Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am your host, Jade Warshaw. I'm joined by a fellow co-host, author, Host of the Rachel Cruz Show. My host, co-host today, Rachel Cruz. Rachel, it's been a little minute since we've been on here together.

I know. Since before, 2023.

That's right. It was last year. That's crazy. But give us a call. The number is 888-885-5225. We'd be honored to take your call in this new year. Let's go straight to the phone lines where we've got Donovan in Atlanta, Georgia. What's going on, Donovan?

Hey. I have probably $50,000 in student debt and rather another six or seven in consumer debt, split between a credit card and a small car payment that we needed. I'm looking to go to grad school for clinical mental health counseling, but obviously, I don't want to go further into student debt to do that. How would you recommend I do that while also doing the baby steps and trying to get out of debt?

Well, I do think that the first thought here is, is going to grad school going to have the return on investment that you're looking for? Because it doesn't always. That'd be the first thing that I'm thinking about. Then two, you don't want to continue to go into debt. You already have 50,000 in student loan debt. If you decide that it does return on investment, what would it look like for you to pay your way and what does it actually cost?

Okay.

Donovan, how old are you?

I'm 24, and I have a child and a wife.

Okay, wonderful. What are you doing now for work?

I work at a local college, and it gives me free rent, but- Are you able to Can you get a grad school program there and get a discount? I am, but it's not accredited, so it would be very low ROI versus getting to a different one.

I hear you. What is the change salary-wise and option-wise? How does that change for you getting your graduate degree?

I think it would double my potential earning, but also I would pay… The grad program would probably be equal to the amount that I would get a raise for. Which is what? It would be about 30,000 of a raise if I got my degree, and I would make 30,000 more dollars.

How long is the program? How long would it take you to go through that?

About two and a half years.

How much are you making now, Donovan?

About 30,000, but I don't pay any rent.

Okay.

And your wife, does she make anything?

Is she working? $26.

Okay, so 30 and 60. Okay.

So, yeah, you all are about $56,000. Okay. Donovan, here's my advice. I feel like sometimes the advice. I just know you're not going to like it. I'm like, That's going to be it. Honestly, if I was in your situation and I had a wife, I had a kid, I had a dream out there. For you, it is to go to grad school. For some people, it's to start their own business. You can fill in the blank on what that is. To me, you have to take care of the necessary things financially and start on, we always say, the firm financial foundation, where financially, you are not in a shaky place. But when you have debt, Donovan, you're in a shaky place. You owe someone something. If something were to happen, you have to pay this debt back. But when you don't owe anyone anything, there is a level of freedom there. There's a less stress. There's options. You don't feel this urgency that, Oh, my gosh, I have to do this, this, and this. And that starts to limit your options just mentally. So If I were you, I would work really hard. I would be working nights.

I would work some weekends. I'd have your wife pick up an extra... I mean, I would do whatever you could to get rid of this 56,000 dollars, which is going to take a lot. But you You don't have rent. There's some expenses you don't have. But it may take a year or two to do that. And then I would save up some money on the side to be saving for to be able to cash flow grad school. Because what's going to happen, Donovan, I'm telling you, you're just 26. Or 24. And I know it feels like, I know what I want to do. I need to keep pressing forward in this. But when you just have some patience and you wait, even if it's three years, okay? And I know that is not fun. But you get to be 27-year-old Donovan, and you're either saying, Get me this degree. I know this is exactly what I want to do. I have the money for it. I'm not putting myself in a bad place financially to do it. We're doing it in a wise way. And I start this path, and I make 30 grand more.

It all happens, and it's great. Or 27-year-old Donovan wakes up and he's like, Golly, things are shifting. We have another baby on the way. We actually want to move back home. You know what I mean? Things start happening in life that may cause make different decisions. If I were you, I think the safest, wisest route is to slow down, get this debt paid off, and then save up and go through grad school.

Listen, I'm right there with you. I don't think that you're going to effectively... Because he said he was trying to do the baby steps, and I don't think you can effectively do both because we're talking about a lot of money, $30,000, $15,000 a year. That's what you would have been putting towards the baby steps. Do you see what I'm saying? Yeah. Something Everything tells me, you say, Hey, I have the ability to double my income. It's $30,000. You and your wife together can make $1,000. That's $1,000 extra a month between the two of you. If you make an extra thousand and she makes an extra thousand, that's $12,000 a month between the two of you. I mean, you're almost there. Does that make sense? You can literally do that with any of these side hustles.

Which is not going to be forever, Donovan. And again, that advice would be if somebody called and they wanted to go and be a photographer full-time and travel the world. I would say, I would clean this up first, get some money to be able to cash flow that dream. It's one of those things that just has to be in the right order. And what happens when it's not in the right order, we get the call at 27-year-old Donovan, and something When something happens and your wife has to stay home. You don't have the money. You're in the middle of grad school. You want to be able to finish, but you can't. You have all this other consumer debt. It starts to just really, really intensify. And if you can just slow down and have some options, I just think that's the wisest That's a really good point.

Sorry, Donovan, we're overloading you, but the other- No, you're good. I love it. The more we talk about it, the more things just keep raising themselves in my mind as a possible thought. There's another part to this where when you're juggling a lot of things, you got a lot of balls in the air, you do feel the stress to complete it because it's a lot. If you try going to school and you're doing this debt thing, at some point you're going to hit a fatigue, whether it's a mental fatigue or a financial fatigue, and Then the option of debt feels even more enticing because it's like, this is a quick fix. If we can, Hey, we're just going to take out 10,000 in student loans, and then we'll be able to pay. That starts whispering to you, and I really don't want that.

Donovan, if you have... Sorry, Jade. No, that's Okay.

I was done.

And if you have a credible job at a college now, I would look at the option. It would be totally okay if you guys found another college you could work for that has a grad program that is credible, and you could go that way and get a discount and maybe speed this up more. So maybe it's even a change of job because you're in a great line of work to be able to get some perk when it comes to higher education. So I would even do that, see if the school will pay for it, if you and your wife move in. Dr. John Deloney, they did that. They lived in the dorms. Yes. And he went through school. I mean, that's what they did. And so I would look at some other options that could fast forward this plan, too, for you, Donovan. But slow and steady, it's always the way to go.

I know that's right. And take advantage of the fact that he's not paying rent. That's great. That's the biggest line item on everybody's budget. Oh, gosh. So to be able to take that money and quickly put it towards the debt snowball. Come on, somebody. Love it. Donovan, you're making the right move. This is The Ramsey Show. Protecting your family comes with important responsibilities and potential pitfalls. Because self-defense in today's world is more complicated than ever, that's why the US Concealed Carry Association is giving away one of their most popular resources right now for free.

It's called the Complete Concealed Carry and Family Defense Guide.

And inside it, you'll find 20 Three family defense strategies, six post-incident tips, defensive training, legal information, and more.

Go to usccaa. Com/ramsey and get your free guide from a company I really trust.

That's usccaa.

Com/ramsey. This is The Ramsey Show. My name today is Jade Warshaw, joined by Rachel Cruz. The phone lines are open, so give us a call. The number is 888-825-5225.

The name change, sometimes change.

Listen, it must be because my mind is not it right in this moment. We're back.

We're here.

It's Friday. We're here. We've been on Christmas break, man.

I know. It's What a hard one to gear back up towards.

And let's be honest, we had a tax meeting before this. We did. So my mind is like, Waking up. All right, let's go to the phone lines, Rachel, because I need a call right now. Let's go to Kaitlyn. She's in New York, New York. What's going on in your world, Kaitlyn?

Hi. Great to be talking to you. I have a interesting question. I'm looking for guidance in how to approach moving to the next step with someone I'm in a relationship with, and they're maybe not on the same page with me financially. We're very happy, but I'm sensing that there's a lot of guilt and embarrassment around their finances. What he has divulged is not the best news. I'm personally not where I would like to be financially, but I'm very actively working towards my goals. My question is, what advice do you have in approaching him in the right way, but also still getting the information that I need to know, which is, can he change his habits? Does he actually want to?

I love this conversation. So what is the information? Has he told you his numbers as far as what he earns, his debt? Has he been open to that extent?

Yes. Not very enthusiastically, I guess I could say. Sure. Again, I think there's a lot of maybe embarrassment or just not super enthusiastic to share what he has so far.

But yes. And I think that's normal, by the way.

Yeah, 100 I mean, it was interesting. I was the one to first come forward and say, Hey, we've been together for so long. I'd like to move to the next step. How long? Almost three years. Oh. Yeah. I would love to move to the next step and move in with him or move our lives forward in that way. I have personally a lot of debt and student loans, and so I wanted to be up front with him with what my situation is and what I'm working towards. But I didn't get the same amount of information from him, so I figured it maybe wasn't good. After some follow-up conversations, that is correct. What he has shared is his income. He has He's taken out a loan on his 401(k). That was one thing that was a bit concerning to me.

Sure. Then in terms of saving- How recently, though? How recently did he take out that loan?

I believe a few years ago, within the last five years.

Okay. What I'm getting at is I think you do have to be delicate with this conversation because you've got your own financial mess over here that you admit, Listen, I've got debt. I've got a mess to clean up. And so he does, too. So when you bring up that conversation, it's almost like you've got to be... It is surrounded by fear and shame and guilt and all of those things. So it's almost like you being very forthcoming with what you've done. And I did this, and here's what my plan is going forward. And I'd probably start asking questions around his philosophy with money and with debt. And you can open that with, Listen, I don't have to tell you. I have this debt, and I've I think I'm done with debt. I don't think I'm going to borrow money anymore. I started listening to... I don't know how much you guys share as far as what you're into in podcasts and things like that, but I think it'd be hard to be dating someone that you've been with for three years, and they don't have a beat on what your interests are, whether it be hobbies or finance or whatever.

So it seems like it could be pretty organic to bring up the conversation of, Hey, you know that podcast I've been listening to? I'm really starting to get into it and maybe asking him more generalized money philosophy questions first, as opposed to, What do you plan on doing with this 401k loan? Kind of thing. Does that make sense?

Yeah. Kaylyn, I always want to know someone's motivation behind why they did what they did. Because for some people, and we find this all the time doing what we do, there is a lot of just ignorance. People don't know. And so it's like, Oh, this is an option to take out a loan? I mean, I guess. They've never heard of another way how to live. And so there is something to be said about once they have some information, what Jade's saying, then be able to say, Okay, so what does this look like now? Because the truth is, I'm like, I mean, Kaitlyn, I would still be in a relationship with somebody if they had student loan debt. But the key is that they want out and they don't want debt to be part of their life. It's a value system thing. Do you know what I'm saying? So to me, it's... Winston, when we We were dating, he had a credit card, and his philosophy was like, Oh, I'm going to use all the rent and all the utilities on the credit card. And I'm like, Well, I can't. I literally can't. If we get paid, I can't do that.

It's not allowed.

And to him, he was like, Okay, so my philosophy shifts to we just pay cash and we don't have a credit score, and we don't need a credit score. It all just made sense. Does that make sense? And I know we were young, and you're probably way more set in your ways, Kaitlyn, and so is your boyfriend. But the point is, it is a value system conversation at that What do we value? And out of your value system is where money becomes a tool, because money is just a tool. It's just a tool to live your life, and you want to be able to live your life in a pretty similar way, or you're going to continue to, or you will butt heads if you guys continue a relationship and open up the store. So for me, that would be my number one. And I think the empathy route, like what Jade is saying, is so true because you're not perfect, Kaylyn. I'm not perfect. Jade's not perfect. None of us are. But I think the key is like, Hey... And maybe he is probably Really feeling a lot of guilt and shame. And the truth is, Kaylyn, he's probably not happy with where he is financially.

So then it's like, Okay, so we have to do something different. And do you want to do this together? Not combining money, but hey, should we start this journey? We each have our own debt snowball. What does this look like to become free and talk about your why, Kaitlyn? Why do you want to be debt free? Are you losing sleep at night? Is it stressful? Do you have to stay in a job you hate because of it? It's those conversations to have. It's not just like what Jade said, the 401(k) loan. There's so much under that, too.

To be clear, Kaitlyn and Rachel, I think you would agree with this. This is a series of conversations over time. Maybe some relationships, you can have that one conversation It's like, All right, it's settled. But I can tell you with Sam and I, these conversations were months. Depending on the level of guilt that's there or shame, these are conversations that you're just looking for a little bit of forward movement with each conversation. Hey, he seemed a little bit more open this time, or, Hey, he seemed like he divulged a little bit more. This time when I brought it up, he didn't go... You're looking for those little steps forward that you're like, Okay, their mind is open, and I can see that he's trying his best. But if you're seeing no forward movement, if it truly doesn't look like, Look, he's not interested. I bring this up, and every time it's like, Okay. But does that makes sense, it may not be something that you get done in two date night dinners. You know what I'm saying?

For sure. And definitely, I haven't been met with a resistance to talk about it, and it's progressing. So that's really great to hear that it is something that has to take time. I just wanted to hear your perspective because I'm only still understanding how much of the psychology of my behaviors has led me to this and exactly what you just said of it's a value conversation where I just want to make sure I ask the right questions and we have the right conversations to make sure we're on the same page. We do look at money the same way. If we were to move forward with making financial decisions together, do we have the right tools to explore what our thoughts are together.

Totally, yes. Yeah, and Kaitlyn, and know this, too, because I'm such the spender in our marriage. My husband's the saver. Winston has four spreadsheets in Excel and every dollar. He has all this stuff. And I don't. Even though I do this for a living, he is way more of that nerd. So also hear me say there may be a sense of him that is just naturally a free spirit, and that is who he is, too. I don't want everyone to think that everyone has to be obsessed with money and can't wait to talk about 401k all the time. And it's so exciting about the new tax code. That may not be exciting to everyone, and that's okay, too. So I think it's the bigger value system that together in a relationship, we are moving in the same direction with our lives. And you could plug You can plug in family, you could plug in spirituality, you can plug in all this stuff. It's just a healthy, balanced relationship, and money is a piece of that.

I love that. It is important, though, to know when you hit your non-negotiable mark. Let me just throw that out there. This is the Ramsey show.

This episode is sponsored by Better Help.

Hey, it's Dr. John Deloney, and I talk about this all the time. I love, love New Year's resolutions.

I love the idea of everyone taking a moment to reflect, consider some ways your life is going well, and consider some things you'd like to be different, and then most importantly, setting in place actual steps you can take to heal and improve your life.

This might mean making exercise or sleep a priority, doing weekly budget with your spouse, or like I did last year, making therapy an important and intentional part of your new year.

If you're thinking of starting therapy, try better help.

Because therapy isn't just for people who've experienced trauma or who aren't able to function.

Therapy helps you find strengths, overcome personal challenges, and practice new ways of living and working to be the best version of yourself. Betterhelp is flexible enough to fit your schedule because it's completely online. Just fill out a short questionnaire to get match with a licensed therapist, plus you can switch therapists at any time for no extra charge. Celebrate the progress you've already made and incorporate new changes this new year with Betterhelp.

Visit betterhelp.

Com/delonie today to get 10% off your first month. That's Betterhelp, H-E-L-P.

Com/delonie.

All right, everybody, you're listening to The Ramsey Show. I'm your co-host, Jade Warshaw, joined by Rachel Cruz. During the break, we were talking about non-negotiables and And so many of us face this, whether you are dating someone and you have to bring up those conversations, Rachel, about money, about religious views, possibly political views. There's all these tough conversations to have. And when do know when you're dating somebody, when you get to that point that's like, Okay, I've hit my point, right? We talked to somebody who was in a relationship for three years, and it's like, Okay, maybe now is the time to start looking at this, talking about this. But it's hard to know, especially if you might see a little bit of progress and you're like, Yes, this is progress. Maybe we're going on the right direction. But what would you say, Rachel, is let's call out some red flags of if you see this this might be pump the brakes. Money-wise.

Money-wise. I was like, I don't know if I'm not a marriage therapist. I don't know if I- No, I'm talking about finances.

Yes.

I would say I always pump the brakes with people that feel like they have all the answers. When it's this idea that I don't have any more learning to do, I'm just stuck in my, This is it. I'm good. And you're like, You don't want to grow or stretch or hear something different. To me in life right now, that feels so prideful. So with money, and we get this call a lot with people that, as we're talking about non-negotiable, so I guess it's a little bit on the other side of this. But this idea that we talk, and they're like, Well, he just tells me he didn't want to talk about it. He's not going to talk about it. Or she won't even enter the discussion. I'm like, That's exhausting. That's exhausting. So you can have your non-negotiables, but be humble about it. It's the spirit that you bring to it.

Well, let me be devil's advocate because there's somebody listening in their car and they're like, Listen, I'm the one who my spouse keeps talking to me about Ramsey this, Ramsey that. And whenever I try to tell her my views on why I want to keep my mortgage payment and invest it instead, she's so close-minded. She doesn't want to hear. She feels like she's found this plan and that's it.

Let's talk about it from that point of view. If I'm her, I would be like, Okay, so talk me through that. Let's run some numbers. Let's look. Let's have a conversation.

Not just you telling him, Well, this is what it is. This is what you should be doing.

Preaching mentality.

Yeah. Being willing to listen.

Very much so. And ask questions. And ask questions. Be curious. That whole spirit as a person, I think, is really important. But when you're so closed off and you don't even want a conversation- That, to me, is the big- That's exhausting. That would be a red flag for me. They won't even talk about it. They avoid it, all this stuff. And you're just like, Oh, man.

Yeah, I think that's a red flag. I think if you're talking about the future, say you're dating and you're talking about, Okay, when we get married, what are your views on combining money? Maybe they've been very open about their money up until this point, and you're like, yes, everything's going good. But then when you start thinking about, okay, when we get married, how is this going to work? Because my thoughts are that we would combine our money and have our goals together. And if they're saying, oh, really? Because I've worked really hard for my savings. And That for me- Would be tough. Would be tough.

And a non-negotiable.

I think it's a non-negotiable. But I'm not going to lie, there's part of me that wonders if there could be a journey there over time. So these are tough conversations, but I would urge people to start having them early. If there's one thing that I can say that I feel like I learned in my marriage is we didn't talk about that dating. Our dating time was very fun and not a lot of... I mean, we talked about heavy stuff, but somehow the financial stuff just wasn't really in there. And then after the fact, it was like, Oh, wait a minute. Luckily, there were certain things that we just naturally aligned on. Thank goodness. But have those conversations.

I would say debt would be one of those. I mean, it would be really tough to marry somebody and they're like, Hey, I want to go $500,000 in debt to do real estate. I'll be like, Oh, no, I can't do that. I can't do that. I can't do that. It's like that would stress. That would stress. Because then you live as the spouse in the stressful state 24/7. And investment, I'm not just primary. Now I get it. Because I see these people on Instagram, TikTok, and they're all about real estate investing.

Leverage to their eyeballs.

Yes. And I just watched that. I'm like, oh, my gosh, that would be so hard. That would be a tough marriage for me.

That is because on the one hand, and I mean, even if it's not real estate, even if it's just one person like, I have this business goal or this aspiration, I want to open a restaurant, whatever it is, but their viewpoint is, I go into debt to do this. And if you're the spouse who says, Hey, I don't feel comfortable with debt. I don't like debt. And they view that as, You're not supporting my dream, or you're not... You know what I'm saying? You don't believe in me. You don't believe this is going to work and we'll be able to pay it off. That right there, that's a very tough conversation to have. Now, don't get me wrong, I still stand my ground because I feel like, Can we do it over time? Is there a way to not leverage debt? Oh, goodness.

All good things to talk about. It's hard and messy.

Good stuff. All right, let's go to the phone lines where we've Anna in Houston, Texas. What's going on, Anna? Anna?

Hello. How are you guys doing? Doing good.

How are you? Sorry, I said your name wrong. It's Anna, right?

You're okay. It is Anna. I have a question, and I'm hoping that you all can help me out because I've been thinking about it for a little while. I am expecting to get a raise here soon within the next maybe two months at work, and it's about, I'm hoping, like 20,000 extra a year. I'm not certain, though, if I should save that amount every year or use it to pay off my student loan debt. That's awesome. I have about $65,000 of student loan debt that I just accrued here recently, going back to school to get my master's. It's just me and my kids, I don't get child support.

How many kids?

I have three. My son is 19, though, now, and so he wants to go to school. That's a whole other situation and needing a little bit of money for that. But I guess my question is just, should I save that extra 20 a year for me and my kids, just for security type stuff, or should I just use it all to pay off this student loan debt? Because I don't want it to go from $65,000 to $200,000.

Of course. That's a great way of thinking. Number one, congratulations on the raise. That's excellent. If you're new to The Ramsey show, we teach everything through a series of baby steps. There's these seven baby steps that you can take that build on each other to ultimately get you to this place of financial peace. The advice that I'm going to give you is based on that. The first thing that we want to create this secure platform for you is you just need $1,000 saved. If you can just, out of that $20,000 raise or out of your bank account or whatever you have of money now, if you can just set $1,000 aside and just, Okay, I've got that there. And then the second baby step is, Yeah, you pay off your debt. Because when you pay off debt, you're eliminating that risk, you're eliminating that financial uncertainty that's in your life. And that's usually the point of stress that people feel is, Oh, my gosh, I've got to make these payments, or these debt collectors are calling me, or my payment is due, right? That's usually the source of stress that people feel when it relates to their money.

So in your case, I would say, if you've got this extra money, congratulations. Let's put it to whatever baby step you're on so that you can keep going in the right direction to get to that ultimate financial piece. It sounds like in your case, you would be on baby step two, where you are paying off the debt.

Anna, how much do you make in your job now?

I make about 4,000 a month. It's about $60,000 a year.

Then with the $20,000 will come, so that'll be about 80?

Mm-hmm. Okay, great. I have the emergency fund, and I even have about 30,000 in a CD account that I put up whenever I sold my house last year. I have that saved.

That's great.

It's going to make you nervous, but I would put that towards your debt, and that will take a huge chunk out of this debt. And you're going to make great money. I mean, you're going to make 80 grand. So you have $35,000 left. I mean, you could pay this off in 18, 24 months. Yeah.

And honestly, when that CD matures, I'd probably put that on the debt, too, and knock it out. 65,000, I would do that. And then once the debt is gone, I'd save back up that money. And I just keep it on a high yield to where it's very liquid. But yeah, listen, I'm proud of you. I think that you're doing all the right things. You've got good instincts and good intuitions.

Yes, you're doing great.

Taking great care of your family. This is the Ramsey Show.

Every year, I hear the same excuses for why people don't get the life insurance they need. Let's look at the facts.

First, it's not expensive. Getting 10 to 12 times your income on a 15 or 20 year plan is just plain cheap in in many cases.

Second, life insurance through your work is not enough, and you lose those plans if you change jobs.

Lastly, stay at home parents need life insurance as much as anyone, especially with those young kids. Go to zander.

Com or call 800-356-4282.

Zander has been my trusted choice for all my insurance needs for over 25 years. You're listening to The Ramsey Show. Give us a call. The number is 8, 825, 5225, and we would love to hear from you. It's a new year. You probably have goals, you probably have questions. And, Rachel, we are here to answer those. We have a livestream coming up, guys, January 11th. That's a Thursday night, okay? It's at 07:00 PM. It's completely free. Yes. All right. It's going to be myself, Rachel Cruz, John Deloney, George Campbell, and the GOAT, Dave Ramsey. We're all going to be there, and we're going to be teaching you how to break the money cycle. We're breaking this toxic cycle. It's actually called Break the Cycle Livestream.

And it's our biggest one yet, Jade. Yes.

The registration is crazy.

Yes. Over 200,000 people have registered. So, yeah, come join us. We just had a meeting about it yesterday. Yes, that's right. And it's going to be really great, you guys. We're going to talk a lot about navigating money anxiety, bad money habits that keep you stuck, some practical tips- Very practical. On what to do to start this new year off. So I hope you join us.

Not to mention If you register, you get entered to win $1,000. And we're doing 10 separate winners. So there's a good chance that you could win $1,000. And that's some nice money.

That's just a sign up. All day. All day. Give me some free money all day. I know.

That's right. All right, let's go straight to the phone lines with Joey in Washington, DC. What's going on, Joey? Hey, how are you all doing? Doing good.

I'm looking for some advice. I'm looking to invest and save money as an 18 year-old, going into trying to pay cash for college, as well as trying to get more better paying jobs. This is just where I should start and where I should look as far as investing goes.

Do you have money, Joey, For college?

Yes. I actually, this is like, I'm starting my first semester in college, and so I paid cash for this semester upcoming, as well as having a part-time job. Okay. Which is what I need to do to can use? Because I really don't want to go into debt. And so it's what I need to do to stay out of debt and be able to set myself up.

Yeah. Well, it's a great question. Well, in your stage, Joey, I probably would not advise investing right now. If I were you, I would just open up a high-yield savings account, and I would put as much cash in there as possible and get through college making sure that you can cash flow it. Because what I don't want to happen is you go and open up a Vanguard account, put some money in, and the market goes down, and you need cash for school, and it's not there, and you're like, Oh, jeez. I lost some of that money. You want to be able to, when you invest, it's a really long-term play. For something big, a big expense like college, I would want you to go through it completely and just know, Hey, I have money. I'm able to cash flow this. Then when you graduate and you get a job, I would build up an emergency fund of 3-6 months of expenses, and then I would look to invest. And when you're investing, you want to do 15% of your income into retirement. And so that's your 401(k) at work for the job you'll get when you graduate to your Roth IRA, open that up.

So yeah, I would honestly not advise you to invest right now just because college is such a big expense. I don't want to make sure you get through it debt-free.

Okay. So I should not be, even into retirement, I shouldn't be worrying about that until after I get out of college and I graduate college.

Yeah. And what's hard, Joey, is we even show a graph here at Ramsey that says, If you're 18 and you start investing what it can be, because compound interest, it's an amazing thing. But I don't, again, want your money stuck in an investment if you really do need it for college. So this idea that if you just wait four years, it's not going to be the end of the world at all. You will be fine starting to invest in retirement at 22 years old. Yes, definitely. You will be plenty fine. You will retire a millionaire. Everything will be fine. But I would, again, make sure that you get through college debt-free. But I appreciate the The call and just the stop process, Joey, of that, because investing is so important for our future, but also not going into debt is as important.

100 %. Awesome. Thank you for the call, Joey. Well, let's keep it going, and let's go to Kat in Los Angeles. What's going on, Kat? Hi there. Hey. How are you? I'm good. How are you? Doing good. How can we help today?

My question is about tithing. My husband and I have been married for 26 years, and we've tithed 10% since day one. That's never been a problem for us. I think the problem part, if anything, has been the 10% saving. We've never done that. But we own our own business, and we're the only two employees. For the past few years, we decided we should tie the 10% off of our gross income from our business. We've definitely done that at the expense of putting money into savings, which I love giving. I think it's important. But the last few years after COVID, we lost some clients. We're making way less than our usual income. Basically, now we're looking at our budget for 2024, and we really want to live the way that God wants us to live. We've always I'm sad, like I said, but we're wondering, would it be wrong to tie the 10% on our personal income rather than our business income?

Listen. I really, really don't want to do the wrong thing, right?

I feel like talking about it is- We're the same.

We're like, Hold on, You feel too much guilt.

Breathe, Kat. You're good. You are good. You're fine. Okay? You're fine.

First off- You're giving. You're giving, which puts you in a very small category. And you're giving 10 %, which is Good. I mean, obviously, if you're a Christian person listening, you're used to that talk. It's like, Okay, yeah, I give my tithes. If you're not a Christian person listening, that's what a lot of Christian people practice, is they give 10 % to their local church. And when you were telling your story, I was like, Oh, that sounds like me and Sam. When we first started our business, we were the only employees. I will be honest, for us at the stage in our life, we wanted to give that extra, and we gave 10 % of the gross of our business. And you can't out give God, and so we saw the fruit from that. But as we continued on and things changed, we were like, Okay, we now give 10% of our gross payroll, like what we take of the business, like what we take home, just like anybody else would. If you work for Walgreens, you get your check and you tie it off of what you receive and the gross amount of what you receive, typically.

And I don't even want to get like, Rachel, too funky fresh on the grosser of the net. It's like, just give.

I think the point of all of this. And I think the heart behind why God has instructed that, why he encourages giving, is because what it does to us. Giving, what that does is it opens our hands. It moves us on the spectrum from being selfish, just thinking about ourselves, to selfless, looking up for others and others' needs. When we give and what we give to is really important because it's transforming a community or a place or an organization. That's the heart behind it. That's the motivation. It's not this tip for tat, gross or net, business or... That's not why God wants us to give. It's not that legalistic. It's not that granular. It is the position and the posture of our hearts. And that's what he's looking for, because he knows When we give, that selflessness starts to occur and you have a richer life. I'm not talking about money. I'm talking about you have a richer relationship with your spouse, because as you're giving, you're becoming selfless, and you become more of that in your marriage as a parent, as a friend, as an employee. It affects you as an entire human being when giving is a part of a habit of your life.

So that's my philosophy of why God has called us to that. And it's a beautiful thing, and it's something And that regardless if you are a person that is spiritual or in the evangelical Christian space or not, giving, regardless of where you land spiritually, we always encourage, because that will do that, whether you believe in a God or not. So for Kat, I appreciate your diligence and wanting to do the right thing, like you said. But I think you are doing the right thing. I think it's the posture of your heart, so I would not get been out of shape. And I do think, Kat, you will feel something from the Holy spirit that He may say, Tithes on your business. And Kat, and be obedient to that. But he also may say, You're okay. And what we teach is tithing on the income you bring in, like what Jade is saying. So that's where we always advise people, Give on your income.

But he might- He might encourage you to do something else.

Yeah, you never know. We gave $100 to the Sonic guy because I just feel like we- You felt like it. That's what we do.

You can't mess this up, Kat.

Yeah, that's right.

You can't mess it up. The only way What you can mess it up is if you start doing things out of obligation or you feel contention or you feel like- God loves a cheerful giver.

There's something in it of that joy. We don't want to rob you of that.

I like that question though, Kat.

But good question though, Kat. I appreciate you, though.

I really do. That's a good one. I think a lot of people feel that. You can get very, like you said, granular is a great way. You're looking, Oh, my gosh, I was 10 cents short. What's this going to mean when I get to the curly gates? Nothing. I mean, come on Guys, this has been such a great hour. Thanks for your calls. We'll be here next hour. Give us a call. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where We help people build wealth, do work that they love, and create actual amazing relationships. I'm your host, Jade Warshaw, joined by your other host, Rachel Cruz. We'll be taking your calls all hour, so give us a call. The number is 888-825-5225. We'll talk about whatever it is that's on your mind, especially in this new year. I'm sure you've got so much that you're trying to accomplish. This is the season of setting goals, right? And I'm sure so many of you have money goals, financial goals. You're trying to save money, you're trying to get out of debt, you're trying to start the new habit of budgeting.

And if that's you, we've got the perfect encouragement for you. Because we're about to get into the time, Rachel, that people already start moonwalking, right? I know. You all are already moonwalking, and I'm like, wait a minute. It's only the fifth. So you need some encouragement. And we've got that for you January 11th. Write this down, like George Strait said, January 11th. This is Thursday, all right? 07:00 PM. We're doing a free livestream event, and it's actually live. It's not prerecorded like some of these folks are doing. It's actually live, and we're going to be giving you the tools you need to break the cycle. And you all know what I'm talking about. There's been a debt cycle, there's been a paycheck-to-paycheck cycle, and you're ready to get free. And you're like, Jade, Rachel, how do we do this? Help me. Help. We're here to help. It's free, guys. You can register ramseysolutions. Com/breakthiscycle. And when you register, you can enter to win a $1,000 giveaway. We're giving that giveaway away to 10 different winners. So be sure to do that. That's the break the cycle livestream, January 11th at 07:00 PM. Be there or be square, as they say.

Let's go to Atlanta, where we have Paige on the phone line. What's going on, Paige?

Hi. First of I just want to say thank you for taking my call. I feel very blessed to get to speak to you both today. My question is, I have the Every Dollar app and the Baby Steps app on my phone. I'm on step number two, the debt snowball. My situation is unique in that I'm only 26 years old and my mom is disabled and my dependent now. She got really sick a couple of years ago, and we finally got out of the craziness of the last couple of years into a zone where I feel very fortunate to be now, where her health is better. She lives with me and not in a facility, which that was a lot of money. She's not doing hospital trips and things like that anymore, fortunately, hopefully, fingers crossed. But with that, she He has debt, I have debt. So my plan, I'm trying to tackle both of our debts, and I manage both of our finances. We live together, we basically share finances and manage medical, everything, basically. So I put all the debts into the Baby Steps app and put the money that we can put on a monthly basis towards the debt, and we can pay a little currently because she's got some insurance policies as well as her retirement right now for the next two and a half years, we can put like $2,600 to $3,000 a month towards her debt, which totals like $90,000.

And that's a combination of her credit card debt, her medical debt, my credit card debt, my student loans, and my car.

How does it break down between the two of you? I'm just curious. I know, number one, you're a hero. It's admirable that you're doing this, and you've honestly essentially put your life on hold to help your mom, and you seem more than willing to combine your debts. That's not normal, and good on you for choosing that. But I am curious because you are two separate people, and so I do want to know, out of the 90,000 of debt, what's yours and what's hers?

I have 25,000 I was in with Sally May for private loans, for student loans, 7,700 in federal loans. My car is 26,000. I just got that one new this last summer. That's a whole other story. I have 7,000 or 8,000 in credit cards. Then as far as I know, my My mom has $30,000 in credit cards, $18 on one card, about $7,000 on another, about $7,700 on another. We, fortunately, have had one card, I don't know I don't know what the proper word is, but pardon us or whatever, and just alleviate it.

They just charged it off?

Yeah, and we wrote it on the taxes and all that stuff. We had one card do that because my dad had her ex-husband. He's an attorney, and He had been helping me try to alleviate some of her debt.

It was just like hardship type?

Yeah. Basically, when she got sick, I was under the impression that she She had a lot of money well, and she had a lot of money in savings. That's at least what the situation was when my parents got divorced when I was eight. Something happened, and she had a higher loan on the house 12 years after You're purchasing the house higher than what she bought it for.

But now the only debt she has is the 30,000 in credit cards.

And it's mostly the credit card because it's a medical?

Or is that separate? No, that's all the credit card that she had once I got into her account.

And then what's the medical debt she carries?

I have $1,000 that I know of. We've, fortunately, been able to get the hospital wanted to do 16,000. We did the financial thing. That's great. You did the right thing. And they wrote that off.

I think there's a couple of ambulances. For time, let me get into this. The car, that's the first thing I'm looking at because what's your take home pay? Or what do you make per year?

I think about $40,000 a year.

If you really want to move through this, I would consider getting out of this car and getting into something cheaper. You just got it. You should be able to sell it, break even, and take some cash and buy something cheaper, $5,000 or $6,000. I would do that. Because I think it's worth it for you to move quickly on this. I'm a little bit inclined for you to have two separate snowballs here, and for your mom to have her money, and you put your mom's money at her debt, and you put your money on your debt, and you're just the one stewarding all of it and making it all happen. But I don't want you combining them and combining the money because you are two separate people with your names on two separate sets of bills. And at the end of the day, even though you've combined your lives in many ways, you're still two separate people, and you're not married.

And the truth is, too, this is not to be harsh on you, but you've gone $8,000 in credit card debt. You've taken on a car loan. Your behavior and habits are one way. And when you feel the weight of, Oh, gosh, it's not going to be an insurance policy that's going to be paying off my debt. I have to do this, that changes your behavior, Paige. And that's what we're all about here, is your behavior has to change. And by you doing the work and paying off that debt, that's going to cause the behavior change. So I want you guys to be cutting up these credit cards. I want you to be selling the car. You guys really have to clean this up. You're in a dire situation of like, there's a lot of mess here, but you can get it cleaned up. You really, really can. But you have to change the way you've been viewing it. And so, Paige, you're doing an amazing job taking care of your mom. Absolutely incredible. But your money habits and where this is led has gotten you guys in that spot. So that has to change. That has to change today.

Cut up the cards.

This is The Ramsey Show. You're listening to The Ramsey Show. I'm Jade Warshall, your host, joined by Rachel Cruz, and we are taking your calls all hour long. The number is 888-825-5225. Give us a call, and we'll chop it up with you. We're always looking at what's going on in finance, what's going on on social media, what's going on in the news, and what the trends are, because this is what people are talking about, and we want to be talking about what you all are talking about and what's important to you guys. I saw initially an article come across My email that was talking about this, and then there's TikToks, and it started popping off a little bit. So I was like, We need to talk about this. And it's essentially, Rachel, this idea that if you make $74,000 a year, Gen Z doesn't think that that's middle class. They don't agree with that. And so I don't want to say much more. I want you guys to watch this and decide for yourself, and then we will discuss. Gen Gen Z doesn't agree that $74,000 is middle class. No kidding, it's not even close.

Check this out. If you take $74,000 for a Gen Zer, let's say they have a bachelor's degree and they're 25 years old. First of all, $74,000 is much higher than the average income. Most Gen Zers are probably making anywhere from $40,000 to $50,000, maybe $60,000, but let's use $74,000. The take home after taxes 401(k) in health insurance is $4,300. The average college monthly payment on a loan is about $500, you're down to $3,800. Let's say this person is financially responsible, decides to split a two bedroom apartment in a medium-sized city like Orlando so that their payment is 1,200 a piece, 200 for utilities, so 1,400. Now, unless they're going to have Lucky Charms and Pizza butter and Jolly, their groceries are going to cost about 600 bucks if they're trying to get chicken, beef, and some healthy stuff. You have a $400 car payment, $200 in insurance, $150 for gas, $100 for a cell phone, leaves you with $950.

This is no savings investment, no emergency fund.

Let's give them at least $300 to go on a couple of dates or hang out with their friends for the month so they can enjoy life a little bit.

They're left with only $650.

A bachelor bachelor's degree, 74K salary, you are splitting a two bedroom apartment with a friend and only have $650 left a month. It would take you years to save up to $30,000 that you would need for a down payment on a house with the closing costs. But even if you could get that down payment saved, you would still need to make $120,000 a year to be considered for a $400,000 loan. The middle class, the goal post has been moved from $70,000 to $120,000 in just the past two years. Okay. Okay. I got some thoughts, Rachel Cruz.

I did, too. You go, Jade.

Number one, when my guy said, Only $650 left, there were a couple of things that are screaming at me. A, only $650 left. I think that if you're just starting out, you're in your 20s. I'm like, Yeah, that ain't bad.

You're 22 years old and you have $650,000 left over. Come on, somebody. Number two- That's good.

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

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

Yeah.

I think we're okay.

I think This is an expectation conversation. Yes.

And we're not going to make $74,000 forever, ever, Amen.

No.

Or $40,000 forever, ever, ever, Amen, or whatever it is. As you get older and you work, you will be making more money over your life time. That is true.

This really rubbed me the wrong way, Rachel. I think that, like what you said, this is all expectation, and it's tunnel vision and getting caught in the now. It's like you're looking at everything that you're seeing on social media and you're creating this bar of what you should have. You're even looking at maybe what friends and family members have. So many people, they come out of their parents house and you've been living in this environment where there's nicer cars, the home is larger, and you immediately feel like, Oh, yeah, I'm supposed to have that, too. And I'm like, Listen, these things take time. It took time for our parents to get where they are if that's what you're comparing it to.

And we'll say this. I'll say this. Number one, has life changed over time? Yes, absolutely. Is stuff more expensive? Real estate being one? Yeah. We are not denying that. Of course. It is. It is more expensive. But the problem I have with it is honest. It's his attitude of like, Oh, Mark. Versus saying, Well, I have $650. What can I do now to better my life with that? You know what I mean? There's an attitude shift as well of how you view this. You can view it like EOR, or you can view it like, This is an opportunity. So what am I going to do? What am I going to do different? How am I going to pay off debt so I can free up an extra $1,000 a month? What's my opportunity here to do? What if I invested three 300 of the $350 every month from 22 to... Run those numbers. Find the opportunity in it.

I agree.

Versus this like, well, you're all screwed. We're all just screwed. I don't know what we're going to do.

And you're just like, oh, my gosh. Yeah, they're approaching it from the wrong angle.

It's just like, yeah, that drives me crazy.

I agree. It's like, oh, it must be nice. You're looking at it and like you said, he's- It's $650.

That's a lot of money. That's where I'm like- Listen, I'm standing on business.

That's $650 is a lot of money. And here's real talk.

What we do on the show is talk to real people every single day for three hours a day. People are in the red. They don't have $650 left over.

And that's what I'm saying. The mindset, it's almost like he's solving the wrong problem or focusing on the wrong thing. And not just him because he's speaking for hundreds of thousands and maybe millions of people who feel this way. But like you said, if you're looking at $650, that's not enough. And you're looking at $400 $100, and he's not addressing that, and he's not addressing the student loan. It's just this is the way it is. There's nothing that's going to change. You're looking at the wrong piece of the puzzle. You've got to look at... I was listening to somebody today that was saying that healthy people, whether it's in a relationship or just you as yourself, you always look at something and go, Okay, what am I contributing to this? If there's a problem, it's very easy to point out there and say it's because of that, that, that, and that. But when you're healthy and have this area maturity, you're always looking at and going, What can I own in this situation? If you're finding yourself, even if it's not a $74,000 budget that we're looking at, if you're looking at your own finances and you just find yourself feeling trapped, blaming your job, blaming the fact that you have student loans, blaming your spouse, you have to stop for a moment and go, Okay, wait a minute.

What am I contributing to this situation? Because here's the guarantee. If there is something that you're complaining about in life, I don't care what it is. At this point, I'm beyond money. If there's something that you're complaining about, I guarantee, I bet your bottom dollar, there's something that you are doing that's contributing, even if it's slightly, that you can tweak to make your situation better. If you start to turn the dial up on that and start focusing on that, that's going to point to another thing that you can change. You start focusing on that, and that points to another thing. It really goes back to that idea of whatever you're looking for, that's what you find. If you're looking for problems, all you find is problems. If you look for solutions, you're going to start to see, even if it's so small. Rachel, you just went through all of this. Okay, what would happen if you paid off your car? What would happen if you paid off your student loan? What would happen? Start asking yourself those questions. What can you contribute? Listen, it's a whole different equation at that point.

I know. I do wonder, you mentioned it earlier, but expectations, and this is something I always wrestle with. And it almost could be just subconscious of what we just naturally expect in our world because we're so exposed to everyone's lifestyle. I mean, whether it's like reality TV or social Social media, Instagram, TikTok. You see into people's lives more than at any other time in history. And you start to see a glimpse and you start to expect what you see. You become numb to it almost. And it's like, Oh, this is normal. And if I don't have that, I'm not normal. I was talking to my mother-in-law at Christmas, and she was like, Oh, my God. She just made a comment how all they did with their little kids at the time, they just all played in the driveway, and all the coldest sac will get together in chairs. Now, I'm like, There's memberships to things. There's all this stuff that's normal. But I'm like, That It doesn't have to be necessary. It's not necessary. Yeah. So it's just this subconscious expectation. We have to reevaluate all the time. I think it's really important to keep us grounded in it because you can just float off into this world, spend a lot of money that's unnecessary, and complain and do a TikTok video.

That's a word, Rachel. That's a word right there. Check out your expectations. Figure out what's motivating you. Is it the money or is it an emotion that you're seeking out? This is The Ramsey Show. You're listening to The Ramsey Show. I am your host, Jade Borshaw, joined by your other host, Rachel Cruz, and we are with you today. So give us a call. The number's 828-825-5225. We will call. We will take your call and answer your questions. Today's Question of the Day is sponsored by Neighborly, your hub for home services. Now you can find expert local help. You can schedule appointments and get special offers exclusively in the Neighborly app. So down Download the Neighborly app now and get started on your home repairs, maintenance, and home improvements done.

Today's question comes from Ryan in Arizona. My wife and I have been using the envelope system for over 15 years and debt-free for almost that long. Awesome. My wife takes care of the finances, but we make decisions together and trust each other. The issue I have is at the beginning of each month, the envelopes still get the same amount of money they did when we started 15 years ago. You should talk to the TikTok guy that we were talking to. I can't convince Tell my wife to increase it. Is it part of your budgeting system to increase the amount in the envelopes as the cost of things goes up? Please help. Oh, Ryan, yes. Tell your wife to put some more money in those envelopes. If you all have it, which I'm assuming you do. It's been 15 years. Yes. What we say is once you're out of debt, you have the ability now with your income to do more with the three things you can always do with money: be giving more, be saving more, and you can be spending more. So increasing It's your lifestyle. I would do it by percentage points. So you guys, up everything by 10%, 15% for a little bit, right?

And just feel that. Now, I also will say we were just talking about our personal line items in the break because the TikTok video we just talked about in the last segment. And I have not increased some of ours dramatically. We've increased our out-to-eats, our groceries some, with everything going on and adding more kids. But ours is not dramatically. It's not dramatically different. It really isn't. I look at I spend more on clothes. Maybe, again, by small percentages. And so I think that's what you want to work in.

Yeah. I'm thinking about what you're saying, and I'm thinking about this question. And I'm with you. I reluctantly raised our grocery budget. When inflation got crazy, I tried to stick to the old numbers. And finally, I remember coming home and being like, Listen, it doesn't work. I got to raise this item. And so I do remember doing that. I think if it's... When it's gradual, I think what she's trying to avoid here is lifestyle creep. Yeah. Or, Well, let me go back. Your girl needs to loosen the purse strings. I think she's just super tight. But I think most people, what their hesitation is, is they're trying to avoid lifestyle creep. Yes, yes. And that's a good conversation to have because when you start earning more and you're like, Okay, I'm doing better. I'm out of debt. I've done all the things. Sometimes there is still that guilt that you face of, Can I really spend this? Can I really do this for myself? And I'm going to go with as long as you're taking care of business, the answer is yes. Sure.

Yes, absolutely. And you want to be able to enjoy your life, and I think that's part of it, too. So increasing it, but increasing the other areas, too. Be increasing your giving and your saving. But doing all three with extra money is really important. So, yeah, Brian, probably more after 15 years, up it a little bit.

And I want to hit one more thing on that because with spouses, be willing to... Your spouse can be into something that you're not into, and they want to spend money on something that you would never spend money on. Sure. And it's like, I feel like that's when it gets a little difficult. It's like, Hey, we're making this money now. I'm really into this. My husband would be like, Why would you ever? Do you know what I'm saying? I remember being on here with Dave, and we were talking about wine or something, and he was like, A $300 bottle of wine. I'm like, I spend $0.99 on wine, Dave. He was like, Oh, go get yourself a bottle. I was like, I can't. I physically can't do it. There's certain stuff that I just... I can't do it, Captain.

Don't make me. Please don't make me.

Oh, gosh. I got to go to the phone lines. This is Kennedy in Pittsburgh, PA. What's going on, Kennedy?

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

Wow. Great job, Kennedy.

This is the question I have. You would think, because we want to retire eventually. We've never taken vacations. We've never been extravagant with things. We have no debt whatsoever. This is what we're at a crossroads, because we were envisioning us when we where all of our rental income, which is over 200 a year, would just keep us afloat and not have to dip into what we've built over the years. Now, I'm noticing that the rental income is just not growing like it should. And so we're trying to decide if we should sell the property, which are probably worth around 3.2 to 3.5 million in total, and just put the money away and earn the interest off of it. Because just in property taxes alone, I just read a check for almost $50,000 just recently for property taxes on some of the property. I'm just trying to make… If an air condition goes out. Things just add up, and it's like that account doesn't build like I think it should build.

Why hasn't the rent gone up?

Well, I do go up on the rent. Now, I will say I am terrible because I manage them all, and I am. I'm a very sweet landlord. I don't go up like I should, especially if they've been there. There's a lot of longevity with my tenants. So I know there's room for growth on that. But I just feel like the expenses, if we get to draw an interest, we could probably draw the same amount in interest every year than what we would be actually bringing in.

I don't think you should feel guilty about you're in a real estate business, essentially, and I don't think you should feel guilty about passing along the cost of business to the customer. For you, as a landlord, there are prices that increase, and some of that you do pass along, and I don't think you should feel guilt in that. Now, if you're still interested in selling, I have my thoughts on this, Rachel. You know far more about real estate than I do, so you take the reins.

Not really. Yeah, that's where, and I don't want to sound cold-hearted, but where you've chosen to put your money and in your investments is in real estate, and real estate involves people. So when you have a big heart like you, Kennedy, and you see it like that, you're not going to get the same return financially when you don't raise rents, right? I mean, that's the mathematical fact. So my question to you would be, if it's less hassle, less work, and you're going to get a bigger return somewhere else, then yeah, I would probably highly consider that. Or if you say, no, real estate is my end game. It is my business, in a sense. It's my investment because I want a percentage of what I've bought this. This is the rental. I mean, the rent basically is your income. It's what you're making, and your income has to stay at market value. If that's how you run it, then I think we're having a different conversation. But it doesn't sound like you necessarily want to run it like that.

The rental properties are just a side. I have my own business, and my husband's also an executive for a company, so we both still work.

How much do you all make a year off those, off that?

Okay, we're at A hundred a year without their rental income. The rental income was just- Okay.

Is it a hassle for you, Kennedy? Are you to the point in life where you're like, I don't want to deal with 18 tenants, and I would rather talk to my- It is a hassle. Okay. So if that's it, if it's not- It is a hassle. I deal with it all. I think real estate has to be a passion. And for some people, they love the diversity. They love getting a property, getting a good price at the front-end, and they're doing that. I mean, it is part in their blood. That would be Dave. If he was sitting here, he loves it. But if it's a hassle for you, and you don't love it, you don't need to be in it, in my opinion. There may be a level, though, Kennedy, that you keep maybe five of these or something just for the diversification aspect. So I think having real estate as part of your overall, especially where you guys are financially, would be smart. So maybe you sell half of them, cut the expenses in half, pick your half that you love, keep those for a few more years. And then if you look up, Kennedy, and you're still miserable managing these- Sell more.

Sell them. Yeah. I mean, this is the joy of your... You want joy in your life. And if it's sucking the joy out of your life, don't do it.

The great thing is they've got choices. Yes. That's what I love in conversations like this is she has choices. She's not chained to one option.

But when you are paying, look at the taxes. You need look at the entire picture, too, if you decide to sell these.

That's a very, very good point. This is The Ramsey Show. Hey, guys. George Campbell here. Now, if we're being honest, most of us know what we should do with our money, right? It's not that complicated. But when it comes down to it, it's our pesky bad habits that keep us from really making progress. And that's why our team here at Ramsey Solutions is hosting a free livestream on January 11th, where you'll learn how to break up with your bad habits and be successful with money. Just go to ramseysolutions. Com/breakthecycle to register for free and start making real progress. That's ramseysolutions. Com/breakthecycle. You are listening to The Ramsey Show. I'm Jade Warshaw, joined by Rachel Cruz. Hey, if you like this show, consider liking and subscribing wherever it is that you listen, whether it's on YouTube or your favorite podcast app. When you like and subscribe and share, it helps in so many ways. Number one, it helps other people find this and use this message and find these resources and hopefully change their life. Obviously, it helps us on our end because it helps us in the algorithms. There a couple of weeks ago, Rachel, we were number one in podcasting on Spotify, which that list is always changing, and in my heart, we're still number one.

And an apple.

I looked it up on this podcast. On Apple, too. Yes.

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

Hey, you guys. How are you?

Great. How are you?

I'm doing great. So my question was, what financial steps should I take as a college student with around, I would say, $15,000 in savings, considering I have no assets, a small school loan of about 1,300, and a credit score of 693? Then this is a two-part question. I also wanted to know any advice you guys have for young adults, especially first-gen college grads, on managing finances and setting myself up for success and building wealth and what not to do as well.

Man, you're so smart. I'm so proud of you. First-generation college grad, asking all the right questions. It's awesome. It's so, so, so good. I'll throw my two cents in, and I'm sure Rachel has plenty to say. I think you're thinking the right way. Number one, you're out of school, you're graduated. Do you plan on going back to school, or is this it? Are you going into your career now?

I have one more semester left, and I graduate in May. Then I plan to go straight into my career, but hopefully down the line, I want to go to grad school for MBA.

Okay, cool. My first thing is, let's get through this final semester. Let's graduate with a degree. Let's get you into a stable job in your field. Then I'd probably start looking at this and going, Okay, first things first. I want to get out of debt. You don't have a whole ton. I mean, 13,000 in student loans. My first thing first, I'd be like, All right, I'm going to commit to walking the baby steps. I'm going to keep $1,000 set aside, and then the rest that you have, the $14,000, I'd pay off your student loan immediately coming out of school. That'd be my first order of business, and that leaves you with $2,000. Then I'd just start saving up. I'd be like, All right, once you're stable, does that make sense? Because you're going to graduate, you're probably, I don't know if you already have a place. Are you living on your own? Are you living on campus?

So after I graduate, I plan to be home for the first semester. I mean, not the first semester, for the rest of the year. And then I want to work remote. And then that job will probably transfer me to a different location.

Yeah. Then that's perfect. You're at home for a year, you're paying off this debt immediately. But then during that year, you're saving up a bunch of money so that when you're ready to strike out on your own, this job sends you somewhere, you can get your own place, or maybe it's a place with roommates. And so you've really just set yourself up. You've got no debt, you've got 3-6 months of expenses, and you've got money in order to get a place for yourself. I don't mean buy a place. I mean rent a place. But you have that margin in your life. How does that sound?

That sounds great.

Thank you, guys. Yeah. Victoria, long term, I think one of the best things that you can do as a young person moving into this adulthood and money is be proactive. I think one of the worst things that people can do with their money is they become apathetic, they're almost reactive to life, or they don't really care that much. I mean, they're just floating. They lose a lot of time, and they end up losing a lot of money. And so if you are just proactive with your income and you budget every month, you know where your money is going, you avoid debt like the plague. You just say, you just draw a hard light in the sand, Victoria just is a person that doesn't go into debt. I don't go into debt. And you can avoid paying interest, and you can avoid being owned by the banks, and your income is completely free. You invest early, invest in and save up for a good down payment on a home later, maybe two, three years down the road. And you do that wisely, and you're investing early, and you do all of these things. Over time, Victoria, you're going to be great.

You're going to do just fine. But I think your attitude towards money, it has to be proactive. You have to own the fact that you have to be the one in control. And you learn this early, Victoria, and I still feel like I learn it even in my mid-30s. It's this swoosh that happens for me where I'm like, Oh, it's up to me. No one's making my annual doctor visit. I have to take care of myself. And now I have kids, and I have to take care of them, and no one's advocating for them. I have to be the one to speak. So it's this idea that you really are in charge of your life, and that removes a lot of victim mentality. I think that removes a lot of expecting someone else to take care of you and to fix stuff for you. When you just own it, Victoria, from the front-end, that's going to do a lot. It really is. It's going to do a lot for your money. So there's a lot of tactical things. If you stay on the line, Victoria, Austin will pick up. And I would love to give you one of my books, Know Yourself, Know Your Money, which plays out the baby steps within it, but also understanding why you handle money the way you do.

And you already have tendencies around money, Victoria. You already have habits around money that you may not even realize. But understanding your why, why you handle money the way you do, when you can learn that early on, you can create great money habits for the future, what we're talking about on this call. I appreciate you calling in because, man, it's so big. And all you Gen Xers out there, there's a lot of them that have been listening and finding us on TikTok in all the places. But for real, you guys, I'm like, when you listen to this show or you follow Ramsey and our advice, we get in the corner of the old-school way of thinking. But I'm telling you, day in day out, this is the way to do it. It really is. So whether you are Victoria and you're 21 years old about to finish college or you're 61, wherever you are, be proactive in this stuff, you guys, and follow the baby steps and do it because it works. It works mathematically. Really, it works in so many ways.

I like what you're saying, Rachel. Honestly, it's reminding me. Earlier, we were in a meeting together, and Dr. John Deloney, one of the Ramsey personalities, was mentioning how the way culture is and society is, definitely wants us to go into a hands-off mentality, and I just can farm this out to them, and they'll take care of it, and I can take my hands off here, and I can automate this and automate that. And there is part of that where your mind goes to sleep on having it front of mind. Does that make sense? Yes. And there is part of that, that going through life. There has been seasons where I've been like, You want to know what? This might sound stupid, but there's been seasons where you're giving, you can automate it, right? And it's like, All right, I can set in and forget it. It's not part of my day to day. It's like, Oh, before you look up, it's like, I've been giving the same amount for two years. But then there's those moments where it's like, You know what? I'm going to take that off automation, and I'm going to be actively part of this each month to where I know, Okay, how am I feeling?

What is my involvement in this? Even paying bills. There are certain bills that I'm like, I don't want to... Back in the day, there was like, I don't want to automate that. I want to see, I want to feel the money going out. I want to know, and I want it to register my brain that I just made a payment. There's something to that.

Being an active participant. Yes.

You're actively participating, and you're not just putting it on the shelf. You're not just letting someone else handle it. Yeah. Does that make sense?

Absolutely.

It's such a good conversation, Rachel. I love it.

But the proactiveness is huge around this.

Yeah, I like that. Listen, I don't know. Do you want to try to take this next call? Can we do it quickly? Yeah, let's go. All right, let's do it. Jacob in San Francisco. What's going on in your world?

Hello. So I have a a situation going on where I just got a $7,000 dental bill, and I have a pretty substantial savings. I'm pretty young, too. I'm 23 years old. Okay. And my situation is basically this. So I have two options. Either I could just pay it all at once upfront and just get rid of it. Yep. Or I have a high interest savings account with SoFi. It's 5 %. And they offered me to take out an interest-free loan over 28 months. Why?

No. No. I got to cut you off. No, it just paid off. Reach into your savings and pay off.

Okay. Let it be done. Because I was thinking, if I had that money sitting over those two years, it would actually accrue some interest.

No. It's a $7,000 dental bill that you have the cash to pay off. Don't complicate it.

We try to finagle numbers like that, Jacob, and try to figure out what works in our favor all of this. But the truth is, when you don't have a debt hanging over your head, you make different decisions in life. There's a freedom there, and it's not hanging around, and you're not trying to play the math game. So, yes, Pay it off, be done with it, and be grateful, my gosh, that you have the money to do that, Jacob. That's amazing. You're diligent and incredible. So just, set it, forget it, and then go and invest and make money that way.

Love it. Listen, a dental bill is not going to be the thing that breaks you free financially on the interest. I love it. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am your host, Jade Warshaw. I am joined by author and host of The Rachel Cruz Show, Rachel Cruz. We will be taking your calls all hour, so give us a call. Phone lines are open. The number is 888-825-5225. We'll talk about your life, your money, relationships and money, kids and money, whatever it is that is on your mind. We would like to talk about that with you and hopefully help you with that. So Well, let's go straight to the phone lines where we have Hunter in Philadelphia, Pennsylvania. What's going on?

Hey, guys. How are you doing?

We're doing good. How can we help?

Yes. It's more of a question of what would you do in my shoes? Basically, my wife is in school for 18 more months, and we will be renting till she finishes just based on proximity and commutability and things like that. At the end of that, we know we'll stay in the area for five to seven years.

We're thinking of buying But we never wanted to time the market to buy necessarily.

But we know it will be a short term five to seven year home. We just don't know if maybe buying with that short term in mind is a smart thing since we know we'll be moving back to Virginia at that point, or if we should just continue renting, keep putting money away for more equity in the house down the road.

That's interesting.

Where are you guys at financially, Hunter? Would you be in a spot in 18 months to be able to buy a home, have a good down payment, letting the mortgage be no more? Have you guys run the numbers? Would you be able to do that financially?

Absolutely. Yeah. So we definitely have the down payment. And in 18 more months, we could own a more expensive house. Not necessarily we're doing that, but financially, we are stable in that sense for sure.

Yeah. I mean, I probably would buy. If it's going to be 5-7 years, I would.

I would. And the fact of the matter is, if you want to make God laugh, tell him your plans. That's the way I feel. I think it's good to have a plan, but you never know. You might get in the area and decide to stay. I just feel like there's a lot of factors in a seven-year window, and for that reason, I wouldn't rent the entire time.

Yeah.

Got you. That makes sense. Yeah.

Go ahead and buy. But again, under making sure you're debt-free, you got a good down payment, emergency fund, all the things, check all those boxes. We give you the thumbs up to do it. Love it. Because I really do think when you look over the scope of time with real estate, it's going to go up, right? I know there's been down times. I know all the things, but over the scope of at least 5-7 years, you're going to see a return on that. And then you can use that as equity when you go buy a home and he goes and leaves and goes to Virginia.

Yeah, I agree. Seven years. It's just a long time to lose out on. Yeah. Not that renting is losing out, but if you don't have to.

That's right. If you have the ability to buy and you have that time, if it was 18 months, I'd say, No, don't mess with that. Yeah, absolutely. But five years, I would.

Very good question. Thanks for the question, Hunter. Let's go on to Newark, New Jersey, where we're talking to Mike. What's going on, Mike?

Hey, Jay, then Rachel. Thanks for taking my call.

You're welcome. How can we help?

My wife and I are going to combine our finances as soon as this weekend. We're just trying to figure out how to split our money between either a high-yield savings account or a generic bank savings account, when our goal is to save 20% for a down payment.

Okay, cool. I'm happy that you guys are starting to combine your finances. Are you newly married or is this just something you decided to do because you think it's the right thing to do?

We're married about a year and we're just finally fully committing into it.

Awesome. You're interested in buying a house, you're saving up for the 20% down payment Where's the best place to put this money, right?

Yes.

I mean, I'd put it in a high-yield savings account. That's what I would do.

You're going to make more interest on a high-yield savings. Usually, some of the best ones I found, Mike, I don't know what you've found, but usually it's like an online bank. My husband and I, we use Ally Bank. Oh, there you go. For our high yield savings. A traditional savings account, you're not going to make as much interest. You may have more flexibility to get money out when needed with that. High yield, you're not able to use it like a standard checking. There's a limited number of transactions. But if you're not- Which you don't want that. Yeah, and you're not using it for that. You're using it to save up for a down payment. You're not going to touch the money once it's in. Those are the big obvious differences in it. Right now, Mike, I'm like, the high yield savings, when the interest went up with the Fed, with the debt, it also went up with the savings. Let's go. I know that's right. So we did. We found some great rates with high yield savings. So, yeah, that's the route I would take for sure.

I love it. Does that answer your question?

You wouldn't put anything in a generic bank savings account. Just put it all in high yield.

I put it all.

I put it all there. But if you have, Mike, For an emergency fund and that thing, I would have separate line items within that account to know, Hey, this is our emergency fund. We're not touching this. This is our dump for our down payment. So even if you wanted two different accounts or within the same account, we have line items in that.

Yeah, this is not an ad for Ally by any means, but I do use Ally, and they have buckets there. You could make another account if you wanted to, but honestly, you can just put them in different buckets and you can see it that way. Honestly, I think with that, it depends on your temperament. Because some people, there was a stage in my life where I definitely mentally would have done better with a separate account for savings for this.

For emergency fund, yes. For emergency fund, yes. Versus that, yeah.

So whatever you think will work better for you and your wife.

All right. Awesome. I saw Alaa had the buckets, and that just seemed the easiest way to do it.

Yeah. And I mean, some people, like Marcus. There's different banks. People have different preferences. So don't see this as an ad. Do your research, figure out the one that you like. But definitely, I would veer towards an online yield savings account. Hope that answers your question. Rachel, I think there's a lot that you can talk about when it comes to savings, because a lot of people struggle with saving money, whether it's for a down payment, emergency fund, or just in general. They've never built that muscle of savings because it really is a muscle that you build over time. We can go through a couple of tips that I think will help people. I definitely think that if you have savings, you need to put it in a separate location like we just talked about.

Versus a checking. Yes.

It can't be grouped all in there together and you just mentally know, Well, this is my savings. That's number one. You're three to six months, I think that once you get that to a place, keep that separate from any other savings, whether it's through buckets or depending on your mentality, like we talked about in a completely different location. I think another great way to save, if you're If it's tough for you, that's one thing that I would automate. We talked earlier in other segments about not automating. Savings is something that I would set up. Once you know what your budget is, it's like, All right, this automatically comes out of my paycheck. The day that I get paid, don't mess around. There's no tentation. Don't mess around. Don't mess around and put it for a couple of days later because before you know it, that money is going to be gone. So that'd be my thing, too. And the thing three, these are not in any particular order, by the way, but you've got a budget for savings.

Yes. You have to know that you have the margin for it and prioritize against it, right? That's right. Prioritize against it. Yeah. If you want to hit a certain amount for a down payment in two years, you have to back out and say, Okay, how much do we have to save per month? And that's going to affect our budget. That's our goal. So you plan it out that way. But it is. I like the automation factor in it, I think, is really good because it creates the discipline.

But the budgeting aspect is so key because if you don't budget and you do an automated transfer for savings, and then something comes up before you know you're pulling that savings right back out. And nothing, Rachel, is more frustrating than that wheel of saving and spending. Saving and spending. So budget for your savings. That's so good. This is The Ramsey Show. It's no secret we love a good deal here at Ramsey, which is why I don't want you to miss this one. Right now, when you pre order my new book, Breaking Free from Broke, you get $100 worth of bonus items for free. I'm talking e-book, online Q&A, and enhanced audiobook, all completely free, and all chalk full of what you need to know about credit card schemes, to investing traps, to mortgage myths, to building wealth, all the research is there. The offer ends January 15th, so do not wait. Go to ramsey solutions. Com/store. That's ramsey solutions. Com/store. You're listening to The Ramsey Show. I'm Jade Warshaw, your host, joined by your other host, Rachel Cruz. We're taking your calls about life and money, so give us a call. The number is 888-825-5225, and we will be here for you.

It's the new year. I'm wondering what your goals are. If you're anything like the rest of the population, it's probably one or two things, money or health, right? It's like you're on a cleanse, you're on a diet, and you're trying to get this budget in order. If that's you, I've got two things for you to consider. Number one, we have a wonderful resource coming up here on January 11th. It is a break the cycle free livestream. All right? So you can register for free. It's January 11th at 07:00 PM, and we're going to give you practical steps on how to get your money on point and in check. If you're one of these people who you're like, Man, no matter what, I feel like I just can't get ahead. I feel like I'm living paycheck to paycheck. This really is for you. All of us are teaming up and we are just hitting you with a one, two punch of money, knowledge to get you through the new year and beyond. So I want you to sign up and register for that. Next thing is, in order to get prepped for that, because you're going to get some information you're going to learn about every dollar, you're going to learn so much.

Then after that, I want you to mark your calendar because January 31st, I'm going to be doing a webinar, basically going over again what you learned at the livestream. Those are two dates I want you to remember. January 11th, January 31st. Go January 11th. It's free. Get the knowledge, right? Get the game, and then come again January 31st, and I will re-up you on the knowledge, and you'll keep going forward. And you need that because, Rachel, goals is not easy. You have to keep at it. I posted on social media, I think it was today I posted, when you set these goals, it's like you're all excited. It's January first. He's like, I write it down. I'm all excited about it. And then the resistance starts coming and you're like, Oh, I didn't know it was going to be like that. And the thing is, the resistance doesn't... If you set a money goal, you're like, All right, this year I'm paying off my debt. Whenever I have extra money, I'm throwing it on my debt. And then suddenly, it's like your car breaks down. Suddenly, something happens crazy in the kitchen. The blender flies off and the knife flies and it breaks the window.

Now you got to pay for the window. It's like all these things start happening and it's all trying to get you off pace. Yes. And when that happens, I want to encourage everybody to just zoom out for a second because I feel like so many people have hit that wall where it's like, Is it going to be worth it? I told myself I was going to bring my lunch, and it's such a hassle, and you already want to give up. You've just got to zoom out for a moment and go, Okay, this is resistance. I knew that this was going to happen. This is not a bad thing. It doesn't mean that I should stop. Matter of fact, the way I view it is if you're getting hit with that, it means you're really creating friction, and that's good. Because if you want change, you cannot change without creating friction in your life. You're doing something completely different. You're going on a new pathway, and there is going to be resistance. So embrace that. Stop for a moment and go, Okay, that's what that was. Now I know that's what that was. I can go forward and don't let it stop you.

That's my encouragement for the day. Now, let's get to the phone lines where we've got Kari in San Francisco, California.

Hi. How are you? Thank you for taking my call.

You're welcome. Thanks for calling us. How can we help?

Well, essentially, I would like to retire. I'm planning on retiring in October. I'm a teacher, and I'm getting nervous just financially if I'll be able to do it. So I just wanted some reassurance. I think I'm going to be fine, but I just need a little reassurance.

Okay, so let's look at your numbers here. Number one, are you working with any professional, or is it just you looking at your accounts, evaluating it on your own?

I do have somebody who manages my Roth and my portfolio.

And what are they saying to you?

He says I'm totally fine. Okay.

Well, that's good. That gives me a little bit of… But let's make sure you understand it. So how much do you have set aside in your nest egg?

I have 350 right now.

Okay.

And what about- And then I have 80,000 in high yielding savings. Okay. And that's just because me, I've been stockpiling since I paid off my house. Okay. More of a train clear. And I also have a travel fund. Yes. And I have a travel fund. That's, I guess, 30,000, and it's another high yielding. And that's the one I was planning on. When I want to travel, I could just go into there and get it. I love that.

And so if you were to retire in October, what percentage are you pulling off of your nest egg, and what is that equal to per year? Oh, Well, I'm not sure if I'll even have to pull out any.

I'm assuming I met with the retirement people, and I'll be getting about 1,800 a month. And from that, I also have another 1,200 that I get monthly from another retirement through a divorce.

Okay, so none of that is the 350,000 that you talked about?

No, no. That's just what I'll be getting from my retirement through work. And yeah, that's what I'll be bringing in.

Yeah. If that 3,000 is enough for you to live your life and do everything you want to do, and you're not, I have no objections, Your Honor. Yeah.

I mean- Okay. Yeah. It's exciting. It's a big question, Kari, because I don't want to direct you wrong. It's like you're retiring. So I do want to make sure that you are talking to somebody that's looking at your actual accounts and the historical data of what they've done. I mean, yeah, they're looking at the whole picture. But for you, calling us in a two-minute radio call- Yeah, that's a good point, Rachel.

Yes.

Yeah. I mean, it all seems to pan out, Kari. You've done a really great job in your living expenses. You don't have a mortgage. Are Do you have any one or anything that you're responsible for financially? Is it just you? No, I don't. Okay. Yeah. I don't. So $3,000 is enough for you, Kari. Plenty month to month. And you have a travel fund over here. I love that. You got $80,000 stuck to it? Yeah.

How much is in that, the one that's paying you 1,200, the one from the divorce you said? How much is in that? What's the nest egg?

I'm going to get 1,200 for life.

For life?

Okay. Yeah.

And then there's the 1,800. Now, are you getting any Social Security?

No, I will be, but it's minimal. I'll only be 60, so it's not… I don't think I can draw on Social Security for quite a while. But yes, there is some available there. I also know I won't be paying into my Roth because that's what my guy told me. He's a carry, but you'll also be having 800 that you pay every month for your Roth. You know, that you won't be paying once you retire.

That's right, because you're not drawing an income. Like, you're not working anymore. Now, the 1,800 that you're getting, what's that nest egg, or is that continuous as well?

That's for life as well. That's just through my work.

Is that just a pension as a teacher?

Yeah. Yes. I'm a teacher. Okay. Yeah.

That's great, Kari. Yeah. I mean, from right now, all… Yeah, that all maps out. It feels like green light. It feels like green light. Yeah, that's great. Congratulations. That's exciting.

Congratulations.

Thank you. All right. Good. I feel a little better.

Thank you so much. You should feel great. You've done wonderfully.

Okay, great. Thank you. You're welcome, Kari. Awesome. Thank you.

Yes. You're welcome, Kari. You're welcome, Kari. Happy New Year to you.

Thank you so much for the call.

There's so many people, Jade, that they want that story. And here's what I love about Kari, too, is I'm like, there's a level of contentment in her. Did you hear that? She's like, I have some money that's set aside for travel, but I can live on three I'm great. I'm great. And the $3.50 that she saved up, I'm like, that's a lot of money to stock away throughout her life. $100. For retirement. And you hear people and they're like, Oh, I have to have X amount, all of this. And I'm like, there's just a beauty in listening to Carrie as she walks through those numbers. And I'm like, Yeah, she's done it.

She did everything right. Yes. She let them take the money out for her pension, but then she continued to put hers away in the Roth, which is what we teach. I love that she's got the 80k saved, which honestly is above and what she might need for an emergency fund. But I love that she has it. That's wonderful. Absolutely. For me, I think the biggest thing, her mortgage is paid off.

Yes, she didn't have a mortgage. No mortgage. There's no bills.

That's why she can be like, Yeah, 3,000? I'm good on that.

Yeah, I'm great. I think It's awesome.

That's what people have to challenge yourself to think about.

And in San Francisco, California, I'm like, Hey. She's in Northern California. As a teacher, did you just hear all of that? Yeah.

That's great. A teacher in Northern California. I feel like we need to marinate on that for Rachel, because that's such- Because I bet with her house, she's close to being an everyday millionaire. 100 %.

We didn't even ask her that. We should have asked her that, Jade.

Carrie, we're going to just dream for you. She's an everyday millionaire. But for those of you listening, start dreaming. It's January. Start dreaming. What would your life be like If one day you paid your mortgage off, right? Most of us are paying a couple of thousand dollars a month for our mortgage. That's the biggest line item. How would your life change? This is The Ramsey Show. Listen, we all We all know the Christmas season can be one of the most expensive times of year. So right now you're probably feeling ready for a fresh start with your money. Listen, I got you. On January 11th, we're hosting a free livestream where we're going to show you how to do just that. You'll get the tools that you need to get unstuck with your money. Guys, all you have to do is decide that you are ready for change. So to register for free, go to ramsey solutions. Com/breakthecycle. That's ramsey solutions. Com/breakthecycle. You're listening to The Ramsey Show. I'm Jade Warshaw. This is Rachel Cruz to my right. We're taking your calls all afternoon, so give us a call. The number is 888-825-5225. I'm excited to be here taking your calls in the new year.

So whatever it is that's on your mind. I know you've got goals. I know there's things that you're aspiring to. You're probably starting to have those difficult conversations with your spouse. You're starting to budget, you're starting to take your lunch, all those things. It makes you feel some type of way. So we're here to help, so give us a call. We've got Annalise, who's on the phone line in Phoenix, Arizona. What's going on, Annalise?

Hi. My husband and I are dual income, no kids, and we're looking to have kids in three-ish years, and we just bought a house. We're trying to figure out for the next three years, we know we're going to have more financial flexibility than when we do have kids. We're trying to figure out because we're young, whether to focus a lot of our attention on chipping away at our mortgage or saving for retirement. Since we live mostly off just his income, we have almost all of my income to put somewhere.

Awesome.

That's great.

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

Pretty familiar. We have zero debt. We have six months of living expenses saved up. We have all those. I'm pretty sure we have all the Baby Steps done.

Perfect. Okay, so then it's just really we're getting to a technicality, right? For all intents and purposes, you're on Baby Step 4, 5, and 6, right? Baby Step 4 for new listeners is putting 15% into retirement. Baby Step 5 is you're putting aside some amount of money that you decide for your kid's college, and you're putting it in a non-prepaid 529 or ESA account. Then Baby Step 6 is you're also simultaneously putting extra money on your mortgage. Now, here's the thing. Baby Steps 4, 5, and 6, if they all apply to you, you do them simultaneously. Are you already at the 15% mark on your investing?

Yes. My husband put 15% of his paycheck, and I put 20% of mine.

Okay. So you want to be at 15% for your household. That's the goal. And once you get to 15%, because remember, we're doing these simultaneously. Anything above 15% at this point, you need to be thinking about Baby Step 5 and Baby Step 6, because you are saying, Okay, now if you want to wait until you have kids to do Baby Step 5? Yeah, that's totally fine. I would not put money aside for future children that I do not have yet. Yes, that's right. And then for you, now you're to Baby Step 6. So the extra money right now, you're putting on Baby Step 6, which is paying off your home. Now, and this is for you and anybody listening, once you pay off your home, then you can go ham on the investing. You can start investing way beyond 15%. That's the beauty of how this plan works, is you are going to have that extra money to just get crazy, and that's where things go off the rails.

In a good way. My question with that would be, we're super young. I'm 22, and so I have heard the advice that investing in your retirement younger is to do better. And since we just got our mortgage, it's probably going to be a little while for us to fully pay it off. Would you recommend putting more than 15% because we're so young, or no matter what, 15% and then pay off the half?

I would still do it the same way because- You're going to be fine. You're going to be fine. And you're creating diversification, which is really important. Yes. 15%, number one, is so much more than average. Most people invest right up to their match. Most people do it while they have debt. So the fact that you're debt-free, you're at 15%, and I'm sure, by the way, if you have a match, the match is not included in the 15%. If you or your husband has some your match, make sure you're still, of your own, money putting 15%. Then, like I said, with this extra money, you guys are young, and that's part of the beauty of this equation for you, because not only are you going to grow compound interest over time because you are actively investing, you're going to have your home paid off over time. It's just going to offer you so many options because you're going to have wealth on two sides. Then once you pay your home off, like I said, you're off to the races, and you're just going to be blown away by how this works for you. Yeah.

Because Annalisa, let me say this, Annalisa, just to paint a picture for you. Yeah, that 15% of your income into retirement, and then everything else goes to the house is what I would do. And because you are so young, you pay it off early. And then what's wild is you're going to be one of these people that stands on the debt-free scream stage, and you have your house paid off, and you guys are in your 30s, and then you go and invest like crazy, because then you'll move on to baby step seven, which is save or invest and be extremely generous. So you will then bump up that 15%, probably, with investing and do more if you guys want. You just have so many options, but having a Made for a house and investing 15 %. That's the ultimate goal, which you guys are working towards, which you could have, which is just crazy. How much do you guys make a year? I'm just curious.

We make roughly combined, close to 88.

Okay. How much is your house?

Our house, we have 305 on the loan.

Okay. Yeah. That's amazing. I love that. So, yeah, you guys are going to get this paid off, and it's going to be great. And then you can bump up other investing if you want after that.

Well, let's reframe this in your mind on a lease, because I do think that sometimes people view, Okay, I've got my retirement investing, and then I've got my house. They're both investments. Yeah, that's a good point. They're both investment vehicles. I don't want you to think that a 401k or a Roth IRA investment is more important or a better investment than a home. There's a reason that real estate is a big choice for people to put their money because the rate on return is very… You can count on it. You know what I'm saying? That's right. We say all the time, if you're owning a property for 3-5 years, 5 years or more, you are going to see a return. That's what we've seen over time. The same way we talk about the S&P 500, we know over time, you can expect a 10% to 12% rate of return annualized over the course of X amount of years. I think that's really important for people listening to understand these are both great investment vehicles. That's why we say do them simultaneously, not do this one first and then reach over here and do that one.

That's something worth pointing out. Thank you so much for the call. I like it. It's a good conversation. All right.

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

Yeah, but we do have to call out, there is that tension between... We know, like she said, obviously, the longer that you're in the market, Your compound interest has a longer time to work for you. Yes. And obviously, the more money you invest, the more money there's there. But it is that tension between if you work the plan and do it the correct way, yeah, you're pushing pause on some things to push play on other things. But ultimately, it all works out together. That's right. And so many people are worried like, Well, if I pay off my debt, then I'm waiting to invest. And I know you guys say pause investing while you're paying off Jade, I'm going to miss out three years. I can't stress enough to people listening that you will make it up. The way this is designed, you will make up for the time as long as you stick to the plan. If you lollygag or if you take this but leave that and you don't... This is a plan to be worked as the plan is written. I can't stress that enough. If you say, Oh, I'm working the Dave Ramsey plan, but you're just messing around with this debt and being willy-nilly on it, and it takes you six years.

Yeah, you miss out on retirement. You're missing out. That's right.

You've got to walk it the way it goes. If you say, Oh... I talked to somebody the other day. They were like, Oh, Jade, I'm working the Ramsey plan. I'm not investing yet, but I just really want to get my house paid off. I'm like, Listen, I'm glad you want to get your house paid off, but you need to be investing. So follow the plan as written if you want the results that we're always talking about.

There's an order. It's the order for the reason. But yeah, like Annalise who just called. She's at the perfect position to do it, and it's going to be amazing. We're dead. And money doesn't have to be the thing that controls you, that you really do control it. So being proactive in that sense.

It's great. I love that. And then I always like to remind people who think that it's too late or it's too late to start or maybe there's no hope. I'm like, Listen, look at me right here. I didn't start investing until my 30s, and I'm blown away. I'm blown away by the numbers I see by just being diligent and working the plan. So if you're out there, you feel like you got a late start, it's not too late. Just keep doing what you know to do, and in the right time, you will reap a harvest if you don't give up. This is The Ramsey Show. You are listening to The Ramsey Show. Thank you for listening. I am your host, Jade Warshaw, joined by Rachel Cruz. We've been taking your calls, and now we've got the scripture and quote of the day. James 117 says, Every good and perfect gift is from above, coming down from the Father of heavenly lights who does not change like shifting shadows. Love that one of my favorite verses. Our quote of the day, I feel like you should read this, Rachel, because you're a true Swiftie.

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

You know what? I'm going to say in front of all the world, I think I need to understand more about Taylor. I've never been on the T-Swift train.

Oh, come on.

I got to get with the times.

I'll share my seat with you on the train. It's a fun ride.

Yeah. Help me get on because I don't get it, and I need to get it because I feel like I'm- I know.

I think she just speaks what we've all felt in life. Is that what it is? It's her song. I think it's her songwriting. She just... She sings, I should say. Yes. And writes. I think just what we all thought. I don't know. That's good. I'm a 14-year-old at heart.

What's your favorite T-Swift song?

Oh, gosh, Jade.

Just hit me with one. Shit.

Give me a few notes.

I'm not going to sing. I'm just getting it. That's going to be my question.

The Lover Album might be my favorite.

That's going to be my question to all the callers moving forward. All right, Let's go to Peter in Manchester, New Hampshire. What's going on, Peter?

Hey, thanks for taking the call. I am about $9,920 in credit card debt and $19,638.87 in student loan debt for a combined total of around $30,000 plus or minus. That's right. A little under that. I was wanting to know, how can I get out of debt, and then what should I do after I'm out of debt? I have no emergency fund, so I don't know where to start.

Good. Well, you came to the right place. I'm happy that you're here. Okay, so let's start by getting some particulars. How much do you earn every month? What do you take home?

About $874 after taxes. I'm a student employee at my university I currently attend.

Okay. What What year of college are you in?

I'm a sophomore.

Okay, sophomore.

Okay. So you're in school full-time?

Yes. If I wasn't, I wouldn't be able to stay in the housing. And since my parents passed away when I was 11 years old, I'd be homeless on the streets. Oh, my gosh. Oh my gosh, Peter.

Oh, I'm so sorry. That's tough. Oh, goodness. How old are you now? I'm making it.

I'm 21 years old.

Wow. Way to go.

Wow. So you went through college. I just want to make I get this. Are you still a student there or you're working there and living there? You're still a student.

I'm still a student. Okay. Sophomore.

Okay. Sophomore. Oh, I'm sorry. I hear you. Okay.

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

While you're a student, my understanding is per FAFSA, which all of them are federal loans, so I won't have to go into repayment until six months after I graduated from the school.

I'm guessing they're subsidized, so they're not gaining interest right now.

Yes. I do have two unsubsidized loans with a max interest on both around 5.38%. Yeah.

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

Yes. Peter, can I ask what caused all the credit card debt?

I was a little I'm really worried I wasn't going to be able to afford college anymore, so I panicked and purchased a bunch of emergency supplies in case I ended up on the streets again. That's the majority of the debt. I also purchased a bicycle to get to and from a job site. When I was homeless, after I left the Marine Corps, after I was medically discharged, I was able to use a bike to go to and from my campsite and my job. So I was planning ahead, and I planned too far ahead. Okay.

Which is understandable. Yeah, totally. But yeah, with Jade, what she was saying, though, I think is key. We don't want to obviously go deeper into that We don't want to default on that. Is there any other time, Peter, that you can look at throughout your week that maybe you could do one more thing on the side to bring in some How does that income?

Currently, I'm also in army ROTC at my college. I just got a medical waiver approved to reenlist or rejoin the military. In about four months or so, I'll be getting an ROTC stipend in addition to a scholarship that should actually reduce the overall cost of my overall college experience by about half because I'll no longer have to account for room and board. Very good. Yeah, it's really good. Then in addition to getting the $420 monthly stipend from the United States Army, I'll also be working an additional on-campus job that pays around 17 an hour.

Okay. How many hours?

For about 20 hours a week. Then my current job I work that nets me after taxes, $874 per month is a work study job. It is a mandatory required minimum of $12 an hour for a maximum of 20 hours a week.

Okay, so here's the equation we're trying to solve for. I like that you're getting into it, you're finding money. The equation we've got to solve for is, can you pay for tuition in cash? How much does it cost? Because you've got $19,638 of student loans, and my guess is that's because you've gotten student loans for each semester thus far. We've got look at going forward, are you able to make this work, and what does it look like going forward? Does that make sense?

Yeah.

What do you need to… How much does school cost?

So my current semester, I was looking over my bill. It's around $25,000 per semester.

$25,000 per semester?

Where are you going to school, Peter?

I'm going to Southern New Hampshire University. Okay.

Is it public, private?

I don't know. I believe it's private. Okay. It's a private nonprofit, though.

That feels expensive.

It's also because I'm an out-of-stater, I was in DC, but unfortunately, it was really unsafe for me to continue living in DC. While I was homeless, I was involved. I was shocked. I didn't feel safe going to school or living in Washington, DC, anymore.

Okay. How old are you again? Tell me your age again.

21? 21 years old.

Okay. What's your degree going to be in?

It's going to be in Justice Studies with a minor in sociology.

I'm going to say something difficult, and it just is what it is. You're choosing an expensive route here for school. You're at a private university, and you're at an out-of-state private university. And you still have two and a half years left. And you've got two and a half years left. And I don't like that for you because with the money that you said, I don't see a pathway for you to pay for this. So something's going to have to change. And I know that you've suffered a trauma, so it's very hard for me to sit here and be the one to say, Hey, listen, go back to DC. I'll be honest with you. If you're in DC, I don't know, can you go to any school? Can you get Can you get into Maryland or can you get into Virginia? Does it count? Because obviously, district of Columbia is a small area. So do the surrounding states count at all? You need to really look into this and start evaluating your options. Is there anything you can do? Is it an online school? Is there something you can do that you can get that degree, go slowly.

You cannot go into any more debt. That's got to be off the table. I know you've been through a lot, but we got to start thinking about this. This is The Ramsey Show. Hey, folks. Dave here.

You want to hear even more life-changing content from Ramsey?

Download the Ramsey Network app so you can catch all your favorite shows all in one place like the Ramsey Show, Smart Money Happy Hour, and the Dr. John Deloney Show. You'll get real talk about life, relationships, money, and your career. Plus, the app lets you browse by topic like debt, business, or selling your home. Get the content you want whenever and wherever you want to listen.

Download the Ramsey Network app today.