When You Play the Game of Debt You Lose Every Time
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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 amazing relationships. I'm George Campbell, joined by Jade Warshaw. This hour, the number to call is 888-825-7000.

5-2-2-5. We've got a great crowd in the lobby of Ramsey Solutions. Look, they're so happy to be here, Jane, and a good reminder that we're open to the public. You can watch the show on the glass. If that's how you want to enjoy your day is to watch a radio show through glass, then come join us. We've got baked goods, coffee, all kinds of things. Fun for the whole family. Love it.

So give us a call, 888-825-5225. And Jay, we're going to kick off this hour with a brand new segment we are calling Change My Mind. Ooh, Change My Mind. I love it. It all started with a friendly voicemail from a listener who wanted to have a friendly debate. Okay.

And so I thought you'd be the perfect person to have a friendly debate with. Okay. And so if you want to join in and you have something you'd like us to change our mind about or change your mind about, you can email ask at ramsaysolutions.com. Put change my mind in the subject line.

And Brad, welcome to this brand new segment. You invented it, my friend. How you doing? Great. Changed my mind. New car versus used car. This is the debate. I'm going to tell you here. Hot debate. Okay. Make your case. My case is...

A new car, $2,000 a year is my case. And I'm not talking hoopties. I'm trying to do a nice regular car, not an upscale and not a hooptie. So we're talking Hondas and Chevys. Okay. $2,000 a year is my...

my goal to beat. And I did that with a brand new little Honda HRV. I bought it, sold it back to him, traded it in and bought another one. And I beat $2,000 a year. I've bought several. I've listened to Dave for a couple of years now. And we bought several used cars, two to three years old, low mileage, get you a good deal on it. And I've gone over $2,000 a year on all those. What do you mean? Yeah. Is this like maintenance?

Um, no, if you buy a car for $20,000 and it lasts 10 years and you throw it out, you paid $2,000 a year. Okay. That's the way I'm trying to do this. Got it. So I bought the $20,000 used Honda Pilot, drove it for 10 years and it had some engine problems and dah, dah, dah, threw it out for $1,000. I sold it. But that is $2,000 a year. Okay. And I'm driving a 13 year old car. Okay.

Okay. At the end of it. Now, my other scenario here that I did, I bought a brand new little Honda HR-V, drove it for three years, traded it in, and I paid the same $2,000 a year. What did the HR-V cost you after taxes? After all the... Around $25,000. For a brand new HR-V? Oh, no, this is...

2018. Okay. I did that. Because you're saying the argument here is new car versus used car. Correct. So are you saying why shouldn't I buy a new car? This is your first time looking to buy a new car? Nope. I've bought several new cars and several used cars. Wow. And I seem to win on the new cars. Help us understand how you're winning. You're saying your yearly cost of ownership, essentially? Yeah.

Correct. Is lower on the new car. None of that. Just the initial cost and what it's worth when you get rid of it. So you're not factoring. You're not factoring in. You're paying cash, whether it's news, new or used is what you're saying.

Oh, yeah. Always cash. OK, so you buy it up front. It's a done deal. You sell it at the end. You complete the transaction. So then really what we're talking about is whether or not you have the net worth to care about the depreciation that's taking place on the new car. The depreciation is what the argument is. OK. Dave always says the depreciation is in the first three years.

I don't agree with that. Okay, three to five. Well, let me give some people the facts because we're changing my mind and I happen to have it right here. One minute after you drive the car off the lot, let's say we're talking about a $35,000 car. One minute after, you're losing somewhere between 9% and 11%. So that's basically what $3,500 out the window right there in one minute. And then after one year...

you're losing around 20%, maybe even more. And then after five years, you're down to about 60%. And then after that, you're 10% each consecutive year after that.

So the idea for the people listening, because some people might not know it, the way we teach is, hey, if your net worth is a million bucks or more, you can buy a brand new car whatever year you are in. You can buy that car brand new in cash. And it's fine because I don't care if you bought a $100,000 car. As long as everything with motors and wheels doesn't add up to more than half of your annual income. Because basically the argument is you're happy with...

burning that money in a pile and just seeing it go up in flames and it's not going to affect your net worth. We look at cars like a vacation property. It's a toy. It's a luxury toy and it's going to go down in value, which unlike real estate, it will go down in value regardless of what people tell me that cars are an investment. They also rust. And so Brad, in this scenario, what is your financial situation? Are you a net worth millionaire? Do the cars add up to more than half of your income?

We're almost a net worth million, plus over $100,000 coming in every year, and we have no bills, no debt. Wonderful. You have a paid-for house? Oh, yeah. Crushing it. Okay. So the argument here is over a few hundred bucks a year in cost of ownership. Wait, I'm sorry? Is the argument here over a few hundred bucks a year of cost of ownership? Hey, the used one cost me $2,000, the new one cost me $1,700.

Yes. Okay. Sort of. Yeah, except yes. That's basically it. I looked around today. I could not find a car that was half its value in five years. Well, you're also looking at a very specific time in the car market.

It's been real weird for the past, you know, three years or so. And so it's a weird time to look at this and go, well, this is reality when this could all change and go back to normal. And so you're right. Cars have held their value more than they have, you know, over the last few decades because of this crazy time in the car market with supply and demand and the chip shortages and COVID and all of this stuff.

And so we're starting to normalize, but everything is still so overpriced that it makes me just want to barf looking at prices of used cars or new cars. They're both terrible investments right now.

I agree. And I am not a car guy. I'm looking at 140 horsepower vehicle here. So I get that, but I am trying to save some money because I would much rather go on vacation than spend it on a car. Love it. So give us the example of the car you bought or you want to buy that's brand new. Let's do my HRV again. Okay. Still $25,000 several years later.

Okay. And when did you buy this? Well, I bought a couple of them. I bought the first one, I think it was 2018. Ah, okay. But you bought it new in 2018. Correct. Okay. Well...

I would look at the next five years and see how it pans out for you. And again, this is, you know, it's a fun little debate and you are not the problem, Brad. You are an almost net worth millionaire with a paid for house. And if you want to spring the extra 200 bucks, it's not changing your world. But if you want to check out the blog we have on new cars versus used cars, we'll put that in the description. It's called Should I Buy a New or Used Car at RamseySolutions.com. More of the Ramsey Show coming right up.

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One day we'll get there. That'll be like our Patreon edition. That'll be fun. All right. Gabrielle is on the line in Detroit. Gabrielle, welcome to the show. Hi, thank you. My question is, should I apply for my first credit card so I don't have to continue paying for everything in cash? No. Where is this coming from? So right now you're paying for everything with actual physical dollars? Yes.

Cash, I mean, as in we'll get that and just money in my bank account. Like your own money. Okay. And so what is your fear with using your own money from your own bank account with a debit card? I guess. I mean, I know that a credit card can help me build my credit. I do have other lines of credit open, just not a credit card, and also...

I guess sometimes it's going to sound silly, but it's kind of hard to let go of some cash all at once. So the idea of paying it in increments by the due date is somewhat appealing. What if I told you that that's your body saying, don't make a stupid decision? When you say letting go of a lot of money at once, what would be the purchase here? Um...

I don't have anything in particular, just my day-to-day transactions. So things like groceries, gas, maybe like a leisurely item here and there. So you'd rather lump it all into one giant mountain and then 30 days later have that come out of your account if you're lucky? I guess not. That's even scarier to me because I've been there. I was that guy who opened the credit card to build the credit, who racked up a bunch of debt on there and the balance carried. So I'm telling you as a guy who did this, you don't want to do this. How old are you?

I'm 24. Okay. Have you ever had a credit card? No. Wow. And you've survived to tell the tale. I just think it's interesting. Okay. Our screen says, I don't want to pay for everything in cash, which kind of feels a little bit like, um,

It doesn't feel like it's as much of a credit card and building. Is it for building credit or is there something else behind this? Like, are you I'm just trying to understand because this might sound simple, but in my mind, I'm thinking if I want to buy something, I should use my money to buy it. That's the whole purpose of working is so that you have money to purchase the things that you want and need and you feel purpose.

in doing that. And so I, there's part of me that kind of feels like credit cards take away that feeling of satisfaction. I've worked my, the money I've earned is good enough for me and I can use that money to make my purchases. Where does that bother you? Like, I'm trying to understand kind of your take on this.

Like I said, I guess just, you know, people always tell me that you should have a credit card to build your credit. Whose people? Just my friends and family. Are your friends outstandingly wealthy that you look up to them and go, I want to be them when I grow up?

Um, not exactly. So there's one reason to not listen to them. There's, there's a fine, there's a foundational difference here. And so where George and I are coming from is where, I mean, you might be new to this show, but everyone here is kind of of the mind, not kind of, we are of the mind that we don't need or rely on credit at all for our lives. Because like I said before, we have jobs, our jobs earn money, and we've learned to live on the money that we earn. And when we do that,

We keep ourselves out of debt and we keep ourselves out of risk in general in life because we're just using and spending the money that we have. We're using that money to pay for our day to day needs. We're using that money to save up emergency funds so that we don't need to rely on credit cards. And so that's where George and I are approaching this. And it sounds like some of the people that you've been talking to have a different perspective.

view of life and their view of life is your money is not enough. And so you have to get credit because they can give you the money you need to have the lifestyle you want. And the only way to get credit is if you can have debt.

And so it's this ping pong between debt and building credit and more debt and building credit. And when you do your life like that, you're just constantly caught in that limbo. You're never debt free and you're never actually living on the money that you earn. And you're in this constant state of risk to play that game when you don't have to.

That's understandable. I appreciate your sharing that.

That's not taught in our culture. I mean, we're really the only ones talking about it over here at Ramsey Solutions. And it's become controversial over time just to pay cash for things. Because when you pay cash for things, no one's really making any additional money off of you. So a lot of companies don't like that. They don't like that we say this. And...

I kind of want you to hear that. Like we're teaching you something that you can live and be self-sustainable and no one's constantly making money off you, right? They're not making money off you on interest and payments and late fees. That's really what this argument is about. You don't have to play that game. So I hope you hear that with a clear, you know,

What is it? Clear minds, clear hearts? Yes. Clear eyes, full hearts, can't lose is what it is. Thank you, James. Texas forever. I'm curious. You said you wanted this to build credit. Why do you feel like you need to build credit? I guess in case I ever needed to take another loan out in the future. Because right now, like I said, I do have three other lines of credit open. What are those lines of credit? I have a mortgage, a car loan, and some student loans. Okay. Okay.

And so your path is let's get more lines of credit to get more lines of credit to get more debt to get more lines of credit. That seems to be the path. I guess that's what I thought I should be doing. Well, I'm trying to what I'm trying to do is unravel this to show you the insanity that America has fallen into. And so when you really look at what credit scores are for, it's a it's a magic number that was given to us by the credit gods to get us into more debt.

And so when you decide, I'm done with debt, I don't want a car loan anymore, I don't want the student loan anymore, you no longer have a need for credit. And even when it comes to buying a house, I bought a house with no credit score. And we teach people, save up and pay for a car you can afford in cash. And then you don't need credit because they don't check your credit score when you pay cash. Because let's just play this out down the line, Gabrielle. What happens if you...

What happens if you do what you called in to do, which you just say, you know what? I don't want to use my own money anymore. I'm going to use credit cards. What happens is each month you have a revolving balance. And if you're lucky, you pay it off. If you're not, you keep some of it there. And so you end up now with a car note, a student loan, and then credit cards. And my question for you was, what does that get you? If you do that, what are you getting out of this deal besides debt? I don't know.

I guess the material item of whatever it was I purchased. Which was probably not a wise purchase. And here's what I found. When you use someone else's money, you look at it differently. When you use your own money, you start to go, oh crap, that's money leaving my bank account right now. Well, that's science, George. There's actual psychological studies on what happens when you use...

Credit card that's plastic versus credit card that's your debit card versus cold hard cash. Your body becomes more and more removed from the process. The more and more it's removed from being actual money in your hand. Even something like Apple Pay, even though it's your money. But their tagline is cashless made effortless. They want to make spending so effortless. And here's what I found, Gabrielle, now for 10 years living with a debit card. When it hurts less, it costs more.

You spend more, you're hoping you can make the payment, you're lucky to make the payment. I found when I use my debit card, I don't need hope or luck. I can just actually pay attention to my money. And when I run out, I can't spend anymore. And to me, that is a great way to build wealth. And it adds really healthy guardrails. So that's why I'm recommending all of this to you. And I unpack all of this in the credit cards chapter of my new book, Breaking Free From Broke. I'm telling you, you will want to take a shower after reading that chapter. I unpack the studies.

I go through every objection that's in your mind. I'll show you how to live life outside of the credit card and credit score system. So hang on the line. Our team's going to pick up and we will gift you Breaking Free from Broke. You can choose audiobook, ebook, the hardcover copy, however you like to read. We want to make sure we get it into your ears or in your hands.

Thank you so much for the call. Great question. Love your heart around this. And I hope we've convinced you to stay away from these gross companies. Because listen, Capital One's out here sponsoring the Taylor Swift tour. We can't afford tickets to the Taylor Swift tour. Who is winning here? It's not us. It's the companies with the big buildings downtown. This is The Ramsey Show.

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Welcome back to the Ramsey Show. I'm George Campbell, joined by Jade Warshaw.

We're going to have some fun here in this next segment. If you've listened to the show for a while, you know we've done some stupid tax segments. And if you don't know what a stupid tax is, you've probably paid one. This is a financial mistake with some zeros on the end. It's just one of those things. If you're over 12, you've paid a stupid tax at some point in your life. Most have. And so we don't do these segments to shame people. We do it to kind of have a laugh and go, we're not alone. We can all grow from this. And really, it's only stupid if you do it more than once. That's how you know. True that, yeah.

And so we've got some folks we've scheduled on the show to call in and share theirs, and I have a whole list of stupid tax stories that were submitted from our listeners. So we're going to kick this off with Erin in Dallas, Texas. Erin, tell us about your stupid tax. Okay. Well, I was working in downtown Dallas, and I decided I started making some real money, and so I decided I needed this designer job.

Prada handbag, and I'm not a flashy person, so I don't know why I decided I needed this handbag, but I bought it, $3,800. And yes, it was a beautiful purse. I bet. It better be for $3,800. But I learned quickly that I didn't enjoy carrying it. I was too paranoid to mess it up all the time. I was worried it would get stolen. I wouldn't take it to the restroom. And like if I was out to eat and I had to go to the bathroom, I didn't like putting it on the floor, on the counter, and...

One time it was raining outside at work and I spent about a half hour covering it in those plastic grocery bags so it wouldn't get wet. And I finally realized I didn't like it that so much. So I sold it a year later for $350. Oh, a year later. Yes. That thing depreciated by 90%. Were you just desperate or is that the going rate for a one-year-old product bag?

It was a buy-sell page, so I guess that was market speaking. Wow. Designer bag. Well, now I know where to get a designer bag for my wife. I'm going to go on one of those pages. Just a year old, honey. It's barely used. It's been covered in a Walmart sack for the last year because Erin was scared. Honestly, it's going for $500, the same bag, going for $500 on the same buy-sell page now. And I still like it, so I kind of thought about buying it again. Oh, my goodness. Now you're like, I feel better buying it for $500. Yeah.

Yes. Oh my goodness. So what purse do you have now? What's your go-to bag? I don't even carry a purse. I just carry my wallet in my hand. Wow. I know that's right. Which wallet is it?

Is it Brighton? No, you know, Brighton, like the mall. Yeah. Oh, wow. That is so funny. Do you know what that reminds me of, Erin? That episode of Friends where Monica wants those boots so, so bad and she finally gets them and they hurt her feet. Her feet are like bleeding and then she has to return them. Oh, gosh. Are you married, Erin? I was at the time, yes. What did your spouse think about this? Was this a conversation or was this just like, I'm doing this?

Well, he was in the military and he was deployed at the time, so I don't really remember asking. Oh. But... Did this go on a credit card? No, I wrote a check for it. That's good, at least. Good old check. There's the silver lining. At least it wasn't $3,800 with 22% APR. Yeah.

Yes. Added pain. Oh my goodness. Well, are you doing well now? I did learn a valuable lesson. You know, sometimes it's just not worth it when you have something you're worried about messing up all the time. Yes. That's a very good point. When you buy that really nice luxury car and then you're parking it a mile away in the parking lot because you're scared someone's going to ding your door. I'm like, was this really worth it for this level of emotional paranoia and stress? Look, I feel that way with kids. Like sometimes I see people with brand new cars and they have like two and three and four year olds. I'm like, these kids are destroying themselves.

the inside of this car. Covered in sauce. They kicked the back of the seat. Oh, yeah. Now you got to get a kick protector, I found out. It's not enough. Just to protect that. Erin, you know, stuff has a cost. And my friends, the minimalists, they talk about this stuff a lot of like, it's not just a financial cost. It's the emotional cost, the mental cost, your time cost. And so thank you for being brave and sharing that with us. That was good. Yes, well, it's good to talk to you guys. I listen every day.

Thank you. Well, hopefully we can steer you away from buying $4,000 bags that will haunt you. And again, let me make it clear. There's nothing wrong. People think we're anti $4,000 bags. If you make a million bucks a year and you're paying cash and that's something you value, you're not trying to just impress people you don't like. You think you gotta make a million bucks a year to

have a $4,000 bag? No, because I know Jade probably has sneakers that have more than my retirement account. Okay, that could be true, but not bags. Okay. Here's the thing. I don't know anything about sneakers, and then I'll see in the YouTube comments, like, oh, Jade's got those Travis Scott friends and family. I'm like, I don't know what they're saying. And then they're like, those are $1,000 sneakers. And I'm like, Jade is walking on pavement. Ha!

Like, why I couldn't wear those out? You know what? I will say, in the live like no one else so later you can live like no one else, my thing is sneakers. Like, everybody has their things. I don't care about, like, bags or jewelry. Like, some people like diamond jewelry. I like costume jewelry. But I love sneakers and I'll pay cash for them. And...

yeah not no stupid tax on that that's fair well if i was in debt it would be stupid tax and i'd be like her like trying to cover them up and like walk without creasing them and that although i do still try to walk without creasing them but still oh that would stress me out listen when i when you sit in a stool and it's like your feet want to like i have to sit like with my feet straight so they don't crease that's too much stress for me but you know what the guys are not they're not uh

guilt-free in this category. A lot of guys, you know, if it's not the truck, it's the sports, it's the hobbies, it's the golf, it's... Well, what's your thing, George? For me, it was gear and technology. So from a music world and from a technology world, I could justify every single camera purchase. Oh, yeah. One time, on a whim, I bought like every GoPro accessory money could buy along with the GoPro, the latest Hero 8 or whatever it was. I spent hundreds of dollars on this.

I can count on zero fingers how many times I used my GoPro. I thought I was going to be some kind of like action adventure hero, you know, going mountain biking with my GoPro. Yeah. I don't leave the house, Jade. I don't know what I was thinking. I could be like that with like kitchen equipment. Like you're like, ooh, if I had the juicer that has the attachment that does this, I'll become one of those people that makes ginger shots. That's what it is. I'm an aspirational shopper. I'm like, if I get the Vitamix, I'll start to enjoy smoothies. Yeah. I will like kale more. Yeah. And if I buy the right equipment, if I...

I bought a Canon 7D because I thought I'm going to be this big videographer, photographer. It has been collecting dust and I have too much shame to sell it because I know for whatever I sell it for, it will be cents on the dollar for what I paid for it. And so I think there's a lot of- Keep it on the old shelf. Yeah.

And guys can do that all the time. So I'm going to share a few stupid tax stories submitted from our listeners. Okay. Crystal said, I financed a Botox treatment with a six-month no-interest deal, quote-unquote. The Botox wore off before I made my first payment. Oh. Oh, man. Her face unfroze just in time for her to go, oh, crap. That's right. I got to pay for this now.

That's nuts. Amanda in Australia, I use the equity in my home to up my 30-year mortgage to buy a brand new Jeep Wrangler worth $50,000 while making $40,000 a year. That one takes your breath away a little bit. I kind of know about that. Wait, let me share mine then. Okay. Because we had a paid for Jeep.

And we're like, yes, we finally paid it off. Most people would be excited and to have their money back in their pocket. We were like paid off our car. Let's go finance a $35,000 Hummer and pay $435 a month. You were a Hummer family. We were a Hummer. Wouldn't take you for a Hummer family. Yeah. Wow.

Those were hot for a while. They were. Listen, they're coming out again and mama wants one. Are they electric or something? Do they make coffee? They're not electric, but they're less gas guzzly.

That's comforting. I want to come back and do it the right way. Thank you for that. All right. Pamela said, I got scammed out of 300 bucks on Facebook by a friend, quote unquote. It wasn't actually my friend. Keep in mind, we are baby step seven, both finance majors. And yet we found a deal on a car too good to be true and immediately sent a deposit after a short conversation with said friend.

on Facebook Messenger, Oi. Uh-oh. I've been scammed before and it hurt. The Nigerian prince. Well, it wasn't a prince, but it is funny. And here's what's funny is this went on TikTok and went viral. And everyone from Nigeria was like, I can't believe this guy is dogging Nigeria. And I was like,

This is just where he had me send the shoes. So I was on Craigslist posting some Nike Dunks I had. Yes. And I thought, I'm going to be a Dunks guy. Could not rock the Dunks. Sold them on Craigslist. This guy says, hey, these are a gift for my cousin in Nigeria. I went, what a kind gift. He said, I'm going to pay you right now for shipping. I'll pay beyond what it costs. Red flag number four. True that. And so I thought I got an email from PayPal with the confirmation of payment. And so I just went ahead and shipped them.

Turns out that PayPal was not, in fact. That was fake. It was not a real email from PayPal. The money never actually hit my PayPal account. That's sophisticated. And I was just an 18-year-old knucklehead. And so good news is six months later, I got a box back to my house that said return to sender. Oh. Address not found. Oh. So I was only out the cost to ship. There you go. So a small stupid tax. No weapon formed. That's right. Hey, we got more stupid tax stories coming up. Don't go anywhere. This is The Ramsey Show.

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Call my friends at BetterHelp. Visit betterhelp.com slash DELONI today for 10% off your first month. That's betterhelp, H-E-L-P dot com slash DELONI. Welcome back to the Ramsey Show. I'm George Campbell joined by Jade Warshaw. 888-825-5225 is the number to call if you want to jump in and talk about your life and your money. We've been having fun sharing some stupid tax stories. And if you don't know what that is,

It's just financial mistakes you've made with some zeros on the end. And we call it a stupid tax around here because it's kind of the price you pay to get an education the hard way. And we've all done it. If you're over 12, you probably have some stupid tax in your life. And so we've got some listener submitted stories and we've got Jenny on the line in Fayetteville, North Carolina, who is brave and willing to share her stupid tax story. What's going on, Jenny? Hey there, guys. How are you? We're doing well. Please share. I'm so excited about this.

So my stupid tax story starts at the beginning of COVID, March 2020. I'm self-employed as is my husband. And so, and we, this was before Dave. So we borrowed money at every chance we got. Our business banker loved us, right? 10 days after the, everything started to happen. He sent us an email and said, Hey, we want to offer you this great loan.

$50,000 unsecured, low rate, no payments. We were like, yeah, that's awesome because we were really worried about the revenue stream over the next couple of months. We didn't really know what was going to happen. So we took out this loan that we didn't need, but just because we didn't have –

sufficient savings, we thought we should do it. We thought it was a good idea. Like I said, this was before Dave. Well, fast forward a year and we had taken financial peace by then and we were deep in the heart of Baby Step 2. And that's when we really realized what did we do this for? It's ridiculous. So that $50,000 debt went in our Baby Step 2. We put it in the debt snowball.

And I figure when it was all said and done, the interest that accrued over the year with no payments, the payments that we did have to make, it probably cost us about $3,000. Yikes. So what did you do with the $50,000? And looking back now, out of it, we're baby step seven. We don't owe anybody anything. And I can't believe I ever thought that was smart. Well, in a moment of panic and fear, you tend to make some pretty stupid decisions. That is true. Absolutely. And that's exactly what it was.

I took that loan out of pure fear, and I was using debt as my emergency fund, but I will never do that again. Yikes. Lesson learned. So $50,000 shows up in your bank account. What do you do with that? Yep, they made me take the money. They didn't just give me a line of credit to use it. They wanted me to take it so they could get interest ASAP. Did you actually use it to cover the business, or did it become sort of a lifestyle spending fund?

Well, honestly, George, I didn't even really ever need it. I'm more in real estate, and real estate was booming. That's right. My husband's in a different industry that really relies on large gatherings like festivals and weddings, and we were really worried about his situation, but he's smart. He was able to pivot and figure it out, though. Wow. Well, that's good. So we didn't even need it. That's the carry on top. Yeah. We did need the money, but it cost us three grand to have it in our account. Are you still friends with the business banker?

Yeah, we're still friends. Okay. Maybe just limit that relationship. He's just not loaning you money anymore. Yeah. Send him a Christmas card once a year, but maybe don't answer his emails when it comes to loans. Thank you for sharing that story, Jenny. That's a fun one. Hey, you know what that reminds me of, George? What?

Kind of during the same time COVID remember with student loans, it was like Biden's going to forgive your student loans. Oh, yeah. Get a refund on the payments that you made during COVID. Yeah. People were getting those advance refunds on the payments that they made. Like people who had literally paid off their student loans, got refunds on their payments and went back into debt thinking, okay,

going to forgive X amount and I'll get that money back. If you had paid your balance to zero and you made $20,000 in payments, the student loan company would bring your balance back to $20,000 as if you went back into $20,000 of debt. That's right. They went, good luck. The government will take care of you. Oh, that was a scary time. Yes. A lot of bad decisions were made. And a lot of people spent the money that they got back and then Biden never forgave the student loans and then they were on the hook again to pay off the $20,000 or the $7,000 or whatever it is again. Brutal. That was a...

That was a big old stupid tax. I know a lot of y'all paid that. I feel bad for you. All right, I'm going to share a listener's story here from Vincent about his stupid tax. My wife had this, quote, amazing idea of starting a hobby farm, so we moved from the city to a rural area. Over five grand later, I'm standing in the rain, getting kicked in the face, trying to milk a goat, and I'm chasing foxes trying to eat the chickens. Oh, man. No milk and very few eggs, and neither of us had the courage to do what had to be done for chicken meat, if you know what I mean. Ha!

Oh boy. That was like the worst. Wow. The worst children's story ever right there. Yeah, that is true. A lot of people are like, I'm going to be a homesteader. We're going to move and live off the fat of the land. And then you realize how difficult it is. Yeah. To become from a city slicker to the farm boy. That's a big jump. To just up and start a farm. Remember when eggs were so expensive and people were trying to buy chickens? Well,

Well, John Deloney famously had some chickens and I think they started getting attacked by some coyotes. And so he ended the chicken coop situation. And eggs aren't that expensive now.

We've come back down to reality. Yeah. But what you said about Ginny is true and about so many of us when we get in the state of fear, eggs are getting expensive. You go to like these crazy extremes or like chicken coop for $4,000. Take out a $50,000 loan. It's like your brain just it's definitely a temporary moment of insanity. Yes. Sometimes. Well, we always say no one makes good decisions when they're panicked or drunk. That's right. And some people were both during the pandemic.

Okay, here's a fun one from Olivia. Buckle in. My mom is paying stupid tax and has been for about 15 semesters of college. My brother's 26, is a full-time college student working towards a bachelor's. To be clear, he has no degree so far and has been attending college, quote, full-time since fall of 2015 after he graduated from high school in May of 2015. He has been academically dismissed from an out-of-state college and is now attending an in-state university where my mom pays for all of his bills. She's a college student

and recently bought him a new truck after he totaled my mom's 20-year-old Corvette. Every semester, when it's time to pay tuition, she hands him her debit card and has never officially seen his grades. Oh, boy.

Every semester, he has a new, quote, graduation expectation date that's typically six months to a year out. And when that time comes, he has another excuse about why he's not graduating. And my mother continues to fund this lifestyle and never hold him accountable, all while financially supporting him 110%. Don't be my mom, people. Set goals and expectations with your kids. Require some aspect of responsibility and accountability. And don't blindly pay for things without seeing the bill for yourself. Woo-wee!

Ouch. It sounds like mom is happy to pay the stupid tax bill for her little boy. Yikes. Well, what is it? Come on now. Now, Dave has a fun rule. He said, I will pay for college, but the requirement is you finish in four years. If you don't, it's on you. Yeah, you're on the hook for the rest. I like that mentality because that encourages you to go. I better finish in four years because homeboy has been going on many, many years and he's just having a good time out there partying on mom's dime and now driving a brand new truck.

All thanks to mom being an enabler and having zero boundaries. That stupid tax remains to be seen, but it'll come out in the wash, trust and believe. That bill must be paid eventually. And if that means mom can't retire, that's going to be on her. We've seen that story, Jade, where parents are like,

I signed up for the Parent PLUS loan because I thought I was being a good parent by taking on the loan for my kid. And by the way, if you're taking on a Parent PLUS loan, it's because the student loan company, who is scummy as all get out, doesn't even trust your little kid to pay back the money. So they go, we don't trust you. You need to co-sign her. And the crazy thing is when parents who already have their own student loans that they're paying back, then turn around and take out Parent PLUS loans. Which have a higher interest rate. So now they've got their loan plus their kid's loans on their back and...

Since they're older they have less time to pay it all off before they retire so there it's just and they go well I thought little Johnny was gonna pay and I just took it out in my name You know he said he was gonna pay and all of a sudden Johnny goes this isn't legally my dad Yeah, this on you, bro It's on you mom and dad you signed up for this because I we had a call the other day this guy went 270 grand into student loan debt for a computer science degree and now is making 50 working cybersecurity yikes

And I'm like, what made you think this was a good idea? That this was even going to ROI?

That's a lot of poor decisions being made out there and colleges are happy to take your money to raise the tuition because they know y'all are going to go out and take as many student loans as it takes. That's right. Yeah. In the moment, in the moment, it always sounds like a good idea because it's getting you what you want in the moment, whether it's, I want to feel like I want this anxiety to go away. I want to feel like I have money. I want to feel like I'm getting the degree, like whatever it is, we want it in the moment and whatever solution presents us getting fastest, whatever,

We kind of get fixated on that instead of opening up our mind and going, okay, what else is possible here? A lot of stupid tacks happening out there. But hey, learn from these stories. I don't want you to create a stupid tack story. If it hasn't happened to you yet, there is hope that you can avoid this.

Learn from us. Learn from us. So we're having fun here, sharing these stupid tax stories, and we've all done it. We're not here to judge. We just want to help everyone get better, including ourselves. That's right. Avoid these financial mistakes. That puts this hour of The Ramsey Show in the books. Thank you to my co-host, Jade Warshaw, all the folks in the booth keeping the show afloat, and you, America, will be back before you know it.

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 amazing relationships. I'm George Campbell, joined by Jade Warshaw. This is your show, America. Give us a call at 888-825-5225. We'll help you take the right next step with your life and your money. Paul and Chris join us up first in Nashua, New Hampshire. What's going on, guys? How you doing?

We're doing well. How are you guys? Doing well. What's going on today? Well, we are having an issue. We're trying to figure out how to increase our debt snowball. We earn $185,000 a year and are falling behind. And is that due to debt payments or you're just not paying attention to the money? What do you attribute that to?

Well, we have, not counting our mortgages, plural, we have $287,000 in debt. Can you break that out for us? What type of debt is it? Student loans. We have about $70,000 in student loan, most of it mine. Okay. We have $19,000 in a single car loan. Okay. We have $122,000 in two different HELOCs. Okay. Can you split the HELOCs out for me?

Sure. One is on... We have $87,000 on a HELOC on our property, on the house that we live in. Okay. And another $35,000 on a HELOC that my ex-wife lives in. Okay. And then we...

To have another $38,000 in solar. Okay. And about almost $38,000 in credit cards. Okay. So, and then you mentioned there's two properties. The other property is the property your ex lives in? Yes. And what's the arrangement there? Yeah. So the arrangement is she and...

She lives there with my kids, and I pay the mortgage on it. And is that the legal arrangement from the judge or what? It worked out to be just about the same amount as the child support alimony payment would be. Okay. So this is in lieu of those? Yeah. Okay. So you're stuck making this mortgage payment. You can't go sell this property, for example.

Correct. I mean, I could go sell the property, but then... Who gets the money if it sells? We split it 50-50. And is that part of the deal or you added that part in? No, that's part of the deal. Would that absolve you of having to make this mortgage payment and any financial tie? Or would you then still have to make alimony and child support? I would still have to make alimony and child support. Interesting. And you have a new spouse now? Yes. And you're both working?

Yep, we both work full-time, and I have a part-time job that I work 30 hours a week at. Okay, great. So you're working hard, which is good news, but we have a giant mountain of debt in front of us, and do you know what all the payments add up to for all of those debts per month? Yep, just without the mortgages, it's just $49.83. $49.83? And that's before food, utilities, shelter, transportation. That's just the minimum payments on all of these debts.

That's correct. And then you still have the two mortgages. Right. What do those add up to per month? $2,816. Okay. And what's your take-home pay between your wife and you? $1,105. Okay. The good news is those mortgages together, I mean, you could have a $2,000. You said the mortgages combined are $2,816, right? Yes. Okay. So that's the good news in all this equation is that the two mortgages combined are still less than 25% of your take-home pay.

For the most part. So that's good. And you have $3,700 left that hopefully covers insurance, food, utilities, all of that. Right. But is there anything left over? If you guys got on our tight budget, could you have an extra $1,000, $2,000 left over? $3,000 left over?

Well, that's what we're trying to do, and that's why we're calling in. Okay. Well, it starts with the budget to me. That is your source of financial truth, and we'll gift you every dollar premium to help you and your wife put a plan on paper. But right now, you're great at counting up all your debt, but we've got to start figuring out how we can attack the smallest one with a vengeance, knock that out, knock the next one out using the debt snowball method. So have you laid this out in a budget yet, or is this new to you? No.

No, we have. We have. And we just don't, we just are struggling to try and find extra to throw at it. It seems like every time we start to get a little bit of money, I'm sorry, it seems like every time we start to get caught up and get ahead, you know, life happens. You know, we just had, you know, $1,600 vet bill for one of the animals and just,

All those little things just keep happening. Do you guys have any money in savings right now? Nope. Just emptied it out for the animal yesterday. So you had $1,600 to your name. Yep. Well, are you guys done with debt? No, we have a retirement account. Sure. We're not going to touch that, though. Right. Should we stop investing in retirement? Yes. How old are you two? I'm 56 and my wife is 54. Okay.

At what point did you guys decide we probably should stop going further into debt if we ever want to retire? What was your I've had it moment? Well, most of this debt was incurred. We, well, me, we started a business and we just kept incurring debt to try and keep it, to try and get the business to take off. And it just never did. So finally,

But a year ago, we just, that was it. We said, we're done. Closed up the business. And now we're just trying to clean up the mess. How old are the kids? Youngest is 21. The oldest is 24. Okay. Just five of them. Okay. What would you net if you sold the other property? I would probably net about $150,000, $170,000. That's after the split? Yeah.

After the split and after paying all the fees and all that. That feels like your best bet right now to get above this. Now, long term, you still have to change your behavior. So I don't want it to feel like a shortcut, but that could knock your consumer debt down to $130 if you put all of the proceeds towards that. And, of course, you would now have a monthly payment you're making in alimony and child support, right? Right. But you also have freed up, you know, you've knocked out over half the debt. Mm-hmm.

I think that's the move. If you can legally do this without, you know, you're uprooting your family in a sense. Right. And they would have to find somewhere to live. Right. But the kids are all grown. But yeah, the kids are about out of the house if they're not already. Right? Yeah, as far as my kids, not my current wife, Chris. Okay. My kids, one is out of the house. The other two are, one's living there, one's still in college commuting. Okay. Okay.

Well, I think that's the move. And then following that debt snowball method, using the every dollar premium budget that we're going to gift you, hang on the line and our team will make sure you get the link to get that app and we'll hook you up with the premium version. But this is going to take some drastic measures. And I think part of that is taking the proceeds of the home sale and knocking out half your debt to free up enough payments to actually make some traction on this. But you got to cut your life down to nothing for the next probably three years to clean this mess up and get back to investing. This is The Ramsey Show.

This is The Ramsey Show. Open phones at 888-825-5225. If you need to get out of the house, join us. We've got a brand new event called Total Money Makeover Weekend happening on May 10th and 11th right here.

by the headquarters at our brand new Ramsey Event Center in Nashville, Tennessee. I know there's a lot of you out there. You've been listening a while, but you've been sitting on the sidelines. You've been kind of Ramsey-ish. You're sort of dipping your toes in the water. Or maybe you're in Baby Step 7 and you need a little pep in your step because it's a long journey.

Turns out after you pay off debt, life isn't over. You still got to live for decades potentially. So in just one weekend, you're going to get a crash course on everything we teach about money. We have brand new content from every single Ramsey personality, Dave Ramsey, Jade Warshaw, Ken Coleman, Dr. John Deloney, Rachel Cruz, myself. And we're going to

We're going to light a fire under your butt to keep making progress on those money goals. And this is going to be interactive. There's live Q&As. We've got Smart Money Happy Hour happening on Friday night. So this is a destination weekend event. So start budgeting for it and get your early bird tickets, which start at just $99 for a limited time. This is it. If you want the best deal, and if you're like me, I love a good deal, this is the time to get it. The Ramsey Event Center holds about 2,400 people. So this event will sell out.

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All right, Jade, it is time for our question of the day, brought to you by Neighborly, your hub for home services. Here at Ramsey, we believe in making home ownership a blessing and not a burden. So we recommend Neighborly's network of service pros to repair, maintain, and improve your home. Find the help you need at Neighborly.com slash Ramsey today.

Awesome. Today's question comes from Ben in Oregon. He says,

We could move to another state and live much better than we do here. Emotionally speaking, it makes sense to stay here. However, financially, it makes no sense at all. If you were in my position, what would you do? Ooh. Ah, I have free reign over this. This is cool. Well,

have questions there's never enough information because I kind of want to know what their dream is right like they live in Oregon we know there's many places in Oregon where real estate has gone crazy I want to know if they have kids I want to know do you know I mean I want to know more about it what's the relationship like with their family and in-laws and parents is everyone nearby is it close-knit because I said deep ties I

But we all have deep ties to our hometown in a sense. You know, it's emotionally, it's sentimental. Yeah. We know it well. But the fact they're even asking this question tells me their heart is kind of going, there's something stirring in there saying, I feel like we should just move. Well, there's, let's give them some scenarios to play out. My thing is like, if you are, let's say they live in a really small place and they know they want to start a family and there's no way to get the home that they want for the family size that they want.

are thinking about, then moving could be a good option. But if I'm like, if you're in a house that's working for you, you just know that it's doubled or whatever, tripled in value, and you just are kind of like antsy to get at that money, that might be a reason to kind of slow down and just say, hey, just enjoy the fact that your property has appreciated in the manner that it has. I really just think that there's...

Let me be, let me think philosophically for a moment because I do think that it's great to be able to financially live the life you want, but you have to ask yourself at what cost and are you doing this as a necessity or as something you just want maybe? Because if you're just, if they're debt-free,

If their house is a fine size for them and they're just like, oh, but, you know, we have six hundred thousand dollars in appreciation, you know, they might just be wanting to get at that money. But if if if they're out of debt, kids are fine. Space is fine. You know, they might regret moving just to get a bigger house. Yeah. The grass always seems greener. And then you move and you go, gosh, I just miss my hometown and the family and people end up moving back. And so what's good is that none of this is fantastic.

fatal or final. And so what I would do personally, if I was in your shoes, which is how Ben asked it, I would go travel and go to the places I'm thinking about living and explore the neighborhoods and see what's around there. And is this a place we want to live and talk to a real estate agent and ask about schools and all the things you're wondering about before you make a move? And so he said, financially, it makes no sense to stay there, which tells me

it may be an expensive area and they're it's not a sustainable place to live so the other thing is they might not be able to move up yeah yeah i don't know about his va disability income and the janitor and substitute teaching they may want to find careers that they can really sink their teeth into and increase their income to where they can stay there and make it financially sustainable yeah that's our hot takes ben you got some homework to do my friend but thanks for the question that's an interesting one yeah guys when you sign in these questions be detailed

It helps us. It does help us. That's why we like the phones, because we can dig in with the questions. The question of the day, while fun, harder to do that. So appreciate the question, Ben. Best of luck, no matter what you do. Olivia's up next on the phone lines in Cincinnati. Olivia, welcome to The Ramsey Show.

Hi, thanks. Thanks for taking my call. Sure. What's going on today? How can we help? So my husband and I are both 25 years old. We've been married for about a year and a half now. Pre-tax, we make about $130,000 a year. We have $13,000 in an emergency fund. We have another account with $32,000 in it for a down payment on a house.

Um, the only debt that we do have is that before we were married, my in-laws purchased a car for my husband and they said, we'll pay the first 12,000 on it. And then we have to pay the remaining 9,000. Um, and that is going to come up.

this July. We'll have to pay that. We have $5,500 of it set aside and we will have the remaining $3,500 in July. So we will be able to pay that off as soon as July gets here. I guess my question is, we're renting right now in Cincinnati and we're kind of

in a crossroads, not sure what to do. October, our lease is up and we're saying, okay, do we keep renting or do we buy a home? We are really young. We're only 25. Um, but we do feel like kind of that itch to have something that's our own and not just keep renting from someone. So I would be interested to hear what your take on our situation would be. I mean, can you afford the house that you're looking at with $32,000 down? Um,

Because at the end of the day, what you're looking at is to fulfill an equation. You want to make sure that you're on a 15-year fixed rate mortgage where the payment's no more than 25% of your take-home pay. So if you can meet that requirement, you know the area you've been renting in Cincinnati, then you're seeing a lot of green lights. You've got your emergency fund here. Yeah. And you're saying this $5,500 is outside of the emergency fund or down payment account?

Yes. So I have all separate accounts for everything. And so, yeah, I have $5,500 set aside for it. And then by July, we'll have the remaining $3,500 that we need to pay the $9,000 off. Okay.

Because my in-laws had been paying payments on the car, and my parents kind of drilled into my head my whole life, do not get a car unless you pay cash for it. So when they told me we were going to have to have $9,000, I was like, okay, no, we will not. Because they said, you could just take over the payment. And I was like, we're not going to do that. I don't want a payment in my life.

Absolutely. You're doing it the right way, getting rid of this car debt as soon as possible. And so I would go do the math. We've got a mortgage calculator on our website that you can use to start to crunch those numbers. And so really, it's not about the timing issue. If you need to sign another six-month lease because you need $40,000 down, I'm totally okay with that. But do not jump into a house before you're ready to where you're like, well, we could do it, but it's on a 30-year and it's going to be 40% of our take-home pay because you're going to be calling us back going, we're stressed, we

we somehow can't make this mortgage payment. This house has become a burden instead of a blessing. And I don't want that for you. Okay. That's, that is really good advice. I,

I love it. Well, thank you so much for the call. Love that question. Young couple wanting to be homeowners, but wanting to do it the right way. Yeah. I looked in the Constitution. There's nothing that says you have to be a homeowner by 25. Absolutely. Or that you have to own a home as soon as you're married. So for all the couples out there, whether you're 25 or 55, don't just buy a home because you've heard it's smart to own a home. Mm-hmm.

And that you've heard renting is a waste of money because you're not building equity because you're going to be calling the show a few years from now saying the home is too much. Should we sell it? Yeah. We thought it was going to be fun, but it turns out homeownership is really expensive and there's property taxes and insurance and maintenance and repairs and the HVAC went out and the roof needs to be repaired. That's just too much stress. Life's too short to have that level of stress. So just rent. It's buying you patience. Do it wisely and you'll be far better off in the long run. You'll have financial peace and it's always worth the price you pay for it.

More of your calls coming up, 888-825-5225. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. We've got a fun livestream happening next week, Jade. Yes. Do you know anything about this? I do know about this livestream. What do you know about this livestream? Okay, so what's cool about it is it's George and I, we're chopping it up right after The Ramsey Show. Whatever Ramsey Show airs that day,

right after we're gonna come on and we're gonna pull up oh that's right it's in the morning i forgot we changed james give us the details 9 to 10 a.m central okay wonderful well there you have it james tells us all i don't have the notes in front of me okay so let me let me run it back last time we did it it was immediately after the show

This time we're going to do it in the morning so that more of you can watch it. But the thing is, we pull up every dollar right on the screen. Never been done before. Never been done, except that one time we did it before. That's right. And the second time in history it's ever been done. But you guys call in and you give us your budgeting questions and we can actually show you and every dollar how to do it. So Tuesday, the 27th of February, 9 to 10 a.m. Central.

That's 10 to 11 Eastern if you're doing the math at home. You have a specific time. Join us on the Ramsey Show YouTube channel. And what's cool is you can go hit the little bell to be notified when we're live. Because a lot of people forget when it's like a YouTube live stream. So hit the button to get notified on the Ramsey Show YouTube channel. You'll see a little thumbnail there that our team has got prepped. It's called something like how to build wealth with every dollar. That's right.

So check that out and we're going to have some fun walking you through not only your questions about budgeting, but getting to show you how to tactically live this out with the EveryDollar app. So looking forward to that. Don't miss it. It's going to be a good time and it's completely free. So you get nothing to lose. Free. If it's free, it's for me. If you hate it, we'll give you your money back. How's that? Zero dollars. All right. Let's get to the phones. Alina joins us in Charlotte. What's going on, Alina?

Hi, George. Hi, Jade. Hey. I have a question about my budgeting slash like credit score. Okay. And so I am currently about $74,000 in total debt. This is including credit cards, student loans, an eviction, a car loan, and I'm including like car insurance and phone bill in there.

Are you behind on those? I'm sorry. These are the car loan and the other, or I'm sorry, the insurance, that's things that you're behind on? That's things I'm including in my total debt, but I'm not behind on anything besides the credit card. Okay, so let's not include it if we're not behind. Let's just call that a fixed expense on our budget. Is that fair? Yes. Okay. Okay. So what's your question?

So for budgeting purposes, my credit score has gone down. So I wanted to ask you guys, would it be smart to eliminate one of these credit cards to begin with?

or start paying down like through the snowball effect, just my smallest amount up to the biggest one. Yeah, definitely. So the purpose of paying off debt is so that we don't have to go into debt again. And when you don't go into debt again, that's also you simultaneously making this decision that I don't,

borrow money and I don't care about my credit score anymore. They go hand in hand, whether people realize it or not, because you don't pay off debt to go back into more debt.

The hope is I paid off this debt. I'm never doing that again. And when you make that decision, credit automatically kind of goes with it because you cannot have a credit score if you're not borrowing money. And so the piece I want to give you about that is when you pay this debt off, you will have money to where you won't need that credit score. So to answer your question, I would do it the way the debt snowball says, list them from smallest to largest by balance, by full balance, not by payment amount.

and if your credit card is not the smallest balance, then I would not pay it first. What is your smallest balance? For my credit card? Well, the smallest balance is like a payment plan, but the total balance for that credit card is actually one of the biggest. So just focus on balances instead of payments. If you ignore what the minimum payments are, what actually has the smallest loan balance out of all your debts?

Oh, one where the credit card company is going to pay off half the balance if I pay one half in the next two weeks. Is that a settlement? Yeah, it's like they'll pay the difference to cancel out basically the credit card to zero. Okay. What's the catch here? Why is this credit card company- Has it just been delinquent forever? Yeah. Are you way behind on this to where they're just willing to settle? They said, hey, give us 50%, we'll call it good?

Yeah, I think so, yes. Okay, make sure you get that in writing and make sure that you don't give them access to your checking account. Okay. Did you already give them access to your checking account? No, they just said it's like a credit card reduction where, you know, I pay the 50%, they'll cover the other 50%. Is this the actual company or is this the collection agency? This is the actual credit card company. Okay. Get it in writing. What's your income? $1,000.

My income currently is about $1,400 a month. Okay. What are you doing for work? Currently I'm a weekend receptionist at a senior care facility, but I have been looking for more like full-time work, including the weekend work that I currently do. Do you have kids? I do. I have one son. He's three years old. Okay. What's the child care situation?

Child care, he's with me during the week, and I will have help with child care if I do get a job during the week. Okay. You need to be working full-time starting tomorrow. And if that's retail, hospitality, whatever you have to do, you've got to be working at least 40 hours a week if you want to make headway on this debt. Because you're at the poverty line right now. You're making $16,000 a year.

And so trying to pay off 80, making 16, you're not going to have any margin to throw. You're going to continually go into debt because you have nothing, no margin in your income. And so we need to get the income up. That's the big factor here. And then we'll figure out child care from there. What's left on the car loan? Car loan? I just got the car last year, so it's $15,000. Gracious. I think we need a downgrading car. What's it worth? $15,000.

I actually don't know. It's a 2013 Volkswagen Passat, so it's a used car, too. I doubt it's worth $15,000. Yeah. I think you got screwed on that deal. Tell us about this eviction.

Yeah, so basically I chose to work. I switched jobs, so my income did change drastically, like $5 an hour, but I was much happier at the other job that I chose over the other ones. So it was just really just the decision of

my overall well-being and stress level to work a job that was less paying, but I was more happy with the work. Well, your current life feels real stressful financially. And so I'm okay being a little stressed when it comes to work if it means we can clean up this debt. So the eviction happened because you couldn't make rent anymore because you lowered your income? Yes. Hey, is there a medical reason you're not working? Like, is there a medical reason, like mentally speaking, that you're not working? No.

No, I just, I moved from a different state. So I moved back home with my family here in North Carolina and I moved from Florida. So Florida does have like, you know, high rents and as a single mom, you know, not the brightest idea. Are you living with family now? Now you've got your family around you, right? So you've got the support system. Yes. Are you living with them? I am. Okay. I think...

I think you need a sense of urgency. I feel like you're kind of like lollygagging and it's like, oh, that's not great, but here I am. And you know, that job, I just didn't like it. And I mean, I'm going to talk tough to you a little bit, but I'm like, you've got a kid, like you got to go after it. You got to go get it. And right now I feel like you're kind of

leaning back a little bit. And I feel like I can talk tough to you now because there's nothing, there's not a health issue. There's nothing standing in the way other than you just getting after it. You moved back to Florida to be with your family. You cannot use this as an opportunity to get lackadaisical. You've got to get moving and you've got to do it like yesterday.

Hang on the line. We're going to send you Financial Peace University. I want you to watch all nine lessons, Alina. I hope that puts some fire in your belly to get outside of this and change your family tree and give that little kid a wonderful debt-free life. This is The Ramsey Show.

I'm George Campbell, joined by Jade Warshaw. This is The Ramsey Show. If you're enjoying this show, be sure to check out all of the great shows on The Ramsey Network. Many of the personalities are out there doing their own thing with Ken Coleman's show, Filming Next Door, and The Dr. John Deloney Show, which has just been blowing up, The Rachel Cruze Show, Smart Money Happy Hour, and, of course, yours truly.

with the YouTube channel. So go check all of that out. We've got content hitting you every day to keep you inspired, keep you on the path, and keep you growing in your money, relationships, and work life. Christine joins us up next in Chattanooga, Tennessee. Christine, welcome to the show. Thank you. What's happening?

So I was just wondering if we should use our gift fund that we have to put towards debt. We're currently in babysit two, but all five of our kids' birthdays fall between November and January. So instead of giving ourselves permission not to put as much towards debt during those months, we put $100 in a fund each month throughout the year. But at the same time, I just don't know if we should be adding that extra $100 that we're paying off or if we should...

So you've got five kids. You're putting away $100 a month for gifts for when their birthdays come at the end of the year. Yes. Does this include Christmas too? So this covers everything?

So you're saying do we forego all gifts this year and tell the kids, sorry, kids, mom and dad are paying off debt, you're not getting anything? Or what are you planning on? No. What I would say is the other option would be to come November, December time, basically not put as much towards debt during those months. I'm just a little afraid to give ourselves permission to stop putting as much as we are right now towards it. So you...

become a habit. George, you can say what you're going to say. You have five kids. You're putting away $1,200 a month. To cover five birthdays plus Christmas gifts for five kids. I'm not going to stop. I think that's very reasonable. It doesn't sound outrageous. Again, truly, it's not going to make that big of a dent. How much debt do you have? We have $42,000 right now. What kind of debt is that?

So we have $20,000 to a family member, and then we have $11,000 in one car and $10,000 in another. Okay. What's your household income? So we are doing a lot of side hustles right now, but I make $26,000 a month, and then my husband makes $26,000 a month, and then we bring in about $800 from DoorDash. He does it in the evening, and we do it as a family on the weekend. So you're bringing home $6,000 a month?

Yeah, that sounds all right. Great. And how much are you throwing towards those debts using the debt snowball? Anywhere from $2,000 to $2,300 we budget for $2,000, but if we're able to bring in a little bit more on the side jobs, it goes straight to that as well. Okay, so you're on track to pay the rest off in about 18 to 22 months? Yeah, I would say about 18 to 20 months. Okay. And you would speed it up slightly by...

So yeah, by pausing your gift fund, this might speed up by a month. And so I don't know that it's worth foregoing the gifts for the kids. I'd rather see you guys use side hustle money to pay for that and to try to not slow down the debt process. But I'm with Jade. I feel like this is a reasonable expense that just stays in your budget. This is not frivolous luxury spending. Yeah.

Definitely could be. And you know what I would do? I would try to be on a budget, shopping the sales hard and getting the kids just what they need and nothing more. And then if you have money left over in the gift fund, let's throw it at the debt come February. Definitely could be. All right. Thank you for the call. It feels good to have solved one mystery in the show, Jade. I feel like that was a decent resolution for our friend Christine. But I just, I don't know, gift for the kids. That one just feels...

Yeah. Especially when the expectation has been like, hey, we get a gift a year. It doesn't sound like these kids are entitled and spoiled. No, not at all. And when you really think about the cost around birthdays and holidays, it's kind of hard to do all of that for any cheaper than what she said. Yeah. Because you think about Thanksgiving and Christmas alone, you're having a big meal. You know, there's...

halloween you buy him a costume or maybe they use the one from last year but you know there's still these little bits of money that add up for all of that and what i'm thinking about with five kids 100 bucks a month that goes lickety split easily so she's doing good a lot going on there all right let's go to ashley in salt lake city ashley welcome to the

Okay, so we have about $13,000 in consumer debt. We had to take out a home equity loan for our heater that had broken a few years ago. And it's only a 4% interest rate on that. So we've been paying off on that. And then we got some inheritance money that we put in the bank for our savings. That's all the savings that we have. How much is it? About $15,000. Okay. Okay.

So not a whole lot, but enough. And that covers about three months of our emergency fund type savings. Then six months ago, I decided to go back to school, which will increase my salary significantly. But I took out a loan for that. And that's a 7% loan. Not due yet. How much is the loan for?

When I'm done with the two-year program, it's going to be $25,000. Okay. When are you going to stop borrowing money? Exactly. This is the cycle we keep doing. We keep having things come up, borrowing the money, paying it off. And if it hadn't been for somebody leaving you money, you would have nothing. You would have zero savings. Let's be clear about that. Right. So what's the plan? You tell me. What are you asking us for today?

So I'm asking which debt to pay. Should I just go ahead and pay for school instead of going into more debt? That's what I think because it's a 7% interest. But it's not due yet. So should I pay off the $13,000? Well, stopping the bleeding is definitely A1. So we want to stop going into debt. So you're saying you haven't gone into the debt yet fully for the school?

Well, I have... She did, but it's not due yet. I mean, I have already paid for six months. Okay. It's not... Technically, it's not due till you graduate. You're already on the hook for the $25,000. Yeah, I'm going to keep going. So we've got to go in order from smallest to largest. The savings, it's not really savings until you've paid off your debt. So yeah, keep the $2,000 aside. Pay off this HELOC for $13,000. You've got $2,000 there. And then...

this loan that you have um i would start especially especially if it's uh unsubsidized i'd start making payments and pay it off there's no point in waiting until you're out of school to pay it off um like i said if it's unsubsidized it's going to start accruing interest so keep a thousand aside and put a thousand on this student loan knock it down to 24 and while you're in school and um what does your husband make like what what will be the income while you're in school

So he makes about $120,000. What's he bring home every month? Probably $8,000 a month. Okay. And are you guys contributing to retirement? Yeah. He has a 401k and his company contributes as well. Okay. So again, I'm challenging this. If I were in your shoes and the way we teach is that I would pause that contribution because how much is it every single month? Um...

If you had to guess. I'm not sure the exact number. Okay, let's say it's... I'm guessing he invests up to the match, probably 4% or so. Yeah. Okay, so that would free up a huge chunk of change every single month to help you attack the debt. Yeah. And you know what it's going to happen to if he pauses that? He's going to want to unpause it real quick, which means he's going to be willing to do whatever it takes, and so will you, to get rid of this debt fast. Y'all have been living fairly comfortably...

you know, slightly uncomfortable because you don't like the debt, but you know, well, the heater went out, we didn't have the money, we'll just take out the home equity loan, which is now secured by your own home, which puts your home at risk. And I want to go to school to increase my income, but I'm going to go into $25,000 in debt and then we'll figure it out later. And so we've got to start thinking about future me and making decisions that would make y'all proud. And part of that means we're taking this inheritance and it's really not going to be an emergency fund. It's going to be pay off the home equity loan fund.

Yeah. I just worry about not having any savings because we do live in an older home. Y'all didn't have savings before.

Yeah, you can't play that card because you didn't have savings before and you didn't do anything to get savings. I'm worried about y'all being in debt for the next 10 years instead of cleaning this up in two. That's right. Y'all make too much to feel this broken and be experiencing this level of pain. So I'm doing whatever it takes. Pause the investing. Use the inheritance to knock out the debt. Get on a tight budget. We're not eating out. We're not going on vacation. And in a year or two, you're going to be out of this mess. You guys make great money and you don't have that much debt. You can clean this up real fast if you get intense. 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 amazing relationships. I'm George Campbell, joined by Jade Warshaw. This is your show, America, so call us up at 888-825-5225. And as you're enjoying the show, if you could do us a quick favor, it's completely free, hit

Hit the subscribe button, the follow button, wherever you're listening. Hit the like button if you're watching on YouTube. Leave us a kind review and let us know what you think of the show. All of that stuff helps us reach more people. It helps make the algorithms happy. And that's what we're all about here is continuing to spread this message of hope in a world gone mad. Curtis joins us up first in Boston, Massachusetts. Curtis, welcome to the show. How are you guys doing? Doing great. How can we help?

Awesome. So I'm in a little bit of a predicament here. Obviously, the housing market is kind of crazy right now. Interest rates are slowing down, but they're still relatively high compared to what my parents went through and so on and so forth. So this past year, I made $100,000 with bonuses, and I've been pre-approved for $250,000.

I am not sure what I can really afford due to the fact that my income fluctuates throughout the year. So overall, I did make a hundred grand. Yes. But some months I'll make six to seven, sometimes eight. And then sometimes I make less than 4,000. So it's hard for me to really budget what I can't afford at the end of the day. And I was hoping you guys could help me out. Sure. So give us a bigger financial picture. Do you have any debt?

Yes. Well, I just paid off my college loans. That was about $40,000. Good. Thank you. And I have $20,000 in my truck, and that's about it. And then I think $2,000 in credit cards. But other than that, nothing. And how much do you have in savings? I have $41,000. Cool. And that's everything that's non-retirement is the $41,000?

Liquid cash? Yes, sir. Okay. And that was, I'm guessing that was kind of your down payment fund as you look to be a homeowner? Yeah, that was going to be down payment, closing costs, you know, all that fun stuff. Okay. And then what kind of house range were you looking at? What's the price point here? It's hard because anything below $200,000 is a fixer-upper, and that's putting it lightly. Are you looking at a condo outside of the Boston area? Yeah.

I was thinking about it, but I've always wanted to be a homeowner, to have my own land, my own property. So at the end of the day, I would like to be a homeowner and look around the 230 range. So 230 would get you a single-family home? Yes. What area is this? I'm curious because I'm from the Boston area. I'm just trying to wrap my head around this. Western, Western Mass. Okay, cool. So let's say 230 is your goal.

I would base your monthly mortgage payment on one of your rougher months. And you can create kind of a peaks and valleys fund. So if you have an 8K month, but you can learn to live off of three or four, then you can put away some of that money to cover you when you have a 4K month.

Okay. So that's one strategy, but it's going to make your whole life more peaceful if you can go, all right, my worst take-home pay is probably going to be four grand. And so I'm going to get the mortgage that's 1250. And that might mean I need to save up for a longer period of time before I get this mortgage. Yeah. And that's kind of what I'm figuring out that I need to save more and more in order to put that 20% down or more. Well, I've got a plan that will help you, but it's not going to make you happy in the short term.

You ready for it? Okay. Yes, sir. That down payment fund is about to turn into getting rid of the truck loan and credit cards fund. And the good news is you can get rid of all of your debt and still have $19,000 left as your emergency fund. But then you're basically starting from zero with your down payment fund. Correct. But let me help you out. What's your truck payment?

$499. You just freed up $500 right there on top of the minimum credit card payment. So now with an extra $500, no debt in your life, how quickly could you save up another $40,000, making $100,000? A lot quicker. Probably a year, a year and a half?

Yeah. Okay. So that feels like a more peaceful way to do this that will allow you to then put 40, 50 down on a 230 property. And then you'd have what? A 90,000, 190,000 mortgage? Yes. And so then I would crunch the numbers on the mortgage calculator to go, all right, if I did a 15 year fix, so I don't want this mortgage hanging over my head, 25% of my after-tax income, is it around that 1250 mark? Is it around that $1,500 mark? Now we're talking.

Okay. So we got to move slow so that we can move fast down the line. But right now, we've got a lot going on at once. Are you investing as well? Yes, I am. I have a Charles Schwab account, Roth individual. How much are you putting away each month? About $100, $100. Okay. So not a ton. It's not a ton. But once you've paid off this debt, I would, you know...

you've got the savings to do it but once you get to baby step 3b which is saving for a down payment you get to decide which one you're going to do first if or if you want to do all three at the same time you can save for the down payment and continue to invest or you can say you know what i want every dollar that i can thrown at this down payment if you can save it up in two or three years and then invest after that okay how old are you got some options all right thank you and what was the other question how old are you curtis i'm

I'm 26. Oh, amazing. Well, you've got a lot of time on your side. And so I know you're itching to be a homeowner, but the difference between being a homeowner at 26 versus 28, not a huge difference. And so I know it feels like, oh my gosh, what if the housing prices go up? And I'm going, yeah, but what if you jump in a home before you're ready?

That's even worse. With a truck payment, and you bid off more than you can chew. And we say that not to scare you, but because those are the calls we get on the show, is when it didn't work out like they thought it would on paper, and people are in a real financial bind. Yeah, no, I listen to your show all the time, and I listen to these horror stories, and I just do not want to be one of those guys. Oh, you're smart. I love that. And, man, you're doing so well. You're making six figures at 26 years old. So good. You have a bunch in savings. You can clear this debt today.

I mean, before your shift at work is over, you can be clear of this debt and be driving that truck completely debt free. And that's what I would do. Yeah. And you'll be a homeowner in no time. That's pretty amazing. That's comforting to know. You can buy a home in Western Massachusetts for $230 these days. I know. That's great. It's way outside of the city. That helps. That is true. But he said something that I think so many of us get caught in is right now it's really easy to compare...

where we are financially, where we are with the state of economics, the housing market to another time period. And it's like... To our parents' time period. Even, yeah, even 10 years ago when you get caught up in that and like Rachel says all the time, comparison is the thief of joy. And as long as we keep comparing it to, oh, but back then it was this and in 2020 and it was this and back then, it's like you just get swept up in that all over again. It's like the wound, you keep just opening the wound up and it's like...

We just have to, like John Deloney says, choose reality and go, this is the way it is right now. I don't know what it's going to be in the future. I can't compare it to my mom. I can't compare it to my dad who's on social media. The people who bought their houses in 2019. Yeah. I see these TikToks, Jay. They drive me crazy. And this guy is just riling people up going like, do you know how much harder it is? I'm like...

This guy's not trying to give you hope. He's trying to get clicks and views and just make you angry with no solution. But it's like just live in where you're at right now and find solutions and find contentment in where you're at right now and just accept, listen, what a time to be alive, no matter what the time is. And then you can find some happiness and contentment there. That's right. They didn't have smartphones back then. So do you really want to go back in time, kids? I didn't think so. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw.

Well, it's everyone's favorite season, tax season. The filing deadline, if you didn't know, Monday, April 15th. Mark your calendars. It's going to be a hot one for your federal tax returns and payments. So in 2024, I'll make this painless as possible. You got options on how you're going to file your taxes. So let's talk through them.

One option is the IRS direct file. So this year, the IRS is launching a pilot plan known as direct file that will give you a free way to submit taxes. And only 12 states qualify. Arizona, California, District of Columbia, Florida, Massachusetts, Nevada.

Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. Now, this has to be like a really, really simple tax return in order for you to use the IRS tool. And the timeline's a little suspect. As it is with the government, it's going to be rolled out in phases and final testing. Final testing is completed and it'll be expected to be widely available in mid-March by the time most people are already filed. I don't want to be a guinea pig for this. Yeah. You know what I'm saying?

I don't know. They're making the deadlines a hard April 15th, but the rollout is like, I think mid-March we'll have it available, maybe. Yeah. Goodness. And this is software built by the government, so lower your expectations. Yeah.

The same people who brought you the DMV at healthcare.gov introduces IRS Direct File. I don't know about this. So here's some feedback from the New York Times about Direct File. Okay. Here's some quotes. It's a half-baked solution. It's a solution in search of a problem.

Direct file is not free tax prep, but rather a thinly veiled scheme where billions of dollars of taxpayer money will be unnecessarily used to pay for something already completely free of charge today. Free to the taxpayer and actually free for the government. Interesting. Here's where it gets really interesting. Guess who the source of those comments was in that New York Times article.

If you're guessing it rhymes with Furbo Wax, you're right. Furbo Wax. Yes. Turbo Tax. It was a spokesperson for Turbo Tax that said all of that, which sort of muddies the waters when they're trashing the government.

Yeah, I mean, they want the business. Yes. So let's talk about TurboTax while we're at it. So we've talked about this. I broke this down. I was real early on the case back in 2021. I talked about this on my narrative podcast series called The Fine Print. And it was all about how TurboTax is trying to screw you. Yes. And they're succeeding. So their whole business model is funneling you into debt products. Let me remind you, Intuit owns TurboTax. That's right. Intuit owns Mint.

And they're shutting it down to push people to credit karma because they have a hard time selling you debt through a budgeting product, which is meant to manage your money. Debt. They want you to get into it. And so think about that. That was very clever. I like that.

So TurboTax and Credit Karma are now in cahoots. They're kissing cousins. That's right. So the FTC ruled they had committed egregious violations of the federal prohibitions against deceptive acts and practices touting free tax prep on the popular platform. And in reality, they were requiring people to pay for its filing services. So they reached a $141 million settlement with state attorneys general in 2022 for this deceit.

And the FTC commissioners ruled that Intuit had, quote, blanketed the country with deceptive ads to taxpayers. And not even good ads, let me remind you. USA Today rated them in the bottom five. If you watched the big game, you saw those TurboTax ads. So they weren't even good commercials. And they spent $21 million on sucky ads. Well, you know...

They don't know how to manage money. Where are they getting that money? From you guys. Their whole new model is trying to funnel you into debt products through their quote free tax filing software. So don't trust it. And if you want a better option for self-filing, we introduced one a few years back to help you avoid these traps. It's called Ramsey Smart Tax. It's simple,

You can trust it. It's easy to use. There's no hidden fees, no hidden agenda, just low upfront pricing. And it teaches you along the way. It educates you on everything you're doing. So it makes taxes feel less painful, less like you're stepping on a Lego brick.

And it's been around for a while. We're not testing it on you guys. We're not a guinea pig and we'll never sell your data and sell you debt. So if you're ready to save up to 70% on the cost of e-filing and file with confidence, go to ramsaysolutions.com slash smart tax to get started. And I think you'll see my smiling face when you get there to encourage you that you can do this. I'm here for you. I like that. ramsaysolutions.com slash smart tax.

All right, let's get to the lines. Don awaits with bated breath in Greenville, South Carolina. Don, welcome to the show. Hey, guys. Thanks for having me. How are y'all? We are doing well. How can we help today?

Yeah. So I wanted to call and ask. So my wife and I, we are about $220,000 in just through the loan debt, no other debts. Woo! Yikes. Yep. And we bring in right now about $10,000 a month, give or take. Okay. So we are gazelle. So we've moved out of our one apartment. We're into a small apartment. Okay.

My wife is picking up extra shifts. I picked up a side gig, so we're trying to knock this out. However, we just found out that we are pregnant. And so right now my wife actually dropped down to PRN, which is as needed. So she's a physical therapist. So she is not full time. She's jumped on my benefits. However, this allows us to make more money as a family.

The only downside is if she doesn't work, we don't make money essentially. And so with us being pregnant, my question is, you know, we're anticipating her not working for about three months after the baby comes. Should we pause paying our debt right now to save up about three months expenses?

And then continue back our debt right now, because right now we're paying about $5,000 a month to our debt. Yeah. And so we're living on five, paying five away. So there's no maternity leave here? There's no pay during that time? No, exactly, exactly. We have no maternity leave, so she's as needed. And you guys can't survive off of your income? I bring in about $3,000 a month.

So, I mean, we could. It's going to be tight. We're probably going to have to get a bigger place. I mean, I would consider this stork mode for you guys. I mean, as much as I'm excited that you guys are gazelle intense, you're paying off the student loan, until the baby comes, I would pile up

as much money as you can, not just three months of expenses for maternity leave, but honestly, as much money as you can from now until the baby's born. The hope is that everything goes well, right? And the baby is healthy and your wife's ready to go. And then you've got that money that's also there for that period of time where she's not working. And then after that, whatever's left, you can throw it towards the student loans. How much could you save up between now and then if you just piled everything that you were piling onto the debt?

You know, if we save, you know, at least, you know, at the minimum, you know, if we save $5,000 for the next eight months, you know, $40,000. I like that plan. That's great. And beyond that, I think we need to find a way to get your income up because you've got a big hole. We need to increase the shovel outside of your wife even going back to work. And clearly she's crushing it. But $220,000, that's a big...

student loan. That is big. And so, you know, I'm doing the math here. Ideally, on average, people pay off their debt in 18 to 24 months. Now, Jade and her husband, Sam, their story is pretty wild. They had almost half a million and it took, what, seven and a half years? That's right. That's right. And so it may not be that two year mark, but I also don't think this needs to be an eight year plan. Right. You guys got to get pretty intense.

I think it was May 2028 is what our goal was. We're on every dollar, all that stuff. I think the goal is we did $5,000 a month. So four years. And that's if your income doesn't change. And my plan is your income doubles in the next year or two. What do you do for work? I'm a college football coach. Okay. What's the career trajectory look like for you to kind of move up the ladder and make more money in that field?

You know, it's really just a phone call away, and I could double my income overnight. It just kind of depends on if I'm going to get picked up or not. Well, why aren't we doing that every day to win that lottery? How do I get that phone call? Yeah. Trust me, we're trying. Yeah, I'm reaching out. You got to win some games or what? Yeah, I got to win some games. That's a fact. All right. Hey, let's really put the pep in the step of those players. Yeah, and what can you do in the meantime to pick up some more money?

Okay. Okay, that's good. Can you do like private coaching or anything like that with your abilities? Oh, got it. Well, I'd do all the side hustles I can until you can get that income up because we need to be throwing, you know, $7,000, $8,000, $9,000 of this debt. And that means you guys have to be bringing in $13,000, $14,000, $15,000. Mm-hmm.

And so find that margin and you'll be out of debt sooner. But we're excited for you guys and that little baby coming into the world. So stork mode, stack up the cash and we'll throw it at the debt once mom and baby are home safe. Thank you so much for the call. More of that coming up. 888-825-5225. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw. Reminder, Jade and I are doing a completely free live stream right here on The Ramsey Show YouTube channel, and it's really easy to join. Just go to The Ramsey Show YouTube channel, and you'll see our faces there, and the thumbnail says, Build Wealth Faster for Free.

That's the name of it. And it's got a little picture of a question mark there. And we're going to show you the free app that will help you build wealth faster. So here's all the only thing you need to do is hit the notify me button and

Right below the video or on the video and that will notify you when we're live because I know a lot of people they you know you want to set it and forget it you don't have to remember so it's Tuesday the 27th of February 9 to 10 central time in the morning 10 to 11 eastern time do the math if you're on the west coast sorry that's too much for my brain.

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Valerie is in Sacramento, California. Valerie, welcome to the show. Hi. Hi, everyone. Hello. Just to give you, I'm $34,000 in debt. Cancer was in 2021. March 2022, we got ripped off by a contractor of about $25,000. Shoot. Yeah. Yeah.

My credit score was really good, so I was able to get a credit card from my credit union. I was also able to open up a couple of credit cards in order to get materials to finish because not only did he leave us in a hole, but some of the things that he did was messed up as well. And so now we're just at a point to where we can't pay it.

um you can't pay the 34 000 you can't pay the 34 000 and things are just um really tight and um things started breaking down other than the stuff that was fixed in the house and everything is not even fixed was this like a fixer-upper situation what happened no no no the house that we have we we gained from my dad my dad passed away and me and my sister live in the house i have three other siblings that

own the house as well, but they're all out of state. And so it's just me and my sister living in the home. So we're paying the mortgage on the home, which the mortgage is only $1,600. I'm a little over $1,600. What's your income? And I bring home...

Oh, shoot. Growth is $40,000, $40,000, $40,000, $47,000. Okay. Wait a minute. It counts backwards. Yeah. About $46,000. $46,000, $56,000, something like that. And you're splitting this mortgage with your sister? Splitting the mortgage with my sister. Splitting everything with my sister. So is it $800 apiece then for the mortgage?

Yes, it's about eight. Yeah. Okay. So all the siblings, you said, own the house though, right? Your dad left it to everybody? Yeah. So my question is, so you're putting in this work to the house. Is everybody chipping in for it since everybody has a piece of the equity? No. No. Why? No. Because they don't want to. And you're just thinking, I'm going to live here and it needs to be a place that I want to live in, so I'm going to spend my money to...

Fix it up. Fix it, yes, yes. So when the time comes to sell, they're going to get a piece of what you made profitable. Right, equal piece.

Right. There is nothing that we can actually do about it except for he told us, because it was a living trust, so he told us that we could actually charge them for, so like if we sell the house now and we have, you know, like $160,000 left on the mortgage, if we sell it now, whatever we've paid for the last,

since 2010, almost 11 years that we've paid on the mortgage, then we can actually make them pay it back to us. Through the net proceeds? Right. So what we've paid into, we can actually make the three of them pay us back for it if that's what we want to do. What does your sister make? What's her income?

My sister makes just a little bit more than I do a month. And the $34,000, is that between the two of you? Is both of your names on this debt?

Um, no. My credit was really good, so I opened up these credit cards. But she is, and me and my sister, we don't have any issues whatsoever. She's paying. She took on two of the credit cards, and I took on the other two credit cards, and then whatever else we have together. I mean, you know, separately. And this adds up to $34,000 between all of this? Yes.

No. That's just your piece. Mine add up to 34. What's the other portion? The cars that are on my name. Say again? What's the other portion that she owes?

That's her stuff. I don't know what she owns. But the $34,000 is every credit card that is in my name. But there's two of them that when we opened up, we opened up four credit cards. When we opened those up, it was to fix the house. And she's paying two of them. I'm paying the other two. So you got two cards, $34,000 balance between them. Say that one more time. You got two cards and they have a $34,000 balance between the two.

In your name. The ones that you have. In my name. In my name, yes. There are two cards. And then the other ones we won't worry about because those are in your sister's name. You're saying you can't afford this. What are the minimum payments on these cards?

Uh, the cards, the minimum payment. One is, one is, one is $250. Uh, uh, one is $171. One is, oh gosh, they're, they're all in the $100s. You said there was two. But there's only two. Unless you have debt from other places other than this renovation, is there other debt laying around that you have?

Yes. And so the total, that's what I'm saying. The total of it is 34, 34,000. So list out the different forms of debt that you have. Let's just go one by one so we can get our heads around this. List out everything that makes up the 34,000 if you can. Okay. So I have, um, there's two credit cards. We know one's two 51s, one 71. What's where's the other? Is it personal loans? What is it?

No, it's not personal loans. They're all credit cards along with my car notes. Okay. But my car notes are not in... My cars aren't in there. It's the $34,000 that... That doesn't include your car loan. Say that again? That doesn't include your car loan, the $34,000? Yeah, it doesn't include the car loan. What's left on the car loan? Probably...

oh um maybe about three years on know how much money four years on both car um 20 28 and 20 and 30 31 why do you have two cars that are so expensive

Okay, so once again, my credit was good, and my sister needed a car. Okay, that's all I need to hear. Valerie, Valerie, Valerie, help us help you. This is a nightmare. I think you need to get out of this house and cut ties with family because they aren't doing you favors, you're not doing them any favors. Y'all are causing each other to make bad decisions. And whoever has the good credit of the day makes the next bad financial decision.

Yeah, you've got to get honestly, both of these cars, the one that's in your that's both of them are in your names. The one that's for Val, your sister, you have to say, listen, I bought you this car. I could I can't afford it. And so you're going to have to find a driving situation for yourself because I have to sell this car and I can't afford whatever comes next. So you're going to have to have that tough conversation, give her a timeline. And then on your car, you've got to sell that car.

You've got to sell it and drive something far less expensive. Are you underwater on that car? Do you owe more than it's worth? No, actually, I don't. No, actually, I'm not. So then, yeah, we're definitely getting out of them. Do you have any savings? No, I don't because we took what we had to try to fix. This home is a money pit and you need to sell it. It is not a blessing from your father. It is a curse on your family.

It's time to get out of this and straighten up your financial life, Valerie. This is The Ramsey Show. Our scripture of the day, James 1.12. Blessed is the one who perseveres under trial because having stood the test, that person will receive the crown of life that the Lord has promised to those who love him.

William James said most people never run far enough on their first wind to find out they've got a second. I like that one. That's good. That's good. People get so close. I know, right? Listen, I'm training for a half marathon now, George. Wow. It's not pretty. Well, it's not your first. You've done this before. It's not. But it's been a while. It's been a while.

It's been a while. That's a deep cut. I couldn't do a 5K if you paid me money. So I'm impressed with you. Yeah. These legs ain't made for running. Producer James has seen me run because he forced me to go one time with his like fitness crew that he has. They lapped me so many times that it became a running joke. Ah, a running joke. I love what you did there, George Campbell. It's the name of my new comedy special. It's called A Running Joke. That's how I thought a 401k was a really long race.

Now, that's the only thing that ends with K that you'll see me being a part of, Jade. Oh, okay. 401. That's what I'm all about. George, all right. We're getting spicy towards the end of the show here. I love it. I'm here for it. We're having a good time. All day, baby. All right. Ashkahn is next in Nashville, just up the road. What's going on, Ashkahn? Hey, how are you guys? Doing well. How can we help?

I appreciate you guys taking my call. So I'll make this quick and fast if I can. I'm in law enforcement, so I don't make a lot of money, obviously. Why obviously? There's some law enforcement folks out there making high six figures. Well, they must be way up there in these big cities then, I guess. Yeah, they are. Are you in the Nashville area or on the outskirts?

I'm on the outskirts. I actually live in Kentucky. I'm a state trooper, and Nashville's about 45 minutes from me. Okay, got it. If we ever get pulled over in Kentucky, I'll be looking for Ashkahn. I hope it's Ashkahn, and remember what we've done for you. Those Kentucky state troopers scared the crap out of me.

Well, we have a reputation. Yeah. It's usually good. Well, we'll try to keep you happy today. How can we help? Oh, I appreciate it, guys. So, basically, I don't have a lot of debt. The only debt that I have, and I've worked really hard to be debt-free, is just for my home. I owe $103,000 on a home, on my home. I

I have a little bit of money, not a whole lot. I'm basically looking at investment opportunities. I wanted to kind of just see what you guys recommended. I'm basically just found out that I'm, when I do retire in about another 15 years, 16 years, I'm only going to get, you know, half of my retirement or 50% of my high three, so to speak, what I made my,

highest three years as a state trooper, which isn't enough to live on, obviously. I've been thinking of getting into rental properties. I've been trying to educate myself on those opportunities. But, you know, with the housing market the way it is and things I'm hearing from people that are already into it, it's a lot of a headache and I've already got a crazy enough job that keeps me busy and things like that. So how old are you today?

I'm 43 years old. Great. And do you have any other retirement options through work? So I do. I have a 401k and then I have what's called a deferred comp. I'm sure you guys have heard of that I pay into as well. About $150 a paycheck. So about $300 a month towards that, which isn't a lot, I know.

And you also can use a Roth IRA outside of your employer. I thought about using that, and that was another option I was going to ask you guys about. I've been told to look into getting a Roth IRA and put money into one of those. I'd go to that. I would do that before you go, quote, invest in real estate opportunities. Because right now your focus, you said you have no debt outside of the mortgage. That's correct. And you have an emergency fund?

I have, well, I mean, I was going to say I have $26,000 in savings and not a whole lot. I've got $8,000 in my checking. That's basically all I have financially. What's the 8K in your checking? Is that for this month's bills or is that some saved money that you have earmarked? Some saved money that's just in my checking that I've built up. Okay. Are you single?

I'm not. I'm engaged with three kids. We've been together for 10 years. She doesn't make a lot of money. She only makes about $30,000 a year. When's the wedding? She has no debt either. The wedding is near the end of the year. We don't know if we should delay it until next year. No, I wouldn't delay it any further. You've been together 10 years.

We have. Believe me, I already get enough crap from her and everybody else. I won't give you any more crap, State Trooper. I won't press my luck here. Listen, combine the $26,000 with the $8,000. Call that three to six months of expenses. Is that fair? Is that three to six months for you?

Yes. And then you're off to the races with investing 15% of your income. And then trying to attack that mortgage. That's my goal for you. When you're 60, you should be completely debt free, no mortgage. And you have been funding the Roth IRA and the 401k at 15% until the house is paid off. Is there any sort of match on that 401k?

Or it's just as it stands? It's just as it stands. And that's another thing is I've been trying to make an extra, I have been making an extra payment every year on the mortgage, sometimes twice a year just to try to bring them, you know. That's good. But I don't want you to do the mortgage at the expense of the 15%. So the thing with Baby Steps 4, 5, and 6 is you do them simultaneously, but you do them in order simultaneously and you knock out as many of them as you can. So you've got to do four.

you do five and six. Like you don't do six instead of four. Does that make sense? So you got to do the 15% first. And since there's no match on your 401k, I do like George said, and I max out a Roth first. You can put $7,000 in there when you and your wife get married, she can put 7,001. And then you go back to that 401k. You have up to 23,000 that you can put in that. So that's a lot of money. And I would do this deferred comp thing last simply because you have less control over that.

And that's the way I would work through this. And what's your income?

I make about $69,000, $70,000 a year. Okay, so $70,000, if you were just going to invest 15% of your income, that's $10,500 a year is what you want to be putting away. And that becomes $875,000 a month, which means you could fully fund a Roth IRA and still put a few thousand to the 401k. That's right. And if you do that, let me tell you... Even with the market, I apologize for interrupting, even with the market, everybody's talking about what, you know, everyone's expecting a big crash. Who's everybody? Everybody.

Fox News and some apocalyptic guy on the internet? Yeah. I am from Kentucky, so there you go. Well, there it is. Well, I'm telling you, man, if you can turn off the inputs and the headlines, what you'll actually see is the stock market is way up this year. It is. And next year, it could be down. But then next year, it's going to be way up. And so the S&P 500 is hitting a record high.

And so that tells me that I have faith in the U.S. economy as a whole over the long term. That's true. I don't have faith in any politicians, but as the economy goes, I feel good about putting my money into mutual funds and index funds in the stock market. And the good news is if you look back on the record, anytime it's crashed, it's recovered very quickly and very, very, very well. So people have ended up, if they stuck by it, they ended up on the upside. Yeah.

Hopefully that gives you a little peace. Do you recommend? No, I'm truly grateful. Thank you. Do you recommend we do two different separate Roth IRAs, me and the future wife, or do our own? Yeah, do them separate. One for you, one for her. If you can max that out every year, as long as you have income, you'll be crushing it. And I did some math for you, Ashkahn, to give you some hope. If you start with zero in one of these retirement accounts, and you put that $10,500 a year into that for

For 20 years, from 43 to 63, assuming a 10% annual average return, which is what we've seen in the S&P 500, you would have over $600,000 in that account at 63. That ain't bad. And that's if your income never goes up. And that's not including anything your spouse does.

Wow. That's just that one account. I appreciate you doing the math for me. Well, that helps me because I go, okay, what's the reason I'm going to invest 15% year after year and just live on everything that's left? That's the reason right there. So that when you have 50% of your income, you also have an account with 600 grand in it that you can pull from if you need it.

Awesome. Great. I hope that encourages you. I'm so glad I called. I truly appreciate it and grateful for you guys. Thank you so much. You too. Thank you for serving your community in that way. And remember me when I get my next ticket. I know. I'm like, love the State Trooper as long as they're not behind me with the lights on. I know. That's right. That's encouraging, though. I think that helps us just look at the math. Yes. Because when you're just focused on what the market's doing today and, look, I could be doing it in real estate opportunities. Yeah.

I say slow down. Yeah. Because that investment account will cash flow potentially way more than that real estate opportunity when you got it with nothing down, high interest rate, 30 year on top of your other mortgage. Yeah. That creates too much risk and stress going into retirement. And it's important to make sure you're doing four, five and six. Like we said,

but at the same time because a lot of people, they start thinking about their age and they're like, I got to get this house paid off. And so they pull back on investing, but I'm like, chances are you're going to be living in your house. Like you need access to liquid money. Absolutely. And so you need to make sure that you're doing that 15% and then anything above that, that's what you're throwing on paying off your house early. That's the gravy. And if you want to know more about when to invest in real estate, that's baby step seven, do it in cash and Dave's new book, Real Estate the Ramsey Way. Hey.

covers that as well as how to make home ownership a blessing, not a burden. So check out Dave Ramsey's new quick read. It's real short, 60, 70 pages. You can read it this weekend. Get it at ramseysolutions.com slash store. That puts this hour of the Ramsey Show in the books. I'm George Campbell. She's Jade Warshaw. We'll be back before you know it.

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