. I would never stay somewhere for a year in a job market like you've described.

Because there are no guarantees. There's an old phrase called a bird in the hand is worth two in the bush. And it simply means if you've got the opportunity to get two birds over here, but I've got one bird in my hand, take the one in your hand. It's old school, I know. But there's some real truth to that. And again, I don't want to play armchair quarterback, but if those two jobs were open right now, Jade, where I was going with this is,

I'll take the $5,000 hit on the lease if I can't negotiate it better than that in order to double my salary, which allows me to immediately do what you're going to coach her to do now on the snowball. So that's, I take double the money because I still come out ahead. I'm not going to stay in Southwest Michigan with no job prospects.

Yeah. In order to not to finish my lease out. I'm sorry. I don't think the, and to be clear, my only, and for the most part, can I agree 100% with you? My only thought was not because of the lease, but just because something really traumatic happened. Yeah.

I was trying to buy you a little bit of time to just get your bearings. Well, double the income will help you with your bearings. I don't know what you disagree with, but I would still go back to it. That was the initial thought. That was the initial thought because we also have a 17-year-old pretty autistic son that has kind of gone into a really bad stupor through this. So the initial thought was,

I guess on my part, which I am regretting at this point, my initial thought, because we had loss of use through insurance. So they were paying for our hotels and they would have paid for the hotels in Florida as well while we searched for an apartment. So that's my biggest regret. But I literally was like, oh my gosh, I can't do that now on the back of...

Well, we don't think you need to go into debt. Well, you know, Jade, I don't think you've got to go into debt here to come up with the $12,000 to move. Well, that's the other part of it where I was a little bit hesitant. Please.

please understand me. My disagreement with Ken wasn't on getting the job. It was on how do we do it? Like, do you need more time to save up? Because I mean, it does cost to move. My husband and I moved cross country, you know, two years ago, and it was over $12,000. And I remember being like, just shook because of that. And if you don't have any cash, yeah, what is your other option? So it will take you time to save up that money. So that's kind of what

That was my only hesitancy is I didn't want you to rush into this and end up making bad decisions that you will literally that will cost you because of it.

I think what you did discover, which is a good thing and can unpack this, is that your job is worth more in another state, which is great to know. And there hopefully will be other opportunities. And if it's not Florida, maybe there's another state that you can be looking at where you're making more money. I would discuss a moving. I would discuss, here's what I know about this economy. If an organization wants you, you could go to them and say, look, here's what we've estimated our moving cost. This is our situation.

Would you be willing to, in lieu of maybe future bonuses or an advance? Yeah. There are creative ways to come up with the moving money, Jay. But sometimes they don't give you the money until after you get there. Oh, it's fine. There's just a lot there. We got to get out of this place. We do got to get out of this place. I want you guys out of Michigan. I want you somewhere where you're making more money, where you have peace. Michigan feels like a traumatic place for you. There was a tornado. There was a bankruptcy. And I think there's a better place for you around the corner. Yeah.

This is The Ramsey Show. This show is sponsored by BetterHelp. Hey, good folks, it's Deloney. And with back-to-school madness on deck, my family's schedule is already so packed. And we haven't even made room for things like exercise and date nights and counseling and all the other things that make our life even worth living. When it comes to taking care of me, I have to remember to put on my oxygen mask first, meaning I have to do the things that help me stay well and whole. And you have to do the same thing, too.

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how much can I spend? I can't remember. You just go into that EveryDollar app and it tells you, you know, you've got this much left to spend. And with that, you can keep a pulse on your spending and it allows you to make progress on your money goals. That's what EveryDollar does. So if you're interested, download EveryDollar for free in the App Store or Google Play today. All right, let's go to Susan. She's in Lynchburg, Virginia. What's going on, Susan?

Hello. Thank you for all that you have done in the world of, to build the kingdom of God, I guess I could say. Wow, thank you. Yeah. How can we help you today?

Yeah, so my husband and I are 71 and 73, and my husband recently had a heart attack type event, and our home is not suitable for us anymore. It's because it's two levels, so we need to get to a one-level place. We own our home free and clear. I was thinking about T.

taking out a mortgage on our home in order to give the cash out to our son-in-law to renovate a second home that we had owned next to their home. And some of our kids are saying, don't do it, and others are saying, yeah, that's

the thing. But anyway, yeah. Okay. So we're just kind of going back and forth. Tell us more about the renovation, the cost, and what it would do specifically.

So that is kind of, it's an unknown, the whole thing. It's kind of a big house and we don't know the costs actually. So the second home, do you own that home or who owns it? Yes, we own that home too, free and clear. Okay, and it's one level. Yes.

Well, yeah, we can live on one level there. It actually has a second level, but we can live on one level. And so what they're saying is our son-in-law and daughter, they're saying they'll renovate that first level quickly and we can move into there and then they'll finish the top level more slowly. Why would they finish the top level if nobody's going to live up there?

Exactly. Because we have lots of grandkids, we would like to come and visit. Sorry, I want to make sure we get all the questions out. What's the difference between you living on one level in that house versus you living on one level in your current house?

Because our current house is 825 square feet and we have a mattress in the middle of the living room floor. Okay, what would happen? I'm just spitballing ideas here. Ken, jump in at any point. What would happen if the house you're currently in is too small, you're not going to do much with it. What would happen if you sold it?

And moved into the other house temporarily. And once you sold the other house and you got the money, then you give it to your kids to renovate. And maybe you live, you know, you figure out, maybe you're uncomfortable for a little while, but you make this work. And that way you're using cash instead of a HELOC? Sounds like what you wanted to do.

Because, well, because the second house is a wreck. We can't move into it right now. Oh, okay. That was my next. So is someone living in it now and renting? No, nobody's living in it. So it's just you own it free and clear and it's just sitting there decaying. That's right. Uh-huh. Then what would happen? I'm going to throw out a third idea. What would happen if you sold both of these houses and moved in and pocketed some of the cash and then moved into a house that was already ready and had everything you needed and wanted?

Well, that's the other option that we're looking at. I like that one. That's the one. This makes no sense for you to go into any kind of debt for this. You just have so many other better options. I'd get rid of the wreck house. I'd sell it for a song and just let somebody else come in and take it. And you don't need to make a bunch of money on it.

and um and i would slowly renovate the uh current house i'd change the current house around uh if i was going to do that i mean maybe the upstairs is for the grandkids and you read rework the it's a small house i get it you know what now that i think about it i'd sell both i think jade's right i'd sell both houses current and stay where you are currently nobody cares that you have a bed in the living room this is a this is a transition period because of a health event i

I like Jade's idea. I'm with Jade. Sell both houses. Come up with a better living situation that fits him. And then you guys are still in great financial shape. And it's a better timeline for him because if you guys, you know, paying someone to renovate the downstairs and then the upstairs, like that could be like a nightmare. I love that plan. Okay. You called us, Susan. That's what we think.

All right. Thank you for the call. Did she say some of the kids were trying to talk her out of it? Yeah. Yeah. We were with them too. That was the smart ones. We get to say that because they're not our kids. That's right. That's hilarious. Let's go right to the phone lines. Elise, Virginia Beach, Virginia. What's going on, Elise? Hi. Thanks for taking my call. You're welcome. How can we help quickly?

So we just started the Dave Ramsey plan, and we called our...

our credit card that has the most debt is 26,000. The interest rate is 14.9. We're military, so we banquet maybe federal. We asked them if they could lower the interest rate or do anything to help us, and they offered us a program where there's no repercussions in any kind of way, but for a year, they'll freeze the card and bring it down to 3.9. Great. So our question is, should we, you know,

Not do the snowball method. And for that year, just throw everything that we can at that one card. What other debt do you have? What other debt do you have? So we are full-time RVers and I know how Dave feels about that. But we have two personal loans. What are the amounts? So we have one for $900, another for $900, another credit card that's $5,000.

um another credit card that's uh 7,600 um a van 7,100 a truck is 57,000 and then the credit card that we're talking about right now is 26,000 and then our RV is uh 71,000 oh my gosh um how much is the RV worth

Um, it's probably worth like 55 now. Oh gosh. In the truck? Well, you got a truck and a van? Yeah.

Yes. Okay. Let me answer your first question first. I probably wouldn't do this. I really think that you guys need to, I mean, you could probably knock out the two personal loans pretty quickly. Right. And then the credit cards, you've got the 5,000, the 7,000. I think that I'd rather just go in order because there is momentum that happens when you do that. You're going to feel the feeling of paying off one and moving on to the next. And if you get to the chance, if you can-

If you look up and it's a year later, ask him, call him back and say, hey, listen, I've banked with you guys forever. You guys offered me this deal, but I'm doing this debt snowball. Will you refund the amount of interest that accrued over this past year? Here was the offer that I was given. See if you can get that in writing.

And that way, get the deal in writing. And even if you don't take it now, bring it back to them in a year and say, hey, they offered this, but I was doing my debt snowball. Here's what we've paid off. Will you refund the difference? I bet you they will. But the bigger problem here that I'm seeing is this truck in this RV thing.

It's going down in value and you have so much money tied up in it. I would rather you be in a rental. I would rather you be in an apartment, anything but these depreciating assets that are just eating you alive. 71,000, 57,000. The more time that goes, the more upside down you're going to be. So I would be looking for a way to get out of this lickety split. What do you think, Ken?

mow money, start working, start selling everything. We've got to get some more money quickly to get some equity back in that RV and sell it instantly. Instantly. This is The Ramsey Show.

Hey,

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Tell you something good. Tell the good people. Okay. There's a lot I could tell you. I think one thing I would tell you is despite all this political uncertainty and interest rates staying elevated, we still sit at a very good employment market. So, you know, as we talk about

money, making more money. One of the good things, despite all the uncertainty and inflation being kind of stubborn and things costing more, we still are in a healthy job market. So that is some good news specifically related to people who go, all right, I'm not happy in my work or, you know what, I'd like to make more money so that I can get out of the baby steps faster. We still are in a really healthy market to make money. And when we got to go to work, we've heard Papa Dave say that for many, many decades,

We're still in a good place there, despite some of the more challenging parts of our economy. So that's some good news. I was reading the job report and the numbers this morning. So that's top of mind when you said, give me some good news. Well, what about people who are saying, like, everything going on with the election is so crazy. Maybe I should wait to see where things land before I make a transition. I wouldn't wait. Although I will tell you that Bank of America economists came out with a report today. I was reading it this morning.

The great resignation, which you remember, we kind of date that 2021 to first part sort of fade at the end of 2022, the first part of 2023. People, the mean of increase in salary people were getting when they left to a new company was 20% bump.

which is, you know, that's a bump. That's a bump. It is now dropped back to 10% bump and that's pre-2019 levels. So I do, to answer your question very specifically...

I wouldn't wait. If it's a good opportunity, I'd go because the days of the big bump and I'm just going to get that job opportunity and the great resignation. We saw the musical chairs. Those days are over. If you feel it's the right move, go. But it can't be, I'm just going for the 10% bump now. I want you looking five, seven, and ten years down the road asking yourself, if I make this professional move for more money now, does it set me up for more money later?

That's the key. I want you making moves that have long-term potential, not just short-term potential. So that's what I would say on that. I like it. Very good. All right. I love it, Ken. Well, I got to be ready, James. You never know when you're going to get a pop quiz from Jade here. That's the tell me something good segment. I did my homework this morning. You did. You had something good to offer. I'm telling you. Or I was about ready to go, the dog ate it.

I did put you on the spot, but you always, Ken is a guy who always has something good to say and have something meaningful and helpful to say. There we go. Coach Ken, you know, you always got something. I appreciate that. All right, let's go to the phone lines. Angela in Philadelphia, Pennsylvania is on the line. Philadelphia Freedom. What's going on, Angela?

Hi, thanks for having me on. So I'm a fairly new small business owner, been in business just under three years and drowning in debt and sales aren't coming in. Yeah. What's your business?

I sell maintenance products online, e-commerce business. Okay. What kind of maintenance? So floor cleaners, machines, that sort of thing. We ship all over the U.S. and into Canada. And you're in your... I'm sorry, I interrupted you. Go ahead. No, it's a business I worked for for a number of years before purchasing it. Oh, okay. So you purchased it from the person you worked for? Yes. What'd you purchase it for?

Oh, I guess what I'm trying to see is how did you ever break even? And then you met like, I want to know more. No, no, never broke even. Been operating at a loss since the beginning. What would you pay for it? $267,000. And was it owner financing or did you go get a loan? No, I went and got a loan. Shoot. Oh boy. So are you, what kind of debt are you in?

A lot. I've got probably over about $500 right now. And that's just all the business? Yeah, and that includes vendors and all that kind of stuff. And that includes the initial loan? Yeah. Has revenue gone down over the three years since you've taken ownership?

Tremendously this year. So first year I did one, two. Last year I did just under a million at $9.89. And this year I've only generated $350,000. What do you attribute that to? Partly because of the lack of cash to keep products in stock and then...

You know, interest rates, my SBA loan wasn't fixed. And so that has been hurting me over the past couple of years. And it's just been, so I'm just at a point where I'm like, all right, I don't know if it's time to like cut my losses. It could be. Are you a sole proprietor, like, excuse me, solopreneur? Do you have a team? I do have staff. I do have three part-timers. Yeah. Have you had to let anybody go?

Last year I did. Last year I was able to cut my expenses by almost $80,000, but that includes me not paying myself. By the way, just real quick, just a quick learning moment for our entire audience here, Jade, and sorry, Angela, to do this at your expense, but you are Exhibit A. This is exactly when the Fed raises interest rates.

this is how it leads to higher unemployment which then cools inflation i just i want to point out like people go why does i'm not saying the fed was right or wrong i'm just saying this is economics 101 right here on the phone this has affected angela those interest rates have crushed you and and it made it very very expensive to do business which again is why we believe in a cash business if if you don't have that debt um then angela has cash so uh back to the question at hand um

What I want, how do you turn this around, Angela, in theory? Without going further into debt. Just on paper, like if you were going to turn it around, what would it take? Yeah, and that's the hard part. I don't want to go into any further debt. You know, I've been calling on, you know, existing customers because they say, you know, it's cheaper to keep a customer than go out and get a new one, right? But then when I don't have the product here, yeah.

That's what I'm wondering. That's why I'm asking that question. I'm not trying to be theoretical. I'm actually, because we got to wrestle with the bankruptcy thing, Jade. And it's like, at what point do we have to say it's time to shut it down? That's why I'm asking. I don't understand your business. Is there anything else that would allow us to, that's what Jade and I need to know before we can fully answer this question. Is there any way

conceptually that you could present to us on how you turn this thing around because you don't even have the cash to actually have the inventory to then actually turn it into sales is what we're hearing. Right, right.

So I've been trying to sell. I do have some stock, just trying to sell that to then, you know, generate income to get the stuff that really, really sells back in. How do you sell? Are you is it people visit your website or are you on Amazon? Are you on the other sites? So they have to come directly to your where do you do the most business on your on your site or on Amazon? Yeah, on our site. OK, so maybe it's a traffic issue. You're not getting enough people organically coming over to your site.

That's a that's part of it, too. There's a lot of competition. You know, that market has been saturated with other and larger companies have come in, you know, and we're going to run out of time. We're going to run out of time. But here's what I think, because there was never it almost felt like you rode the wave from the previous owner and then it just steadily went down. You never had a moment of prosperity before.

on your own in many ways. And I hate to say it like that, but there's something about this that that's not clicking for you. There's some missing pieces and I don't want you to keep losing money on this. And at this rate, that's, that's all that's going to happen. I would love for you to get connected with our entree leadership program because within that, at some point you can get access to coaching and maybe somebody else can look at this, or maybe you're looking for a business consultant to say, Hey, here's what's wrong. Here's what we need to fix.

But for all intents and purposes, me listening to this, I think at some point you're going to have to cut losses, sell it, figure out what you can sell it for. If you can sell it for something. For something. I would also agree with that. I try to see what you can sell before you go the full bankruptcy route. Yeah. I don't think you keep going forward in this business model. Yeah, absolutely. Oh, that's the hard part. So sorry.

Oh, I hate that. I hate that for small business people like Angela. I know because she's on the hook for that money. Yeah. Either way. Don't go into debt when you start your small business. Don't do it. Speed of cash. That's the way to do it. You're listening to The Ramsey Show. We'll be right back.

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All right. All right. You're listening to The Ramsey Show. Hey, thanks for listening. I'm Jade Warshaw. Next to me is Ken Coleman. I'm here to help you with your money. He's here to help you with your career. So if you have a question, you can give us a call. This is a live show. You can call in. The number is 888-825-5225. And we'll hook you up. All right. Ramsey Show question of the day. All right. Today's question comes from Ryan in Colorado.

Oh, boy, Jade. Take a deep breath on this. I need you to slow your pulse down as I read this. I have a $350,000 HELOC loan on our house, which is worth $700,000. The first mortgage balance is $400,000. I also have $40,000 in credit card debt and two vehicles that we owe nearly everything.

$100,000. Are you up to date on this right now? How's your blood pressure? It's high. I also have a $30,000 loan against my 401k.

I earn $175,000 a year. My wife is a stay-at-home mom. These debts are primarily the result of my attempts at stock market trading, where I chased losses, creating this financial disaster. This cycle of greed and poor decisions has not only affected my family, but also my mental health. I'm overwhelmed with guilt and feel like I have failed as a husband and a father. I am in desperate need of advice on how to manage and overcome this financial crisis. Large asterisk here for Jade as she takes this on.

This is an email. You can't go back and forth with this guy, but go ahead. Take it away. I mean, no wonder he's feeling overwhelmed and no wonder he's feeling like he failed and no wonder his mental health is feeling affected. This is a big, big, big, big, big mess. He doesn't tell us over what period of time this happened, all of this. And I'd be interested to know because...

The truth, Ken, when I look at this, I see a person with a gambling problem. Oh, there's no question. This is a gambling problem. And it was just in the form of stocks. Uh-huh. Day trading. I'm going to take a guess that it was a short amount of time because this feels desperate to rack up the 350 he locked. Uh-huh. Uh-huh.

Uh-huh. And then the loan against the 401k, it feels like he was like, I got to earn this back fast. Yeah. The credit cards, I guarantee the credit cards are all for this. The HELOC is all for this, the 401k loan. Um, and now the cars, that's kind of a separate lifestyle issue. Um,

Let's talk about the mental side of this first. Like I said, I think this is a guy with a gambling problem. If I'm you, I'm getting into Gamblers Anonymous. I'm getting into some support groups. I'm getting on with BetterHelp and I'm going to go into counseling, A, for me. And then I'm going to do a separate set of counseling with my spouse, right? Because this is taking a toll on your entire family. And what a woman, right?

to to stand by you at this point um although she doesn't need to be standing by she needs to be working yeah i mean we that's the next he's got a good income but you know this is back to the baby steps yeah we're back to the baby steps so that was the the mental side let's talk about the money side which is ken is exactly right both of you guys need to be working and at this point you know i'm assuming probably there's a stay-at-home mom situation here and this is all hands on deck

There are certain times where that's just required. And I'm sure the wife is like, heck no, I didn't do this. You know, and there's probably part of her that's like, I don't I had no part in this. I don't want to help clean, clean this up. I don't want to sacrifice. And that could be her choice to make. But, you know, if they want to come out right side up on this, they're going to have to start working. I'm clearing out these cars, $100,000 worth of cars. You guys are driving beaters like crazy.

less than $10,000 cars to get out of this. You know, I was just doing some math that I want America to catch up on. If you're new to the show and a lot of you are, Jade and her husband, Sam, paid off half a million dollars. I just did the quick numbers. If we take out the actual first mortgage, we're still at $520,000 he's racked up here. It's a lot. So you've actually done this.

I've done this. What was your combined income? Do you mind telling us? Yeah. You and Sam. Yeah. When we started, it was $30,000 when we started. Right. Then the next year, it went up steadily. It went up steadily.

with us working like crazy yeah so it was like 30,000 year one 50,000 year two you know 80,000 year three and we were moving moving up um what was the highest because i'm what i'm doing is i'm comparing it to where he is on a single income of 175 this is very doable is the point and i'm looking at a person who knows that it's doable this is very doable um there might be a situation where they've got to get out of this house right um

And probably so. That's what I would do. For more reasons than one, not just a financial reason, but you guys need a fresh start. Like you need a new start at life here. And so for that reason, I mean, you got $50,000 of equity here. That's your wiggle room for you to pay the realtors and get clear of this and get into a...

Get in an apartment. I'd live in a box to get rid of that HELOC of $350,000. I think it was. And Ken Coleman, because a lot of people right now, I don't know when they bought this house. I don't know what the interest rate is. And there's a lot of...

talk about, well, you know, I rarely would tell somebody to sell their house in this market, especially if they had a two, two and a half percent interest rate or 3%. But in this case, this is something that you burn down and begin again. Like in my mind, there's nothing to hang on to here. Every time he walks in that house, he's going to feel like,

the weight of his mistakes. You know what I mean? And so there's a piece of that, that is like, just start fresh. You've had way too many conversations in the kitchen. You've had way too many arguments with your wife in that bathroom. Like you need to start fresh. So I think that that's probably what I would do to get some of this out of the way. And then once they clear the cars out, now they're looking at $70,000 of debt. He's making $175,000 in income. They can absolutely get right-sized. Right. But they got to change their behavior. And I'm glad that you brought up Ken's

Sam and I's journey because, you know, I say all the time, you know, sometimes I'm hard on people who call in and sometimes people think that I, you know, I go too hard in the paint, but the truth is there's a level of sacrifice that really is possible. Yeah.

And I tell people, I mean, you just asked a good question. And I'm like, income was such a piece of it. You know, you have to look at what you're willing to do to get right side up. And a lot of people want the benefit on the other side, but they don't want the work on the front end. And I'm like, listen, you do what you have to do. I tell people all the time, Sam and I got roommates. We had roommates for a year. Right.

And I wouldn't recommend it. It's not fun. But if you want to get out of debt, you're saving. 100%. You weren't thinking ideal. You were thinking, let's get real and get out of this thing. Yeah. How long did it take you? Seven and a half years. Seven and a half years. And what was the most amount of income you guys made in that season? The seventh year, we made $260,000. Okay. So that's a pretty good size shovel, but it was not always that. It wasn't that. But here's the thing. There's part of this where...

It's kind of a biblical principle, right? Where you're, when you're faithful with a little, God gives you more. Yeah. And that's what happened. A lot of us, here's the thing. A lot of us think all I need is a big check. And if I get a big check, I promise I'll put it on the debt. You don't know that you'll do that. And so for us, there was this part of it that was like, Hey, you know, the first five years of whittling away with this, with a teaspoon, right? It's like, okay, every bit of extra money we got went to the debt.

And even as our lives, you would think like your lifestyle could increase as your income is increasing. But we had none of that. I mean, we didn't people know we sold all of our furniture. We slept on an air mattress. We didn't get a couch until. Well, I love that. You know what? I think I missed the point.

that you and Sam had another couple live with you for a year. Yeah. Where was that year? What? One, two, three, four, five, six, or seven? That was in 2009, 2010. No, but what year in your seven-year journey? Three. So three years in. And so I'm curious, did that couple paying you rent, did that cover your rent? No, it cut the rent in half. Okay, but that's a huge deal. We each paid $650,000. Okay, so that saved you half in rent. It saved us half of the

rent. Which is masterful. It was masterful. And I mean, these are the things that you have to do, you know? And so sometimes it's a... That would have been a great reality show. Because here you are sharing an apartment with another married couple. Yeah. They got two couples sharing an apartment. That's a great reality show. Yeah. For the purposes of getting out of debt. I mean, we got along. There was no like crazy, you know, there was no like fights or anything like that. But you just share the kitchen, share the fridge. Yeah. Yeah.

You got to share. And it's like, you come home and you're like, what is that smell? Oh, I'm roasting pork chops. It's like, oh, gosh. Next time I was Sam, I got to ask him for a couple stories. I know he's got some fun stories on that. Because that's just not natural, but it was worth it. But the point is...

you know, you're not going to... The chances of you opening up the mailbox and getting an envelope full of the money you need is few and far between. You have to build up that trust with yourself that no matter what margin you have, you're going to put it towards the debt. And when you're faithful with a little bit, you can have more. And then when the more comes...

You'll also put that to the debt, right? And so that's how this thing works. Hey, America needs to know this before we go to break. You had two bathrooms, right? During that time? Yes. Two bathrooms, one upstairs and one downstairs. Not sharing a bathroom. There was going to be some follow-up questions had that been one. Listen, if that's what it takes. I get it. Whatever it takes. This is The Ramsey Show. We'll be back.

Hey folks, Dave here, and I know some of you listen to the show waiting for a call that answers your specific question. Maybe you need help with budgeting or investing or saving your emergency fund, but wouldn't it be great if you could get the answers you need right when you need them? Well, I got great news for you because you can. When you download the Ramsey Network app, you get our advanced AI search that lets you easily find the calls that matter to you. You

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Just search Ramsey Network in the App Store today. From the Ramsey Network, it's the Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Jade Warshaw. Next to me is Ken Coleman, one of my favorite guys to host with. Wow. I gotta say.

You know, there's not many to choose from. I was going to say, the list is not very long. The list is short. We have a good time on here. I'm here talking about your money, and Ken is here to talk to you about your career questions, so you can give us a call, 888- Make and mow money. By the way, can I point out before we go to the phones? Yeah. Somebody has brought a cutout of Dave Ramsey. Yes. Is it you folks out there? Is it this couple here in the lobby? It's throwing me off.

And I swear to you all, like, every, and I know it's there, but James, multiple times I look up and it freaks me out, man. Like, he's just standing there, and it's pretty life-size. I mean, it's close. Well, he's pretty, that's a pretty short. No, I'm talking about the head and the shoulders. Yeah. You know, knees and toes. Yes. Okay. I'm just saying it freaks me out a little bit. I look out there.

So I may make you all turn him the other direction here in the second, third hour. We'll see. Sorry, Jade. Have you noticed him? I noticed at first hour and I did like a triple take. I was like, what's Dave doing? And then I was like, wait a second. Yeah.

That's funny. ADHD is real. It is real. I was talking about the number if you wanted to call it. Sorry, I know. Just freaking me out. No, you are right about that. 888-825-5225. And we will take your calls about your life, your money, and your career. We got Renee in Houston, Texas. H-Town, what's going on?

Hey, guys. It's so wonderful to talk to both of you. I really enjoy listening to the Ramsey Show and grateful for all of the insight, especially Ken. Your books are just great. Thank you. So I've been in a job now for about three years. I, during that time, was able to get my master's in project management, engineering.

through my work, I actually am benefited with, um, tuition remission. So my school, and so, yeah, it was great. Um, in the process though, because of the position that I have, um, I'm only a few hundred dollars less than, um, one of my managers. And, um,

I think that a lot of that has caused a lot of resentment, and she's had issues. How she communicates with me is very retaliatory at times, and I've even gone to ombuds just to seek out some additional assistance with how to actually communicate.

improve work relations, if you will. Um, it's, uh, she's not wanting to go to ombuds cause that's just kind of like, um, she doesn't apologize for how she treats me at times. And, um, it's difficult because she's kind of like not my direct boss. I have a program director, um,

for medical education. Um, I love the people that I work with. Um, they're all doctors. They are the salt and life of the world and very service oriented. Like I have learned with being a project manager. Um,

I am scheduled to take my PMP on August nights, and I'm super stoked because, as we know, it's kind of like the boards for becoming a project manager. And a lot of funds are usually tied to that because a lot of job places want that if you have that certification. Sure.

She doesn't see the value in the fact that I have this exam scheduled. It's always about the job that I have, and I don't want to stay in my job forever because I'm at a wall financially. Right. I went through a divorce a few years ago, have three kids. Right. And...

I'm just really trying to put my best foot forward and I have applied for jobs and just really don't know what to do next. Okay, so let me dig a little bit. So if you were to pass the PMP, are you immediately going to be up for some type of role in your current company?

I don't think I could. Keep your phone on your mouth here because it's kind of going in and out. There we go. Okay. So, all right. So that's not a viable option right now. No. But. Because it's a university and they don't have job openings. Okay. Gotcha. But you'll be immediately looking for something the moment you pass that. You'll immediately be looking for project management roles, correct? Correct.

Oh, absolutely. And I have already because I have my master's and plus 20 some odd years of work experience. Yeah. I'm not fresh out of college. Well, I didn't hear an exact question, but I know what you're saying. And so I'm going to tell you that I would not sweat her very much at all. I wouldn't sweat that. You are a short-termer. Would you agree with this? Oh.

Oh, absolutely. Absolutely. And there's a lot of what you do right now with your actual, I don't understand if she's like your half boss or you're sort of kind of, like that threw me for a minute. But all of that is I'm just kind of coming in at going, number one, you're not going to be there long term. Number two, she's not even your direct leader. And you actually said the other folks are the ones you actually enjoy working with. I would treat her the way we treat difficult people that we cannot remove.

And I think all of us have difficult people in our lives that we cannot remove. I don't want that to sound. Don't look at me, Ken. No, no, gosh, stop it. I'm just saying my point is whether it be in our family,

Whether it be in our friend group, whether it be at the office, I think we can all acknowledge today there are difficult people that we don't have any kind of actual control to be able to remove them from our orbit is what I'm getting at. And so what do we do in a situation like that? Jade, how do you handle a difficult person that you can't change that person and you can't get them out of the orbit? So how do you deal with it? I'm doing two things. I am...

avoiding as much as I can. Like if I don't have to, if I don't have to interact with you, I'm not going to, but when I do, I'm killing you with kindness.

She did not know I was going to put her on the spot, Renee. I think that's fantastic advice, and that's where I was going. I think you just be the bigger person. Do not give her any power. This is kind of like the mean girl or the bully. She's on the hater rate. Yeah, you don't give her any power. And the more you let her get to you, the more she sees that she's getting to you, and she goes, I'm winning. I love Jade's killer with kindness. I think that might drive her away from you. Yeah.

Because she's going to be like, well, that's not working. See, here's the bottom line. This is a woman who is consumed with resentment. And it's very clear, and you know why. So because you're short-term, I would literally rise above, and I'd take Jade's advice. I thought Jade's advice was fantastic. Wow. Thanks for the call. It was a great call. Yeah, absolutely. You know, that's a— Got to be the bigger person. You have to be. Bigger, better person.

you know, kinder, just be like, I'm like, I'm not letting you pull me into your vortex. You know, she saw, it's almost like, I'll call her her leader for lack of a better word, but saw, saw her going up and achieving more and doing more. And instead of congratulating her, you know, she started hating on her. And I'm like, that is, that is, it is not a good quality. Exactly right. And by the way, one other thing to add to this, now this takes some maturity and I wish I could tell you that I, that I did this right away. I,

I had to learn this and I will tell you, I had to learn it slogging through the learning process. Okay. But here's what you have to do in that situation. If you can get to the point where you realized that this is a hurting person,

and they're not happy with their life, and they see your progress, and all your progress does is remind them of their lack of progress. By the way, folks, I'm getting real right now. Some of you all are dealing with this, trying to get out of debt, and your friends and family are being haters. Yeah. And you're going, what's the deal? And it doesn't make sense because they're supposed to be for you, and they still are. You've got to give them a little bit of grace because what I think they're dealing with is they're seeing you progress and

And as you're leaving their debt-ridden status, they feel like you're leaving them. And they want to pull you back in so they don't feel as bad about themselves. I'm telling you, I'm spitting truth right now. Come on, Ken. And I think to the extent that you can see that person with empathy and grace and then go, I'm not going to let them bother me. Bless their heart. It's that old school, bless your heart. Bless your heart. As you said, you said it, kill them with kindness. Kill them with kindness. Yeah, whenever you're moving forward, like Ken said, it's a mirror. And when you do it, they can see.

They can see all the things they're not doing in the mirror of things you are doing. This is The Ramsey Show.

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- You're listening to The Ramsey Show. Hey, thank you for being a listener. I know a lot of you guys have been with us for a long time. Some of you maybe just found the show, but you're here with us today. And if you're here with us today, I have a small favor to ask you. If you like the show, whatever you're listening to, whether it's a podcast app,

If you're listening on YouTube, take a moment, like and subscribe to the show if you can. Share it with a friend or a family member or a coworker. When you do that, it's so helpful for all of us. It kicks it up in the algorithm and more people have access to the life change that you experience on this show every single day. And it literally moves us up the charts. It's crazy. Yes. We got an email not too long ago. We were like number one or two or something in the whole thing. And I called my mom.

So it helps us with our parents. Is that what you were getting at? Just a stupid joke. Just a silly joke. You know, no, of course not. But that's kind of wild. Yeah, it is crazy. That's how the whole algorithm works. I can't spell algorithm, but apparently that's how it works. Yeah. And when you subscribe to it, it's great. Because then when you open up your app, it's already there. Like you don't have to search for it. It's already served up to you, which is nice. And of course, when you share it, you're sharing the good news. And people need what we're talking about on this show. People need to hear Ken Coleman.

Well, yeah. Yeah, I'll go with that. Sure. Sure. By the way, I'm Jade Warshaw. He's King Coleman. We're taking your calls. This is a live show. That's right. So if you want to get on, you got to call in. No script here. We're having fun. This is the real deal. There's no script. And you know what? Let's just take a moment because some people probably want to know like what's on our papers. Like, does it tell us what to say? No. And the answer is no, it doesn't.

It's a lot of blank pages that tell us. Suggestions. Yeah. We got suggestions, you know. Yeah. What happens the next hour, you need to talk about the question of the day. Right. And after that, you need to talk about, you know. But there's no cue cards. No. All right. It's all real. It's real time, real life happening in the moment. That's right. So if you want to call in. Let's help somebody. Let's go to Melissa in Sacramento, California. What's up? Hi there. How's it going? It's going great. Good. How are you?

Oh, I'm so excited. I'm here with my husband, Chris, and we're very excited to talk to you today. Excellent. Because we are waging a debate. Oh!

Oh, I get to get my gavel. Yeah. So we've been married for eight months and we just finished baby step three. So I'll kind of give the debate and then some background and then I'll let you do your thing here. So our debate is that now that baby step three is complete, what do we do with the extra margin as we prepare to buy a house and start a family? Essentially to 3B or not to

to 3B? That's our question. Ooh, I love how you posed it. My husband would like to continue using our monthly margin just to stack cash for upcoming moving and growing family, where I'm a little more keen to start Baby Step 4 and then put away any other leftover as sort of like a liquid account. Okay.

All right. So a little bit of background here. Our goal is to buy a house in the next six to 12 months. We have about 70,000 in equity in our condo, which we'd sell to move. And we'd probably walk away with about 130,000 after selling. The homes that we're looking at

are about $450,000 to $500,000 range, but our income is not currently high enough to meet the monthly 25% rule with a down payment on a house for that cost. So we're in process of raising that. We've been earning about $6,000 to $9,000 a month. We've had a pretty variable income for the last six months.

My husband is working on changing careers. I'm looking at getting a raise and looking at tax withholdings as well. So essentially, we've been able to find $2,000 to $4,000 each month to put towards savings

And again, my husband wants to just keep on stacking that margin for all the upcoming expenses that we plan to have in the next six to 12 months. Plus, plus, plus, plus, we've got to have more down payment is what you're telling me in order to get to the 25%. Is that what I'm hearing?

Yes, if we can't get the income up. How much more do you need? And I wrote down $130,000 is what you're saying you guys are going to walk away with in selling the condo. So in order to get to that formula that we teach, that your mortgage is no more than 25% of your take-home, how much more down payment? So beyond the $130,000, how much more cash would we need to get there? I don't want to assume the income, and I'll tell you why in a second.

I have a chart, but I don't know what the number is off the top of my head. Does Chris? I don't know. I think that maybe he could look it up here for me real quick. Okay.

I would want to say it'd probably be another like $20,000. Okay. Okay. I'm just getting that information for Jade there because I think it helps us, you know, because we've got to come up with another $20,000 there. In order to get it to 25%. In order to get it there. And how long do you think it would take you all to get that $20,000 at your current rate?

At the current rate, so that's a little bit of a tough thing. So for the last six months, we've been earning that sort of like variable, about $9,000 a month. But with the recent career change, our income has changed. Okay, but ballpark it, ballpark it.

Probably about, again, five to six, well, yeah, five to six months maybe. Okay. All right. So do you think that you spend more time in the $9,000 range or in the $6,000 range?

Right now with where we're at job-wise, it would be $6,000. Okay. So that's a big change. That's a $3,000 swing every single month. So when you're calculating this with him, are you calculating it at the $6,000 mark or the $9,000 mark? Yeah, to get to the six months from now to have that additional $20,000. That's what we're asking.

We have been calculating at the 9,000 because the career change just happened this month. All right. So does that push it back to, we're being conservative, does that push it back to nine months, 12 months to get the additional 20?

Yes, most likely. If we didn't focus on, I think we're focusing more on getting our income up versus giving up the down payment. And I think that's great, but I think it's both and. Like you guys can still save money while trying to get better jobs. So it's not choosing one or the other. Jade, I'm going to get out of the way because you're the money expert. I'm going to vote for I'm with Chris.

I think Chris is right. I think I would save the additional money because it's such a short amount of time, but it gets you in such a better financial position, one that we actually recommend. And then once we're in the house and we made all the moves and stuff, that cash that Chris has pulled aside, then we go into baby stuff for. Yeah, Ken is right. And the reason he's right is the way that we look at this is,

You're right. You have the opportunity to toggle between those two or choose one or the other. But the way that we decide what's best is if it were going to take you more than three years to save up this down payment that you need, we might say, okay, save up hard for three years. And then once you hit the three,

year mark we want you investing something so from there on you would kind of split it up um or you could decide you know if a home ownership wasn't even on the table at all you could go directly to four and then once it is on the table you could pause it and go back to 3b so you have options but because for you guys it's less than a year that that all of this can take place yeah i'd probably you know put my head down and you guys save up this money i'm with ken all the way

All right. Well, Chris will be very pleased to hear that. Is he on the line? Is he right there? He's in the house, but I'm in a different room. Oh, okay. But you know what? You're being sweet about it, but this is not like a major fight. You guys and your heads are in the right place. I just think if anything, this will motivate you to actually knock that 20 out really quick and pursue the professional changes and the timeline changes when that income changes.

Yeah, absolutely. And yeah, we've had a good time talking about all of this. That's good motivation. Yeah, we had our dream conversation and he gave me a hard time because he said I didn't know how to dream. Well, I think what he's saying is like, you're probably the saver, aren't you? Of the two, you're the big saver.

Yes, I've realized. Yes. Yeah. Well, you know what? You got to have a little bit of fun in the midst of all that discipline. I think that's what Hubs is saying. Yeah. This is really good. I think a lot of people face this. So we appreciate the call. And by the way, if you're a person who is looking to figure out if you can afford the house, should you be investing? Should you be waiting? Should you be saving for the down payment? We have a really cool mortgage calculator that you can check out.

It can help you determine how much house you can afford. There's one that can help you determine when you're going to pay off your house. It's really, really helpful. You can find that at ramseysolutions.com slash real estate, along with anything else that you could have in way of real estate needs. It's a really great hub. So yeah, check that out. This is The Ramsey Show.

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You are listening to The Ramsey Show. Thanks for hanging out with us. I'm Jade Warshaw. Next to me is Ken Coleman, taking your calls all hour long. Give us a call. Number is 888-825-5225. We'll try our best to get you in. Ken.

You know, I partake in the Instagrams and the TikToks a little bit. Yeah, you're pretty good at it. I mean, I post, yeah. But, you know, every once in a while I'll like. Oh, you mean the scroll? Yeah. You know, I'll get in there and scroll for a little while. I try not to do too much. But the stuff on car payments and car notes is really what gets me. There's a lot out there. And recently James sent me one that I had not seen that I was like, this is diabolical. Oh, this is fresh. Are we about ready to see one? Yeah. Take a look at this. You'll see what I'm talking about. Oh, boy.

Hey, you know how mortgages let people buy houses they can't afford? Think about doing that for cars. Like loans for cars you can't afford. Yeah. But no one's going to want to borrow to buy an appreciating asset. I think they might. Well, the loans would have to be dirt cheap. See, I always think about making them expensive. Like more expensive than a mortgage. Mate.

Nobody's gonna go for that. I got a feeling that by 2024, Americans alone will owe $1.6 trillion in car debt. Really? So let me get this straight. If I wanted to buy a Mercedes with a loan, it'd end up costing me like 75,000 bucks. But if I saved up, it might cost me like 50,000. Saved up? What are you, six years old? Do you want a new car? I do.

Oh, no. You know what? That's brilliant, actually. I didn't know what we were going to get there. That's actually brilliant. From start to finish, that's brilliant.

Yeah. I mean, it's brilliant. Okay. So for those of you who couldn't see, it's basically a guy and he's explaining the fact that, hey, you know, mortgage loans make sense. I mean, it's an asset that's going up in value. People are willing to pay. It's, you know, a low interest rate, you know, depending on who you ask. But with cars, the idea is like, what if we did the same thing with cars? Nobody would want to do that. It's a depreciating asset. And why would they want to spend more in interest payments? And

And the truth is people do it. It's the last line. What I mean by brilliance is in how he lays out the absurdity of the proposition, but lands it on the clarity of the psychology. And he basically, the last line where he looks at the guy and he says, do you want a new car?

Yeah. That's the psychology. Simply put, that's why the whole system works. People go, I want it. This is painful. This doesn't make a lot of sense, but gee whiz, it feels good.

want to know what and thus you get a car I don't even think people run it out like that Ken I don't even think people think about the numbers at all I don't think they're going well it is a depreciating asset yeah but they do feel like this is gonna hit me I think they know what that payment's gonna be but people are dragging around seven hundred dollars plus well I think that's because most people are just like I want it I want it now that's what I'm getting don't tell me the

numbers that's the whole point at the very last line they they are going the payments a little stiff that's going to be tough but I don't care and I thought that was what was so brilliant James has that thing gone viral

I'm not sure. And some of the context that you couldn't see if you were just listening is it says like the invention of car loans. So it was like taking it back to the parody of that. Yeah, I saw it. It was brilliant. This is how it all came about. Yeah. It's just somebody was like, we need to make money. How can we make money off these folks? This is how it came. Like we have proven we'll pay a premium for anything, even something that's going down in value. And I love what he said. I don't love this, but he highlighted this and it's actually a sad truth.

over $1.55 trillion in auto loans as it stands. $1.55 trillion, Ken? I know. You know what I was thinking about halfway through that deal? There's another trend that's probably come and gone. What? How it started, how it's going. Remember that? Yeah. I think it was kind of a relationship thing or something. So the how it started, James, is that right there, the car loan. Yeah. How it's going.

is what George gets all upset about where people are financing a 12-pack of Coke. It's gone crazy. With Walmart. Like, we've gone from that to now we're actually financing household groceries. Yeah. That's how it's going. But I mean, I think... It's crazy. You know, this car payment thing, though, it's...

you know, like we said, people go, I want it. I'm going to get it. I've got the margin. And, you know, yeah, they ran out the numbers and said what you're paying beyond because of your interest rate. But you have to do the bigger opportunity cost here and really play this out. Because think about it. Okay. The average new car payment right now is $736. But there's a large percentage, almost 20% of people are paying $1,000 or more for their auto loan. And I always play it to you like this. I'm like,

If you live in a family, like most people have two cars, so it could be double that. Oh, absolutely. You're looking at a lot of American households having $1,500 or more a month combined. And then, Ken, this stat's going to blow your mind.

64.5% of buyers that have payments over a grand also have long-term loans. So people are paying $1,000 a month and they're locked into seven-year terms. For seven years, the opportunity it costs on that, that's $120,000. If you took that same money and just invested it for that same seven-year term, it's $120,000. Oh my gosh.

Oh, my gosh. Yeah, and I love what he said in that thing, too, that if you saved up for the Mercedes, you can get it for a whole lot less as opposed to financing it. My favorite Mercedes is the one that I picked up on an unbelievable deal a couple years ago. A little old lady had it. It was her second car and only had 47,000 miles on it. And your boy rolled up and paid cash. Listen, your Mercedes is cute. I've seen it. It's a cool little car. Yeah, I like it. It's not brand new.

It's a Mercedes. That's my point. Yeah. But I paid $16,000. That's it? Told you. Because it's a 2013. Okay, Ken Coleman. I'm keeping it real. But you wouldn't know it's a 2013. I wouldn't know. Yeah, and it had 47,000 miles on it. That's a sweet deal, Ken. It's a little deal. And you know who's going to get it next? Josie Bird, my daughter. Okay.

So, you know what I'm saying? Like I'm driving it. And my point is, is like, that's a quality vehicle. Yes.

And I got it for a song. But you're not. Because I was not, I didn't have to have the ego attached to the car. And you're not thinking about the values depreciating because it's off your books at this point. Like you pay cash for it. You're not thinking about that. I'd still brag on what kind of deal I got for it. But if you had payments each year and each mile that goes on it. Well, let me give you two E words. If I had ego and emotion, which I think is wrapped around all this stuff you've been talking about, then your boy's financing a G wagon. Yeah.

Because I love, you know how much I love the G-Wagon. That's my dream car, Ken. We haven't talked about this. Let me tell you. I want the matte black finish. Is that you too? Ken, you're a gangster. I've been trying to tell these folks.

these folks that ken is a gangster listen i don't know what that means but i'm receiving it when when sam and i were getting out of debt we put on our calendar it was like 10 years in the future like we buy we said what's our dream car i said i want a g wagon we put it on our calendar this is the day that we can buy it we're all gonna roll around in g wagons i'm speaking it over us wow i gotta get my kids i gotta get my kids through through school yeah you know what i'm saying but but

but let me tell you something daddy is gonna get a g-wagon when mark it down ken when you get a g-wagon you need to roll by the workshop payments no pain oh well i'm gonna pick us up listen stacy and i are gonna roll down there pick you up we're gonna go to nash vegas i'm gonna be like but i think it's wild that we both want the matte i love that matte black oh that's with the mag wheels yes and what's the interior

you know what we could go a lot of different directions okay the best for our listening audience it would be a um a deep deep caramel is what i like kind of like this wood finish for our viewing audience a dark yeah not a tan rich a little richer in fact i'll tell you what it is uh bmw has a has a leather and it's cognac is what they call it that's what i would want wait pronounce that is it not cognac did i give you a cog did you give me a coat is that right

Oh, boy. We both looked at James for the answer. Cognac. I think it's cognac. Thanks, Dad. How did I say it? Did I say it wrong? You put a G in there. I didn't mean to. Oh, okay. I didn't know. Cognac is how you say it. Did I do the cog? It might have been the G. You gave a little cog on there. I was on the G wagon. That's what it was. Good.

Because I started fantasizing about that vehicle. Me too. I would climb a mountain with that thing. That's right. But one thing neither of us would ever do is go into debt for it. As much as we salivate for these vehicles, we will never go into debt for them. And neither should you. It's costing you. Whether you realize it or not, it's costing you your future. This is The Ramsey Show.

Listen, tickets for the Live Like No One Else cruise are selling fast. This is the ultimate debt-free vacation, and I can't wait to celebrate with all the folks who've worked their butts off and changed their family trees. We will be sailing through the blue waters of the Caribbean with the Ramsey personalities.

and other special guests. A bunch of cabin options are already sold out, so hurry and reserve yours with a $600 deposit today at ramseysolutions.com slash events.

You're listening to The Ramsey Show. Hey, we've got big news. Ken, this is the biggest the news gets. Oh, I think I know what you're talking about. It's almost as big as a cruise ship. All right, we got the live like no one else cruise. Guys, it's almost sold out. Like this thing sold like hotcakes.

this cruise is really the ultimate debt-free celebration. That's what it is. It's for people who have walked through the baby steps. They've paid off their debt. They've saved up the money. It really is for people who are in baby step four or above. It's not like we're bouncing people, but... Well, George and I made a joke about that on Wednesday on the show. We were like, George, you should be at the...

What is it called? The gangway? The gangway, yeah. Oh, look at me trying to. Good job. This is your world. I am over my skis right now. But anyway, I said you should be there with a clipboard and making people at least look you in the eye and commit to it. Yeah, that's funny. We were joking about it, but we're not going to do that to your point. No, we're not. But the truth is you'll have more fun if you wait. I'm sure at some point we'll do it again. All right, I got to ask you. Okay, for those of you, well, let me tell you all about Jade really quick so then I can ask her this question and you'll understand. Okay.

So Jade is a veteran. She's a professional musician, not just an awesome, you know, bestselling author and wonderful coach and all the things that she is. In her previous life before us, she was, you know, I mean, like she can sing Whitney. I was a Whitney Houston impersonator. Do you understand what I'm saying?

do you understand like how hard that is yes you people do you've seen American Idol you know how hard it is so she could sing Whitney and so she and Sam would travel together he's a musician producer he's a talented dude and so they would travel on all these cruises like how many cruises would you say a thousand three thousand okay it's a lot all right here's my point uh

I want to know what you think of this itinerary. Mrs. I've traveled the world. It's a win. You like Turks and Caicos. It's a win. Turks and Caicos. St. Thomas. St. Thomas is great, especially if you're into buying jewelry. Great port for that. See, look what I tell you. She's got the inside scoop. Puerto Rico. Puerto Rico, wonderful...

I wonder for it. I like downtown. Downtown is beautiful. Old Town San Juan. Old Town San Juan. Really fun. There's a lot of free things that you can do, a lot of scenic walks that you can take. And then last but not least? Bahamas. What do you think? I'm guessing it's the private island. It is. You like this itinerary? I love it. Okay. You can jet ski on the private island. Matter of fact, when my husband and I were getting out of debt, we were jet ski instructors. I'm telling you. That was one of our jobs. I'm a demon on the jet ski. Really? Uh-huh. Speed demon. Speed.

That's what I'll be doing on the excursion. I promise you that. I love it. Who else is going besides you and me? It's going to be all of the personalities. Myself, King Coleman, Dave Ramsey, John Deloney, Rachel, George. Everybody's going to be there. It's seven days. Now, this is a seven-day cruise. James, are you going? I am not going. Look at that face. I know. Only a mother could love it.

March 22nd through the 29th is when the cruise is going down. Here's the thing. The cabins are running low. So VIP upgrades and many of the cabin types are actually completely sold out. So if you want to get in, you got to get in where you fit in. So pick up your cabin now. You can secure your spot with a $600 deposit. That's all it takes to get started. And you want to book this today. So go to ramseysolutions.com slash cruise to book your cabin. And I did

say the personalities are going to be there but there's also going to be a lot of kind of like celebrity folks there steven curtis chapman manit shohan i love her from the food network uh and tons more all week there is a rumor going around that there will be some you know like musical moments i asked john if he was going to play his guitar he said yes oh me and george are working on our duet really no yeah i was gonna say i don't like that pairing at all you got too much power it's

He's like the folksy guy. You know, he's kind of your folk music, folk rocker kind of thing. We could do a Kermit and Miss Piggy deal. Yeah. I feel like that's a... Now that, yeah, that's true. He could do that. That is good. All right, let's go to Scott. He's in Spokane, Washington. By the way, I want to say this before you go to Scott. Okay. Since I'm a little offended no one's asking me for a duet opportunity, I'm sneaky good at singing. People don't know this. But... I feel like you're like a... If there's a pickleball court on this cruise, I'm just telling y'all, I am holding court literally. Okay.

All right. Lessons, domination, conversation, all of it to be had. All right. I need to check into that. Check in. I will check in with Ken. All right. Spokane, Washington, the city I was born. We got Scott. What's going on?

Holy smokes, you're from that part of the world? Listen, I'm from Cheney, Washington. Don't judge Scott. I was born in Spokane. And I know where that is, and that's where my late wife and I started our journey back in 1984. Wow. I was born in 1984. Oh, this is getting to be thick now. What is happening? April 7th of 84 is when we were married. Wow.

I am another commercial for Dave. We did not listen to, and I've only been listening for a short time, but we had gotten term insurance, and a month before it was going to expire, she passed away after a year-long battle. Oh, so sorry. Oh, my gosh. How long? 37 and change. Years we were married, lost her in October of 21. Oh, so sorry, Scott. So sorry. So...

My question is, do I need life insurance? Because mine obviously expired about a month after, you know, and I, it's just going to get cost prohibitive. I have insurance to work, which is equivalent to two years of my salary. I have no debt. I have no,

I'm beyond baby step three, I'm sure, and four. I don't know where it'd be, but there's 100 plus stacked in the bank. The house is paid off and the house is worth over 700. And how much is your work insurance policy worth? Two years of your salary. What's the number? It's going to be probably about 200K. Okay. And are you remarried? Yes.

No, I have not remarried. It's going to have to be somebody really special for me to remarry. Any kids? I told my kids. Is there anyone who depends on your salary?

No, my kids are all adults. My youngest is turning 24 next month and my oldest will be really close to 40 in December. Nine grandkids. So yeah, it's, yeah, that's not an issue. I just wonder, you know, because obviously they're going to get everything. My 401k is going to have a little over 300 when I retire and I'm retiring in two years. And it's already, it's

I'm 63. Going to be 64 in December. Yeah, I mean, the purpose of insurance is to...

replace income for the people who depend on it. In this case, there's really nobody there. And you know that your estate is in really good shape. There's no debt there. There's only assets. You've got this other policy through work that's worth 200K, which is more than enough to pay for, you know, any final things that you would want for your children in your case. Yeah, you don't need it if you want it.

to have this money to, you know, as for legacy sake, you could do that. If you're willing to, you know, for your kids, if you say, you know what, I've got a great estate, but I'd love to leave them a little bit more. You could do that, but it's not a necessity at this point. You could, you know,

You're at that self-insure place in life in this case. But if it's worth it to you to pay, I mean, if you're healthy and it's worth it to you to pay a couple hundred bucks every month or whatever it is, then yeah, you could do that. And it really just puts your legacy, sets that up a little bit better, but you don't have to. Uh-huh.

I wouldn't. I wouldn't if I were you. When and where were you in Cheney? Oh, gosh. Well, I was born on a cold day in 1984. I'm just kidding. I was born in 84, but we lived there for a little while and then we moved over to Oregon. And so, yeah, not long, but I got a few memories. There was a place called, do you remember the place called? It was called Zips. Yeah, it's still there. It's still there? Wow. Wow.

That's something. This is great. I'm going to go ahead and take the rest of the show off, and you and Scott can just get caught up. That would be great. Listen, if I'm ever in the Cheney area, I'm going to look you up, Scott. You should. Hey, thanks for the call. Oh, my goodness. Where were you born, Ken? I was born in a teeny tiny town in West Virginia called Point Pleasant, a town of 5,000 people, just really super small. Most people are like, what?

But my dad was a pastor, started a church there out of college. That's how I got to teeny tiny town in West Virginia. Moved away when I was 12. Wow. To Virginia. So there you go. Wow. That place is so small, they pump sunlight into it. Wow. That's saying something. Think about that. Well, I love that call. I loved hearing from Scott again. Insurance, it comes in need when you need it. If you don't have it, you need term life insurance and you can get that from...

Zander Insurance, which is where Ken and I get ours. Term life is what you're looking for. All right, that does it for this hour of the show. We'll see you. This is The Ramsey Show. You're listening to The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. From Ramsey Network, I'm your host, Jade Warshaw. Next to you, next to me, is Ken Coleman. We're taking your calls about your life, your money, your

your career and you can get involved in the conversation it's a live show so you can call us at 888-825-5225 and we'll get you in as long as you know it's a good question that's right you got to get through the screener that's right you got to get through the screener all right laura got through the screener she's in harrisburg pennsylvania let's see what she's talking about what's going on laura hi thank you for having me you're welcome we're glad you're here

So my husband and I are on baby steps four, five, and six. We have three kids, four and under, and we plan on moving next year. And we're talking about leaving both our careers and moving to another state and starting a business. Wow. Y'all don't like to sit still or chill, do you? No. That's my husband. That's not me. What state are you moving? What state?

Pennsylvania. We're in Pennsylvania now, but we're looking at like Wyoming, Idaho, or Tennessee. Somewhere a little more conservative. Okay. A little more land. Yeah, we're the land of the free down here for sure. Tell us about the business. What would this business be?

So we've been debating about it, and we think a donut shop. I was set on a bakery before. I love to bake. My husband also loves to be in the kitchen. We love to bake. I need my heart to beat. My heart needs to beat for a second. Listen, I have so many questions. I do, too. All right, so hold on a second, Jade, before you go there. So what does he do now for a living? And I guess both of you, what do you do for a living?

He works on the family dairy farm. I supervise a unit of analysts for a law enforcement agency. What do you guys earn together? $130,000, $135,000. $130,000. Who makes what? Break that down. I'm at about $100,000 and he's at about $35,000. And when you say the family dairy farm, it's his mom and dad's? His aunt and uncle. His aunt and uncle. And he's only making $30,000? Yeah. How old is he? 35. 35.

All right. Well, that let me tell you something. That is not enough. No. But what's also not good about this equation is that for me. OK, I'm going to say where my objections are and you correct me where I'm wrong. You've got a great income between the two of you.

You are in baby steps four, five and six, which means you really do have three to six months of expenses. But then the idea is we just up and move to a place we've never been and we open up a donut shop, which we've never done before. And we're going to quickly make enough profit to sustain our lives. Not going to happen. Can I pop the bubble? Yes. Tell me, tell me, tell me what's going to happen. That's going to make this happen exactly as you've said it.

So the idea is when we move that he would most likely work and I would be starting the business from home, like a cottage food industry. Yeah, yeah. I did that. And having the main job and I would be working on that. OK, we're ready to go full time. And what would his main job be and what would he be making?

We haven't figured that out yet or looking long term, at least a year out. So this is a dream. A dream without a plan is a wish, right? It's just a wish that you have in your heart. Ken, let's make this into something that is... All right. So let's take the current plan and let's try to put some brick and mortar around it. All right.

First of all, he's 35 years old. I don't know what his work history is, but he is at his age with his ability. I'm going to suggest gently that he's grossly underpaid for what he could be making in the world of work. Would you agree with that, Laura?

Yes, I agree. Okay. He's working for aunt and uncle Larry and Mildred and he's on a dairy farm and they're underpaying him or he's doing a job that quite frankly, that's what it earns. And he's okay with that because your mama's bringing home the bacon to the tune of a hundred grand. So, I mean, that's pretty great. So, um, what I'm going to do is, is he's going to get a better job.

And he's going to get a job with any kind of skill, any kind of experience he can that is at least double what he's making. This is all minimums, by the way, Jade. This is my minimum plan. Okay? So he needs to be doubling his income at a minimum with a path for growth, for heaven's sakes. All right?

And then you need to do your best to stay within your industry or something that is transferable and make similar money. Yeah. You need to still be making $100,000. So we go to Wyoming, Tennessee. What was the other place? Idaho. Idaho. All right. And so we've increased our income.

And then at night and on the weekends, you are coming up with two or three signature donuts. Not 20 different types of donuts. You're right, Ken. Two or three bangers. Something really creative going, this is my best shot. And I'm not going to spend any money.

On growing this business, other than the materials, or I say materials, ingredients I need to make my best donuts. And I'm going to sell those donuts to people at church. Coffee shops. I'm going to give them away at places. And I'm going to test my donut. And I'm going to see what people say when they bite into my donut.

right? And then I'm going to go, what's happening here? All right. Is it better than everybody else's? And if I've got something, then we figure out what are the next steps to grow the business from home. But I think this is a pure side hustle testing play before you try to launch this business and make any money that would go towards living expenses. So I know I took a little bit of time with that. That's right, Ken. But I,

That's the process. And oh, by the way, you still can move to a place where you like the politics and the values and whatever, whatever, whatever, all in the middle of that plan. Yeah. I think Ken has laid this out beautifully. I don't have a whole lot to add to it except to beg and plead with you to take his advice.

Because, you know, it's like the best laid plans, right? If you don't plan for the what ifs and you get out here and let's say, you know, I don't know you very well, Laura, but you might actually be a terrible cook. We think you're great. But what if nobody likes the donuts? So what Ken said is so true. By the way, by the way, I got to add this. Have you had five daughters donuts locally? Oh, show you're right, Ken. So guess what? I know her.

I know the lady who owns it. Oh, yeah. The founder. Okay. Her daughter and my daughter are friends. So I have had the chance to talk to her at a birthday party and ask questions. Here's why I'm going to share this. Okay. You know how expensive $5 donuts are? They're pretty high. They're pretty high. But they're pretty freaking fantastic. Listen, I'll pay the price in more ways than one. I'm about to shock some Ramsey people right now. Ramsey show listeners, because y'all are cheap, because we've told you to be.

Okay, let me tell you what a dozen donuts, five dollars, it's over 50 bucks. Yeah. Okay, but they're on the front row. She was like, they are cussed. Like they are flavors you're not going to get. First of all, the donut is this tall. I mean, it's massive. It is unbelievable. Very specific flavors. It's a meal. Here's my point. Laura, here's what I'm trying. I'm not trying to get you to copy what she's doing. What I'm saying is

She's making margin on those donuts. A lot of margin. But the value exchange...

is there. You've got to figure out this donut business because you cannot feed babies and pay the bills on donuts unless you're selling a lot of donuts or you're selling a premium donut. I'm just giving you a little business 101 lesson here to figure this thing out. It's all fun to go, I want to bake donuts. Yeah, but you'll starve. Yeah, the move is not to go dream about business spaces, go get a space and just be like, and I've got $39,000.

flavors and you're just a grand opening. The way to do it is the way Ken said, where you start small, you start on the ground level, you let people taste it, let the people decide. That's great advice, Ken Coleman. This is The Ramsey Show.

Hey folks, there's a lot of half-baked investing advice out there, but here's what you can do to get more confident about this stuff. Check out the SmartVestor program. SmartVestor connects you with local financial advisors who have the heart of a teacher. They'll help you level up your knowledge and build a retirement plan based on your goals, not theirs.

Go to ramseysolutions.com slash smartvestor to get connected and get more confident about your plan. That's ramseysolutions.com slash smartvestor. Ramsey Solutions is a paid, non-client promoter of participating pros. Learn more at ramseysolutions.com slash smartvestor.

You're listening to The Ramsey Show. I'm Jade Warshaw. Next to me is Ken Coleman. We're your hosts for the day, which means we are the ones taking your calls about your life, your money and your career. So if you want to get involved, you can give us a call. The number is 888-825-5225 and we'll get with you. Hey, Ken, let's get started.

Let's talk about real estate for a moment. Oh, I love talking about real estate. You know this. I do too. Selling a house the Ramsey way makes home ownership a blessing instead of a burden. We talk about that all the time. We have a set of parameters around here that we teach people how to buy and sell the right way. And so the Ramsey Trusted Program was created to kind of help push this forward. It's the only way to find an agent that you can trust.

to keep you on track with what we teach here at Ramsey. And this will help you get the best offer on your house or find the right house for you. We send some of the top agents that are in your area. These are people that we trust. You review their stats, you get to interview them and you get to decide which one ultimately that you want to work with. And

And so these Ramsey Trusted Agents, they have years of experience, guys, and they are going to help you make wise decisions when it comes to pricing, marketing, making, or even choosing the right offer. So if you are looking, whether you're buying or you're selling, this is for you, okay? You find a Ramsey Trusted Agent for free, by the way, at ramseysolutions.com slash agent. And I always tell people, I love my Ramsey Trusted Agent. She's great. She's wonderful.

And that's all I have to say about that. That's great. All right. So check it out. All right, let's go to the phone lines. We've got Brooke and Raleigh in North Carolina. Come on and raise up. What's going on? Hey, yes. My mom is worried that she does not have enough to last her in retirement. And I mean, to the point that she's like worried it's been anything, like it's not a necessity. And I have tried every which way I know how to tell her and show her that

I think she's more than okay. I think a lot of her fear is coming. We lost my dad suddenly last spring. And then she also retired this June, which was the plan before my dad passed. And so we've kept to the plan that she was able to retire. But I think it's just, I think she's just a lot of fear is there without his income and everything. That makes sense. How old is she? So she is 66. Okay.

And how, do you know what the nest egg is? Do you know what she has? I do. So I, and just for a background too, I'm an only child and we have a really good relationship. So I've been helping her with everything. So her nest egg, the retirement nest egg is about $750,000. Okay. And does she have debt? No debt. Including the house? No.

including the house and she owns and so for real estate they have a little vac she has a little vacation home um that's worth 200 000 that's paid for um and then a part of the other plan was when my dad retired they were going to move next door to us they already owned a piece of land next to us um we did move that up once he passed away just because i am my only child and

We both felt better with her being closer. Okay. So that, she's living there, and that was paid cash for. Okay. The house and all. She built a house. And so now we are in the process of selling the house that they had lived in. Okay. But that's going to bring another...

about 250 000 okay um and the house that she lives in now that's paid for is worth about um 265 okay so you got the 750 nest egg here in a minute you're going to add 250 from the sale of the other house to it everything is cash is she using the vacation home i guess for now you know keep it on the keep it until she's not using it anymore but i mean does that generate revenue the vacation home

No. So that was one thing my dad actually bought that a year before he passed. And it was kind of like that. It was somewhere that we went every week out of the year for as a family. And he didn't want it to be rental. It's like ours as far as a family. It was going to be our little place. Listen, over a million bucks is here. The way to look at this, and I still want her to sit down with maybe a SmartVestor Pro to really get her head around this if she's not

Because sometimes, you know, I think that you're really helping her and doing a good job, but sometimes you want the person with the degree and the letters after their name to tell you. But the way I'm looking at this is kind of, I'm looking at the average return on this. So even just the $750,000, if you think of her average annualized rate of return, if it's in good growth stock mutual funds, she should be somewhere around 10%. And so if you think, hey, can she live off of just the growth? Okay.

She's got no debt in her life. Can she live off of $75,000 a year? My guess is the answer is yes. Yeah, right now she started drawing Social Security in...

off of my dad's because he always made more than she did. He worked part-time for years. And she's only getting in like $2,600. And I've tried to do a budget, like worst-case scenario, and also including like insurance and taxes for the year for both properties. And I mean, worst-case scenario, she would have to draw like

an additional $600 a month out of her retirement if she wanted to live, but I want her to be able to enjoy it too, and that's what

I'm trying to tell her that if she wants to go and get a meal with a friend for $10, it's okay. Probably, it sounds like your dad did a great job handling this and she kind of deferred to him and maybe he encouraged her to, you know, cut back over the years so that they could have this great nest egg and now it's here and maybe she's used to looking to him for, you know, what we do next and, you know, that's understandable. It was actually the opposite. It was the opposite. He was the spender and she was the saver. But,

But he made more. Okay. His income was quite a bit more than hers. Right. And I think the thing is now...

I think too without the comfort of that income. Yeah, she's scared. She's really scared. You know, here's what's interesting. I think Jade's advice is absolutely, as what I was going to say, I think she's spot on. I would get her with a SmartVestor Pro in your area or two. Let her meet with two or three. And she gets to pick the one she wants that she's most comfortable with. That's the advice we've given for decades.

And this additional income from the house goes on top of the $750,000. Now let's just say you're Mrs. Calculator. I am. I'm going to give you a chance here because I always go to Jade. She loves this. She's 66. Let's just say...

What does the $750 turn into in 10 years if she doesn't even touch? Well, she's adding the $250 from the sale of the house. That's what I'm saying. I want you to be able to make this case, but a smart investor pro will do this with her. But if the daughter's trying to get her to listen, but Jade's right, she's not going to listen to you. She needs a pro to tell this.

But just the $750,000 alone over the next 10 years is going to turn into a sizable chunk of change. But let's just say it's a million. The million at the time she's 76, what's that going to be? Well, let me start by just saying a lump sum is going to double every seven years. That's why I was saying the $750,000 example. What's the $750,000 going to be 10 years from now? Well, can't I just turn it to a million?

I'm sorry. Well, you were throwing me off. Okay. I was trying to just stick with the $750,000 because that's what she has now, and that's plenty of money. We're trying to prove it to her. Okay. Let me go back to $750,000. I want to make sure I'm not crazy. You're not crazy. I feel like she's good. No, trust me. I feel like she's okay. Survey says it's coming. All right. So if we say just for the next 10 years, $750,000, she doesn't add anything to it, average rate of return. Let me get that decimal out of there because it doesn't want that there.

it will be $1.8 million. Ding, ding, ding. All right? And that's her doing nothing. That's just the $750,000, and I think we add the $250,000 on top of all this, and all that's going to just burn away in a good way. It's just going to keep moving and investing. So I think the SmartVestor Pro is the way to go. You have a pro who's got great bedside manner. You're just the prophet in your own town. You're too close. Yeah, that's what it is. Jade's right. You're right, Jade.

I mean, it's 100% what's going on. We're going to go meet with her. She's not. No, no. I just want to make sure. I'm not leading her down the wrong road. Let her see this show. Play the show for her. Go into the Ramsey Network app. You know what? That's it. Go into the app or show her on YouTube. Here's the deal. What's your mom's name? It's Ann. Ann. Listen to me, Ann. Uh-huh.

You're not okay. You're great. You are in great shape, Ann. You need to go have a lunch every weekend with the fried green tomatoes. Have some fun. Join the YMCA and take a swimming class. You know what? You're going to be okay. You're going to be good. Because even with the million, if we did a million for the next 10 years, it's 2.4 million. Even if you do nothing to it. Fantastic.

Mama is good to go. She's fine. I love when we have good news, Ken. I love when we get to give the good news. And in this case, it is very, very good news. Compound interest is always good news. It is. This is The Ramsey Show.

Hey, it's Dr. John Deloney. Look, when you're stressed about money, it makes everything feel out of control. You run around like a maniac trying to make sure everything's covered, everybody's okay. I've been there. It's the worst. But you can flip the script with an every dollar budget. It helps you track spending and expenses in real time so you always know what's happening with your money. Talk about a weight lifted off your shoulders.

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You're listening to The Ramsey Show. I'm Jade. He's Ken. Give us a call. The show is live, so if you want to talk to us, call in. 888-825-5225. We'll take your call about your life, your money, and Ken will hit you up with that career advice. Although you do jump in on the money, and you do a good job, Ken. Oh, yeah. You know, there's a microphone in front of me. That means I'm going to say something. And it's going to be good. All right. We hope. Lee is here. He's from Washington, D.C., our nation's capital. What's going on, Lee?

Hi, thanks so much for taking my call. I was actually calling because I recently, yesterday I was laid off from my job and I was contemplating if I should pay off my credit card debt, which I was initially going to pay off before I got laid off, but I'm wondering if I should change my priorities. What happened?

Um, the, the company, so I worked at a startup and, uh, they just couldn't afford to, to continue to pay me. I had, I had just started that job, uh, in July, July 1st. So it only, this is the first month. Um, I got the job through internship because I was interning with them for two months and then they hired me on and now they've, uh, they've laid me off because they couldn't afford to pay. Well, first of all, I'm sorry about that. That, uh, that stinks. And, um,

And it's happened to all of us. What were you doing for them? Software sales. So I was a sales development representative. What's your confidence level? I'm sure your brain has been running 100 miles an hour. What's your confidence level of getting another sales job or something else in that field or just anything? What's your confidence level in the next 30, 60, 90 days? I'd say in the next...

I think that I could confidently say that I could be placed in the same role with a different company at least in the next 60 days. Can you survive from a cash standpoint? What's your cash situation, your bills and everything that you've got responsibilities for? I do. Yeah, I can survive right now. I have about four months of expenses saved. Do you have any debt besides the credit card? Yes, sir.

Yes, I do. Okay. Yeah, I mean... Jade, walking through that whole situation. In this situation, I hate that you got laid off. And you're kind of in a...

transition. And so we would tell you to pause the baby steps. So for all intents and purposes, you're on baby step two, which is you have debt and you need to clear out your consumer debt. And so because this kind of storm has happened, we'd say, pause that stack up as much cash as you have. It sounds like you have four months of expenses, but you also have debt. And so if I were you, I'd continue to make the minimum payments on all your debt because you want to stay current. You want to stay on top of things, but I wouldn't pay anything over it until you land that next position.

Okay.

play out the interview process, but I would be doing some type of part-time job or maybe something full-time until I had something, something that's just a gig kind of a thing, the gig economy, you know, and keep income coming in. Here's why. Let's say that this thing plays out like you think it's going to, and within 60 days,

you're back and up and working. Now all of a sudden we're right back in the baby steps like Jay just told you. And now that four months worth of expenses is all going towards the debt. But I want you to keep income coming in in this time. That's where you actually turn a really sucky situation into

into a better situation by going, all right, I got laid off. That sucks. Taking a pay cut, but I'm at least bringing money in. And Jade, if he could, let's say, make enough money in a gig to take care of his four walls, and I'll let you explain that, then I like his position once he gets back up on the horse. That's excellent.

Excellent. Matter of fact, I might keep a little bit of the gig while I get back on the horse so that you can pay off this debt as quickly as possible because that's the goal. I want you to, once you land the job, the money that you have in savings, I want you to use that to pay off the debt. That's the baby steps. Baby step number one is you keep

You keep $1,000 or you get $1,000. You stash it away. That's your starter emergency fund. Baby step two is you pay off all of your debt except your mortgage using whatever extra money you have laying around and to Ken's point, side hustling and doing all those other things. So you said you have four months of expenses.

at this point if i were you that money goes to the debt and then after the debt is cleared up you save back up that four months of expenses or up to six months if you wanted to and then you move on from there and you start investing at baby step four so that's how i would run this if i were in your shoes very good call uh let's go to maggie she's in tampa florida what's going on maggie

Hi, thank you for taking my call. You got it. I'm getting a little anxious. We were, my husband's 76 and I'm 69. And we just bought a house. We wanted to downsize from the one that we had that was bigger. And I'm getting a little anxious because the house is taking a little long to sell. It's been on the market for six months. So you sold one and you moved into another house before you sold the other one?

Yes. And so are you about to be paying two mortgage payments? No, no, no. The other one is paid off. Okay, good. The one that we're selling is paid off. Okay. Okay. So we thought it would sell really fast, but with the market, the way it's going, it's been a little longer on the market. How long? About six months. What is your real estate agent telling you about your current listing price?

Oh, we just lowered it some. When was it? It was at $575,000, and we just lowered it to $569,000. Okay. So I just saw this headline today.

Today, we're seeing the Florida housing market begin to contract a little bit because it was exploding. And now we're seeing it contract. In fact, many people feel like it was overpriced, overheated. And so you're in Tampa, which is the Tampa area, which is certainly one of the better markets.

in Florida. So I think if you've got a really good real estate agent, and if you don't, I would highly recommend that you go to RamseySolutions.com slash agent and talk to some of the trusted pros there on that site that we know. Because in this current market, I think patience is the game. And listen, six months...

For a house listed in Tampa? I don't think that's crazy. At this point, it's not. If your pricing is right. Yeah. Yeah, I agree. I agree. Tell me, is there anything on fire, though? Because, of course, everybody wants their house to sell. Was the plan to take the proceeds from this sale and put it on your current house? Or did you buy your new house in...

Tell me more about that. No, I put some down. So we owe $326,000 because the house was $430,000. Okay. So we just want to pay the house. We don't want to have that. We don't want to pay the bank any interest. Sure, but you're not... We didn't have to. But what Jade's asking you is, are you in a financial squeeze because this thing has not sold yet?

No, we're not. All right, then be patient. This is all about making sure your pricing is right and then just hold. Yeah, just hold. I definitely don't want you to...

Put a price that's too low because you're anxious and you just want to move it. I agree with that. You're not everything must go. You're not in that mode. So just, you know, you got to know when to hold them. Sit tight. I'm going to do a little bit of fork. I'm no real estate pro, but as you know, I pay way too much attention to the headlines. Okay. Forecast for us, Kim. I pay attention to what the Fed is doing and what they're saying.

We are in a presidential election. I would not be surprised, given where we are right now, we're seeing unemployment tick back up over 4 point. I think it's 4.1, the latest job report, last month's job report. We're starting to see a softening in the labor market. All of this in a presidential election. This is exactly what the Fed set out to do.

Jerome Powell is on record as saying, we've got to raise interest rates and it is going to cause pain in the employment market. And pain in the employment market, okay, and then when we see interest rates high for the home industry, mortgage rates,

This creates a cooling of consumer demand. Of course. And consumer confidence, which then in turn, theoretically, drops inflation. So all that to say... Put it in more layman's terms, because the cooling is happening because everybody's holding onto their money. That's exactly right. Okay.

And so what's happening is people are also sitting and waiting to see what happens in the next quarter or the fourth quarter as it relates to mortgage rates. I think you're going to see a slight rate cut in the third or fourth quarter, and I think you'll start to see people move back into the housing market. So I would sit tight if I'm in a position where I'm listing, I'm going to list it and stay with it. But I think you're going to see an increase in home sales as we look to the end of the year. All right. I love that because that's been the issue. Not enough homes on the market, not enough supply to meet the demand.

You heard it first. You heard it here from Ken Coleman. Let's see. Is he correct? This is the Ramsey show. This is the Ramsey show. Your scripture and quote of the day. Do you not know that in a race, all the runners run, but only one gets the prize. Run in such a way to get the prize. That's first Corinthians nine 24. And then Simone Biles Olympic opening ceremony is today, by the way.

I will be watching. I'm a big fan of the gymnastics. Me too. Well, she said this. She said, I'd rather regret the risk I didn't take. I'm sorry. Let me read it again. I'd rather regret the risk that didn't work out than the chances I didn't take at all. Yeah, I like that. Can we throw that scripture of the day back up there? I'm going to do something I've never done before, James. Are you going to preach? I might. I might.

It says, do you not know that in a race all the runners run but only one gets the prize? Run in such a way to get the prize. So there it is, a little biblical case for there are winners and losers. And maybe we shouldn't be giving trophies to people who lose soccer games 11 to 0. See what I'm doing there? Yeah, just leave that right there. We got a bunch of soft people coming out into the real world because they think everything needs to be handed to them. And Scripture says right there,

Everyone runs the race, but only one of them wins. And I got news for you. It's the dude or the gal who breaks the line before everybody else. And that's the person, by the way, that we will see in the Olympics this next two or three weeks gets the gold medal. So you're telling everybody else to quit whining? I'm just saying you don't deserve a trophy or a medal if you don't place. That's right. Work in a way, live in a way that you place yourself.

And if you don't place, it's because you didn't work hard enough or you aren't good enough. So, man, I'm just, I'm so tired of all the whining in this world. Stop whining and get to work or get some self-awareness. There's a reason why I'm not trying to play pro basketball right now. I'm five foot eight. I'm white and can't jump.

Okay. There's three reasons. Keep going, Ken. I'm just saying. I'll give you the slow clap. This is the only thing I can do is actually talk on a mic. It's like the only thing I can do. Quack. Some of you will get that. Some of you will not. Yes. I love that. Good job, Ken. You know what I'm saying? You're right. No, you're 100% right. I'm not trying to be mean. I'm just. It's the truth. You got, if you listen, we're here to help you win. Yes. And you need to understand that winning with money is the same as winning in a race.

You know, you got to put the work in. You got to be disciplined. So, all right, enough. Take it one day at a time. Enough of that. So for some reason, that verse got me all fired up. I think it should. That's very good. People needed to hear that and people needed to know that, Ken. All right. They did. Let's go to Matt. He's in Scranton, Pennsylvania. What's going on, Matt? Hey, Jade. Hi, Ken. Thanks for taking my call. You bet. Question. So I'm 30 years old. My wife and I are in baby step two.

We were looking forward to getting out of debt next spring. However, there's a parent plus loan that is in my former stepmother's name that morally I do feel obligated to kind of at least take over the principal amount of that loan, which is about 60K. What's the problem is? Okay.

Sorry, go ahead. When you said the principal amount, what's the rest of the amount? What is it with interest? So, yeah, about $38,000 worth of interest has accrued from, you know, the time they began being dispersed till now. I was told that, you know, it was being worked on and taken, quote, taken care of. However, obviously, obviously that's not the case. Is your name on it at all? Is it connected to your... It is not. Okay.

So this is just you saying, um...

I guess what I want to ask you is initially, and this is what I always ask people with the Parent PLUS loan, it's horrible and it causes so much division. The question I want to ask for you is when this loan was taken out, what was the decision? Like, what did you guys decide? Did you say, okay, we're taking out this loan and it's up to you to pay it, Matt? Or was it, hey, we're going to help you out as your parents. We're taking out this loan. We'll pay it. Or was it a half seize? Like, what did you guys decide?

So, yeah, the intent was I would have my own private loans, which I got, and about $4,000 from being paid off on those. And then the Parent PLUS loan would be taken care of, you know, by them. And it kind of fell through the cracks, and I'm obviously a little upset that I was totally out of the loop on this. How did you find out about it?

My father and now former stepmom got divorced and the loan is in her name. Okay. Now I see why you're feeling the need to step in and do this. What's your wife say about it? We're kind of in alignment with, you know, morally I should pay the principal, but the interest, that was not my doing. So I don't feel responsible to pay that interest. I'm good with that. I agree. I'm good with that. I feel the same way.

That feels case closed. It's case closed because I think honestly for you, I applaud you because you looked at the situation and said, this woman stepped into my life. She was here for a season. She did this thing, which in her mind was a good idea. Obviously it wasn't and it didn't pan out well for her. I think that you're a really good guy for stepping in there and even saying, hey, let me take care of the principal. What does she say about all this? Is she's trying to say, no, pay the whole thing. Tell me what her stance is on this.

Yeah, so I got, like, we got something in the mail last week, like a letter, a certified letter, I guess, basically recommending paying the $98,000, which includes the interest, within 30 days. From her? From her. Oh, that's rich. So there was, like, legal action. Oh, yeah. Like, she's trying to get into that. That's what it sounds like, but if we're going the legal route, again, like, my name's not on it. Facts. So there's no, you know.

Yeah, that certified letter is a joke. I'm not trying to stick this on her completely. I get it. But that tells you where she's at. This is going to be interesting. It is going to be interesting. I think that I don't know what your relationship with her is. I'm guessing it's not wonderful if she started with this. Is this where she started on the conversation? Yeah.

Or had you been talking up until this point? Yeah, we talked last fall when this was still, you know, when forbearance interest wasn't accruing. And I said, you know, just let me know what I need to do. Like all, and I even started then, like, I don't feel responsible for this interest. I don't think you should pay this full amount. I agree with that because, you know, you're my stepmom. All right, hold on. What did she say when you said this to her in person?

So this wasn't in person. We used to have a great relationship, but then when everything happened with the fallout between her and my dad, you know, we don't, we're kind of just on text messaging terms. Got it. Oh gosh. This was all over text. You know? Yes. The only positive is it's in writing. That's the only positive. So what was her answer via text when you said, I'll pay the 60 or whatever it is? She, so the last text I have from her was she's going to see if there's a payoff amount and what they would take for a payoff amount. And,

Oh, like a settlement? And then you've not heard anything else until this letter? I haven't heard since. That was last week when I got the mail. Wow, okay. So that ratcheted up pretty quickly. Yeah, she escalated that quickly. Listen, I think you stick to your guns, and I think that you, in many ways, I actually do like the fact that you kind of have this text message chain. I think if this goes further and you need to

settle it in some other way, it'll be good to have just kind of some written document. But to Ken's point, she is on the loan. And so legally, really, she's liable for it. And she should be thankful that you're a good guy stepping in. And by the way, she has no leverage. So don't give her any emotional leverage. This certified letter feels like a tactic to me. Yeah, it is a tactic. Like I'm going to fire a shot across the bow. And I think I would just laugh and just say, you missed.

And let me tell you how this is. I'm a good person. I'm a person of integrity and character. And here's what I'm going to do. And I'm not going to pay a nickel more than that.

And that's how it's going to go down. And just look her and call her bluff. I mean, in poker, that's what you do. You think you got the cards, you call someone's bet. And I think in this case, you've got the cards. She doesn't. Because $60K, that's a pretty penny. How long will it take you to save that up real quick?

Because we're about to go out. Oh, to save it up? Oh, geez. Well, with our other debt, we have a little under $40,000 left and everything else. So we were going to be out of that by next May. Okay. You do that first. I ran the debt snowball with the $60,000 and it pushes us out to like spring of $27,000. Okay. And by the way, I'd let her know that. If I were you, I would obviously finish your debt snowball first. I'd even put your three to six months in first. Okay.

And then I tackle this because it's not your debt. You're doing it out of the goodness of your heart. And I'd want to make sure that you're squared away first. And honestly, yeah, that's, that's the way I do it. I don't want you to miss out on any time because of this. And so keep moving forward through your baby steps and, and weave this in at the right point. That makes sense for you and your family. Good to host with you. Ken. Thanks for the guys in the booth for making the show happen. This is the Ramsey show.

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