Break the Paycheck-to-Paycheck Cycle
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Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am your host, Jade Warshaw. I am joined by fellow co-host, author, host of The Rachel Cruze Show, my host, or co-host today, Rachel Cruze.

Rachel, it's been a little minute since we've been on here together. I know. Since before 2023. That's right. It was last year. That's crazy. But give us a call. The number is 888-825-5225. We'd be honored to take your call in this new year. So let's go straight to the phone lines where we've got Donovan in Atlanta, Georgia. What's going on, Donovan? Hey, so I have probably $50,000 in student debt.

and another six or seven in consumer debt split between a credit card and like a small car payment that we needed. And I'm looking to go to grad school for clinical mental health counseling. Okay. But obviously I don't want to go further into student debt to do that. Right. So how would you recommend I do that while also doing the baby steps and trying to get out of debt? Well, I do think that the first thought

thought here is is going to grad school gonna have the return on investment that you're looking for because it doesn't always so that'd be the first thing that I'm thinking about and then two yeah you don't want to continue to go into debt you already have 50,000 in student loan debt so if you decide that it does return on investment what would it look like for you to pay your way and what does it actually cost okay yeah so yeah Donovan how old are you

I'm 24 and I have a child and a wife. Okay, wonderful. And what are you doing now for work? I work at a local college and like it gives me free rent. Are you able to do the grad school program there and get a discount? I am, but it's not accredited. So it would be very low ROI versus getting to a different one. I hear you. What is the change in like,

salary-wise and like option-wise, how does that change for you getting your graduate degree? I think it would double my potential earning, but also I would pay, the grad program would probably be equal to the amount that I would get a raise for. Which is what? It would be about $30,000 of a raise if I got my degree and I would make $30,000 more. And how long is the program? Like how long would it take you to go through that? About two and a half years. Okay. And how much are you making now, Donovan? $30,000.

About $30,000, but I don't pay any rent. Okay. And your wife, does she make anything? Is she working? $26,000. Okay, so $30,000 and $60,000. Okay. So, yeah, y'all are about $56,000. Okay. Donovan, here's my advice.

I feel like sometimes the advice, I just know you're not going to like it. I feel like that's going to be it. Honestly, if I was in your situation and I had a wife, I had a kid, I had a dream out there for you. It is to go to grad school. For some people, it's to start their own business. You can fill in the blank on what that is.

To me, you have to take care of the necessary things financially and start on, we always say, the firm financial foundation where financially you are not in a shaky place. But when you have debt, Donovan, you're in a shaky place. You owe someone something. If something were to happen, you have to pay this debt back. But when you don't owe anyone anything, there is a level of freedom there. There's a less stress. There's options. You don't feel this urgency that, oh my gosh, I have to do this, this, and this. And that starts to limit your options just mentally, right?

So if I were you, I would work really hard. I would be working nights. I would work some weekends. I'd have your wife pick up an extra. I mean, I would do whatever you could to get rid of this $56,000, which is going to take a lot. But you don't have rent. There's some expenses you don't have. But it may take a year or two to do that. And then I would save up some money on the side to be saving for to be able to cash flow grad school. Because what's going to happen, Donovan, I'm telling you,

You're just 26 or 24 and I know it feels like I know what I want to do. I need to keep pressing forward in this. But when you just have some patience and you wait, even if it's three years, and I know that is not fun, but you get to be 27-year-old Donovan.

And you're either saying, get me this degree. I know this is exactly what I want to do. I have the money for it. I'm not putting myself in a bad place financially to do it. We're doing it wise, in a wise way. And I start this path and I make 30 grand more. The raise, it all happens. And it's great. Or 27-year-old Donovan wakes up and he's like, golly.

Things are shifting. We have another baby on the way. We actually want to move back home. You know what I mean? Things start happening in life that may cause you to make different decisions. And so if I were you, I think the safest way

Why is this route is to slow down get the step paid off and then save up and go through go through grad school Listen, I'm right. I'm right there with you I don't think that you're gonna effectively because he said he was trying to do the baby steps and I don't think you can effectively do both because we're talking about a lot of money $30,000 $15,000 a year. Yeah, that's what you would have been putting towards. Yes, the baby steps and um, yeah, do you see what I'm saying?

Yeah. And something tells me, you know, you say, hey, I have the ability to double my income. It's $30,000. You and your wife together can make 50. That's a thousand extra dollars a month between the two of you. If you make an extra thousand and she makes an extra thousand, that's 12,000 a month between the two of you. Put that. I mean, you're almost there. Does that make sense? Like you can literally do that.

With any of these side hustles. Which is not going to be forever, Donovan. And again, and that advice would be if somebody called and they wanted to go and be a photographer full time and travel the world, I would say, I would clean this up first, get some money to be able to cash flow that dream. Like it's, it's one of those things that just has to be in the right order. And what happens on a minute when it's not in the right order, we get the call and

At 27 year old Donovan And there's a You know Something happens And your wife Has to stay home You don't have the money You're in the middle Of grad school You want to be able To finish but you can't You have all this Other consumer debt Like it starts to just Really really intensify And if you can just Slow down and have Some options

I just think that that's the wisest way. That's a really good point. And sorry, Donovan, we're like overloading you. But the other, I mean, the more we talk about it, the more things just keep raising themselves in my mind as like a possible thought. And there's another part to this where when you've got a lot of, you know, you're juggling a lot of things, you got a lot of balls in the air, you do feel the stress to complete it because it's a lot, right? If you try going to school and you're doing this debt thing, at some point you're going to hit a fatigue phase.

whether it's a mental fatigue or a financial fatigue, and then the option of debt feels even more enticing because it's like, this is a quick fix. If we can, hey, we're just going to take out 10,000 in student loans and then we'll be able to pay. Like that starts whispering to you. And I really don't want that. And Donovan, if you have, oh, sorry, Jade. No, that's okay. I was done. And if you have, you know, um,

a credible job at a college now, I would look at the option and would be totally okay. If you guys found another college you could work for that has a grad program that is credible and you could go that way and get a discount and maybe speed this up more. So maybe it's even a change of job because you're in a great position

you know, line of work to be able to get some kind of perk when it comes to higher education. So I would even do that. See if the school will pay for it if you and your wife move in. Dr. John Deloney, they did that. They lived in the dorms. Yes. And he went through school and all. I mean, that's what they did. And so I would look at some other options that could fast forward this plan too for you, Donovan.

But slow and steady, it's always the way to go. I know that's right. And take advantage of the fact that he's not paying rent. Like, that's great. That's the biggest line item on everybody's budget. So to be able to take that money and quickly, you know, put it towards a debt snowball. Come on, somebody. Love it. Donovan, you're making the right move. This is The Ramsey Show.

This is the Ramsey Show. My name today is Jade Warshaw, joined by Rachel Cruz. The phone lines are open, so give us a call. The number is 888-825-5225. The name changed sometimes, Jane. Man, listen, it must be because my mind is not it right in this moment. We're back. We're here. It's Friday. We've been on Christmas break, man. I know. It's been a hard one to gear back up towards. And let's be honest, we had a tax meeting before this. We did have a tax meeting.

So my mind is like waking up. All right. Let's go to the phone lines, Rachel, because I need a call right now. Let's go to Caitlyn. She's in New York, New York. What's going on in your world, Caitlyn?

Hi, great to be talking to you. I have a interesting question. I'm looking for guidance in how to approach moving to the next step with someone I'm in a relationship with, and they're maybe not on the same page with me financially. We're very happy, but I'm sensing that

there's a lot of guilt and embarrassment around their finances. What he has divulged is not the best news. And so, you know, I'm personally not where I would like to be financially, but I'm very actively working towards my goals. My question is, you know, what advice do you have in approaching him in the right way, but also like,

still getting the information that I need to know, which is like, can he change his habits? Does he actually want to? I love this conversation. So what is the information? Like, has he told you his numbers as far as like what he earns, his debt? Like, has he been open to that extent?

Yes. Not very enthusiastically, I guess I could say. Sure. Again, I think there's a lot of maybe embarrassment or just sort of not super enthusiastic to share what he has so far. And I think that's normal, by the way. Yeah, 100%. It was interesting. I was the one to first come forward and say like,

hey, we've been together for so long. I'd like to move to the next step. How long? Almost three years. Oh. Yeah. And I would love to move to the next step and move in with him or move our lives forward in that way. And I have personally a lot of debt and student loans. So I wanted to be upfront with him with what my situation is and what I'm working towards. But

but I didn't get the same amount of information from him. So I figured it maybe wasn't good. And after some, you know, follow-up conversations that is, that is correct. So what he has shared is like his income. Okay. He has, he's taken out a loan on his 401k. That was one thing that was like a bit concerning to me. And then, you know, How recently did he take out that loan?

I believe a few years ago, within the last five years. Okay. What I'm getting at is I think you do have to be delicate with this conversation because, I mean, you've got your own financial mess over here that you admit, like, listen, I've got debt. I've got a mess to clean up. And so he does too. So when you bring up that conversation, it's almost like you've got to be, it is surrounded by fear and shame and guilt and all of those things. So it's almost like

you being very forthcoming with what you've done and I did this and here's what my plan is going forward and I'd probably start asking questions around his philosophy with money and with debt and you can kind of open that with like listen you I don't have to tell you you know I have this debt and I've just kind of I think I'm done with debt like I don't think I'm going to borrow money anymore I've started listening to I don't you know I don't know how much you guys share as far as what you're into and podcasts and things like that but

I think it'd be hard to be dating someone that you've been with for three years and they don't kind of have a bead on what your, you know, what your interests are, whether it be hobbies or finance or whatever. So it seems like it could be pretty organic to bring up the conversation of, hey, you know that podcast I've been listening to? I'm really like,

starting to get into it and maybe asking him more generalized money philosophy questions first as opposed to what do you plan on doing with this 401k loan kind of thing? Does that make sense? Yeah, and Kaylin, I would always and I always want to know

someone's motivation behind why they did what they did. Because for some people, and we find this all the time doing what we do, you know, there's just, there is a lot of just ignorance. People don't know. And so it's like, oh, this is an option to take out a loan. I mean, I guess, like they've never even heard of another way how to live. And so there is something to be said about once they have some information, kind of what Jade's saying,

then be able to say, okay, so what does this look like now? Because the truth is, I'm like, I mean, Caitlin, I would still be in a relationship with somebody if they had student loan debt. But the key is that they want out and they don't want debt to be part of their life. It's a value system thing. Do you know what I'm saying? So like, to me, it's,

you know, Winston, like when we were dating, he like had a credit card and his philosophy was like, oh, I'm going to use all the rent and all the utilities on the credit card. And then, and I'm like, well, I can't like, I literally can't. It's not allowed. He was like, okay, so my neck, my philosophy shifts to we just pay cash and we don't have a credit score and we don't need a credit score. And okay, like it, like it all just kind of made sense. Does that make sense? And I know we were young and you're probably way more set in your ways, Caitlin. And so is your, your boyfriend. But yeah,

The point is, it is a value system conversation at that point. What do we value? And out of your value system is where money becomes a tool. Because money is just a tool. It's just a tool to live your life. And you want to be able to live your life in a pretty similar way or you're going to continue to – or you will –

butt heads if you guys continue a relationship and open up the store. So yeah, for me, that would be my my number one. And I think the empathy route like what Jade is saying is so true because you're not perfect. Caitlin, I'm not perfect. Jade's not perfect. None of us are. But I think the key is like, hey,

You know, and maybe he is probably feeling a lot of guilt and shame. And the truth is, Caitlin, he's probably not happy with where he is financially. Right. So then it's like, okay, so we have to do something different. And do you want to do this together? Not combining money, but hey, should we start this journey? We each have our own debt snowball. Like, what does this look like?

to become free and talk about your why caitlin why do you want to be debt free is debt you know are you losing sleep at night is it stressful do you have to stay in a job you hate because of it like like it's those kind of conversations to have it's not just like what jade said the 401k loan you know there's so much under that too to be clear caitlin um and rachel i think you would agree with this these are this is a series of conversations over time um and

maybe some relationships you can have that one conversation and it's like, all right, we, we, we, it's settled. But I mean, I can tell you with Sam and I, these conversations were months and like, depending on the level of guilt that's there or shame, these are conversations that you're just looking for a little bit of forward movement with each, with each conversation. Like, Hey, he seemed a little bit more open this time or Hey, he seemed like he divulged a little bit more this time when I brought it up, he didn't go, Oh,

you know, like you're looking for that little, those little steps forward that you're like, okay, their mind is open and I can see that he's trying his best. But if you're seeing no forward movement, if it truly doesn't look like, like, look, he's not interested. I bring this up and every time it's like,

you know, okay, you know, but does that make sense? It may not be something that you get done in two date night dinners. You know what I'm saying? For sure. And definitely I haven't been met with like a resistance to talk about it and it's progressing. So that's like really great to hear that it is something that has to take time. I just wanted to like,

hear your perspective because I'm only still understanding how much of like the psychology of my behaviors has led me to this and exactly what you just said of like it's a value conversation where I just want to make sure I ask the right questions and we have the right conversations to like

Make sure we're on the same page. Like we do look at money the same way. And, you know, if we were to move forward with making financial decisions together, like do we have the right tools to kind of explore like what our thoughts are together? Yeah. And Caitlin, just know this too, because I'm,

the spender in our marriage. My husband's the saver. Winston has like four spreadsheets in Excel and every dollar. He has all this stuff. And I don't, even though I do this for a living, he is way more of that nerd. So also hear me say he's

He there may be a sense of him that is just naturally a free spirit and that is who he is too Like I don't want everyone to think that everyone has to be obsessed with money and can't wait to talk about 401ks all the time and it's so exciting about the new tax code like Like that may not be exciting to everyone and that's okay, too So I think it's it's the bigger value system that together in a relationship. We are moving in the same direction with our lives and

And you could plug in, you know, family. You could plug in spirituality. You can plug in all this stuff. And it's just a healthy, balanced relationship. And money is a piece of that. I love that. It is important, though, to know when you hit your non-negotiable mark. Let me just throw that out there. This is The Ramsey Show.

This show is sponsored by BetterHelp. Hey good folks, the back-to-school madness is upon us. It's hitting us right now. We got travel and work and all these forms to fill out now and sports to travel to and on and on. My family's schedule is so packed and we haven't even begun talking about things like exercise and date nights and counseling and church and home projects. And those are the things that make our life even worth living.

Here's what I've learned. When it comes to taking care of me, I have to put on my oxygen mask first. And that means that I have to do the things that keep me well and whole. And I know that you have to do those same things too. So don't skip the things that matter to you, including regular exercise, hanging out with your friends and regular therapy appointments. And when it comes to therapy, contact my friends at betterhelp.com.

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All right, everybody, you're listening to The Ramsey Show. I'm your co-host, Jade Warshaw, joined by Rachel Cruz. And during the break, we were talking about non-negotiables. And so many of us face this, whether you are dating someone and, you know, you have to bring up those conversations, Rachel, about money, about, you know, religious views, possibly political views. Like there's all these tough conversations to have. And when do you know...

When you're dating somebody, when you get to that point, that's like, okay, this is, I've hit my point, right? Like we talked to somebody who was in a relationship for three years and it's like, okay, maybe now's the time to start looking at this, talking about this. But it's hard to know, especially if you might see a little bit of progress and you're like, yes, this is progress. Maybe we're going on the right direction. But what would you say, Rachel, is let's call out some red flags, right?

of if you see this, this might be pump the brakes. Money-wise. I was like, I don't know if I'm not a marriage therapist. No, I'm talking about finances. Yes. I would say...

I always pump the brakes with people that feel like they have all the answers. Like when it's this idea that like, I don't have any more learning to do. Like I'm kind of just stuck in my, this is it, I'm good. And you're like, you don't want to grow or stretch or like hear something different. Like to me in life right now, that feels so prideful. So with money, and we get this call a lot with people that, as we're talking about non-negotiables, so I guess there's a little bit of the other side of this.

But this idea that, you know, we talk and they're like, well, you know, he just tells me like he don't want to talk about it. He's not going to talk about it or she won't even she won't even enter the discussion. I'm like, that's exhausting. Like, that's exhausting. So you can have your non-negotiables, but be but be humble about it. It's that's true that you bring to it. Well, let me be devil's advocate because there's somebody listening in their car and they're like, listen,

I'm the one who my spouse keeps talking to me about Ramsey this, Ramsey that. And whenever I try to tell her my views on why I want to keep my mortgage payment and invest it instead, she's so closed minded. Like she doesn't want to hear. She feels like she's found this plan and that's it. Like there's no like let's talk about it from that point of view. I'm her.

I would be like, okay, so talk me through that. Let's run some numbers. Let's look. Let's have a conversation. Not just you telling him, well, this is what it is. This is what you should be doing. Preaching mentality. Yeah. Being willing to listen. Very much so. And ask questions. And ask questions. Be curious.

Like that whole spirit as a person, I think is really important. But when you're so closed off and you don't even want a conversation. That to me is the big. That's exhausting. Like, you know, that would be a red flag for me. They won't even talk about it. They avoid it. You know, all this stuff. And you're just like, oh man. Yeah, I think that's a red flag. I think if you're talking about the future, like say you're dating and you're talking about, okay, like when we get married, you know, what are your views on combining money?

That like maybe maybe they've been very open about their money up until this point. And you're like, yes, everything's going good. But then when you start thinking about, OK, when we get married, how is this going to work? Because my thoughts are that we would combine our money and kind of have our goals together. And if they're saying, oh, really, because I've worked really hard for my savings and. Yep.

That for me would be tough, would be tough. And a non-negotiable. I think it's a non-negotiable, but there's part, I'm not going to lie. There's part of me that wonders if there could be a journey there over time. Yep. Yep. So these are, you know, these are tough conversations, but I, I would urge people to start having them early. If there's one thing that I can say that I kind of feel like I learned in my marriage is we didn't talk about that.

dating like yes our dating time was very fun and not a lot of like we I mean we talked about heavy stuff but somehow the financial stuff just wasn't really in there and then after the fact it was like oh wait a minute luckily there were certain things that we just naturally aligned on thank goodness yeah but yeah have those conversations yeah and I would say debt would be one of those I mean it would be really tough to marry somebody and they're like hey I want to go

you know, $500,000 in debt to do real estate. And I'll be like, Oh no, I can't do that. I can't do that. I can't do that. It's like, that would stress. That would be, cause then you live as the spouse in the stressful state 24 seven, you know, an investment. I'm saying not just primarily, but it's like, cause I see these people on Instagram, Tik TOK.

and they're all about real estate investing. Leverage to their eyeballs. Yes, and I just watched that and I'm like, oh my gosh, that would be so hard. That would be a tough marriage for me. That is because on the one hand, and I mean, even if it's not real estate, even if it's just one person like, I have this business goal or this aspiration, I want to open a restaurant, whatever it is, but

But their viewpoint is I go into debt to do this. And if you're the spouse who says, hey, I don't feel comfortable with debt. I don't like debt. And they view that as you're not supporting my dream or you're not, you know what I'm saying? Like, you don't believe in me. You don't believe this is going to work and we'll be able to pay it off. That right there, that's a very...

Tough conversation to have. Yes. Now, don't get me wrong. I still stand my ground because I feel like I'm not like, can we do it over time? Is there a way to not leverage debt? Yes. Yes. Oh, goodness. All good. It's hard. It's hard. And good stuff. All right. Let's go to the phone lines where we've got Anna in Houston, Texas. What's going on, Anna? Anna. Hello. How are you guys doing? Doing good. How are you? Sorry, I said your name wrong. It's Anna, right?

You're okay. It is Anna. So I have a question and I'm hoping that y'all can kind of help me out because I've been thinking about it for a little while. I am expecting to get a raise here soon within the next maybe two months at work. And it's about, I'm hoping like 20,000 extra a year. I'm not certain though, if I should save money.

That amount every year or use it to pay off my student loan debt. That's awesome. I have about 60, yeah, I have about $65,000 of student loan debt that I just accrued here recently going back to school to get my master's. And it's just me and my kids. I don't get child support. How many kids? And I have three. Okay.

My son is 19 though now, and so he wants to go to school. That's a whole other situation and needing a little bit of money for that. But I guess my question is just, should I save that extra 20 a year?

For me and my kids, just like for security type stuff. Or should I just use it all to pay off this student loan debt? Because I don't want it to go from $65,000 to $200,000. Of course. And that's a great way of thinking. Number one, congratulations on the raise. That's excellent. So if you're kind of new to...

the Ramsey show, we teach everything kind of through a series of baby steps, right? There's these seven baby steps that you can take that build on each other to ultimately get you to this place of financial peace, right? And so the advice that I'm going to give you is based on that. So the first thing that we want to kind of create this secure platform for you is you just need $1,000 saved, right? So if you can just out of that $20,000 raise or out of your bank account or whatever you have,

of money now, if you can just set a thousand dollars aside and just, okay, I've got that there. And then the second baby step is, yeah, you pay off your debt because when you pay off debt, you're eliminating that risk. You're eliminating that financial uncertainty that's in your life. And that that's usually the point of stress that people feel is, oh my gosh, I've got to make these payments or these debt collectors are calling me or my payment is due. Right. That's usually the source of stress that people feel when it relates to their money. So in your case, um,

I would say, if you've got this extra money, congratulations. Let's put it to whatever baby step you're on so that you can keep going in the right direction to get to that ultimate financial piece. And it sounds like in your case, you would be on baby step two where you are paying off the debt. Ana, how much do you make in your job now? So I make about $4,000 a month. It's about $60,000 a year. Okay. Okay.

And then with the $20,000 will come, so that'll be about $80,000? Mm-hmm. Okay, great. And I already have the emergency fund, and I even have about $30,000 in a CD account that I put up whenever I sold my house last year. So I have that saved. Okay, that's great.

I would put on it's going to make you nervous, but I would put that towards your debt and that will take a huge chunk out of this debt. And you're going to make great money. I mean, you're going to make 80 grand. So you have $35,000 left. I mean, you could pay this off in 18, 24 months. Yeah. And honestly, when that CD matures, I'd probably put that on the debt too and knock it out.

65,000 I would do that and then once the debt is gone I'd save back up that money and I just keep it in a high yield to where it's like very liquid but yeah listen I'm proud of you I think that you're doing all the right things you've got good instincts and good intuitions yes you're doing great taking great care of your family this is the Ramsey show

I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable. Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible, are people that call in and their spouse has passed away suddenly, and they don't have life insurance. When you have to think through how am I going to pay my bills...

I'm going to eat next week. Yeah, in the middle of all that grief. Like it's just, it is, it's terrible. So life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here.

You got to say it out loud and you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of stinking pizza. To get a free quote, call 800-356-4282. That's 800-356-4282 or go to zander.com.

You're listening to The Ramsey Show. Give us a call. The number is 888-825-5225. And we would love to hear from you. It's a new year. You probably have goals. You probably have questions. And Rachel, we are here to answer those. We have a live stream coming up, guys, January 11th. That's a Thursday night, okay?

It's at 7 p.m. It's completely free. Yes. All right. It's going to be myself, Rachel Cruz, John Deloney, George Camel, and the GOAT, Dave Ramsey. We're all going to be there. And we're going to be teaching you how to break the money cycle. All right. We're breaking this toxic cycle. It's actually called Break the Cycle Livestream. And it's our biggest one yet, Jade. Yes. The registration is crazy. Yes. Over 200,000 people have registered. So...

Yeah, come join us. We just had a meeting about it yesterday. Yes, that's right. And it's going to be really great, you guys. We're going to talk a lot about navigating money anxiety, bad money habits that keep you stuck, some practical tips. Very practical. On what to do to start this new year off. So I hope you join us. Not to mention, if you register, you get entered to win $1,000. And we're doing 10 separate winners. So there's a good chance that you could win $1,000. And that's some nice money. That's just a sign up.

All day. All day. Free money all day. That's right. All right. Let's go straight to the phone lines with Joey in Washington, D.C. What's going on, Joey? Hey, how are you all doing? Doing good. So I'm looking for some advice. So I'm looking to kind of invest and save money as an 18 year old going into trying to pay cash for college, as well as trying to get more, I guess, better paying jobs. And they're just kind of like where I should start and where I should look as far as investing goes.

So do you have money, Joey, for college? Yes. So I actually, this is like I'm starting my first semester in college. And so I've paid cash for this semester upcoming. Okay. As well as having a part-time job. Okay. Which is kind of what,

I need to do to continue because I really don't want to go into debt. Yeah. And so it's kind of what I need to do to stay out of debt and be able to kind of set myself up. Yeah. Well, it's a great question. Well, in your stage, Joey, I probably would not advise investing right now. If I were you, I would just open up a high yield savings account and I would put as much cash in there as possible and get through college, making sure that you can cash flow it. Because what I don't want to happen is,

As you go and open up, you know, a Vanguard account, put some money in and the market goes down and you need cash for school and it's not there. And you're like, oh, geez, you know, I lost some of that money. And so you want to be able to when you invest, it's a really long term play. So for something big, a big expense like college, I would want you to go through it completely and just know, hey, I have money now.

I'm able to cash flow this. And then when you graduate and you get a job, I would build up a emergency fund of 36 months of expenses. And then I would look to invest. And when you're investing, you want to do 15% of your income into retirement. And so that's, you know, for your 401k at work, for the job you'll get when you graduate to your Roth IRA, open that up. So,

So yeah, I would honestly not advise you to invest right now just because college is such a big expense. I want to make sure you get through it debt free. Okay, so I should not be like even into retirement. I shouldn't be worrying about that till now.

Kind of after I get out of college and graduate college. Yeah. And what's hard, Joey, is I'm like, you know, and we even show a graph here at Ramsey that says if you're 18 and you start investing what it can be because compound interest is it's an amazing thing. But I don't, again, want your money stuck in an investment if you really do need it for college. So this idea that if you just wait four years, it's not going to be the end of the world at all. Like you will be.

you will be fine starting to invest in retirement at 22 years old. Yes, definitely. You will be plenty fine. You will retire a millionaire. Everything will be fine. But I would, again, make sure that you get through college debt-free. But I appreciate the call and just the thought process, Joey, of that because investing is so important for our future generations.

but also not going into debt is as important. So 100%. Awesome. Thank you for the call, Joey. Well, let's keep it going and let's go to Kat in Los Angeles. What's going on, Kat? Hi there. Hey, how are you? I'm good. How are you? Doing good. How can we help today?

My question is about tithing. My husband and I have been married for 26 years and we've tithed 10% since day one. Like that's never been a problem for us. I think the problem part, if anything, has been like the 10% saving. Like we've never done that, but we own our own business and

And we're the only two employees. And for the past few years, we decided we should tie the 10% off of our gross income from our business. And we've definitely done that at the expense of putting money into savings, which I love giving. I think it's important. But the last few years after COVID, we lost some clients. We're making...

Right.

Listen, I really, really want to do the wrong thing. Right. I sort of feel like talking about it. We're the same. We're like, hold up. You feel too much guilt. Breathe, Kat. You're good. Yeah, you are good. You're fine. OK, you're fine. First off.

You're giving. You're giving, which puts you in a very small category. And you're giving 10%, which is good. I mean, obviously, if you're a Christian person listening, you're used to that kind of talk. It's like, okay, yeah, I give my tithe. If you're not a Christian person listening, that's what a lot of Christian people practice, is they give 10% to their local church. And when you were telling your story, I was like, oh, that sounds like me and Sam. When we first started our business, we were the only employees. And I will be honest, for us...

At the stage in our life, we wanted to give that extra and we gave 10% of the gross of our business. And I mean, you can't out give God. And so we saw the fruit from that. As we continued on and things changed, we were like, okay, like we we now give 10% of our gross to

payroll like what we take of the business like what we take home just like anybody else would right like if you work for Walgreens you get your check and you tithe off of what you receive right and the gross amount of what you receive typically and I don't even want to get like Rachel too funky fresh on the grosser the net it's like just give I think the point of all of this and I think the heart's

behind why God has instructed that, why he encourages giving, is because what it does to us. Like giving, what that does is it opens our hands. It moves us on the spectrum from being selfish, just thinking about ourselves, to selfless, looking up for others and others' needs. When we give and what we give to is really important because it's transforming a community or a place or an organization. Like

Like that's the heart behind it. That's the motivation. It's not this tit for tat, gross or net, business or private. That's not why God wants us to give. It's not that legalistic. It's not that granular. It is the position and the posture of our hearts. And that's what he's looking for because he knows when we give...

that selflessness starts to occur and you have a richer life. I'm not talking about money. I'm talking about, you have a richer relationship with your spouse because as you're giving, you're becoming selfless and you become more of that in your marriage as a parent, as a friend, as an employee. I mean like it affects you as an entire human being when giving is a part of a habit of your life. So agree. That's what, that's my philosophy of why God has called us to that. Um,

And it's a beautiful thing And it's something that Regardless if you are You know A person that is spiritual Or in the evangelical You know Christian space or not Giving regardless of where You land spiritually We always encourage Because that will do that Whether you believe in a God or not Yeah So for Kat I really I appreciate your diligence And you know Wanting to do the right thing Like you said But I think you are Doing the right thing Yeah I think it's the posture Of your heart So I would not get Been out of shape And I do think Kat

You will feel something From the Holy Spirit That may say Tithe on your business And be obedient to that But he also may say You're okay And what we teach Is tithing On the income You bring in Like what Jade is saying So that's where We always advise people Give on your income And then

But he may, he might encourage you to do something else. Yeah. You never know. $100 to the Sonic guy. Cause I just feel like we, you feel like, yeah. So like you can't mess this up, Pat. Yeah, that's right. That's right. You can't mess it up. If you feel the only way you can mess it up is if you start doing things out of obligation or you feel contention or you feel like, Oh,

God loves a cheerful giver. There's something in it of that joy. So I don't, yeah, we don't want to rob you of that. Ooh, I like that conversation though, Kat. I appreciate you though. I really do. That's a good one. I think a lot of people feel that and you can get very, like you said, granular is a great way. You're like looking, oh my gosh, I was 10 cents short, you know, like,

What's this going to mean when I get to the pearly gates? Nothing. I mean, come on now. Guys, this has been such a great hour. Thanks for your calls. We'll be here next hour. Give us a call. This is The Ramsey Show.

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I'm your host, Jade Warshaw, joined by your other host, Rachel Cruz. We'll be taking your calls all hour, so give us a call. The number is 888-

825-5225. We'll talk about whatever it is that's on your mind, especially in this new year. I'm sure you've got so much that you're trying to accomplish. This is the season of setting goals, right? And I'm sure so many of you have money goals, financial goals. You're trying to save money. You're trying to get out of debt. You're trying to start the new habit of budgeting. And if that's you, we've got the perfect...

encouragement for you because this is we're about to get into the time Rachel that people already start moonwalking right y'all are awking and I'm like wait a minute it's only the fifth so you need some encouragement and we've got that for you January 11th write this down like George Strait said January 11th this is Thursday all right 7 p.m we're doing a free uh live stream event and it's actually live it's not pre-recorded like some of these folks are doing it's

It's actually live and we're going to be giving you the tools you need to break the cycle. And y'all know what I'm talking about. There's been a debt cycle. There's been a paycheck to paycheck cycle and you're ready to get free. And you're like, Jade, Rachel, how do we do this? Help me. Help me. We're here to help.

It's free, guys. You can register at ramseysolutions.com slash break the cycle. And when you register, you can enter to win a thousand dollar giveaway. We're giving that giveaway away to 10 different winners. So be sure to do that. That's the break the cycle live stream January 11th at 7 p.m. Be there or be square, as they say. Let's go to Atlanta where we have Paige on the phone line. What's going on, Paige?

Hi. Um, first of all, I just want to say thank you for taking my call. I feel very blessed to get to speak to you both today. Um, my question is, so I have the every dollar app and the baby steps app on my phone. And so I'm on step number two, the debt snowball and my situation is kind of unique. Um,

I'm only 26 years old, and my mom is disabled and my dependent now. She got really sick a couple years ago, and we finally kind of got out of the crisis.

craziness of the last couple years into like a zone where I feel very fortunate to be now where her health is better. She lives with me and not in a facility, which that was a lot of money. And, you know, she's not doing hospital trips and things like that anymore. Fortunately, hopefully, fingers crossed. But with that, you know, she has debt. I

I have debt. So my plan, I'm trying to tackle kind of both of our debts and I manage both of our finances. I mean, we live together. We basically share finances and manage medical, everything basically. So, you know, I put all the debts into the bank.

baby steps app where, and put like the money that we can put on a monthly basis towards the debt. And we can pay a little currently because she's got some insurance page, um, policies as well as her retirement right now for the next two and a half years. Um, we can put like 2,600 to $3,000 a month towards our debt, which kind of totals like $90,000. Um, and that's a combination of her credit card debt, her medical debt, um,

my credit card debt, my student loans, and my car. So... How does it break down between the two of you? I'm just curious. I know, number one, you're a hero. Like, it's admirable that you're doing this, and you've honestly essentially put your life on hold to help your mom, and you seem more than willing to combine your debts. Like, that's not normal. And...

Like, good on you for choosing that. But I am curious because you are two separate people. And so I just I do want to know out of the 90,000 of debt, what's what's yours and what's hers? So I have 25,000 with Sally Mae.

um for private loan for student loan um 7,700 in federal loans my car is 26,000 um I just got that one new this last summer that's a whole other story and I have like seven or eight thousand in credit cards um

And then as far as I know, my mom has $30,000 in credit cards, 18 on one card, about seven other, about, you know, 7,700 on another. We fortunately have had one card like,

I don't know what the proper word is, but like pardon us or whatever. And just so we just charged it off. Yeah. And we wrote it on the taxes and all that stuff. So we had one car do that. Cause my dad had, you know, her ex-husband, he's an attorney and he had been helping me try to,

alleviate some of her debts. It was just like hardship type? Yeah. You know, as far as, yeah. Cause I mean, basically when she got sick, I was on the, under the oppression that she managed her money well and she had a lot of money in savings. That's at least what the situation was when my parents got divorced when I was eight, something happened and she had a higher loan on the house than

12 years after purchasing the house higher than what she bought it for. But now she's now the only debt she has is the 30,000 in credit cards. And it's mostly the credit card because of medical? Yeah.

Or is that separate? That's all the credit card that she had once I got into her account. And then what's the medical debt she carries? So that I have like, I have a thousand dollars that I know of. We've fortunately been able to get the hospital wanted to do 16,000. And we did the financial thing and they wrote that off. Okay. So for time, for time, for time, let me, let me get into this. Um, the car, um,

That's the first thing I'm looking at because what's your take home pay? Um, or what do you make per year? 40,000 a year. Okay. Um,

If you really want to move through this, I would consider getting out of this car and getting into something cheaper. You just got it. You should be able to sell it, kind of break even and take some cash and buy something cheaper, five or six thousand dollars. I would do that because I think it's worth it for you to move quickly on this. I'm a little bit inclined for you to have two separate snowballs here and for your mom to have her money and you put your mom's money at hers separately.

debt and you put your money on your debt and you're the you're just the one stewarding all of it and making it all happen yes but i don't want you combining them and combining the money because you are two separate people with two your names on two separate sets of bills and at the end of the day

Even though you've combined your lives in many ways, you're still two separate people and you're not married. And Paige, and the truth is too, this is not to be harsh on you, but you've gotten $8,000 in credit card debt. You've taken on a car loan. Your behavior and habits are one way. And when you feel the weight of, oh gosh, it's not going to be an insurance policy that's going to be paying off my debt. I have to do this. That changes your behavior, Paige. And that's what we're all about here is your behavior has to change. And by you doing the work and paying off that debt-

That's going to cause the behavior change. So I want you guys to be cutting up these credit cards. I want you to be selling the car. You guys really have to clean this up. You're in a dire situation of like, there's a lot of mess here, but you can get it cleaned up. You really, really can, but you have to change the way you've been viewing it. And so Paige, you're doing an amazing job taking care of your mom. Absolutely incredible. But your money habits and where this is led has gotten you guys in that spot. So that has to change. That has to change today. Cut up the cards. This is the Ramsey Show.

You're listening to The Ramsey Show. I'm Jade Warshaw, your host, joined by Rachel Cruz. And we are taking your calls all hour long. The number is 888-825-5225. Give us a call and we'll chop it up with you. You know, we're always looking at what's going on in...

what's going on on social media, what's going on in the news and what the trends are, because this is what people are talking about. And we want to be talking about what y'all are talking about and what's important to you guys. And so I saw initially an article come across my email that was talking about this. And then there's TikToks and it kind of started popping off a little bit. So it was like, we need to talk about this. And it's essentially, Rachel, this idea that if you make $74,000 a year, Gen Z,

doesn't think that that's middle class. Like they don't think, they don't agree with that. And so I don't wanna say much more. I want you guys to watch this and decide for yourself and then we will discuss.

Gen Z doesn't agree that $74,000 is middle class. No kidding. It's not even close. Check this out. If you take $74,000 for a Gen Z or let's say they have a bachelor's degree and they're 25 years old. First of all, 74,000 is much higher than the average income. Most Gen Zers are probably making anywhere from 40 to 50, maybe 60, but let's use 74. The take home after taxes 401k and health insurance is $4,300. The average college monthly payment on a loan is about 500 bucks. You're down to 3,800.

Let's say this person is financially responsible, decides to split a two bedroom apartment in a medium sized city like Orlando so that their payment is 1200 a piece, 200 for utilities. So 1400. Now, unless they're going to have Lucky Charms and peanut butter and jelly, their groceries are going to cost about 600 bucks. If they're trying to get chicken, beef and some healthy stuff, you have a $400 car payment, $200 insurance, 150 for gas, $100 for a cell phone leaves you with 950 bucks.

This is no savings investment, no emergency fund. Let's give them at least 300 to go on a couple dates or hang out with their friends for the month so they can enjoy life a little bit. They're left with only $650. A bachelor's degree, 74K salary. You are splitting a two-bedroom apartment with a friend.

and only have $650 left a month. It would take you years to save up to 30,000 that you would need for a down payment on a house with the closing costs. But even if you could get that down payment saved, you would still need to make $120,000 a year to be considered for a $400,000 loan. The middle class, the goalpost has been moved from 70K to $120,000 in just the past two years.

I got some thoughts, Rachel Cruz. I did too. You go, Jade. Number one, when my guy said only $650 left, there were a couple of things that are screaming at me. A, only $650 left. I think that if you're just starting out, you're in your 20s. I'm like, yeah, that's... If you're 22 years old and you have $650,000 left over. Come on, somebody. No.

Number two, that's good. Then I'm like, okay, I'm just getting into $300 on fun money. Again, that's a lot of money. Like that ain't bad. Can I be 100% real talk? Yeah, go. On my budget right now, where it says Jade Fun Money, it's $300. And I'm telling you, I make more than $74,000 a year. So...

Okay. And then, so then add in, which is normal, I get. But what if you decided to get an extra job and pay off this debt? You would free up a car payment. $400. And free up $500 student loans. That's $900. $600 for groceries for a single person. I think you can do it at $500. So that's an extra $100 that you take out. So there's an extra $1,000. So that's really $1,600 extra. Yeah.

Yeah. I think we're okay. I think this is an expectation conversation. Yes. Yes. And we're not going to make $74,000 forever, ever. Amen. No. Or $40,000 forever and ever and amen or whatever it is. Right. As you get older and you work, you will be making more money over your lifetime. That is true. I just... This really rubbed me the wrong way, Rachel. I just...

I think that, like what you said, this is all expectation and it's kind of tunnel vision and getting caught in the now. You know, it's like you're looking at everything that you're seeing on social media and you're creating this bar of what you should have. You're even looking at maybe what friends and family members have. Like so many people, they come out of their parents' house

and you've been living in this environment where there's nicer cars, the home is larger, and you immediately kind of feel like, oh, yeah, I'm supposed to have that too. And I'm like, listen, these things take time. It took time for our parents to get –

where they are if that's what you're comparing it to yeah and and we'll say this i'll say this number one has life changed yeah over time yes absolutely is stuff more expensive real estate being one yes yes like we are not denying that of course it is it is more expensive but the problem i have with it is is honest it's kind of it's

kind of his attitude of like, oh, Mark, versus saying, well, I have $650. What can I do now to better my life with that? You know what I mean? There's an attitude shift as well of how you view this. You can view it like Eeyore or you can view it like this is an opportunity. So what am I going to do? What am I going to do different? How am I going to pay off debt so I can free up an extra $1,000 a month? What's my opportunity here to do? What if I invested $300 of the $350 in...

every month from 22 to you know run those numbers like like find the opportunity in it I agree versus this like well well you're you're all screwed we're all just screwed I don't know what we're gonna do you know and you're just like oh my gosh like yeah they're approaching it from the wrong angle it's just like yeah that drives me crazy I agree it's like oh must be nice like you you're looking at it and like you said he's it's like $50 that's a lot of money

That's where I'm like... Listen, I'm standing on business. $650 is a lot of money. And here's real talk. What we do on the show is talk to real people every single day for three hours a day. People are in the red. They don't have $650 left over. And that's what I'm saying. The mindset. If you...

It's almost like he's solving the wrong problem or focusing on the wrong thing. And not just him, because there's he's speaking for. Yeah, yeah. Hundreds, you know, thousands and maybe millions of people who feel this way. But if you're like you said, if you're looking at six hundred fifty dollars, that's not enough. And you're looking at four hundred dollars and he's not addressing that and he's not addressing the student loan. It's just this is the way it is. There's nothing that's going to change. You're looking at the wrong problem.

piece of the puzzle you've got to look at i was listening to somebody today that was saying that healthy people um whether it's in a relationship or just you as yourself you always look at something and go okay what am i contributing to this like if there's a problem it's very easy to point out there and say it's because of that that that that and that but when you're um healthy and have this area of maturity you're always looking at and going what can i own in this situation yep and if you're

finding yourself, even if it's not a $74,000 budget that we're looking at, if you're looking at your own finances and you just find yourself feeling trapped, blaming your job, blaming the fact that you have student loans, blaming your spouse,

You have to stop for a moment and go, okay, wait a minute. What am I contributing to the situation? Because here's the guarantee. If there is something that you're complaining about in life, I don't care what it is. At this point, I'm beyond money. If there's something that you're complaining about, I guarantee, I bet your bottom dollar, there's something that you are doing that's contributing, even if it's slightly, that you can tweak to make your situation better. And if you start to turn the dial up on that and start focusing on that, that's going to point to another thing.

thing that you can change and you start focusing on that and that points to another thing so it really goes back to that idea of whatever you're looking for that's what you find so if you're looking for problems all you find is problems if you look for solutions you're gonna start to see even if it's so small like Rachel you just went through all of this like okay like what would happen if you paid off your car what would happen if you paid off your student loan what would happen start asking yourself those questions what can you contribute listen it's a whole different equation at that point

I know. And I do wonder, you mentioned it earlier, but expectations. And this is something I always wrestle with. And it's and it almost could be just subconscious of what we just naturally expect in our world because we're so exposed to everyone's lifestyle. I mean, whether it's like reality TV or social media, Instagram, TikTok, like you see into people's lives more than at any other time in history. Yeah. And you start to see a glimpse of.

And you start to expect what you see. You become numb to it almost. And it's like, oh, this is normal. And if I don't have that, I'm not normal. I was talking to my mother-in-law at Christmas and she was like, oh my God. You know, she just made a comment how all they did with their little kids at the time, they just all played in the driveway and all the cul-de-sac would get together and chase. Now I'm like, there's memberships to things. Like there's all this stuff that's normal. But I'm like, that wasn't, that's not, that,

That doesn't have to be Nora. Yeah. So it's just this like subconscious expectation. We have to reevaluate all the time. And I think it's really important to keep us grounded in it because you can just float off into this world, spend a lot of money that's unnecessary and complain and do a TikTok video. That's a word, Rachel. That's a word right there. Check out your expectations. Figure out what's motivating you. Is it the money or is it an emotion that you're seeking out? This is The Ramsey Show.

You're listening to The Ramsey Show. I am your host, Jade Warshaw, joined by your other host, Rachel Cruz. And we are with you today. So give us a call. The number is 888-825-5225. We will take your call and answer your questions.

Today's question of the day is sponsored by Neighborly, your hub for home services. Now you can find expert local help. You can schedule appointments and get special offers exclusively in the Neighborly app. So download the Neighborly app now and get started on your home repairs, maintenance and home improvements done.

Today's question comes from Ryan in Arizona. My wife and I have been using the envelope system for over 15 years and debt-free for almost that long. Awesome. My wife takes care of the finances, but we make decisions together and trust each other. The issue I have is at the beginning of each month, the envelopes still get the same amount of money they did when we started 15 years ago.

He should talk to the TikTok guy that we are talking to. I can't convince my wife to increase it. Is it part of your budgeting system to increase the amount in the envelopes as the cost of things goes up? Please help. Oh, Ryan, yes. Tell your wife to put some more money in those envelopes. If y'all have it, which I'm assuming you do, it's been 15 years.

Yes. I mean, what we say is once you're out of debt, you have the ability now with your income to do more with the three things you can always do with money. Be giving more, be saving more, and you can be spending more. So increasing your lifestyle, I would do it by percentage points. So you guys, yeah, I mean, up everything by 10%, 15% for a little bit, right? And just focusing

Feel that. Now, I also will say we were just talking about our personal line items in the break because the TikTok video we just talked about in the last segment. And I have not increased some of ours dramatically. We've increased our out to eat. Yeah. Our groceries some with everything kind of going on and adding more kids. But ours is not dramatically increased.

It's not dramatically different. It really isn't. Like I look at I spend more on clothes, like maybe by again, by small percentages. And so I think that's what you that's what you want to work in. Yeah, I'm thinking about what you're saying. And I'm thinking about this question. And, you know, I'm with you. I reluctantly raised our grocery budget. You know, when inflation got crazy, I tried to stick to the old numbers. And finally, I remember coming home and being like, listen,

It doesn't work. I gotta raise this item. And so I do remember doing that. I think if it's when it's gradual, like I think what she's trying to avoid here is lifestyle creep. Yeah. Or well, let me go back. Your girl needs to loosen the purse strings. I think she's just super tight. But I think most people,

What their hesitation is, is they're trying to avoid lifestyle. Yes. Yes. And that's a good conversation to have, because when you start earning more and you're like, OK, I'm doing better, I'm out of debt, like I've done all the things. Sometimes there is still that guilt that you face of can I really spend this? Like, can I really do this for myself? Right.

And I'm going to go with as long as you're taking care of business, the answer is yes. Sure. I mean, yes, absolutely. And you want to be able to enjoy your life. And I think that's part of it, too. So increasing it, but increasing the other areas to be increasing your giving and saving. But doing all three with extra money is is really important. So, yeah, Brian. Yeah, probably more after 15 years.

Up it a little bit. And I want to hit one more thing on that because with spouses, be willing to... Your spouse can be into something that you're not into and they want to spend some money on something that you would never spend money on. Sure. And it's like, I feel like that's when it gets a little difficult. It's like, hey, we're making this money now. I'm really into this and...

you know, my husband would be like, why would you ever like, do you know what I'm saying? Like, I remember being on here with Dave and we were talking about wine or something. And he was like a $300 bottle of wine. I'm like, I would never like, I spend, I spend nine 99 on wine, Dave. Like I could, he was like, Oh, go get yourself a bottle. Well, I was like,

physically can't do it like there's certain stuff that i just yes i can't i can't do it captain don't make me please don't make me oh gosh i gotta go to the phone lines this is kennedy in pittsburgh pa what's going on kennedy

Hi, ladies. Thanks so much for taking my call. You're welcome. I have a couple things. My husband and I have been married almost 34 years, and we've worked hard our entire life to build what we have built. And we're kind of at a crossroads on a few things. And we have 17 rental properties. Woof.

that we have acquired. Um, they're all paid for. Wow. Great job, Kennedy. This is, this is the question I have. You know, you would think, you know, we want to retire eventually. We've never taken vacations. We've never been extravagant with things. Um, we have no debt whatsoever. Um,

This is what we're at a crossroads because we were envisioning us when we retire, you know, all of our rental income, which is over $200 a year, would just keep us afloat and not have to dip into what we've built over the years.

Now, I'm noticing that the rental income is just not growing like it should. And so we're trying to decide if we should sell the property, which are probably worth around $3.2 to $3.5 million in total, and just put the money, you know, away and earn the interest off of it. Because, you know, just in property taxes alone, like I just wrote a check for almost $50,000 just recently.

for property taxes on some of the property. And so I'm just trying to make, you know, and if one, if an air condition goes out or, you know, I mean, things just add up and it's like that account doesn't build like I think it should build. Why haven't the rental, why haven't, why hasn't the rent gone up? Well, I do go up on the rent. Now I will say I'm, I am terrible because I manage them all and I am, I'm a very sweet landlord and,

I don't go up like I should, especially if they've been there. There's a lot of longevity with my tenants. You know, so I know there's room for growth on that. But it just, I just feel like, you know, the expenses, you know, if we get to a general interest, we could probably draw the same amount in interest every year than what we would be actually bringing in. I don't think you should feel guilty about, you know, you're in a real estate business essentially. And I don't think you should feel guilty about,

passing along the cost of business to the customer. And for you as a landlord, there are prices that increase and some of that you do pass along. And I don't think you should feel guilt in that. Now, if you're still interested in

in selling, I, you know, I have my thoughts on this, Rachel, you know far more about real estate than I do. So you take the reins. Not really. Yeah, that's where, and I don't want to sound cold hearted, but where you've chosen to put your money and in your investments is in real estate and real estate involves people. So when you have a big heart like you, Kennedy, and you see it like that, you're not going to get the same return financially because

When you don't raise rents, right? I mean, that's just the mathematical fact. So my question to you would be, if it's less hassle-

less work and you're going to get a bigger return somewhere else then yeah I would probably highly consider that or if you say no real estate is my end game it's it is my business in a sense it's my investing my investment because I want a percentage of what I you know I've bought this this is the rental I mean the rent basically is is your income it's what you're making and

and your income has to stay at market value, and if that's how you run it, then I think we're having a different conversation. But it doesn't sound like you necessarily want to run it like that. Well, you know, the rental properties are just a side. You know, I have my own business, and my husband's also an executive for a company. So we both still work. How much do y'all make a year off those, off that? Um...

Okay, we're at $800 a year without the rental income.

And so rental income was just. OK, is it a hassle for you, Kennedy? Like, are you to the point in life where you're like, I don't want to deal with 18 tenants and I would rather. It is a hassle. OK, so that's it. I think real estate has to be a passion. And for some people, they love the diversity. They love getting a property, getting a good price at the at the front end. And they're doing that. I mean, it is part in their blood. That would be Dave. If he was sitting here, he he loves it.

But if it's a hassle for you, yeah. And if it's a hassle for you and you don't love it, you don't need to be in it, in my opinion. There may be a level though, Kennedy, that you keep maybe five of these or something just for the diversification aspect.

So I think having real estate as part of your overall, especially where you guys are financially, would be smart. So maybe you sell half of them, cut the expenses in half, pick your half that you love, keep those for a few more years. And then if you look up Kennedy and you're still miserable managing these, sell them. Yeah. I mean, like this is,

This is the joy of your life. You want joy in your life. And if it's sucking the joy out of your life, don't do it. The great thing is they've got choices. Yes. That's what I love in conversations like this is she has choices. She's not like chained to one option. But when you are paying, look at the taxes. Like you need to look at the entire picture too if you decide to sell these. That's a very, very good point. This is The Ramsey Show.

You are listening to The Ramsey Show. I'm Jade Warshaw, joined by Rachel Cruz. Hey, if you like this show, consider liking and subscribing wherever it is that you listen, whether it's on YouTube or your favorite podcast app. When you like and subscribe and share...

It helps in so many ways. Number one, it helps other people find this and use this message and find these resources and hopefully change their life. And obviously it helps us on our end because it helps us in the algorithms. There a couple of weeks ago, Rachel, we were number one in podcasting on Spotify, which that list is always changing. And in my heart, we're still number one. And at Apple.

I looked it up on this podcast. Yeah. Yes. I love it. And that's really all because of you guys. So keep liking, keep subscribing and keep sharing in the new year. We're so, so grateful. All right. Let's take it to the phone lines. We got Victoria in Austin, Texas. What's going on, Victoria?

Hey, you guys. How are you? Great. How are you? I'm doing great. So my question was, what financial steps should I take as a college student with around, I would say, $15,000 in savings, considering I have no assets, a small school loan of about $1,300, and a credit score of $693? And then this is like a two-part question. I just wanted to know, like,

any college or not college advice, any advice you guys have for young adults, especially first-gen college grads on managing finances and, you know, setting myself up for success and building wealth and what not to do as well. Man, you're so smart. Like I'm so proud of you. First-generation college grad asking all the right questions. It's awesome. It's so, so, so good. Yeah. I mean, I'll, I'll, I'll throw my two cents in and I'm sure Rachel has plenty to say. Yeah.

I think you're thinking the right way. Number one, you're out of school. You're graduated. Do you plan on going back to school or is this it? Like, are you going into your career now?

I have one more semester left and I graduate in May. Okay. And then I plan to go straight into my career. Um, but hopefully down the line, I want to go to grad school for like MBA. Okay, cool. Um, yeah. And my first thing is like, let's, let's get through this final semester. Let's graduate with a degree. Um, let's get you into a stable job like in, in your field. And then, yeah, I'd probably start looking at this and going, okay, first things first, I want to get out of debt. You don't have a whole ton. I mean, 13,000 in student loans, um,

So my first things first, I'd be like, all right, I'm going to commit to walking the baby steps. And so I'm going to, you know, keep a thousand dollars set aside. And then the rest that you have, the 14,000, I'd pay off your student loan immediately coming out of school. That'd be my first commitment.

order of business and that leaves you with $2,000. And then I just start saving up, you know, I'd be like, all right, once you're, you know, stable, does that make sense? Because you're going to graduate, you're probably, I don't know if you already have a place. Are you living on your own? Are you living on campus? So after I graduate, I plan to be home for the first semester. I mean, not the first semester, for the rest of the year. And then I'm

I want to work remote. And then that job will probably transfer me to a different location. Yeah. Then that's perfect. You're at home for a year. You're paying off this debt immediately. But then during that year, you're saving up a bunch of money so that when you're ready to strike out on your own, this job sends you somewhere. You can get your own place or maybe it's a place with roommates.

And so you've really just set yourself up. You've got no debt. You've got three to six months of expenses and you've got money in order to get a place for yourself. And I don't mean buy a place. I mean like rent a place. But, you know, you have that margin in your life. How does that sound?

That sounds great. Thank you, guys. Yeah. And Victoria, I think, you know, long term, I think one of the best things that you can do as a young person kind of moving into this adulthood and money is be proactive. I think one of the worst things that people can do with their money is they become apathetic. They're almost reactive to life or they don't really...

Care that much I mean they're just kind of floating they lose a lot of time and they end up losing a lot of money and so if you are just proactive with your income and you budget every month you know where your money's going you avoid debt like the plague you just say you just draw a hard line in the sand so Victoria just is a person that doesn't go into debt I don't go into debt.

And you can avoid paying interest and you can avoid being owned by the banks and your income is completely free. You invest early, invest in, you know, and save up for a good down payment on a home later, you know, maybe two, three years later.

down the road and you do that wisely and you're investing early and you do all of these things over time, Victoria, you're going to be great. You're going to do just fine. But I think your attitude towards money, it has to be proactive. You have to own the fact that you have to be the one in control. And you learn this early, Victoria, and I still feel like I learn it even in my mid-30s. It's kind of this like reality, like swoosh that happens for me where I'm like,

Oh, it's up to me. Yeah. Like I, no one's, no one's making my annual doctor visit. Like I have to take care of myself. Like, and now I have kids and I have to take care of them and no one's advocating for them. I have to be the one to speak, you know? So it's just, it's this idea that you really are in charge of your life. And that removes a lot of, you know, victim mentality. I think that removes a lot of expecting someone else to take care of you and to fix stuff for you when you just kind of own it, Victoria, from the front end.

That's going to do a lot. It really is. It's going to do a lot for your money. So there's a lot of tactical things. Yeah. And if you stay on the line, Victoria, Austin will pick up and I would love to give you one of my books, Know Yourself, Know Your Money.

which plays out the baby steps within it, but also understanding why you handle money the way you do. And you already have tendencies around money, Victoria. You already have habits around money that you may not even realize, but understanding your why, why you handle money the way you do, when you can learn that early on, you can create great money habits for the future, kind of what we're talking about on this call. So,

I appreciate you calling in because, man, it's so big. And all you Gen Zers out there, there's a lot of them that have been listening and finding us on TikTok and all the places. But for real, you guys, I'm like, you know, when you listen to this show or you follow Ramsey and our advice channel,

We kind of get in the corner of the old school way of thinking. But I'm telling you, day in and day out, this is the way to do it. It really is. So whether you are Victoria and you're 21 years old about to finish college or you're 61, wherever you are, be proactive in this stuff, you guys, and follow the baby steps and do it because it works.

It works mathematically. It works in so many ways. I like what you're saying, Rachel. And honestly, it's reminding me, earlier we were in a meeting together and Dr. John Deloney, one of the Ramsey personalities, was mentioning how kind of the way culture is and society is definitely wants us to go into kind of a hands-off

And I just can farm this out to them and they'll take care of it. And I can take my hands off here and I can automate this and automate that. And there is part of that where your mind kind of goes to sleep on having it front of mind. Does that make sense? Yes. Yes.

And there is part of that, that going through life, there has been seasons where I've been like, you want to know what? Like, this might sound stupid, but there's been seasons where like you're giving. You can automate it. Right. And it's like, all right, I can set it and forget it. And it's not part of my day to day. And it's like, oh, before you look up, it's like I've been giving the same amount for two years. Right. Right. But then there's those moments where it's like, you know what? I'm going to take that off automation and I'm going to be actively giving.

part of this each month to where I know, okay, how am I feeling? What is my involvement in this? Even like paying bills. There are certain bills that I'm like, you know, I don't want to, like back in the day, there was like, I don't want to automate that. Like I want to see, I want to feel the money going out. I want to know and I want it to register in my brain that I just made a payment. Like there's something to that. Being an active participant. You're actively participating and you're not just putting it on the shelf. You're not just,

letting someone else handle it yeah does that make sense absolutely such a good conversation rachel yeah i love it but the proactiveness is is huge around this yeah i like that listen i don't know do you want to take try to take this next call can we do it quickly all right let's do it uh jacob in san francisco what's going on in your world

Hello. So I have a kind of a situation going on where I just got a $7,000 dental bill and I have like a pretty substantial savings. I'm pretty young too. I'm like 23 years old. Okay. And my situation is basically this. So I have two options. Either I could just pay it all at once up front and just get rid of it. Yep. Or I have a high interest savings account with SoFi. It's like 5%. And they offered me to take out like an interest-free loan over 28 months. Why? No! Yeah.

No, I got to cut you off. No, it just paid off. Reach into your savings and pay off. Okay. If I had that money sitting over those two years, it would actually like accrue. No, it's a $7,000 dental bill that you have the cash to pay off. Don't complicate it.

I know. And we try to finagle numbers like that, Jacob, and try to figure out what works in our favor, all of this. But the truth is, when you don't have a debt hanging over your head, you make different decisions in life. There's a freedom there. And it's not hanging around, and you're not trying to play the math game. So, yes, pay it off. Be done with it. And be grateful, my gosh, that you have the money to do that, Jacob. That's amazing that you're diligent and...

Incredible. So just, yep, set it, forget it, and then go and invest and make money that way. Love it. Love it. Listen, a dental bill is not going to be the thing that breaks you free financially on the interest. I love it. This is The Ramsey Show.

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am your host, Jade Warshaw. I am joined by author and host of The Rachel Cruze Show, Rachel Cruze. We will be taking your calls all hour, so give us a call. Phone lines are open. The number is 345-625-7000.

888-825-5225 we'll talk about your life your money relationships and money kids and money whatever it is that is on your mind we would like to talk about that with you and hopefully help you with that so let's go straight to the phone lines where we have hunter in philadelphia pennsylvania what's going on hey guys how you doing we're doing good how can we help

Yes, it's more of a question of like, what would you do in my shoes? Basically, my wife is in school for 18 more months and we will be renting till she finishes just based on proximity and commutability and things like that. At the end of that, we know we'll stay in the area for like five to seven years. We're thinking of buying, but we never wanted to time the market to buy necessarily. But we know it will be a short term, you know, five to seven year home.

We just don't know if maybe like buying with that short term in mind is a smart thing since we know we'll be moving back to Virginia at that point, or if we should just continue renting, keep putting money away for more equity in the house down the road. That's interesting. Where are you guys at financially, Hunter? Do you guys have, would you be in a spot in 18 months to be able to buy a home, have a good down payment, letting the mortgage be no more? Like, have you guys run the numbers? Like, would you be able to do that financially? Yeah.

Absolutely. Yeah. So we definitely have the down payment. And, you know, in 18 more months, it'll just be, you know, we could own a more expensive house. Not necessarily we're doing that, but financially we are stable in that sense for sure. Yeah. I mean, I probably would buy. I would. If it's going to be five to seven years, I would. I would. And the fact of the matter is, like...

Like if you want to make God laugh, tell him your plans. Like that's the kind of way I feel like I think it's good to have a plan, but you never know. You might get in the area and decide to stay. Like I just feel like there's a lot of factors in a seven year window. And for that reason, I,

I wouldn't rent the entire time. Yeah. Yeah. That makes sense. Yep. Go ahead and buy. But again, under making sure, yeah, you're debt free. You got a good down payment, emergency fund, all the things. Check all those boxes. We give you the thumbs up to do it. Love it. Because I really do think, you know, when you look over the scope of time,

With real estate. It's going to go up. Right. I know there's been down times. I know all the things. But over the scope of at least five to seven years. You're going to see a return on that. And so. Absolutely. And then you can use that as equity when you go buy a home. Yeah. And he goes and leaves and goes to Virginia. So. Yeah. I agree. Seven years. So it's just a long time to lose out on.

Yeah, but yes. Like not that renting is losing out, but it's just if you don't have to. That's right. If you have the ability to buy and you have that time, if it was 18 months, I'd say no, don't mess with that. Yeah, absolutely. But five years, I would. Very good question. Thanks for the question, Hunter. Let's go on to Newark, New Jersey, where we're talking to Mike. What's going on, Mike? Hey, Jada, Rachel. Thanks for taking my call. You're welcome. How can we help?

So my wife and I are going to combine our finances as soon as this weekend. And we're just trying to figure out how to split our money between either a high yield savings account or a generic bank savings account. And our goal is to save 20% for a down payment. Okay, cool. I'm happy that you guys are starting to combine your finances. Are you newly married or is this just something you decided to do because you think it's the right thing to do?

So we're married about a year and we're just finally fully committing into it. Awesome. So you're interested in buying a house. You're saving up for the 20% down payment. Where's the best place to put this money, right?

Yes. I mean, I'd probably put I'd put it in a high yield savings account. That's what I would do. You're going to make more interest on a high yield savings. And usually some of the best ones I've found, Mike, J. I don't know what you've found, but usually it's like an online bank. Yeah. We like my husband and I, we have one. We use Ally Bank online.

Oh, there you go. For our high yield savings. So a traditional savings account, you're not going to make as much interest. You may have more flexibility to get money out when needed with that. High yield, you're not able to use it like a standard checking, right? That's right. There's a limited number of transactions. But you don't want that. Yeah, and you're not using it for that. You're using it to...

save up for a down payment you're not going to touch the money once it's in so those are the kind of the big you know obvious differences in it so yeah you're and right now mike i'm like the high yield savings when the interest went up okay the fed with the debt it also went up with the savings so we did that's right we found some good some great rates with high yield savings uh so yeah that's that's the uh the route i would take for sure i love it does that answer your question so you

You wouldn't put anything in a generic bank savings account? Just put it all in HAYU? Yeah, I'd put it all there. But if you have, Mike, for like an emergency fund and that kind of thing, I would have separate line items within that account to know, hey, this is our emergency fund. We're not touching this.

this is our dump for our down payment. So even if you wanted two different accounts or within the same account, we have line items in that. Yeah, this is not an ad for Ally by any means, but I do use Ally and they have buckets there. So you can, you could either, I mean, you could make another account if you wanted to, but honestly, you can just put them in different buckets and you can see it that way. Honestly, I think with that, it depends on your temperament.

And because some people like there was a stage in my life where I definitely mentally would have done better with a separate account for savings for this versus that. Yep. So whatever you think will work better for you and your wife. All right. Awesome. Yeah. So I had the buckets and that just seemed like the easiest way to do it. Yeah. And I mean, some people like Marcus, like there's different banks, like people have different preferences. So don't see this as an ad. Like do your research, figure out the one that you like. But definitely I would veer towards an online yield savings account.

Hope that answers your question. Rachel, I think there's a lot that you can talk about when it comes to savings because a lot of people struggle with saving money, whether it's for a down payment, emergency fund, or just in general. They've never built that muscle of savings because it really is...

A muscle that you build over time. And I always, these are, we can go through a couple of tips that I think will help people. I definitely think that if you have savings, you need to put it in a separate location like we just talked about. Versus a checking. Yes. Yes. It can't be grouped all in there together and you just mentally know like, well, this is my savings. Like that's number one. Your three to six months. I think that, you know, once you get that to a place where,

Keep that separate from any other savings, whether it's through buckets or depending on your mentality, like we talked about in a completely different location. I think another great way to save, like if you're just if it's tough for you, that's one thing that I would automate. We talked earlier in other segments about not automating savings.

So savings is something that I would set up. Like once you kind of know what your budget is, it's like, all right, this automatically comes out of my paycheck. The day that I get paid, like don't mess around. Yeah. Don't mess around and, you know, put it for a couple of days later because before you know it, that money's going to be gone. So that'd be my thing too. And thing three, these are not in any particular order, by the way, but you've got a budget for savings. Yes. You have to know that you have the margin for it and, and prioritize against it. Right. That's right.

like if you against it yeah if you have a you know you want to hit a certain amount for a down payment in two years you have to back out and say okay how much we have to save per month and that's going to affect our budget if that's our goal so you kind of plan it out that way um but it is i like the the automation factor in it i think is really good because it creates the discipline um but the budgeting aspect is so key because if you don't budget and you do an automated transfer for savings and then something comes up before you know you're pulling that

savings right back out and nothing Rachel is more frustrating than that wheel of saving and spending saving and spending so budget for your savings that's so good this is the Ramsey show

You're listening to The Ramsey Show. I'm Jade Warshaw, your host, joined by your other host, Rachel Cruz. We're taking your calls about life and money, so give us a call. The number is 888-825-5225, and we will be here for you. It's the new year. I'm wondering what your goals are. If you're anything like the rest of the population, it's probably one or two things, money or health, right? It's like you're on a cleanse, you're on a diet, and you're trying to get this budget right.

in order. If that's you, I've got two things for you to consider. Number one, we have a wonderful resource coming up here on January 11th. It is a break the cycle free live stream. All right. So you can register for free. It's January 11th at 7 p.m. And we're going to give you practical steps on how to get your money right.

on point and in check. If you're one of these people who you're like, man, no matter what, I feel like I just can't get ahead. I feel like I'm living paycheck to paycheck. This really is for you. All of us are teaming up and we are just hitting you with a one-two punch of money knowledge to get you through the new year and beyond. Okay. So I want you to sign up and register for that.

Next thing is in order to get prepped for that, because you're going to get some information you're going to learn about every dollar, you're going to learn so much. And then after that, I want you to mark your calendar because January 31st, I'm going to be doing a webinar, basically going over again what you learned at the live stream. So those are two dates I want you to remember, January 11th, January 31st.

go January 11th. It's free. Get the, get the, get the knowledge, right? Get the game and then come again, January 31st. And I will re-up you on the knowledge and you'll keep going forward. And you need that because Rachel goals is not easy. Like you have to keep, you have to keep at it. Like, um,

I posted on social media, I think it was today I posted, when you set these goals, right? It's like, you're all excited. It's January 1st. He's like, I wrote it down. I'm like, all excited about it. And then the resistance starts coming. And you're like, oh, I didn't know it was going to be like that. Like, and the thing is, the resistance doesn't like if you set a money goal, you're like, all right, this year, I'm paying off my debt. Whenever I have extra money, I'm throwing it on my debt. And then suddenly it's like your car breaks down. Suddenly, like,

you know something happens crazy in the kitchen the blender flies off and the knife flies and it breaks the window now you got to pay for the window like it's like all these things start happening and it's all trying to get you off pace yes and when that happens I just I want to encourage everybody just zoom out for a second because I feel like so many people have hit that wall where it's like is it going to be worth it like I told myself I was going to bring my lunch and it's just it's

It's such a hassle and you already want to give up. You've just got to zoom out for a moment and go, OK, this is resistance. And I knew that this was going to happen. This is not a bad thing. It doesn't mean that I should stop. Matter of fact, the way I view it is if you're getting hit with that, it means you're really creating friction. And that's good, because if you want change, you cannot change without creating friction in your life.

Right. You're doing something completely different. You're going on a new pathway and there is going to be resistance. So embrace that. Stop for a moment and go, OK, that's what that was like. Now I know that's what that was. I can go forward and don't let it stop you. That's my encouragement for the day. Now let's get to the phone lines where we've got Carrie in San Francisco, California. Hi, how are you? Thank you for taking my call. You're welcome. Thanks for calling us. How can we help?

Well, essentially, I would like to retire. I'm planning on retiring in October. I'm a teacher. And I'm getting nervous just financially if I'll be able to do it. So I just wanted some reassurance. I think I'm going to be fine, but I just need a little reassurance. Okay, so let's kind of look at your numbers here. Number one, are you working with any sort of professional or is it just you looking at your accounts? Yes.

evaluating it on your own. I do have somebody who manages my Roth and IRA, my portfolio. And what are they saying to you? He says I'm totally fine. Okay. Well, that's good. That gives me a little bit of, but let's kind of, let's make sure you understand it. So how much do you have set aside in your nest egg?

I have $350,000 right now. Okay. And what about... And then I have $80,000 in high yielding savings. Okay. And that's just because me, I've been stockpiling since I paid off my house. Okay. More than train clear. And I also have to travel. Yes.

And I have a travel fund that's like it's 30,000 and it's another high yielding. And that's the one I was planning on, you know, when I want to travel, I could just go into there and get it. I love that.

And so if you were to retire in October, what percentage are you pulling off of your nest egg? And what is that equal to per year? Oh, well, I'm not sure if I'll even have to pull out any. I'm assuming I met with the retirement people and I'll be getting about $1,800 a month. And from that, I also have another...

$1,200 that I get monthly from another retirement through a divorce. Okay, so none of that is the $350,000 that you talked about? No, no. That's just what I'll be getting from my retirement through work. And yeah, that's what I'll be bringing in. Yeah, like if that $3,000 is enough for you to live your life and do everything you want to do and you're not... I have no objections, Your Honor. Yeah.

Yeah, I mean, it's exciting. It's a big question, Carrie, because I don't want to direct you wrong. It's like you, you know, retiring. So I do want to make sure that you are talking to somebody that's looking at your actual accounts and the historical data of what they've done. I mean, like, yeah, they're looking at the whole picture. But for you calling us in a two-minute radio call. Yeah, that's a good point, Rachel, yes. Yeah, I mean, it all seems to pan out, Carrie. You've done a really great job. And your living expenses, you don't have a mortgage anymore.

um do are you do you have anyone or anything that you're responsible for financially is it just you okay yeah so three thousand dollars is enough for you carrie um plenty of months month and you have a travel funds over here you got eighty thousand dollars back to it yeah uh how much is in that divorce the the one that's paying you twelve hundred the one from the divorce you said how much is in that what's the nest egg

Um, I just, I'm going to get $1,200 for life. For life? Okay. Yeah. And then there's the $1,800. Now, are you getting any Social Security? No, I will be, but it's minimal. You know, but, and I'm, and I'm only 60, and I'll, I'll only be 60. So it's not, like, I don't think I can draw on Social Security for quite a while. But, um...

Yes, there is some available there. And I also know I won't be paying into my Roth because that's what my guy told me. He said, Carrie, but you'll also be having $800 that you pay every month for your Roth, you know, that you won't be paying once you retire. That's right, because you're not drawing an income. Like, you're not working anymore. Now, the $1,800 that you're getting...

What's that nest egg is or is that continuous as well? That that's for life as well. That's just through my work. Is that just a pension as a teacher? Yeah.

Yes, let me teach her. Okay. Yeah. That's great, Carrie. Yeah, I mean, from right now, yeah, that all maps out. Yeah, that's great. Congratulations. That's exciting. Congratulations. Thank you. Yes. Thank you. All right, good. I feel a little better. Good. You should feel great. You've done wonderfully. Okay, great. Awesome. Thank you. Yes. You're welcome, Carrie. Happy New Year to you. Thank you so much for the call. Okay, great.

You know, there's so many people, Jade, that, oh, they want that. They want that story. And here's what I love about Carrie, too, is I'm like, she is, there's a level of contentment in her. Did you hear that? She's like, I have some money that's set aside for travel. Yeah. But I can live on three grand. I'm great. I'm great. And the $350,000 that she saved up, I'm like, that's a lot of money to stock away throughout her life. One for retirement. For retirement.

And, you know, you hear people and they're like, oh, I have to have X amount, you know, all of this. And I'm like, there's just a beauty in listening to Carrie as she walks through those numbers. And I'm like, yeah, she's done it. She did everything right. Yes. She let them take the money out for her pension, but then she continued to put hers away in the Roth, which is what we teach here.

I love that she's got the 80K saved, which honestly is above and beyond what she might need for an emergency fund. But I love that she has it. Like, that's wonderful. Absolutely. And for me, I think the biggest thing, her mortgage is paid off. Yes. She didn't have a mortgage. No mortgage. There's no like bills. Yeah. And that's why she can be like, yeah, $3,000. I'm good on that. Yeah. I'm great. I mean...

It's awesome. That's what people have to challenge yourself to think about. And in San Francisco, California. I'm like, hey. She's in Northern California. Like as a teacher, y'all. I mean, did you just hear all of that? Like. Yeah. It's great. A teacher in Northern California. Like, yeah, I feel like we need to marinate on that for a second, Rachel, because that's such. Because I bet with her house, she's close to being an everyday millionaire. 100%. Yeah, we didn't even ask her that. We should have asked her that, Jade.

Carrie, we're going to just dream for you. She's an everyday millionaire. But for those of you listening, start dreaming. It's January. Start dreaming. What would your life be like if one day you paid your mortgage off? Right? Most of us are paying a couple thousand dollars a month for our mortgage. That's the biggest line item. How would your life change? This is The Ramsey Show.

You're listening to The Ramsey Show. I'm Jade Warshaw. This is Rachel Cruz to my right. We're taking your calls all afternoon, so give us a call. The number is 888-825-5225. I'm excited to be here taking your calls in the new year. So whatever it is that's on your mind, I know you've got goals. I know there's things that you're aspiring to. You're probably starting to have those difficult conversations with your spouse. You're starting to budget. You're starting to take your lunch, all those things.

It makes you feel some type of way. So we're here to help. So give us a call. We've got Annalise who's on the phone line in Phoenix, Arizona. What's going on, Annalise?

Hi. So my husband and I are dual income, no kids, and we're looking to have kids in like three-ish years, and we just bought a house. And so we're trying to figure out for the next three years, we know we're going to have more financial flexibility than when we do have kids. And so we're trying to figure out because we're young whether to focus a lot of our attention on kids.

chipping away at our mortgage or saving for retirement. Since we live mostly off just his income, we have almost all of my income to put somewhere.

Awesome. That's great. That is great. I think that's a great way to be thinking because it is true when you have kids, life changes and things do get more expensive. And so there comes the question, put the extra money on the mortgage or onto retirement? So the answer that I'll give you is just kind of filtered through the framework that we use here at Ramsey Solutions. How familiar are you with the baby steps?

Pretty familiar. We have zero debt. We have six months of living expenses saved up. So we have like all of those. I'm pretty sure we have all the baby steps done. Perfect. OK, so then it's just really we're getting to a technicality. Right. So for all intents and purposes, you're on baby step four, five and six. Right. So baby step four for new listeners is putting 15 percent into retirement.

Baby step five is you're putting aside some amount of money that you decide for your kid's college and you're putting it in a non prepaid 529 or ESA account. And then baby step six is you're also simultaneously putting extra money on your mortgage. Now, here's the thing. Baby steps four, five and six. If they all apply to you, you can you do them simultaneously. So if are you already at the 15 percent mark on your investing?

Yes, my husband puts 15% of his paycheck and I put 20% of mine. Okay, so you want to be at 15% for your household. That's the goal. And once you get to 15%, because remember, we're doing these simultaneously, anything above 15% at this point, you need to be thinking about baby step five and baby step six, because you are saying, okay, now if you want to wait until you have kids to do baby step five, yeah, that's totally fine. I wouldn't put...

I would not put money aside for future children that I do not have yet. Yes, that's right. And then for you, now you're to baby step six. So the extra money right now, you're putting on baby step six, which is paying off your home. Now, and this is for you and anybody listening, once you pay off your home, then you can go ham on the investing. Like you can start investing way beyond 15%. That's the beauty of how this plan works is you are going to have that extra money to just get crazy. And that's where things like go off the rails.

So my question with that would be, we're super young. I'm 22. And so I have heard the advice that investing in your retirement younger is going to do better. And since we just got our mortgage, it's probably going to be a little while for us to fully pay it off. Would you recommend...

putting more than 15% because we're so young or no matter what, 15% and then pay off the half. I would still do it the same way because you're going to be fine. You're going to be fine. And you're creating diversification, which is really important. 15%, number one, is so much more than average. Like most people invest right up to their match. Most people do it while they have debt. So the fact that you're debt free, you're at 15%. And I'm sure, by the way, if you have a match, the match is not included in the 15%.

So if you or your husband has some sort of your match, make sure you're still of your own money putting 15%. And then, like I said, with this extra money, yeah, you guys are young. And that's part of the beauty of this equation for you, because not only are you going to grow compound interest over time because you are actively investing, you're going to have your home paid off over time. It's just going to offer you so many options because you're going to have wealth on two sides, right?

And then once you pay your home off, like I said, you're off to the races and you're just going to be blown away by how this works for you. Yeah. Because Annalise, let me say this, Annalise, just to paint a picture for you. Yeah. That 15% of your income into retirement and then everything else goes to the house is what I would do. And because you are so young, you pay it off early. And then what's wild is you're going to be one of these people that stands on the debt-free screen stage and you have your house paid off.

And you guys are in your 30s and then you go and invest like crazy because then you'll move on to baby step seven which is Save and be you know or invest and be extremely generous So you will then bump up that 15% probably with investing and do more if you guys want like you just have so many options But having a paid for house and investing 15% like that's the ultimate goal which you guys are working towards which you could have Which is just crazy. How much you guys make a year? I'm, just curious. Um

We make roughly combined close to like $88. Okay. How much is your house? Our house, we have $305 on the loan. Okay. Okay.

Yeah, that's amazing. Oh, I love that. So yeah, you guys are going to get this paid off and it's going to be great. And then you can bump up other investing if you want after that. Well, let's kind of reframe this in your mind on a lease because I do think that sometimes people view, okay, I've got my retirement investing and then I've got my house. They're both investments. Yeah, that's a good point. Like they're both investment vehicles. I don't want you to think that a 401k or a Roth IRA investment is more important or a better investment

investment than a home. Like there's a reason that real estate is a big choice for people to put their money because the rate on return is very, you can count on it. You know what I'm saying? We say all the time, like if you, if you're owning a property for three to five years, five years or more, you are going to see a return. Like that's what we've seen over time. The same way we talk about the S&P 500, we know like over time you can expect, you know, a 10 to 12% rate of return annualized over the course of, you know,

X amount of years. So that's, I think that's really important for people listening to understand these are both great investment vehicles. That's why we say do them simultaneously, not do this one first and then reach over here and do that one. So that's something worth pointing out. Thank you so much for the call. I like it. Yeah, it's a good conversation. All right. And the younger people are that are calling, it's, it is, it's

It's amazing. I'm like, Jade, I feel like we've had so many calls of young people doing this stuff early, you guys. And I'm like, and it's just an encouragement to you listening out there. Again, regardless of age, but man, there is something to be said about these principles and doing them in the right order. And...

And being diligent about it, it just, it proves in your favor always. It will yield in your favor. Yeah. But I mean, we do have to call out, like there is that tension between, we know, like she said, like obviously the longer that you're in the market, compound interest has a longer time to work for you. And obviously the more money you invest, the more money there's there. But it is that tension between if you work the plan and do it the correct way,

Yeah, like you're pushing pause on some things to push play on other things. But ultimately, like it all works out together. That's right. And so many people are worried like, well, if I pay off my debt, then I'm waiting to invest. And I know you guys say pause investing while you're paying off debt. Jade, I'm going to miss out, you know, three years. And I can't stress enough to people listening that you will make it up. Like the way this is designed,

you will make up for the time as long as you stick to the plan like if you yeah yep like lollygag or if you like take this but leave that and you don't this is a plan to be worked as the plan is written and i can't stress that enough um if you say oh i'm working the dave ramsey plan but you're just you know messing around with this debt and kind of being willy-nilly on it and it takes you six years yeah and you miss out on retirement you're missing out that's right that's right so you've got to walk it the way it goes you know if you say oh like i talk

to somebody the other day they're like oh jada i'm working the ramsey plan i'm not investing yet but i just really want to get my house paid off yeah i'm like listen i'm glad you want to get your house paid off but you you need to be investing yes yes so follow the plan as written if you want the results that we're always talking about yeah there's an order yeah it's the order for the reason but um but yeah like on elise who just called i'm like she's at the perfect position to do it

And it's going to be amazing. We're debt and money doesn't have to be the thing that controls you, that you really do control it. So being proactive in that sense. It's great. I love that. And then I always like to remind people who think that it's too late or it's too late to start or maybe there's no hope. I'm like, listen, look at look at me right here. I didn't start investing till my 30s.

And I'm blown away. Like I'm blown away by the numbers I see by just being diligent and working the plan. So if you're out there, you feel like you got a late start. It's not too late. Just keep doing what you know to do. And in the right time, you will reap a harvest. If you don't give up. This is The Ramsey Show.

You are listening to The Ramsey Show. Thank you for listening. I am your host, Jade Warshaw, joined by Rachel Cruz. We've been taking your calls, and now we've got the scripture and quote of the day.

Love that one of my favorite verses. And our quote of the day, I feel like you should read this, Rachel, because you're a true Swifty. I feel like it's a Taylor Swift quote.

No matter what happens in life, be good to people. Being good to people is a wonderful legacy to leave behind. T-Swift. See, there you go. What a gal. What a gal. She was at the Chiefs game handing out $100 bills to the staff and everyone. Yes. That's pretty awesome. She like crazy. She like tipped insane bonuses to all of her truck drivers and stuff for her tour.

And yeah, I'm about that way. I believe she's generous. You know what? I'm going to say in front of all the world. I think I need to understand more about Taylor Swift. I've never been on the T-Swift train. Oh, come on. I got to get with the times. I'll share my seat with you. Yeah. It's a fun ride. Yeah. Help me get on because I don't get it and I need to get it because I feel like I'm... I know. I think she just speaks what we...

what we've all felt in life is that what it is it's her song i think it's her well like her songwriting like she just she sings i should say yes and writes i think just what we all thought i don't know that's good i'm a i'm a i'm a 14 year old at heart what's your favorite what's your favorite t swift song oh gosh jade just hit me with one shoot give me a few notes um i'm not gonna say i'm just kidding

That's going to be my question. The Lover album might be my favorite. That's going to be my question to all the callers moving forward. All right, let's go to Peter in Manchester, New Hampshire. What's going on, Peter? Hey, thanks for taking the call. So I am about $9,920 in credit card debt and $19,920

$19,638.87 in student loan debt for a combined total of around $30,000 plus or minus. - That's right. - A little under that. And so I was wanting to know how can I get out of debt and then what should I do after I'm out of debt? I have no emergency fund, so I don't know where to start. - Good. Well, you came to the right place. I'm happy that you're here.

Okay, so let's start by getting some particulars. How much do you earn every month? What do you take home? About $874 after taxes. I'm a student employee at my university I currently attend. Okay. What year of college are you in? I'm a sophomore. Okay, sophomore. So you're in school full-time. Yes. If I wasn't, I wouldn't be able to stay in the housing, and since my parents...

passed away when I was 11 years old, I'd be homeless on the streets. Oh my gosh, Peter. Oh, I'm so sorry. That's tough. Oh, goodness. How old are you now? I'm 21 years old. Wow. Way to go. Wow. So you went through college. I just want to make sure I get this. Are you still a student there or you're working there and living there? You're still a student? I'm still a student. Okay. Sophomore. Oh, I'm sorry. I hear you. Okay. So...

Okay. I want to address two sides of this. So I get the feeling of, I understand being in college and being a debt because that was me. However, I don't want you to get too hung up on this because your student loan is technically not due yet, right? It becomes due six months after you graduate. At least it used to. I think that's still accurate. It's still in...

So while you're a student, my understanding is per FAFSA, which all of them are federal loans. So I won't have to go into repayment until six months after I graduate from school. I'm guessing they're subsidized, so they're not gaining interest right now. Yep, I do have two unsubsidized loans with a max interest on both around $5.38.

Okay. Yeah. And I know that it sucks that it's accruing interest on the two unsubsidized loans, but I wouldn't let that get to me right now. Now your credit cards, you don't want those to go into default. So I would work to make sure I'm paying minimum payments on those. If you can get a little extra, that's fine. But my main focus for you is focusing on school and focusing on graduating without any more debt. Is that fair enough? Yes. And Peter, can I ask what caused all the credit card debt?

So I needed, I was a little worried I wasn't going to be able to afford college anymore. So I kind of panicked and purchased a bunch of emergency supplies in case I ended up on the streets again. And so that's the majority of the debt. I also purchased a bicycle to get to and from a job site when I was homeless. After I left the Marine Corps, after I was medically discharged, I was able to use a bike.

to go to and from my campsite and my job. So I was kind of planning ahead and I planned too far ahead. Okay. Which is understandable. Yeah. Yeah. Yeah. Totally. But yeah, with Jade, what she was saying though, I think is, is key. We don't want to obviously go deeper into that and we don't want to default in that. And so is there any other time Peter that,

that you can look at throughout your week that maybe you could do one more thing on the side to bring in some income? Yeah.

Currently, I'm also in Army ROTC at my college. So I just got a medical waiver approved to reenlist or rejoin the military. Okay. And so in about four months or so, I'll be getting an ROTC stipend in addition to a scholarship that should actually reduce the overall cost of my overall college experience by about half because I'll no longer have to account for room and board. Okay, good.

Yeah, it's really good. And then in addition to getting the $420 monthly stipend from the United States Army, I'll also be working an additional on-campus job that pays around $17 an hour. Okay. How many hours? About 20 hours a week. And then my current job I work at NetSmart after taxes, $874 per month is...

work-study job so it is a mandatory required minimum of $12 an hour for a maximum of 20 hours a week. Okay, so here's the equation we're trying to solve for. I like that you're getting into it, you're finding money. The equation we've got to solve for is can you pay for tuition and cash?

How much does it cost? Because I don't want you, I mean, you've got $19,638 of student loans. And my guess is that's because you've gotten student loans for each semester thus far. So we've got to look at going forward. Are you able to make this work? And what does it look like going forward? Does that make sense? Yep. So what do you need to, how much does school cost?

So my current semester, I was looking over my bill. It's around $25,000 per semester. $25,000 per semester? Where are you going to school, Peter? I'm going to Southern New Hampshire University. Okay. Is it public, private? I don't know. I believe it's private. Okay. Private nonprofit, though. That feels expensive, though.

It's also because I'm an out-of-stater, so I was in D.C., but unfortunately it was really unsafe for me to continue living in D.C. While I was homeless, I was involved. I was shot. So I didn't feel safe going to school or living in Washington, D.C. anymore. Okay. How old are you again? Tell me your age again. 21 years old. Okay.

And what's your degree going to be in? It's going to be in justice studies with a minor in sociology. I'm going to say something difficult. And it just is what it is. You're choosing an expensive route here for school. You're at a private university and you're at an out-of-state private university. And you still have two and a half years left. And you've got two and a half years left. And I don't like that for you because with the money that you said, I don't see a pathway for you to pay for this.

So something's going to have to change. And I know that you've suffered a trauma. So it's very hard for me to sit here and be the one to say, hey, listen, go back to D.C. I'll be honest with you. If you're in D.C., I don't know. Like, can you go to any school? And can you get into Maryland or can you get into Virginia? Does it count? Because I'm obviously District of Columbia is a small area. So are there the do the surrounding states count at all? You need to really look into this.

and start evaluating your options. Is there anything you can do? Is it an online school? Is there something you can do that you can get that degree, go slowly? You cannot go into any more debt. That's gotta be off the table. I know you've been through a lot, but we gotta start thinking about this. This is The Ramsey Show.

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