Don’t Be Middle Class Fancy (aka Broke)
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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 the one and only Jade Warshaw, and we're taking your calls at 888-825-8255.

I know y'all are DMing us all your questions, and I say, call the Ramsey Show. Okay, I can't sit here all day in the DMs. This is where we answer the world's questions. So call us up, and we will help you. Zachary has chosen to do so to kick us off. He's in Madison, Wisconsin. What's going on, Zachary? Hey, how's it going? Good, how are you? Good, good. I was just calling to get some input. I'm currently a travel nurse, and...

Uh, we don't have like a retirement plan for travel nurses and my wife, she doesn't have a retirement plan and we don't have any debt right now. We have about 200,000 in savings.

And we don't have much of a retirement, and we were looking to buy a house, but we didn't know whether to just put all of our money that we have in savings into our retirements or to try and buy a house. Right now we have a Roth IRA. I have about $50,000 in that, and then she has like maybe $20,000 in hers. Okay. How old are you two?

29, and she's 28. Great. Well, the good news is you guys got plenty of time to build wealth, and the fact that you have this amazing foundation, no debt, and 200 grand tells me that you're on to something here. So your luck is not lost, and those Roth IRAs are retirement plans. So you do have those options at the very least right now while you're doing this travel nursing. I imagine you're going to eventually be in a more stable situation with work.

Yeah, hopefully this year. And so then you'd have retirement plans, right? Yeah, for me, not for her. She works for a South African company, so she doesn't get any benefits. So you may have different options in the future. For now, maxing out those Roth IRAs is a great move. I'm guessing you have a six-figure income. What's the household income? About $160,000 between both of us now. The rates are going down for travel nurses, so...

Yeah. Well, that's still going to be plenty of money that you could be investing. And the way we look at home ownership versus investing, you're kind of in this baby step three B. So you want to be, you could be investing. You could just put all this into a house. I would recommend a mix of both. Have you looked in your area? Do you kind of have your eye on what you might want and do you know what it costs?

Well, I'm looking for like $350,000. My wife keeps sending me ones for like $500,000. Well, I mean... Trying to talk her out of the sky. At the end of the day, you know, the guidelines that we teach is you want to go in looking for a 15-year fixed rate conventional mortgage.

And you don't want the payment to be any more than 25% of your take-home pay. So that's kind of what your aim is. And if you were looking to put $150,000 down on a $350,000 house, I'm sure you'd be just fine. Because I do want you to keep, you said you had $200,000 saved. I do want to make sure you're saving out three to six months of expenses and that you're not thinking, hey, I'll just dump this whole $200,000 down.

into a mortgage because, you know, houses come with upkeep. What was that? I said houses come with upkeep and ACs go out and the roof gets busted and water leaks in the kitchen. And so you want to make sure you go in with three to six months of expenses into that just as an emergency fund there.

Do you recommend moving over any of our save money? So the retirement doesn't include, it's not included in that $200,000, so it's all liquid in the $200,000. Do you recommend setting any of that aside to put into a longer-term retirement? I mean, you could max out your Roth IRAs. That's $7,000 for each of you, so that's $14,000 right there.

You could, but you don't have to. I mean, you guys are 29. If you said to yourself, listen, I'm going to, like I said, I'm going to keep out $40,000 of this for three to six months of emergency. And from this point on, I'm investing 15%. You could do that. How long did it take you to save the $200,000? I'm curious, because kind of as a rule of thumb, we also say if it's going to take you more than two or three years to save up a down payment, you should probably start investing something. So how long did it take you to save this $200,000?

About four years, just because of the travel nursing money. And I'm kind of with George. I'm in George's camp. I would definitely set aside. I think there's just a nice mix here. If you took 40 for your emergency fund, put 14K, max out the Roths, and the rest can become your down payment, that leaves you with 146 to put down. And then you can start crunching these numbers to go, hey, we can afford a $400,000 house right now.

Or we can wait another six months and bump up to $450 if we keep saving. And so you guys are in a position where you have those kinds of options. But I would at least start the search. And you can get connected with a Ramsey-trusted real estate agent who sells a whole bunch of houses. And they know what they're doing in this weird, wild market, even in your area in Wisconsin. And they can help you get your homework going to see what you can actually afford and even start getting some game plan of what you're going to do and what you're going to buy. Yeah. Yeah.

Okay. I appreciate it. Yeah. Do you have the $200,000 in high-yield savings right now? I have $98,000 in high-yield savings and $35,000 in a mutual fund and then another...

$34,000 in Robinhood. Oh, boy. Get it out of Robinhood. Yes. You're about to get hoodwinked by Robinhood, my man. Oh, man. That app makes it so easy. Those apps are made to take your money, not make it. So be careful. I would move it all to high-yield savings, including your emergency fund, and you could be making 4% to 5% guaranteed without making a stupid decision. Indeed. Because of an app notification. Which ain't bad, especially if you're not ready to pull the trigger on anything in the next...

several months like listen you may as well put it somewhere where you can get a little return on it every hundred grand that sits there for a year you made five thousand so okay pretty good couch money right there my friend

Yeah. Okay. All right. I'll start looking into it. Thank you, guys. You got it. I appreciate it. You bet. Happy to snap you out of the paralysis analysis. That can happen. I mean, what a problem to have. $200,000 sitting there. We want to buy a house. We know we should be investing. But hey, no debt to pay off. Listen, that's a good place to be in. Gives you different options. A much better situation to be in as opposed to, I'm in debt. I'm $200,000 in debt.

My house is too expensive. I don't have anything saved in retirement, which we hear that every other call. I got a DM, speaking of which, on Instagram. This guy was like, hey, here's our situation. We have these goals. We have no debt except the mortgage. And I said, what's the mortgage? He said, it's a million dollars. Woo!

And they made 160, which is a great income. But he said 60% of their take-home pay was going toward the mortgage. That's known as house poor. Exactly. And so that's what happens when people make these decisions before they should, because they got a little starry-eyed while zillowing. Yes. And they went, well, woe is me. The housing market's crazy. Let's just buy our dream home now. Yeah. And the dream home becomes a nightmare. Don't do that. That's... I can't breathe thinking about a million dollar mortgage. With 160,000 income, for sure. Yeah.

60% of your money out the door. That's called living to work. That's middle class fancy right there. That's living to work, not working to live. 100%. Looks good to the outside world, but you can't even breathe inside of that box. That's costing you way too much to live in. I wouldn't leave my house. I'm like, I pay too much of my money to ever leave. Oh, in two seconds.

Yeah. No, I'd be up and out of that. Move with patience, my friends. Out of debt with the emergency fund, then get a solid down payment. Do this so that it's a blessing, not a burden. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour, and we're taking your calls at 888-825-5225. Chris is up next in Cincinnati. Chris, welcome to The Ramsey Show.

Hey, thank you. Thank you for taking my call. Absolutely. How can Jade and I help? So my wife and I are expecting our first baby in July. Yeah, super excited. And we've been paying off debt very consistently, putting back a lot of money. We are looking to get rid of the motorcycle that I currently own, which I am upside down on. And in our...

order of debt, it would be second to the house. So I was wondering if I should, since we were trying to get rid of it, if I should skip the credit card and truck payment and move straight to that and chip away at it, or if I should just continue to follow the order. I would follow the order. I mean, the point of listing the debts from smallest to largest is not, it's more psychological than it is

me getting my hands on more money in one moment because you want to feel those wins. My question for you is this motorcycle, what do you owe on it and what is it worth? So I blame myself for this, but it is worth $17,000 and I owe about $31,000. Oh, Lordy. My goodness gracious. Okay. What's the payment on it? Just curious.

$694. Oh, my Lord. Okay. What's the truck worth? The truck is worth $30,000. And what do you owe on that? About $30,000. Let's get rid of that truck. This poses an interesting conundrum here. You got another car? We have a Jeep Wrangler that is paid off. We're getting rid of the truck. What's the truck payment? The truck payment is $575. Okay.

Golly gee willikers. Like, this is crazy. And what's left is the credit cards. Is that it? Yeah, we just paid off one credit card and we only have one left, which has about $4,300 on it. Okay. So that's your smallest debt. That's going to knock out instantly. Yeah. Do you have any savings? We have about $10,000 savings. Good. Here's, George, let's see if we're on the same page.

You've got a Jeep. Do both you and your wife work outside the home? Yes. Okay. I think this is possible because especially when you don't have kids yet and your wife's probably going to be going on maternity leave if not already soon here. I would sell this truck for $30,000 and you've got 10K. I would throw that towards if you wanted to just pick up a cash car. If you needed it, you could. Yes.

but you don't necessarily have to because I have a sneaking suspicion. Mom is going to have a baby. She's going to be at home for a little while. They can probably make the one car thing work for a while. He could knock out this $4,300 credit card and have some money to put towards the upside downness of this motorcycle for when he does sell it.

Yeah, with the baby on the way, I'm really trying to think what I would do in your shoes. Oh, you do have the baby on the way. If you sell the truck, I like what Jade's saying, is we're going to use the 10K and maybe take six of that and get a used car for now. Okay. For you to get around in. You leave her with the Jeep until baby's here, and then stack up cash until baby and mom are home safe. Once that happens, you may have enough to get rid of this upside-down motorcycle. Okay.

Okay. Once baby and mom are home safe and you've got a bunch of money stacked in savings. Right. So that's probably what I would do in that order. And if you could find an even cheaper car, I'd love you to knock out the credit cards and then just stack up money until mom and baby are home. Listen, George is being nice because I would tell you to go with one car. I'm just, I would never tell you to do something I never did. And when I was pregnant, we had one car because we sold the other one.

So I'm just saying it's an option to you. It just depends on how quickly you want to go. And commutes and, you know, can she drop you at work and, you know, do that whole rigmarole, carpool, whatever you got to do to get by for a little while. Mm-hmm. Right. So you've got some options. Yeah, you've got options. But keeping the toys with wheels, that's not one of them. No, that ain't. What's your household income? Right. Okay.

I think in 23, it was just over $100,000. Love it. All together between the both of us. And is she going to continue working outside the home after baby's here? Not like right away, obviously, but I think that her plan is to eventually return. She's a nurse in a nursing home. And I believe her game plan is to go back to work. Okay, cool. Are you guys doing any investing right now?

Uh, no. No, I wasn't sure if we should. You shouldn't. Not yet. You're right. I just want to make sure you weren't, because if you were, you'd pause that, and that would free up some money as well. Okay, yeah. Man, I think this truck is going to free you up of that $575. You can then start throwing into savings. Yeah. Yeah.

And think how quickly you could, I mean, the 10,000 aside, because there is a world where you just keep that 10K sitting there until the baby is born. You don't do anything. And that's probably the best choice here. But even with that 575 cleared up, think how quickly, you know, once baby is born and once everything's, you know, back up and running, think how quickly you could pay out this credit card, close the gap on that motorcycle. There's just...

It's so much money. Even if they did this today, six months without that payment is $3,500. Exactly. And so that's at least as much as you could save just by getting rid of the payment, making no other sacrifices. Right. Okay. So it would be smart then to once that...

is all out of the way, what you guys just talked about, to chip away at the bike and tell it's down to what it's worth and just sell it and break even as far as... Yeah. I mean, the other option you could do is go out and take a smaller loan against the difference with a credit union to get out from under this sooner. Yeah. Leaving you with a 13, 14K loan because you don't even need the motorcycle. You don't need it for transportation. So you don't need to go get another one.

So at least you'll be $14,000 in debt instead of $31,000 in debt. Right. That's going to make your snowball a lot bigger payment-wise too. So I would go down to your local credit union and see if they would give you the amount for the upside down portion. But just to clarify, the key to press go on all this when you put the keys in the ignition is when the baby comes home safe. That's when we're turning the keys to start doing real things, right? Right, yeah. Okay. Yep.

Sweet. I love it. Yeah, congrats. You know, I want to give you guys a little baby moon gift, if you will. I'm going to gift you guys Financial Peace University and every dollar to give you guys a little bit of hope, a little pep in your step as you make this journey, grueling journey of not only getting rid of this debt, but also third trimester. That's a real one. That's a real one. Ooh.

man tempers real tempers flare george there's a lot of emotion that most of them were geared toward me any man yeah not just you george i will say i enjoyed the nesting phase because i like organizing so i was like finally game on you're like i can do this let's do this thing listen i feel sorry for just about any man in the in the third trimester it's real you know what i did enjoy was she got real into sugar in that third trimester and so it was like

Ice cream and Oreos again? But don't eat hers because then it's atomic status. I learned that. I need to get my own pint. Get your own pint. Husbands, this is the real advice. Like you're here for the financial advice, but you stay for the third trimester advice. Yes, do not dip your spoon into her ice cream. That is... Lesson learned. But that is a good financial piece that people don't think about. We call it stork and snore mode. That's right.

Only time to pause the baby steps, pause the debt snowball is if you're in a major storm. I'm not talking about a flat tire. I'm talking about a major medical event, a job loss where you got to go, hey, we got to pause and save up. And babies fall into that category because when things go right, it's wonderful. But it's when the medical bills start to stack up and you were in the hospital for more weeks than you thought. And-

You know, you didn't think about insurance not paying out 100%. That's right. And what your deductible and out-of-pocket max is. And so all of that adds up. Yeah, because in his case, I mean, $10,000 saved sounds like a lot of money. But if your deductible is $5,000, you know you're going to hit it when you have a baby.

So it's worth talking about, you know, making sure you've at least, at the very least, got that deductible in cash ready to go because you're going to be handing out some cash when you have a baby. Before you hit that max, thank God. It's on the insurance company now. That's important. More of your calls coming up. 888-825-5225. This is The Ramsey Show.

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over the phone or via text, their team will cater to your needs and help you make the right decision. This is an absolute necessity, and Zander has made the process easy and convenient. Call them at 800-356-4282 or visit zander.com for instant online quotes. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw.

Our question of the day is brought to you by Neighborly, your hub for home services. Go to Neighborly.com slash Ramsey and download their winter maintenance checklist. It's free and it's full of tips to get your home through the colder months with no issues. Again, you can check it out at Neighborly.com slash Ramsey. All right. Today's question comes from Lucas in Kentucky.

He says, I'm 18 years old and earn $42,000 a year. I got into an accident this week and totaled my Camaro. I'm expecting the insurance settlement will be about $10,000 and I still owe $6,300.

The problem is I want a new car. Don't we all? I'm into muscle cars. Aren't we all? And found a 2023 Mustang for about $46,000. Bet you did. Yeah, I know it's a lot, but I can get a loan at 7% interest in 84 months with payments of $650 a month.

My parents said it's too much. Thank you, parents, for what I'm making and for being so young. I'd like a second opinion from you. Listen, we'll give you a second opinion, a third, fourth, and fifth, because I'm sure the Booth guys probably agree with us. Jade might give you more than an opinion. It might be a whooping by the end of this one. This is not a good situation. There's nothing I would love more than to put a whooping on Lucas, but he's 18, and...

You know, he needs a little... Did they stop teaching basic math in school? Did we just like skip to the Pythagorean theorem and calculus? Because in many cases, yes. Like making $42,000 and you're going to buy a depreciating asset that's worth $46,000. He doesn't see it that way, though. He sees it as I'm making $42,000. I live at home. I have no bills. I, you know, the world is my oyster and I can easily make a $650 payment. That's what he sees. And so I get it.

But I love that he's like, he's like, the problem is I want a new car. We all want a new car. And even we all love muscle cars. Like nobody looks at a Camaro and goes, I hate that.

I prefer my cars flabby without muscle. That's right. If you're offered, if you win the prices right and you're offered a 2023 Camaro, everybody's going to be happy with that. So here's the confusing part, though. He says, I know it's a lot, but I can get a loan at 7% interest for 84 months and the payments will be 650. As though this is some kind of opportunity for stupid. I actually did the math for him, Jade. What is it? He'd be paying, get this, over $12,000 in interest alone.

He didn't think about that. So this $46,000 car, you're really buying a $58,000 car. Oh my word. Making 42. And by the way, once you pay it off, it ain't worth close to 58. It's probably worth 25. That's a good fact. Because new cars on average lose 60% of their value in the first five years. That's right. That's right. Goodness. And he's going to sign on to an 84 month...

You know what's funny? These car dealerships are so smart, Jade. They talk about loans like they're babies. It's like, how old's your baby? She's 84 months old. Just say it's a seven-year car loan because that makes you think twice. Yeah. In terms of months, for like, I don't know, 84 months? A month is only 30 days, Jade. This will fly by. I think he thought he's parlaying this settlement into a great opportunity. He's like, listen, I'm getting $10,000. He owes $6,300 still. I only owe $6,300. It sounds like after he applies the...

It sounds well, the way I read it was he's getting 10,000. He owes 63. So he'll come away with, you know, 400 or whatever. Yeah. That he can use as a down payment on this car is what I'm thinking. I don't think it's that he'll owe 6300 after the fact.

But even still, no matter how you slice this, it's stupid. And I get so many people think, oh, I got in an accident. I'll just replace it with a brand new car. And for what I've been through, I should be able to get what I want. And that's not it. If you've got $3,700 or $4,000, just buy a car in cash and slowly trade up.

Think of this as an opportunity to not go into debt again. Cause I'm guessing the Camaro that you had before, clearly you had payments on it because you know, there you have it. He owes money.

So let's look at this, Lucas, as an opportunity to kind of break that debt cycle and see what life is like without a car payment. Think about all the things you could do. My guess, like I said before, as you're living at home, think how quickly you could save for the car that you want, making $42,000 a year. At 18, that's amazing. Instead of trying to level jump. I wish I was making 42 at 18. Yeah. This kid's very smart in a lot of ways. He is very smart in a lot of ways, but you have to be...

ultimately smart that you don't kind of go, oh, you know, get too big for your britches and think, listen, I'm doing good for myself. I can just jump into debt because debt is, it's interesting. When I was that age, I remember thinking people who had car, let me be real. I thought people who leased cars were like balling, balling.

want to be a baller that's what I thought I'm like if you're leasing a car if you've got a credit card and you've got like a like a $15,000 limit I thought that that's what you were supposed to aspire to and I learned the hard way that all that is is a facade and what's behind it is stress anxiety payments

And I guarantee to get ahead. I guarantee their Instagram bio says entrepreneur. And I'm like, okay, you're unemployed and you live with your parents, bro. Like, let's not pretend. Right.

Like that you own owning a vending machine is you being an entrepreneur. Okay. I mean, goodness gracious. Y'all wear me out. You sound like you're talking about somebody specific. Some days I wonder, like, am I a boomer that accidentally was put into a millennial body? A little bit, but that's okay. I'm right there with you. Kids these days. Anyways, Lucas. Get off my lawn. Don't do this, please.

don't do this. You make 42K a year, save up and pay cash, get you a little hoopty until you can upgrade in cash. Yeah. That's what I did. Uphill both ways. That's what I did. Good job, George. Good job. It wasn't long ago I was driving a $6,000 old Civic bumper half hanging off, and I was proud of that thing. That's good. You paid cash for it. I had goals. I love it. So there you go. There's your question answered, Lucas, if that really is your name. All right, moving on to the phone lines. Bethany is in Salt Lake City. Bethany, how are you doing today?

Good. How are you? Doing great. How can we help? So we just very recently found out that I'm pregnant. Thank you. We're definitely planners. So, so far what we've been doing is we've been trying to put all of our savings into various thinking funds, but mostly focusing on a deposit for a house. But now that I'm pregnant, I'm wondering if should we totally pause on the house and only focus on building like a baby thinking funds and the health fund?

Like our health bills funds or should I equally doing all of them? I'm just not quite sure what to do. The baby is definitely priority in my book. And that may delay the dream of homeownership. It may not. We just have to wait and see. But are you guys debt free with an emergency fund right now? Where are you at financially?

Yeah, so we're debt-free. We're a single-income household. My husband works. We have about four months saved on the emergency fund and about $25,000 in our home fund. Cool. So those are separate funds? Yeah. Okay. Okay.

I'd just continue to save up and that all becomes savings in general. And then once baby and you are home safe, we can unpause the dream and see where we're at with our savings account. And if you've got, I'd want six months with a single income family, I'd bump that emergency fund to six months. Then whatever's left over becomes your down payment fund.

We should take money out of the home. I'm not far along now, so I figured we'll try and do what we can, but if we get closer, should we take money out of the home fund to put in those other places? To make sure you have a six-month emergency fund? Yeah. Yeah, it's just a matter of labeling it differently, right?

Okay. Because the money's the money. You got 50 grand total, whether it's 25 and 25 or 30 and 20. You know, the goal here is to have six months. I would put that in a separate high yield savings and then have a different high yield savings account or bucket for the home down payment. Okay. Does that make sense? Yeah, it does. Good. Well, congrats on the baby. What's the due date?

It's going to be end of September. Nice. Fun. Love it. Exciting times. We're very excited. Yeah, hope that helps and hope you guys become homeowners one day as well. That's two really fun pieces of adulting. For sure. Having the kid, getting the house. But here's the thing, Jade. A lot of people go, we have the baby now. We need the room. We need it. Because babies take up so much space. It's a tiny little bassinet in the corner. They're fine. My child, my first born.

born son who will remain nameless on here. He we had his whole bedroom done his crib and everything. He never even was in that room. Nobody told me that baby lives next to your bed for the first few months. Yeah at least six months. This joker didn't even go in his bed until six or seven months. So this idea that your two bedroom isn't enough because you had a baby and now we need to upgrade to the five bedroom house. It's crazy.

Yeah. It's crazy. It is crazy. But it's exciting, and I think you just feel like, oh, I want to get the baby's room. New stage. Yeah. Yeah. That was a big phase for us. We got the Borden batten in the room, got it painted a little blush pink. It was very exciting for me. She's never even been up in there, has she? She doesn't even know colors yet. Let's be real. Might as well be agreeable gray to her. There you go. There's your Sherwin-Williams reference for the day. More of The Ramsey Show coming right up. Don't go anywhere.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. You call us, we'll talk about your money, your life, whatever is going on. Celeste joins us in Guadalajara, Mexico. About time, Celeste. How are you doing over there?

Hi. Hi. Nice to meet you guys. So I'm a grad student right now. I'm visiting my folks. And my question actually is about them. So they're asking for advice on whether they should take out a loan for a car, a used car, or whether they should dip into their savings. Why would they why do you think that they would prefer having payments over using the cash they have?

I so I guess I'll say it in pesos, but they have about 400,000 pesos saved up. And then a new well, sorry, a used car, a six, seven year old car would be about 250,000 pesos.

The reason I say this is because they're debating is because this is pretty much their only savings account. I mean, my father is the only one who works. My mother does not. They own two cars. One of the cars is pretty much on its last legs. And my mom is looking for a job and trying to find a way to reliably get to work.

Okay. So, yeah, so that kind of stems from that. So I think their worry is that they would not, it's been about five years. It took them five years to accumulate what they have in savings, you know, for, to have an emergency fund, they would have to dip into. Why did it take five years? Do they have any other debt?

They don't have any other debt. So they own three properties. They're all paid off. Both of the cars are paid off. And I don't think my father wants to sell any of them. So I think his idea would be to use the money that they have now and not take out a loan. I think he's pretty resistant on it now. And why are they asking you about it?

I'm just a concerned bystander. Okay, so did they bring it up? Did they say, hey, Celeste, we're wondering, do you think this is a good idea? Or did you say, hey, I overheard you guys talking about this. I wouldn't do it.

Yeah, that's the second one. Okay, so they didn't ask for your opinion. You're just concerned for their financial well-being as a great daughter. Yes. Okay. Well, I just did the conversion here from Peso. So they have about 23,000 plus USD.

Yes. And they're looking to spend about $14,000 of that USD? Yes. Okay. And they would leave them with $7,000. I mean, that's still... They can then rebuild their emergency fund with the payment they would have been making on the car. They just use that to replenish the emergency fund. Yeah. And just on a... Theoretically speaking, I consider... I would consider... And again, we're having this conversation with you, not your parents, so you're probably right there with us. But if I'm looking at risk...

I'm thinking okay going into debt is creating a bigger risk than depleting my savings by half to avoid debt and I almost feel like they've got the equation swapped and they're thinking depleting my savings is a bigger risk than going into debt and that would be completely wrong because usually your debt the debts in your life are what create the emergency feeling not lack of something goes down it's like oh I got to pay the debt off I need the savings yes so you don't have debt you lower your risk

And so you're asking us, how do you talk to your parents about this? You could tell them, listen, I care about you guys. I know you don't need my opinion, but I care about you guys so much that I'm begging you not to take out this loan because it's going to put your future at risk. And you can show them some math. Some people need the math. Some people need the emotion. Maybe it's a mix of both where you say, listen, this is what this car is really going to cost you with interest. Here's what you could do with that free to payment.

And worst case, he can sell one of the properties if something huge goes down. But my bigger concern is why it took him five years to save up an emergency fund. Is the income low? Well, he's got these three properties too. Yeah.

Yeah, well, one they recently inherited from my grandmother's passing. So they're renting that one out. My mother doesn't work currently, and my father makes about 50 with the rent from that property. And his job, he makes about $50,000 a month in pesos. Okay. So that's about three grand almost. Yes. Okay. Okay.

So that's the part I'm looking at here is, okay, that's how many months of his income is it going to take to buy this car? And when you do that math, it's a little more, it puts it into perspective. And you go, all right, it's $14,000 divided by three. That's almost five months of him working to get this car, which is not bad. And it tells me in five more months, he can replenish that money. If he doesn't have a payment, it's going to free them up. And if their expenses are low and these rentals are cash flowing,

Right, yeah. But that would be minus whatever monthly expenses they have. Sure. Do they have a lot of expenses? Not currently. Both my brother and I are out of the house, so it's mostly just them right now. You said your mom's looking for work. She is, yeah. Good. So how are you doing financially? Because what I'm looking at is I'm thinking...

I'm thinking about my younger sibling, because I'm trying to liken it to what you're at. You're the kid trying to tell their parents what to do. So I'm thinking, okay, my younger brother, he's seven years younger than me.

what would make me take it? What would make me take his advice of him saying, Hey, I, I heard you were about to go buy a car, Jade. Here's what, here's what I think you should do. Right. I'm trying to flip that on, on its head and think, okay, what would I want? I'd want him to be doing better than me financially. And I can see it. Hmm.

I'd want to be able to look at him and go, he seems like he's got it together. Like he's always talking about paying cash. I've never seen him talk about debt. Matter of fact, I don't think he has any debt. Like I'd want to be able to visibly observe certain qualities that make me go, this is somebody who has their financial life together. So my question is, how are you doing?

Right. Totally makes sense. I'm actually a graduate student right now in the States. So I'm taking care of myself. My brother's in college. He's also, you know, putting his way through school. So, I mean, I currently don't have any debt other than seven grand in student loans that is on pause right now since I'm still in school. Sure. So that's kind of where I'm at. Okay. You know,

You can attempt this. I don't know what your relationship is with your parents, but all you can do is float it out there. I think, like George said, you've got to say it in a way. If you're not saying it in a way that's like, here's what I'm doing or here's what I've learned, then the chances of it sinking in is going to be little to none. And I think the best way that you can relate it is...

Two is probably your own debt and the mistake you feel around that. Like if you say, listen, I took out the $7,000 student loan and I'm now realizing it would have been better for me to pay cash and here's why. And I don't want you to make that same mistake with this car payment because I know how I feel. And you guys, you know, that's the only way that you're going to be able to shift this in their mind as opposed to just saying, hey, you should really use the money you have saved.

Right. Okay. That makes sense. Are you a Spanish speaker? Yes, I am. You should check out and have them check out our friend Andres Gutierrez. He's like Spanish Dave. He used to be one of our personalities here, and he does a great job explaining these concepts to that community, and he has his own show on YouTube and radio and his own version of Financial Peace. So be sure to check that out. I think maybe he'll connect with them better than I can for sure. That's a good point. And that could be a good resource for them. Absolutely. Thank you for the call.

Thank you, guys. Bye.

George, that was a deep cut. My man Andres, I was just thinking about him. I was like, man, they're talking pesos. I'm doing calculations here. We got to send him to Andres. So you know how Dave does the scissors with the credit cards? Andres has a machete. So he's got a giant machete that he uses to cut up cards. He's got a wooden block and it's so entertaining. And he's a solid dude doing great things out there in the San Antonio area. You're telling me he puts the credit card on a cinder block.

It goes on this wooden thing and the credit card sits in there and then he'll just swipe them with machetes. That's dramatic. It's very intense. That's very intense. But you need intensity to convince people to get out of debt. They thought we were intense. My goodness. There you go. That's about as cultured as I'll get this hour, Jade.

That puts this hour of The Ramsey Show in the books. Thank you to my co-host, Jade Warshaw. All the dudes in the booth, we got them all today. Austin, Ben, James, Zach, Nathan, Andrew. They're all hanging out. And thank you, America. We'll be back with you before you know it. This has been 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 Jay Warshaw, and this is your show, America. So call us up at 888-825-5225. We will do our best to give you inspiration.

And it's worth what you paid for it. Remember that if you don't like it. And don't call in if you don't. If you already know what we're going to say and you don't want to take it, don't waste the air time. But if you need that confirmation to push you over the fence because you know what you need to do, we're happy to give you a little pep in your step. Some people need to be a little firm. They need to be handled firmly. There we go. And that's what Jade's here for. She's the muscle. I'm just the eye candy that gets us through it all.

Michael is up first in Wilmington, North Carolina. Michael, welcome to the show. Hey, thanks y'all. Thanks for having me. I've been listening to y'all for a few years now. I'm just looking for some advice. Um, my wife and I bought a house together in 2022 and she recently decided that she wanted to divorce and that she's going to be moving out next week. I'm sorry. Um, I

I appreciate it. Me too. Um, and so I know a bunch of my friends and family have said that, um, you know, the only way to be able to, uh,

take the loan over would be to refinance. And I found out through our mortgage company that they do have assumption of the loan process. And I was just curious which way might be best for me to go that way I could get the mortgage and everything solely in my name.

Yeah, well, that's great that your lender has those options. A lot of them, the only way to do it is refinance. But again, it's always worth asking your lender to see if they can do a loan modification or the loan assumption. And it sounds like, have you looked into the terms of that? It sounds like it'll be the cheaper route for you to do a loan assumption if you can afford it and take on that risk on your own.

Sure. They literally just sent over the email today. I'm at work, so I kind of went through it a little bit. And just even the numbers from that, you know, like you said, it can be kind of pricey. And so I wasn't quite sure what the refinance is. We haven't touched any of the equity in it or anything, so that's...

Part of the reason why I was hoping that, you know, before I found out about their assumption details, might have been able to refinance and maybe use that equity for the stuff to refinance it. What is she owed in this deal? What? Have you guys gone through the process? Well, that's what I wanted to ask. Are there lawyers? Is she going to get a piece of this home and the equity? I don't know.

Um, I'm not, it's not like I'm trying to, um, it's not like I'm trying to do all this, um, like behind her back or, or shady. I'm just trying to try and I guess, figure out the best option, um, for me. Cause I want to stay in the house. My father is, um, just been put on hospice and he lives with me. Um, so I'm trying to keep the house.

I just want to know if you got like, did you guys say, hey, we're just going to figure this out ourselves? Or are there any lawyers involved that are saying and kind of mediating this for you and saying, OK, here's the deal. Here's what it's going to be. I just don't want you to get ahead of yourself and this not be the terms of the actual divorce. If you go through all this and then it turns out you have to sell the house or do a cash out refinance to pay her portion anyways. And so now you've got two refinances. So that we're just trying to make sure you know what the next steps are before you make a big financial move like this.

Sure, sure. No, we have not gone through anything just yet as far as lawyers or any type of agreement. I've been trying to work with her as far as some type of agreement. How long were you married? Yeah.

The end of February will be two years. Okay. So depending on the, I mean, the judge is who's going to decide what's fair and equitable here. And so there may be a situation where he goes, listen, you guys weren't married enough to split this half and half. Here's what she gets. Here's what you get. You get to keep the house. Who knows how it's going to shake down. But I would absolutely work with an attorney, even if it's one in just mediation between you two to get all this down on paper. Sure.

before we make a decision on what's next. Yeah, I definitely don't pull the trigger on any of this yet. Okay, yeah, no, I appreciate it. I just wasn't sure if regardless of however certain ways went about it, there was a better way to handle it if I was able to assume or if refinancing was the better option. How much equity do you have in the house?

I'm not sure, honestly. Normally I was the one just out working and putting the money in the accounts and I let her handle paying it. Have you guys separated bank accounts yet? Not, well, we have one joint account and we had one for the house and then we each had our own individual. Okay. I would separate finances to keep things clean right now.

Okay. And it sounds like you're going to be paying the mortgage on your own. Yes, well, I have been. And how much is the mortgage compared to your take-home pay? Um, the...

The mortgage is $1,750 a month, and I bring home give or take four a month. Wow, that's tight, tight, tight like a tiger. So it's almost half your income going towards this. And here's the thing. Let's say she gets a portion of the equity and you have to do a cash-out refinance. Yeah. Well, that's going to make your mortgage payment go up.

And so I don't know that you're going to be able to stay in this house based on how much equity you have and what this new mortgage will be. I mean, you already kind of can't, even if that weren't a factor. Yeah, sure. Well, I, like I said, I've been the one who's been paying for the house ever since we moved in. I work a full time and I try and pick up some side jobs here and there too. But that was with her income too, right? Was she contributing financially?

Um, no, not, not to, um, not to the house. So you guys were just really scraping by then with this? Well, what I tried to do was I tried to be the one, um, that went out and worked to cover the bills so that way she could, um, stay home and focus on the baby and focus on school and not have to work. You guys have one kid together? Yep. Yeah, we just had a son seven months ago. Oh, my goodness. I'm sorry.

So when you go out and work, you said, you know, you kind of close that gap. When you go out and do other jobs, what type of jobs are you doing and what are you bringing home in addition to your $4,000 a month? Well, it's not consistent, but I go out and I do mechanical services on the side. So I could bring in anywhere from, I don't know, an extra grand to extra three grand a month.

Here's where I'm at. Listening to what you're saying and kind of what it's been and what you're bringing in and the consistency or inconsistency of it all with what George is saying, as it is, I think that your mortgage was already too high, assuming she wasn't contributing much financially there. And then like George said, if you do this cash out refi, it is going to cause your monthly payment to go up. I don't think that you can handle that.

you know, you're going to sit and you're going to talk with the lawyer and you guys are going to figure this out. But if it were me, I probably try to walk away from this a clean break and get into something that you can afford monthly. That's 25% of your take home and is not contingent. One thing you don't want to do, and this is not just for you, but anybody, you don't want to have to side hustle to pay your mortgage.

If you're side hustling to make sure that you can afford your mortgage payment, something's wrong and you're out of balance. It's not sustainable. Yeah, side hustling is to do extra things like pay off debt and save for things, not to make sure you can clear your mortgage. Hang on the line. We're going to send you a link to our divorce checklist from our friend Dr. John Deloney on the Ramsey blog. This is The Ramsey Show.

This is The Ramsey Show. I'm George Camel, joined by Jade Warshaw. Friendly reminder, because we just went out during the break to the lobby and met some wonderful people from all over the country. You can come visit us and watch the show live. If that's your form of entertainment, is to watch people through glass sit at a desk.

and do a show that you could listen to on podcast, we'd love to have you. And people travel from all over just to hang out with us. We got two birthdays in the crowd today, Jade. This is how they wanted to celebrate. - And George gives out hugs to every single person. - I joke that if you hug me, I'll break. Like I'm that weak and sensitive. So be careful. I go down easy. Well, Jade, we both love food. - We do. - And we both talk about money. And so we thought, what if we did a fun little segment on this show

called Tacky or Hacky. Yes. This is where I throw out something that people do, maybe that we've done, and you gotta give your take if it's tacky or if it's kind of a money hack. I'm ready. So this is restaurant edition today. Restaurant edition. You ready for this? Okay, and you guys at home, if you're listening wherever and you're with someone or you wanna talk to yourself-

You let us know. Is this tacky or hacky? Taking extra stuff from restaurants for your house. Napkins, condiments, plastic utensils. What do you think? I'm going to mostly go with tacky. Hmm.

I think there's a line here. All right. Mine is, were they given to me? Yes. Or am I just grabbing a whole handful of condiments for the road? Right. I was at Chipotle yesterday. I'm not taking, I only needed one fork. I'm not taking five because they have the nice plastic forks. I will say Chipotle's utensil game on point. It's sturdy, right? And I didn't take, I will say sometimes I take a few extra napkins for the car, not for my home. Oh, okay.

Yeah. But I'm willing to admit that that's tacky. I don't like Chipotle's napkins, I'm going to be honest. Like the brown cardboardy napkins, we can do better even for a car situation. So I'm going to go mostly tacky and it's hacky if it was given to you or if you're taking a reasonable amount. Now I will save the chopsticks from, you know, because they usually give you maybe one extra one and it's nice to keep it in the drawer just in case one time you order and they forget. Yeah.

That's fair. That's hacky. We've got that.

All right, next up, ordering your drink with no ice, I'm assuming in order to get more liquid. I'm going to go hacky on that one. Hacky. Been there, done that. That's not tacky at all. And it avoids it from just getting super watered down if it takes you a while to drink it. Now, this depends on the kind of drink. I mean, some people, I feel like with a fountain drink, you need some ice in there. It's just strange without it. And you can always refill it. You know what I mean? So it depends on the beverage. Well, let's add an outlier here because...

People go to extremes. I might know someone in my family who would save a cup and bring it in the next day. Bring it back for a free refill? And get a free refill. That to me is tacky. That's beyond the moral line for me personally. So are you calling my family members tacky, George? I'm not going to report them.

I'm just saying, if I did that, my wife would be like, really? Oh, most definitely. There'd be some eye rolls. Yeah. That's extended family, by the way, not Sam Warshaw. Okay. Next up, kids meals for older kids slash teenagers are...

I'm going hacky. I'm going to go hacky because, I mean. Smaller portion, cheaper price. Probably the correct portion. What about if the menu says like 12 and below? Oh, it doesn't matter. Even if the menu says 12 or below, like here's the thing. I still, to this day, I'll go to Chick-fil-A and I'll order a kid's meal.

And not one time have they been like, sir, is there children in the vehicle with you? Does it? But I don't think it says that on their menu. But if you go to a restaurant, it'll say on the kids menu like 12 and below. Now, the fancier the restaurant, the less likely I am to do this. You know what I mean? Yeah. But if I don't need, I mean, some of these portions, Jade, you've seen them. Gargantuan. I'm like, yo, we're eating for three over here. You know, I got a little physique. I don't need that much.

Wow. Okay. So I think it's hacky in most situations. But again, if they say, hey, kids only, I go, all right, no big deal. I'm not going to put up a stink about it. What about, okay, again, sorry, I'm going rogue a little bit, James, because it's making me think of like trifling things I've seen people do who shall remain nameless. All right, you go to the Mexican restaurant, they bring chips to the table that are usually free. It comes with a meal. And you're really done with the chips, but you're like,

I'll order another basket and I'll take those home. Oh, the to-go chips scenario. All right. I'll go hacky on that one. Is that hacky? I think I would say tacky on that.

I wouldn't do it just to take it to go. I would get the chips and be like, all right, I'm really done with the chips here. My entree's here. And these chips are going to go to waste. You know they're going to throw them out. One would hope. So you're saying it's the motivation behind it. If you didn't know there was going to be leftovers, you take them, but you don't order it knowing you're not going to eat them. They don't recycle the chips off the table, do they? Yes, they do. Yes. I got trust issues now. I used to work on a cruise ship. Let me throw this out here. I used to work on a cruise ship. You know, you go out at any restaurant and they give you a bag.

basket of bread. Yeah. If you can, and you know, you rifle through it to pick the piece of bread you want. They will 100% save that bread and put it in somebody else's basket. You're welcome. Now it's gross. I know. Is that just cruise ship?

I'm going to go with that's an everyday life, George. I feel like the restaurants that I frequent, they wouldn't do that. They're too classy. And there's OSHA violations. There's too many issues that could go wrong. Sam and I went to a restaurant a couple of weeks ago, and it was fairly nice. And when they brought out the bread basket, I could tell it had a lot of crumbs in it. There was a piece that looked like it had been broken off of the lavash. I was like...

I'm not getting a good vibe about this bread basket. Well, to be fair, I told you guys don't go to Applebee's after 10 p.m. And you did it anyway. You did it anyway. Well played, George Camel. Okay, let's keep going on this. Well played. All right, next up, splitting meals, hacky or tacky? Okay, I do this, so I think it's hacky. It's hacky. I don't think it's tacky. Here's where it gets hacky and tacky. Don't tell them you're going to split it because some restaurants- They'll charge you for a split plate. So don't tell them. Just eat it off each other's plate. Yeah. Yeah.

Well, I like to get an entree. My wife will get an entree and then we'll kind of eat half and switch or something. Haki. And some restaurants, I mean, like we'll get fajitas at one of these local Mexican places. It's tons of food in a fajita for one. Yeah. And my wife and I split that and we have a great time. So I don't think there's anything wrong with that. I'm not doing anything immoral. Okay. But what about this? Alcoholic beverage, if you will, splitting one of those.

I mean, that's strange. Because cocktails are expensive at a restaurant. Yeah. I wouldn't split a... I'm trying to think of... You know, I wouldn't split a soda. Maybe a glass. Well... The one thing I have done... Sodas have free refills, though. So you could split one...

Yeah, but then the server, that's tacky. That's tacky? Splitting a soda so you get free refills and then you each can have your fill of... Because you're trying to avoid paying another three bucks for your soda. But I think a cocktail is fine because those are wildly expensive. There's no free refills on cocktails. And some people might not want to handle a full drink. Okay. So that one's fair if it's alcoholic. If it's not, I think it's a little tacky. A little tacky. All right. Next up, ordering an appetizer or dessert only. Hacky! Yeah, I don't know what's wrong with that. That's just saving money. Next up...

Now, here's the thing. Skip the absent dessert and get the entree. Here's what I do. Well, here's where the motivation part of it comes in. Like, what was your motivation going in? So when you're getting out of debt, right? And you're like, I'm not going to spend a lot of money and your friends are going out, but you're like, I'm not going to go out and spend money. I'll just go for the company.

There's always a friend that feels bad and it's like, you know, I got yours. I'll get yours. So if you say yes and you're like, I'm just going to get in. I'm just get the soup or I'll just get the side salad. Or I'll get a water. And then you're dipping your little grubby hands into those fries that we got. Oh, you know, hey, there's another move.

I think if you're just honestly like I'm going out, this is all I want. Definitely hacky. But if you have a motivation, you know, it's tacky though. And I've been in this situation is people go, well, we'll just split it all evenly. It'll be easier.

And then I'm like, whoa, I didn't get the appetizer or the three cocktails. I got water and one entree. I'm like, hold up. We're not splitting this evenly. I know, that's right. It's tacky to be the person who says, let's just split it evenly when you got the most. That's because it's always the Michael Jordans and the LeBrons that say that. And I'm over here, the sixth man. I may not make what they make. I'm Muggsy Bogues out here. Okay. You know what I mean? Okay.

The sixth man does not make what the point guard, the starting point guard makes. And so when you're out to dinner with your friends, you got to play. You got to think about that before you say, hey, let's just all split it. And you go and order the filet mignon, George, like you did. I'm just kidding. That's fair. Okay. Last one. Getting soda at the soda fountain when you didn't order a soda. So you get the cup for water. That's legit stupid.

Stealing. That's tacky. That's tacky. But you know what I have done is right next to the water, there's a soda button. There's no syrup. It's just soda water.

All right. I'll do that with a cup of water. It's still water. Listen. No syrup. I didn't cost the company any money with their paying for syrup. For the OGs, you already know. You order water and lemons and go ahead and put your own sugar in there. I make my own little LaCroix. Like Chipotle, get the soda water. I squeeze a lime in there. You got a lime LaCroix for free. Okay. There's your Chipotle hack. Listen, I think that it's tacky, but...

Thank you, Jade. This has been Tacky or Hacky Restaurant Edition. Hope you guys enjoyed that and budget for it, whether it is tacky or hacky. You're listening to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The phone number to call is 888-825-5225. David is up next in Burlington, Vermont. David, welcome to the show. Hey, guys. Thank you so much for having me. Sure. How can we help today?

So I have a small problem. It seems like compared to some of the other callers, but, um, I am getting, I run a small auto glass business here in Vermont. Um, it is new. It's about seven months old and I'm looking to, I got a little bit of money back in taxes or I'm getting money back about $2,000 worth. Um, the problem is, is I do have some credit card debt. Um, I have about $2,800 in credit card debt. Um,

And so I'm assuming what you're going to tell me is to just pay the credit card debt. But I do have an opportunity to invest the money into the business for the calibration systems that I need to do or need to use in the industry. So I just don't know if I should just pay off the debt immediately or if I should invest it into the business. Well, you're right. You may not like our answer, but do you have $800 in savings as well, cash in the bank? I don't. Okay. Okay.

I've pretty much thrown every bit of money I have into the business at this point. Well, to me, that's the more glaring problem is that you are on thin ice already, my friend, as far as this business and your cash flow and your personal financial world. And so before you put another dime into this business, we've got to become debt-free and then cash flow once we're debt-free, once we have an emergency fund to then grow this business. How long can you get by without the calibration systems?

Well, that's the thing. So right now I'm subbing the calibrations out to other shops. I'm not essentially losing money, but it's money I could be making. Right now I'm getting by. The issue isn't getting by, it's just making more profit, seeing the potential to make more profit. Are you working full-time at this business? I am, yes. Okay. Are you able to take on a side hustle while it gets off the ground to bring in some more income right now? What is this bringing in for you, net income?

I'm not saying it's it's I to be completely honest, I haven't I haven't even tracked it. I know I'm making enough to pay the bills and that's it. OK. Is this just you? It is. Yes. OK. All right. OK. OK. You said seven months old. Are you putting aside since you're not really taking inventory? Are you putting aside for quarterlies and for taxes?

Yeah, so the taxes are handled. I actually just had a huge scare with the state. They thought I owed $26,000. Yikes. I was able to resolve that luckily. But yeah, so right now the tax isn't the issue. Okay, good. Listen, I'm with George. I would, A, start getting a handle on what you are making because you got to understand if your business is doing well and what it's doing because then you might look at the numbers and go, oh,

I should be able to pay for this out of the business and not my tax return, you know, but I do think that you should pay off this credit card debt first. Okay. Even though the credit card debt is more personal versus the business. Everything's personal, man. Guess who signed those business documents?

Gotcha. Okay. So, yeah, there's really no such thing as business. It's all in your name, and therefore you owe it all. And so I want you to have as little risk as possible, run this business debt-free. I love that you're wanting to cash flow these systems, but you'll get there once we have more financial footing and foundation underneath us. Mm-hmm. Good. Gotcha. Okay. Thank you so much. Yeah. I would pause on this. Even though you could be making money, any opportunity to do something that puts you at risk is not an opportunity. Mm-hmm.

And whether that's going into debt or investing in the business when you have debt, it's all the same. And you've got to get that emergency fund in place ASAP. But I am glad, you know, you get a refund instead of owing $26,000. That is quite the scare. And I know it's tax season. A lot of people out there, Jade, are now filing and getting their documents together. I want to let them know we have a great free resource at ramseysolutions.com slash tax.

And on that site, you'll see my pretty face along with Dave's extra pretty face. And we'll help you figure out, number one, is it worth filing with a pro or can you do it on your own with tax software? We also have some really great free resources. I use these every year. I go to the site and I download the personal checklist for taxes and it has every single document I could need.

I love that. So I go through that and I pull it online, log into the site, and I can knock it out in a real short amount of time. There's also a really great beginner's guide to taxes that is super helpful. How do income taxes work? What do you need to know for the 2024 tax season? How to file? What about deductions and credits? How to choose a tax advisor? Filing an extension?

The Truth About Tax Refunds. It's all right there. I can't believe it's free, Jade. And so go to ramseysolutions.com slash tax to get all of those resources. I promise you it's going to give you, it's going to help you burn less brain calories this tax season. That's so true. Have you filed yet? Have you done it? I got my appointment to file and I've got all my documents ready in...

on my computer in a folder. Everything's labeled perfectly. My wife is like, how do you know all this? I'm like, I don't know. I'm just a giant nerd. There was a glimmer in your eye just now when you were talking about it. I'm not going to lie. Like spending three hours on a Saturday doing that was somehow invigorating. It was like cleaning out a closet. You know what I mean? It just feels good once you're done. Satisfaction. I get that. All right. There we go. We're moving on to Philadelphia. Matt joins us there. What's going on, Matt? Hi, how you guys doing? Great. How are you? I'm

Good. So I just started listening to the program about six months ago or so, and I have a general question on finances and then another question on potentially getting married. So I'm following the program, not perfectly, but I'm trying. I have down about $3,000 in credit card debt. My biggest debt is actually I have to pay back. I'm visually impaired and I have to pay back Social Security. Okay.

A substantial amount, about $80,000. But that debt is actually interest-free. So I've been just paying the agreed payment, basically, and attacking my credit card and my mortgage, which is down to about $73,000. I've kind of been paying them both. I know that's not the exact way to do it. I'm just about to get rid of the credit card debt. But my main question was, with all that, I'm still investing through

through work 6% because they match the 6%. Should I be stopping that completely until the debt is gone? Yeah. You know, you said you listen to what we teach and you're not doing it perfectly.

I don't think you're really doing it at all in our way. I think that you have in your mind that you want to pay down your debt. But the way that we would teach to do this is very different than what you're doing. So I'd like to kind of call out the major differences. But I think you know what they are.

What's your income? I guess it's just, it has a 64 K. Okay. I mean, right now you're paying off your mortgage along with your other debts, which we would tell you that's further on down the line. Baby step one, you get a thousand dollars saved first and then baby step two, you pay off all your consumer debt, everything except the mortgage. So you're really flip-flopping it. Do you have the thousand dollars saved by the way? Yes. How much do you have saved?

uh around four thousand so you can knock out the credit card debt but i i want to call out the fact that you're really not doing our plan at all even a little bit my main concern was i have to have like a some some housework done like a roof on the garage okay save a little cash to potentially pay the person to do it in cash rather than okay so it's like a sinking fund yeah

That's my safety net, I guess, at this point. That's the only reason I haven't done it. How urgent is that roof over the garage? Is it like falling apart? It's not falling apart. It's got a slow leak. I mean, if you had to say, what's the timeline on this thing? I need to get it done soon. I was kind of waiting for the winter to get over, but probably in the next month or two. Okay. So, okay. I got it. What's it going to cost?

That's a good question. I'm not really sure. I'm thinking somewhere around $1,500 to $2,000. Okay. Okay, so you've got a little extra there. Find out exactly what it is because this is money, all this money when you just kind of keep it around and hoard, it's not to say that you have lots of it, but it's money that could be going to work for you. So if this thing is only going to cost $1,500 or $1,100, you've got another...

$1,300 here that could be helping you right now. So let's get a clear estimate on that. I want you to stop investing. I understand that you're getting 6%, but that's a lot of money that could be back in your pocket for you to be paying off these credit cards and really paying off this social security. I'm not sure...

You probably don't have to go into it, but I'm not sure how that happened. But $80,000 is a lot of money. Regardless of it's interest free, it is a weight on your body. And I want you to get that paid off. So I want you to stop on the mortgage, wait until baby step six, which is when you're supposed to do that. And right now, I really just want you focused on paying off this debt using the debt snowball.

And that's how you're going to do this. That's how we teach to do it. So if you want to do our plan, that's the way it goes. And freeing up that investment, that's $3,840 a year. That's $320 a month. That'll make you feel some progress instead of doing 17 things at once without making any. So we hope you follow our plan all the way, man. That's the only way it works. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. And while you're enjoying this show, if you could do us a tiny but huge favor for us, hit the share button, hit the follow button, hit the subscribe button, leave a review, leave a kind comment, send a link to your mom, and we'll see you next time.

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We're doing great. Thank you. You guys are the marketing plan and it's free to you. This is a free show for you and we appreciate you being here. Bill is in Boston up next. Bill, what's going on? Hi guys. Thanks so much for taking my call. Sure. Um,

I'm 51 years old, single. I'm a homeowner with $50,000 left in the mortgage, a value of $750,000 in the house. Awesome. I have a retirement of $157,000. I started all over 12 years ago when I got divorced. I've got about saving. I've got $10,000 of savings, no credit card debt, no car payment.

And I have a Vanguard target retirement of a 2040 fund as well. You said 240? 240, yes. It's a target date fund that goes until 2040? Oh, 2040. I'm sorry. I misunderstood you. Okay. Okay. All right. What's your question today?

Should I be doing anything else? The past few years, I've put about $18,000 into my 401k. I just want to get ready. I'm working hard not to have debt. I don't do much. Do you have anything except the mortgage as far as debt? No, sir. Great.

And so if you're following the Ramsey plan, this would put you at, I know you found us, so let me lay it out for you. Baby step one, $1,000 emergency fund. You're through that. Baby step two, pay off all consumer non-mortgage debt. You're through that. Baby step three is three to six months of expenses. Do you have that with the $10,000 or do you need more than that? My guess is more. If you added up six months of your expenses to run your house, is that going to be? I don't have six months. Would that be closer to 20 or 25 for you?

Uh, yeah, it'd be closer to 25. Yeah. Okay. So that's a good goal for you in the savings. And then beyond that, once you have that 25 saved, then we can move on to investing 15% of your income into retirement. How much are you investing now? Percentage wise? Uh, 20. Okay. So you could dial that back to 15 and then whatever's left over, you can throw at the mortgage and get that knocked out.

I wasn't, yeah, I wasn't sure what, I had a feeling you were going to ask me to back it off a lot just to bang out the mortgage. Well, you're 51. My goal for you, and I think your best path to wealth and being secure in retirement is to have no mortgage payment, no debt whatsoever, and have that nest egg building. And so that's going to also decrease your biggest fixed expense. What's your mortgage payment?

It's not much. It's just $500. Well, without taxes, just mortgage alone is $500. Okay, plus taxes and insurance. So you'll free up $500 once you get rid of the mortgage, which will be helpful in retirement. Okay. And the good news is at over 50, you're going to have some catch-up contributions. And so once the mortgage is paid off, you can increase investing to 30%, 40% of your income, be maxing out everything. Okay.

Oh, I didn't know that. So you're able to contribute additional money that I'm not able to at 34 years old. But once you're over 50, you can contribute more to that 401k, more to the IRA. And so that's going to help you to build up that nest egg faster as you race toward retirement. What can you max out at your 401k at 51? Let me see the 2024. They just upped it. Let me check on that for you with my handy dandy laptop here. Here we go.

Okay. I am seeing... Well, George looks for that. I'm just kind of curious, what set you on this path to start paying off your mortgage and doing all of this? I see on here that you're kind of new to Ramsey. So was it just you realizing, I want to start over? I just never liked debt. I got divorced. I carried a lot of debt after that and passed.

I'd say four or five years is when I, it took me about seven years to really finally get out of it. And now I'm able to do the 20% for my 401k. You know, I want a future. I don't want. Well, you've got a taste of the freedom on the other side, getting rid of all that debt too.

Right. And I don't, you know, I mean, I don't do any, I like to fish, I like to hunt. You know, I know a little bit of money goes to that, but that's just a few thousand dollars a year. That's my thing. Yeah, you don't sound like you're living a crazy, frivolous lifestyle here. You're doing a lot of the right things. And I found the contribution limit for 2024, it's $23,000. And then you get to contribute an additional $7,500 on top of that.

That's significant. So that's pretty serious. You're putting over $30K in that 401K as you get in your later years working. What's your income? Depending on overtime, I would say I average about $85K. Okay. Okay.

And we've got a great investment calculator on our website that's free, Bill. You can jump on there, ramsaysolutions.com, and you can start punching in these numbers and going, all right, I have 157 saved right now. If that just grows and I keep contributing, you know, 500 bucks a month, 1,000 bucks a month, you can see exactly what you'd have over time. And I think that will be an encouragement to you.

uh to go oh okay i'm gonna be okay another 10 years of compound growth and investing with no house payment you could have a pretty uh decent little nest egg there and i imagine you're going to be able to work in your later years or do you have a goal in mind i would love to be 65 okay but i but i my social security i went down to the office uh two weeks ago and it's 67 for me so if that's it so be it but um

They told me 67 at my age right now is when I would be able to retire. Well, I just popped in some numbers for you, Bill. You're 51 at 65. If you keep contributing to this 157 with 10% return on average, you'd have 1.3 million sitting in that nest egg.

Is that, okay, what is that with, what is it that I'm contributing every year to make that happen? That's at $18.75 a month. I just put on a random number in there. That's $22.5. So that's even below the current limit without your catch-up contributions. So at $22.5, now until $60.75? Now until $65. Now until $65, $22.5, that would be how much? $1.1? $1.3 million, my friend.

So start dreaming. A lot can happen in 14 years with a little bit of consistency and you keep staying on this plan and you get rid of that mortgage. But again, you got to do these things in an order because a lot of people, Bill, what they do is they try to do 17 things at once. And the beauty of the baby steps is it's focused. And so while you're going to be investing 15% while paying off the mortgage, as soon as that thing's knocked out, you can weigh up that investment. And you remember, you also freed up 500 bucks from that mortgage.

Right. Would you suggest that I just stop my 401k for two years, pay off my mortgage, and then get back on it? No. That's two years of compound growth you'd lose. The one thing that I would do, you may want to pause temporarily to get that emergency fund in place because getting 20% of your income back to save up that 25k, that's going to protect you. Because a lot of times what happens, Bill, is people have one of these emergencies later in life, and it might be a $12,000 emergency. You don't have $12,000. Right.

So what do you do? You go into debt, moving you backwards, and it halts your wealth building journey. Okay. And that's baby step three to have six months. Exactly. All right.

And Bill, I'm going to send you a copy of my new book, Breaking Free from Broke. It'll walk you through all these baby steps. It'll talk about wealth. It'll talk about investing in mortgages. All of that stuff is in there. And I hope it gives you some confidence for your retirement. But I feel good just looking at a calculator. Sometimes the numbers is exactly what you need. It is. You know, I think about that statistic. It says 52% of Americans feel that they're not prepared for retirement or that they don't have enough saved. And I sometimes think that that...

that fear and that anxiety could be remedied if people just looked at the actual numbers instead of assuming they don't have it or assuming they can't do it. When you start plugging real numbers into that calculator, it can give you peace and it can help you see what you need to be doing so that you can have the retirement that you want.

That's a good word. Knowledge is power. And listen, it's not too late for you, America. If you're 51 and you only have 100 grand in retirement, it's not too late. Look at Bill. He's already about a millionaire, and he's going to be doing just fine 10, 15 years from now when he retires. That puts this hour of The Ramsey Show in the books.

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 Camel, joined by Jade Warshaw this hour. The number to call is 888-825-5225. Don't wear it out. You call in, and we'll talk about your life and your money. Elizabeth kicks us off in Atlanta, Georgia. Elizabeth, how can we help today?

Hey, thank you guys so much for answering. Absolutely. Well, Austin answered. He just then patched you through to us, so you can thank Austin for that. He's a good man. Thank you, Austin, and thank you for having me on.

Um, so I'm currently a college student and I am getting all of my college paid for by a family member right now. And I'm renting again through that family member. And I was, I'm in school for interior design and I do want to get into real estate after I graduate. So I'm trying to think of a way that I can get set in the right foot after I graduate per se. So I would like to, uh,

proposed the idea of buying a house to this family member and then possibly buying it from them after I graduate. Oh. And I just want to know if that's a good idea. Hold on. They buy it for you? They buy it. I live in it until I graduate. And then once I start making a steady income, buy it from them. That is a tall order.

It is. It is. It is. But with the rent I am paying right now, buying a house would be cheaper in the long run. But you're not buying a house. Hold on. I'm sorry. I don't mean any harm. So you said it's the same family member. So the same family member that is allowing like paying your rent now and paying your way to college. You mean to tell me you're going to go to them and say, hey, why don't you also buy a house for me to live in?

And then the assumption is that you'll buy it from them because you just get to decide when they're going to sell their house and who they're going to sell it to. Well, this, I mean, this is the proposal. I know. Why not just you get yourself in a position to buy a house? Why do they have to be involved? Because straight out of college, I won't, I don't have, but you don't have to be able to buy a house. That's how it should be.

I'm just trying to set myself up in the right way. Yes, but you're not the one setting yourself up. You're trying to have somebody else prop you up.

And what does well for us as adults is when we form and craft our way through life financially. Listen, I'm so happy that somebody is going to college debt free. Right. That's great. But once you graduate, listen, buying a house is not just kind of like a willy nilly thing. Hey, why don't you buy this house for me? I'll live in it. And then when I'm good and ready, you can sell it to me. That's I don't think you understand kind of how.

how much you're inserting yourself into that person's life and deciding the timeline on their financial investment. And I get that you don't realize that, but what George and I are trying to get at is you don't have to, we all have this checklist in our mind of, I go to school, I get my degree, I get my big girl job, I get my car, I get my house, I get married, I have my kid. And it's like, we're trying to check these things off the list to tell ourself that that's what makes us successful.

And it doesn't have to go that quickly. The fact that you're in school without student loans, that is a major win. The fact that you are going to graduate without student loans, major win. And the fact that you are going to get a job in your field, that's thing one. And then you're going to be able to sustain rent and understand what it just feels like to have that responsibility because I don't mean any harm, but you haven't had to assume any financial responsibility yet. So this idea that you're just... I have. With what? I have. I have.

I did. I did live by myself for two years with no financial stability from anybody else. And then once I decided to go to school, then I was given the opportunity to have my life paid for. But I did. I did rent a place by myself 100 percent on my own. OK, that's good. I'm glad you did that. I think that you should do that again when you come out now with this. This is the job I want. I'm in the career field I want.

pick a place in town where you want to live. There is a big part to that. Having the three to six months saved up and just walking through this and being you, Elizabeth, and standing on your own two feet in no world. What I think, what I say that it's a good idea to say, who is the family member, by the way? It's a grandparent. No way. What I say, grandma, grandpa, will you buy a house worth X amount of dollars and,

And me be the renter paying full rent. And because here's the thing, I'm just assuming, are you renting at cost or are they charging you a real rent where they're able to make some money on this investment? That's something I would have to talk about with the grandparent. That's a big deal. So for you to even make the assumption, listen, I'll just rent at cost. You won't make any money on the renter, you know.

and whatever it appreciates whenever i'm ready i'll buy it because they might be ready they might want to hold the property longer like what if that's the case that they're like listen this the market's not great right now we understand that you want to buy it but it's not great for us there's so many factors and volatilities there that have the ability to make you know the relationship not the best that it can be yeah how many more years do you have until you graduate

I'm supposed to graduate within two years. Okay. So you graduate with an interior design degree. You said you wanted to go into real estate, as in be a real estate agent? No, just I want to own property. Okay. So you just want to be a homeowner? That, but I also want to be able to own other properties. Like lots of properties. Okay. You want to go full monopoly here. All right. And is the goal to be working full-time in interior design? Yes. And so you'd start off working for an interior designer company?

I imagine. And then work your way up to maybe starting your own interior design company one day. That is the hope. What's starting salary? Like when you come out of college, what does an interior designer in your area earn? It really just depends. I don't plan on staying in the area, but it can start anywhere from 50K a year to maybe 80. Okay. 50 to 80. So let's say 65. So you come out, you're making 65. You've got no debt. Yeah.

Tell me more about your personal financial situation. About my financial situation? Yeah. I have a paid off car. I have $2,000 of my own separate money. I've been doing commissions, like little side hustles, and saving that on my own. So I've got $2,000 saved up of my own personal money, and it's working its way up right now. And what's your rent right now? Do you pay rent? My rent right now, my grandparent does. It's $2,500 a month. Well, you just said the mortgage is cheaper than rent.

If I was to get a house that was, or this is all very hypothetical, but if there was to be a house that was bought. Then that is assuming that you're paying it at cost, that you're not going to. That's my worry is there's a lot of assumptions here. And one is that renting is just, I might as well get a mortgage. $2,000 in rent, $2,000 in mortgage. It doesn't work like that because there's property taxes, there's insurance, there's maintenance, there's all the surprise repairs. And you have $2,000 to your name.

I'd be scared out of my mind if I had two grand and I was a homeowner.

Well, she's going to live in the parents' house until she's ready. She's going to ask the grandparents to buy the house. I would work your tail off, get a down payment, and work on just continuing to stack up cash. And when you're ready to be a homeowner, you'll be a homeowner. But I would not try to leapfrog this and shortcut your way there and ruin relationships over it. Your grandma has done enough. This is such a blessing, and I would let that be your setup for your future. And grandma, if you're listening, don't do this. Deal. Deal.

Because you might be listening to Granny and Grandpappy. Don't do this deal. It's not a good deal. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225. You call us. We'll talk about your life and your money.

Jay, we were talking during the break and I thought this might be good content to talk about on the show. What's that? I got an email from the Social Security Department with my yearly statement. Okay. So I thought, all right, I'm a young buck, but I'll open this up. Let me see what's inside this bad boy. And it was pretty interesting to see how much money the government thinks...

I will be given when I'm the ripe age of 62 or 70. And I wanted to break this down because we get this question frequently on the show. People are asking, hey, when should I take Social Security? Will it even be there for me? Note on that part, there's actually a spot in the document where they know that people are concerned about this. So like, hey, we want to give you confidence in your future and retirement. So click this PDF to show how we'll be there for you.

Well, here was the rousing confidence booster. We know that at least until 2034, the money will be there. Yeah. And I was like, okay, 2034, that's 10 years from now. So 10 years from now, they're not going to have 100% of the funding to keep Social Security going. No, not at all. And we know this. And they encourage me by saying, hey, listen, even if nothing changes, we'll still be able to pay 80% of each benefit due.

Because that's fair. Because I paid into this thing for my whole life for them to then...

discount it but keep in mind that the benefit was only at a portion of your exactly so they're giving you 80 of what was already what was only a 40 benefit to begin with so uh that we're at 2.83 trillion in the fund in the trust funds as it stands today and so that's why um i encourage people especially the younger generations do not rely on this this is icing on the cake and i talked about this in my new book breaking free from broke jade can i tell you what i wrote

Hit me. Research from the Fed reveals 26% of non-retired Americans have $0 in any kind of retirement account. That's one in four non-retired people. This is not great. And in research from Ramsey Solutions, 48% have less than $10,000 saved in retirement. So that's going to get you about, what, three months into retirement if you're lucky.

So then people are going, well, Jade, at least I'll have Social Security. Well, we just showed you how that's not going to be enough to get by. Here's the real numbers. The average monthly benefit in 2023 from Social Security was around $1,700 a month. Try living on that and you'll see why we call it social insecurity. That's approaching the poverty line. That's $1,700 a month. And by the way, that's the average, Jade. Some people get less than $900 a month.

Wow. Yeah. And here's the last stat. 52% of workers have never stopped to calculate how much money they'll even need in retirement. So... Half of them are just YOLOing and fingers crossed, head in the sand. Yet again... We'll let someone else worry about it. Yet again, assuming that the government will be there to handle them financially. Listen, I will tell anybody who will listen, if you want to be thriving...

You want to be thriving during retirement years, not just surviving and scratching by. And then there's the scam. I'm going to just call it a scam, George, where it's like, OK, if I take Social Security early at 62, I'm only going to get this much. So I'm going to wait till I'm fully aged, you know, where I can get the full benefit. But if you wait even longer, you get more.

more money. This is what we need to talk about. Yes. And this, we do need to talk about it because I did the math for you. I just talked with the, uh, I think it was CNBC. I was talking to them and I was saying, listen, if you don't have to, like, if you're going to work beyond 62, start taking social security.

You know your boy's going to take that money out the day it's available at 62. Yes, and invest it. George, give him the math. Okay. I crunched the numbers for you because you know I'm a nerd and I needed the numbers. So at age 62, if I took out my benefit and I started getting that every month and I invested that whole portion, let's just say into a taxable brokerage account, not even in a retirement account, and let's assume 10% rate of return. Okay. From age 62 to age 80, starting from $0 in this account, I would have $1.45 million. Ooh!

Oh, wow. Just from extra money that I took immediately when I could take it. Right. Yes. Now, if I wait till 70, of course, people go, well, George, you're going to have, you know, a lot more money coming in from Social Security every month. Right. Yeah. But I also lost out on eight years of compound growth. So even investing the larger amount for 10 years from age 70 to age 80 at age 80, I now have nine hundred twenty one thousand dollars in that account.

Listen. So that's a difference. Get this. Because I took Social Security as soon as I could and invested it instead of waiting till 70, it's a difference of over half a million dollars. Guys. To my net worth and to what I can pass on to my grandchildren.

What I want to say, because George, you laid that out perfectly, but I know there's still people who feel this weird sense of fear about even considering that as an option. It's like, well, the government's giving me that money. It's for my retirement. I'm like, number one, the government's not giving you anything. That was your money that you paid in and you're only getting a portion of it back. Let's be clear about that. The government doesn't gift anything. It's just redistributing all of our money. Yeah.

You're getting back your money. You gave it to them and they invested it poorly at like a 2.2% return. And now that's part of the reason here that we're not having enough to fund everything. They're giving your money back to you so you can take it and do whatever you want with it. And what George is suggesting and what I'm suggesting is invest it. Invest it in something that gets better than a 2.2% return because at the end of the day, they were only going to provide 40%.

Of the lifestyle you've been used to living. You can't rely on this. And after 2034, that 40% goes down 80%. That's crazy. That's critical. This is why it's called social insecurity. Get this camera on me right now. Here's the deal, America. Go fund yourself. I said it.

Live on the Ramsey show, do not rely on the government to take care of you with this terrible plan, especially those that are younger, because it may not even be around. And if it is, it's going to be pennies compared to what your parents got and their pensions and all these wonderful ways they were able to just not save for retirement.

But it's going to be on us, Jade. And that's why we tell people invest early. That's right. Get out of debt. Get the emergency fund. Get to investing. Compound interest is your best friend. And if you just do the simple thing, be the tortoise instead of the hare. That's right. Avoid the crypto. Well, my buddy said I need to get an annuity and a whole life insurance policy. And I saw this rapper on his TikTok video said this is what the wealthy do. Just invest in your 401k. I promise it's not a scam. 80% of the millionaires we studied said,

said the 401k was the number one vehicle. Yeah. Your retirement employer plan. It is so boring and yet it works when you just invest in- Over time. Mutual funds, over time, the S&P 500, the overall stock market has returned 10 to 12% since its inception. Yeah, it's almost like you boil it down to just these. If you can, in the course of your lifespan, we strike out when we're 18, 20 and most of us are gonna work until we're 65, God willing, maybe even 70 if you want to. But if you can do three things, if you can just-

pay off your debt and live a debt-free lifestyle. If you can, and so that you're entering retirement without consumer debt, then if you can do one better and invest monthly regularly when the time comes, so you've made it a habit of investing. And if you can enter in retirement without a home mortgage, like,

Three goals you have in life. If you can do that, you are golden. And when you do that, George, you don't need as much of a nest egg. If you can enter into retirement without consumer debt and without mortgage debt, suddenly this need to have all this giant money, you're like, okay, I've eliminated so much of the payment, so much of what's needed that you needed before that you don't need to have.

When you decrease your risk, you increase your peace. That's right. It's that simple. And so when you do that, and luckily for my wife and I, we decided to do that early. We thought, what would it be like in our 30s to have no mortgage payment, to be investing for a future, now bringing our daughter into this world? Yeah. It's just a different way to live. We're not as worried about inflation and what if there's a crash and what if the pandemic...

We just get to live our life with peace. That's right. We don't have payments. And that's what I want for everyone out there. And investing consistently, everyone's arguing about net worth and what your home equity. I'm going, listen, I'm not touching this money. That's right. We got margin in our day-to-day life until I'm 62 and tap into social security and those investment accounts. And Lord willing, we won't need much of it.

Yeah. What we're saying is a good man leaves an inheritance to his children's children. And you can't do that if Social Security was your only option.

That's it. Like you just stopped and said, okay, I'm done making money. I have no assets and social security is there. You can't leave anything to anybody like that. And do not rely on your kids. We take enough calls in the show where relationships are destroyed because parents are relying on the kids. The kids are relying on the parents. They didn't communicate. They didn't invest for retirement. And they're calling us at 65 going, we have nothing saved. What do we do?

Get a time machine. I mean, there's not a lot you can do. You can get out of debt. But folks can break the cycle today. There are people who can start breaking that cycle today. Be one of those people. Wealth gained hastily will dwindle, but whoever gathers little by little will increase it. Be the tortoise. Be a crockpot in a world full of microwaves, my friends. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. And in the lobby on the debt-free stage, we've got Tony and Hypatia. How are you guys doing? Doing great. Well, I can tell by your Ramsey swag t-shirts, live like no one else, debt-free. You're here to do a debt-free scream. That is correct. Where are you guys from? Hammond, Indiana. Wonderful. And how much debt did you pay off? $301,000. Wow. And not a penny less. Yeah.

Okay. And how long did that take? Four years and seven months. Nice. Wow. And what was the range of income during that time? We started at $60,000 and ended at $123,000. Let's go. That'll do. I like that. What do you guys do for a living?

I'm a flight attendant and a recent FCMT graduate. Financial coach graduate. Nice. Went through our financial coach training. Yes. That's cool. Yes. And I'm an assistant principal. Wonderful. Okay. So let's talk about this $301,000. What kind of debt was this? Oh, it was student loans. Primarily. Primarily student loans. Wow. Who was it? I was the smart one.

She's like, I have no problem pointing at you for this.

I have a semester of high-quality college education, so it's all his master's degrees. So a lot of education. What else was in the mix? 401K loans, two phones, two iPhones, two cars, credit cards, all of that. Wow. Just the normal, typical American lifestyle. Yes. Just a little potpourri of debt, if you will. Yeah, and it kind of started when we actually had our...

second oldest son uh when my wife had him then we ended up um I ended up getting a torn Achilles a month after she had him so we were both off work for um and I was off for at least six months wow and then my wife couldn't couldn't go back to work because at that time we she was taking care of two babies uh unfortunately me and my son who was the bigger baby oh my goodness

I would say he was. Okay. Wow. Okay. So four years, seven months ago, I mean, something took a turn. What happened? I was sitting on the couch, just tired and the Holy Spirit tapped on my shoulder and said, you have a book that can change this. And I

As a flight attendant, I used to go in the front and sit with the pilots because they had a lot of money. So I used to ask them a lot of questions. And one of them told me to get Total Money Makeover. And I got it in my early 20s, but I didn't need it at the time. But it said in my library all that time. So I went to where our books were and I looked and I found the book. And I read it in a day.

And gave it to him and he read it. And that's what started. Wow. So Tony, she comes to you with this book. She just read in a day. She's looking like crazy eyed over this plan, I'm guessing. And what was your response? Were you like, okay, honey, sounds good. So initially, yes, I said, okay, honey, it sounds good.

with no intentions of reading it like she did. But once I picked it up and actually looked through it and started, it's such an easy read. That's right. And it was just so understandable and relatable. And then just listening to the other testimonials, I ended up reading it within not one day, maybe two days. But yeah, I definitely got on board right away. Wow.

So, Hypeisha, when you started talking about it, there's clearly emotion there. Is the emotion, oh my gosh, this book changed our life, is the emotion, I wish I had started sooner? Tell me about what you're feeling in that moment. I felt like God asked me to do something important for my family. And there was a lot of death happening. My mom and my grandma and seven people died on my mother's side of the family. Oh my goodness. And I felt like,

Before I died, I wanted to do something special for my family. Well, at that point, you're like, life is short. What are we doing? We got to get on this thing. I was unsure about what I was going to leave, what legacy I would leave behind. And so...

This was something you could control. You can control this. Yes. You guys changed your family tree in four years and seven months. $301,000 paid off. What was the hardest part of this journey? Because that's not a short amount of time to sacrifice. I would say cooking. Cooking every day. Listen. That's a word.

Our budget in the beginning was $50 to eat out. So we went to Golden Corral during lunch hours because we couldn't afford the dinner prices and once a month. And so, and just the people that I thought would be here to see it, they passed on before it happened. And that adversity just...

just really made us stronger spiritually and stronger marriage. Yeah. Oh, I bet. Most definitely. And I just wanted to add to that. I think that, um, neither one of us coming from a family tree that had a lot of money and not so much as just the money aspect, but the knowledge of it. That's right. And so that was the key takeaway just from, for me, um,

or us as a, as a, as a unit, just wanting to get the knowledge so we could prepare our children to have, you know, to have a brighter financial future as well. Absolutely. What a crew. And I'm sure they, I mean, they're old enough. They saw mom and dad. They're going to remember this journey. Oh, most definitely. The goodwill runs. We were in thrift stores like crazy. I mean, there was a lot of sacrifice, but it,

it was worth it. It was well worth it. And I do want to add this.

We paid off all of the debt, the cars, we sold cars. We bought $2,000 cars, $3,000 cars during the journey. And then we just had two student loans left. We paid off one student loan for $13,000. And we had a $45,000 student loan and then $123,000 left. And I was watching Anthony O'Neill and it said, if you have student loans, do this before October 31st. And I did it. And...

We went from 44 qualified payments for student loan forgiveness to 125. So that whole, all of those, it got forgiven, all of that. And so God not only gave us something to do, but he helped us get there. Yeah, you guys were faithful every step of the way. He gave us a quantum leap. That's amazing. It's exciting. Who were your cheerleaders?

uh each other most definitely each other our anthem church um our children yes and god yes that'll do you know what and then we had um i do want to shout out um

Damien Harmon, the Harmon family. So they did, they knew about our journey as well. Pete McAdams, a close buddy of mine. They both live here actually in Tennessee as well. So those people I know we spoke to a lot about it, who was right there with us from the very beginning and just told us to keep pressing. And it just, it felt good. It feels good. It definitely feels good. Oh, I bet it does. So what's next? You're debt free. How are you celebrating? Um,

So we're having a debt-free party. Hey, I love it. Yeah, we're going to have a debt-free party. I love that. We're still working out the particulars on when exactly. Because it's still such a surreal moment. Yes. Just being able to...

Do something that we've never seen done. Yeah. But then also do it for our children to let them know that their destiny affirmation starts here with this moment. And this will be in the new chapter in our lives as a family. Well, get the kids up here. What are the names and ages? Okay. We have Talon13.

We have Anahi, and today is her birthday. She turned 12. Happy birthday. Hey, get up on stage, y'all. Happy birthday. We have Valerie. She's nine. And then Ali, she's six. Oh, my goodness. Well, they get to scream with you. They were a part of this process, and they're celebrating mom and dad's freedom because that's freedom for them, too. That's changing the family tree. Let's do this thing. Y'all ready? We're ready. All right, we got a living gift box for you, including Baby Steps Millionaires, Total Money Makeover, and Financial Peace University. So use it or pass it on to someone else to kickstart their journey. You guys are an inspiration. Yeah.

All right, we got Tony, Hypatia, the whole gang, $301,000 in four years, seven months, making $60,000 all the way to $123,000. Count it down. Let's hear a debt-free scream. Three, two, one. Win! Now that's a scream, George. With the matching Better Than I Deserve t-shirts and the Live Like No One Else t-shirts. Wow.

That generational curse is being broken. Listen, you heard it in their voices. That was a dead free scream if I ever heard one. My goodness. Woo! That'll put a pep in my step. I got some shivers on my spine. This is The Ramsey Show. Our scripture of the day, Psalm 37, 23, and 24. The Lord makes firm the steps of the one who delights in him. Though he may stumble, he will not fall, for the Lord upholds him with his hand.

In other news, Slash from Guns N' Roses once said, No one expects the rug to be yanked out from underneath them. Life-changing events usually don't announce themselves. Who knew? That's the kind of wildly varying entertainment you get on this show. From Proverbs and Psalm to Slash. There we go.

Well, Jade, I don't know if you've been keeping up with the news. The Grammys just happened. The big game is coming up this weekend. Everyone's talking about Taylor Swift instead of the big game. Yes. But the big news is right here on The Ramsey Show. You ready for this? Tell me more. We just launched...

a new Ramsey-trusted national partner that can help you find the right health insurance. Really? I know, not the news you were expecting. I didn't know. Tell me more. Well, we all know health insurance, it's not the most exciting or fun thing on people's list. But you know what it is fun? Having the right health insurance when you need it. Facts. I mean, the amount of people going bankrupt...

in medical bills is frightening. And so, you know, to get a load off your mind, protection for your hard-earned money, not panicking at the first sight of the medical bill, that's my idea of fun, at least partially. And it's why we are so excited to have a new partner called Health Trust Financial.

And this isn't really new because here's why. Our team has worked with Health Trust Financial folks a lot over the years, and a bunch of their independent agents have actually been serving Ramsey fans for more than two decades now. First, they were part of our endorsed local providers program, then as Ramsey Trusted Pros. And while a lot of health insurance companies out there care more about premiums than people, Health Trust Financial cares about educating you, saving you money, and shopping different providers to fund you the health insurance you need. Okay.

And they've done such a great job working with our fans that our team decided to expand this relationship and make Health Trust Financial the only health insurance company we recommend here at Ramsey. That's high praise. Listen, that's big. You've got to do right by people for a long time and treat them well and treat our fans well because trust is all we have here at Ramsey. That's what we're all about. So the fact that you guys have a new...

company out there you can reach out to for all of your health insurance needs, Health Trust Financial. That's huge. They know their stuff and they want to help you protect your wallet from unexpected medical costs. So if you need help figuring out the best health insurance for you and your family, be sure to check them out at healthtrustfinancial.com. Very cool. Very cool partnership. All right, let's go to the phones. Chris is up next in Myrtle Beach, South Carolina. Chris, welcome to the show. Hey, how are you guys doing? Doing well. How can we help today?

My wife loves your nails, Jade, by the way. The color of your nails. Thank you. It's always Jade and never George. What's wrong with my nails, Chris? I love them. Thank you. And your watch. Thank you. Appreciate that. How can we help? So we're looking to relocate here mid-year, probably June, July. And I've done some math to where I could probably safely get us out of debt with the equity within our home and be debt-free.

When we move, but my wife is a little skittish. She wants to be able to buy right away when we relocate. Where are you relocating to? Pennsylvania. Okay. Is this for work? Just better lifestyle overall. The tourist town really isn't for us. We're touristy income, so to speak. Seasonal positions, that kind of thing, it's tough to get. What's in Pennsylvania? What drove you guys there?

That's where I'm originally from. We moved down here, my parents, before I became of age and didn't have a choice. Moved here. I met my wife. We've got a family here. But we've been back there to visit over the years. She likes it. Obviously, I liked it when I was up there. I would have stayed, but I didn't have a choice at that time. So is the assumption that if you bought a place, you'd live in the area that you grew up or the area that you know?

Correct. Even if we, you know, the way I want to do it with renting, we would rent somewhere within that vicinity. I got to tell you, I would vote for the rent in the vicinity that you think you want to live because... Times have changed out there, I imagine, since you live there. True that. And so part of this is financial. I mean, how much equity do you guys have in the house? We owe $140,000 and we could sell...

For roughly $275,000. Okay. So net of fees, you're looking at what, $110,000, $120,000? Based on my calculations with transfer taxes and things like that, about $101,000. Okay. So let's say you walk away with $101,000. How much debt do you have? About $48,000. That's including a vehicle. Okay. So we clear the debt, and that leaves you with $53,000 total to your name?

Uh, let's see here. Unless you have money in savings. Uh, I don't. So it would be, yeah, yeah, what you said. That's correct. So let's call that your emergency fund plus a little bit of down payment money. Um, so my idea was, um, from the 101 and the, the debt, um,

We could take about $26,400. Rent on average for the space we would need there as of right now is about $2,200. That's on the higher end. Take that for a year, $2,600, $2,400. Pay that up front. Why pay up front?

We could then take that $26,400 that we would pay up front and then we could save that over the entirety of the year to make that our down payment on the home that we would look, you know, to purchase within that year. Hold on. The next year. Are you saying, I want to make sure I'm following you. Are you saying you want to pay your rent up front for six months? Correct. And then take for a year. Correct. To who?

We would pay the lease out in full for the full year as opposed to paying it monthly. I wouldn't do that. I would just pay monthly and you have the money sitting in savings already. Because what if something, what if something happens and you're like, we're renting here, the guy above us smokes pot and we can't get out of this. Like what if, what if there's a complication? Are you not concerned that it could be a pain in the butt to get your money back?

I hadn't really thought that far into it. I would. That's part of the reason why. I just think there's too much unnecessary risk in that and no benefit. So I would just pay the normal payment, $2,200 a month. What's your take-home pay as a family? As a family, about $950 a week. Wait, so it's only less than $4,000 a month? Yeah, about $33,000. I make $49,000 salary a year. Well, here's the problem. Your rent is over 50% of your take-home pay. So you guys can't afford to live in this area.

Right. But we would... What's the plan? We would have that savings from... We would be able to pull our six-month emergency fund... But draining your savings is not a sustainable option, even for a year, because then you're still not in a position to buy a house.

20 grand down is not going to get you very far in today's market. So I think we need to rethink this whole thing. And if your income is not going to double in the next six months to a year, we need to rethink where we're living and what our situation is. I love the idea of you selling this place to get out of your debt and have some money in the bank, but we're not in a position to go move somewhere where the rent's 2,200 bucks. What about your wife working? How old are the kids? She works...

full-time in the summertime over the summer months and then part-time inside gigs over the over the wintertime months when it's not as busy at her job. Did you include that in the 49k? Did you include that? That's correct. Oh you did? I'm sorry no that's just that's just my salary the 49k. Okay so what what is her set like what does she bring in regularly if you had to average it out what does she make in a year?

In a year, we... Last year, we grossed $5,600, $9,900.

Okay, $56,000. Okay. We still need to get this income up. So she's making $6,000 a year gross, which is... What I'm getting at is what about her... Because if you tell me, hey, I make $49,000 and then with her money, it's $56,000. I'm like, okay, she made $7,000 in a year gross. That means net y'all didn't bring hardly any in. So what I'm getting at is, is there a way that she can make real steady money to contribute to this? That's why I asked how old the kids are because I kind of wanted to see what that's like.

Real quick. Right. They're all school age kids. Yeah. 17, 13 and 8. That's the key to crack this code. If you need to get a six figure salary in order to afford $2,200 a month, you need a take home pay of about $8,000 or at least. Yeah. She needs to work and double match what you make.

Right, but with the relocation, she would be making right around the same amount as me, so that would put us at right around $80 to $90 a year. I'd crunch these numbers hard, Chris, before you make this move. Right now, I have some hesitation that this is the time, but we need to get the income up, and you need to find a cheaper place to rent, and you need to get rid of this debt. This is The Ramsey Show. ♪

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