Live from the headquarters of Ramsey Solutions. It's The Ramsey Show where we help people build wealth, do work that they love and create amazing relationships. I'm Ramsey personality, George Camel, joined by the illustrious Rachel Cruz, who also is my co host on Smart Money Happy Hour.

That's right, here we are together answering your questions.

America a very different show. We're very serious, very professional on this show and then we have a good time on Smart Money Happy Hour. Just dishing, just talking like us old gals, but this show is very different. You call in with your questions and we will do our best to give you sage advice. And that comes from Rachel. So triple 8825-5225 is the number to call and Talon, I believe, is how I say it is in Provo, Utah. Talon, welcome to the show.

Thank you so much. Appreciate you guys taking my call.

Sure. How can we help?

Yeah. So I am currently working on baby step two. I'm finishing baby Step one, should be finishing that by the end of the month. I'm kind of planning a roadmap for baby. Step two on paying off all my debts and looking on paper, I'm seeing one of my cards that I have is kind of ugly on paper, and looking at the value of it. I'm upside down a little bit on it, and I'm wondering if it would be worth taking out a loan on my 401 to pay down what I'm upside down in it and then to sell it from there.

Well, short answer.

You want to take that one, George?

I don't like this plan. And we'll talk about why. What is the car worth and what do you owe on it.

So I currently owe 26 five on it and at least the Kelly Blue Book value. From what I'm seeing, it ranges from 18 to 21. And looking at similar cars on the market and on different classified ads and stuff like that, I'm seeing like about around 20.

Okay, so you're about six grand underwater. How much money do you have in the bank, if anything?

I have very little.

Okay. And what's your income?

I currently make average 65 a year. Okay. And it's just how much overtime is given to me. What was that?

Are you single? It's just you?

I'm married and have two kids.

Okay. And is your spouse working outside the home?

No, we're on a single income.

Okay. Is she able to.

She could, but we've kind of decided between the two of us that she's going to stay home with the kids.

Okay. What other debt do you guys have, Talon?

We have her car and then we have which is how much student loan, which is 24,000, and we're right on track on hers.

Like the car is worth 24?

Yeah.

Okay, and then how much student loan debt?

We have around six grand.

6000?

Yes.

Okay.

That helps us. Okay. So back to the 401K loan situation, the reason you don't want to do that, the only time we would tell people, hey, tap into that 401K is in case of emergency, and by that I mean a foreclosure or bankruptcy, but never just to pay off debt to help you get out of this bind. And there's two reasons. One, you're going to decimate all of the future growth of that money. And so if you take out a $5,000 loan, even if you're going to pay it back over time, the possibility of that money growing for you in that time will hurt your brain to see compounded growth over the next few decades. And number two, you're going to pay taxes and penalties on that money, which means you're taking 30, 35% hit just to get out of this debt. So I'd rather see you use future income to get out of this mess versus trying to rob Peter to pay Paul.

Yeah.

And I'll say this, Talon, you guys are well over. You're getting close to your annual income and car debt. I mean, you guys are right at that $50,000 mark of car debt. And our recommendation is always not to have cars worth anything on wheels, we say engines and wheels, more than half of your annual income. And so you guys are beyond that talent. And so if I woke up in your shoes, honestly, you got two kids at home, you have a wife, your family, and I'm like, I think I just would want some relief. And so if I were you, I would look at selling both of these cars. You'll have to take out a small loan for the difference and a small loan just to get to be able to buy another vehicle. But I would just want some relief from this. And the amount of stress that you're probably carrying over a car, it's not worth it, do you know what I mean? And you guys can go get a great car again, it's not that you guys can never drive a great car, but I mean, this is a lot of your income that is wrapped up in car payments right now.

How much is your car payment? How much is her car payment a month? I'm just curious.

So mine is about 580 and hers is 500.

Okay, so over $1,000 would get over $1,100. Yes. And then if you think about it Talon, you do that and yeah, you'll have a small loan, but that means that frees up money to be out of, completely out of debt in probably seven months and then be able to save an emergency fund. You have no money in the bank right now. And so that's stressful. I mean, you guys are one life event or one decision away of this going spiraling down real quick and not having the option of like, should we sell or not these cars, we're going to have to, to be able to do x, Y, and Z if you don't get a paycheck in before they get repoed. Right. I'm not trying to base all these decisions off of fear, but it's just the reality of where y'all are and you're so normal. Talent this is what everyone does. It's what everyone does but everyone.

You're not even special, according to Rachel.

But it's just not worth the stress. And I have three kids at home, and I'm like and just even the stress your wife probably feels of like, man, we don't have money in the bank. We don't have a lot saved. So just the entire situation. Talent I would flip it on its head. I would probably just sell the cars and just for the sense of a radical change in your life, it'll free you guys up emotionally, financially, and then reevaluate and be all right. We want to buy something else, so let's look at replacing it here in the next year. You know what I mean? You'll have the option to do that soon, but just for the moment of.

Relief, that's almost you've got a few decisions to make. So this is how it would play out. Talent you would go to your local credit union. You'd get a loan for would cover your underwater portion and give you guys a little bit of money to get some beater cars. We're talking you get a $4,000 car, she gets a $5,000 car, and the other six will get covered. The underwater portion get it?

Okay.

So then you have these beater cars. You still have her car. You could sell, freeing up that payment at that point. And I would encourage you to do both because here's the other side of the coin. It's either this or she's got to get to work and bring an income. Staying at home is a luxury, or.

You'Re going to be able to work extra.

Or you got to take on two jobs to bring your income up to 80, 90 grand. Yeah.

Because by April, you guys will have your student loans paid off and then you'll have that $15,000 loan and just working and again, working extra, cutting lifestyle, all of it. And I would want to pay that off in nine months. You look up next Christmas, you guys would be in a totally, totally different financial situation.

This is like triple bypass surgery is what you're about to go through. But you're going to have some big relief on the other side, man relief and sleep.

You'll have peace.

I'm going to give you three months of our budgeting, app every dollar premium to help you guys make a plan for all of this money, because I want you to call back and celebrate with us when you're debt free. Thanks so much for the call. This is the Ramsey show.

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37027. Welcome back to the Ramsay show. I'm George Campbell, joined by Rachel Cruz. This hour, this is a show for you, about you, and the number to call is triple 8825-5225. Now, as I mentioned, I'm co hosting with my friend Rachel Cruz, and we also co host Smart Money Happy Hour, which is one of the hottest shows on the Ramsay Network. And we have a good time. I'll just say you why do you think that is? Here's my theory.

Okay.

I think people want a light hearted, casual conversation, easy listening where they can laugh and then they accidentally learn something.

Oh, that's good. That's the way I see yeah. It's like you're kind of eavesdropping in a conversation with friends. You're part of the happy hour.

I don't know if you wish that we were your friends. That would be ideal. Rachel. Obviously, that's Rachel's vibe.

I want to be your friend.

Let's just say that I'm not accepting applications for new friends right now. I have a newborn Rachel priorities.

But one of our episodes that we did that became one of our highest ones.

113,000 views. And this is what it was called, explaining our most hated financial advice. And for some reason, people really the haters showed up as well as the fans.

Yes. So we're going to go through that. People do not like us sometimes and we're going to talk about it.

It was also cathartic for me. Can I be honest? It felt good to just, like, have my rebuttals. Oh, yeah, my retorts.

Okay, you go that first one. George, this is very you.

Thank you. I don't know if that's a compliment, but I'll take it. The first one we say is crypto is a terrible way to invest and spend your money.

We say it. And all the crypto, I'm going to say, dudes, I just don't feel like a lot of the women haven't ran.

Into a lot of women.

A lot of women don't get well, I think it's because the way the guys do.

The guys are like, women use something called logic a lot, whereas guys are like, it's like a flex.

Come on, man.

Yeah.

Crypto.

Now, women have girl math and so they're not innocent.

That's true. We can justify some spending.

Crypto. From the very beginning, I was just, like, scratching my head about crypto and I thought, well, maybe I'm not dumb enough to understand. And the more I looked into it, the stupider it got. And now on the other side of it, we kind of all know it was a farce.

Just not good.

And the reason is, I'll give you a real reason. Crypto is not based in anything. It's just based on hype. When you even buy a single share of a company, you're hoping that the company produces more profit and revenue, whereas crypto is just, I made a coin. This is the coolest, hottest coin. Come get my coin. And so it's very multi level marketing vibes. And so I always joke that crypto is just Mary Kay for young men for that reason, which, no offense to the Mary Kay ladies.

Okay, there are some yeah. Diehard Mary Kay.

They're out there.

So that's that the second thing. People just yeah, they don't care for us. On you shouldn't use credit cards. We talk about this a lot.

That one increasingly is controversial.

Yeah. And people it's because the points and the airline miles, what they get from it, they claim is worth it. But when you sit in RC, we talk to so many people where credit cards are not a blessing, it's not a thing that has helped people. It's actually gotten people into a lot of trouble and they end up being in a financial position where the credit card company is winning and they're not winning, and we want you to win. And then you can go through all the amount of stuff that doesn't work when it comes to the points and the airline miles playing the game. You can go through the moral side door of you get these points and you get this cash back and you get the airline miles and everything because other people are not paying off their cards. Banks make their money off of interest and so they're making all this money off of people that are struggling and then reaping the benefits. So it's a gross thing all the way around to me. And I'm like, if you have a debit card, just pay for everything in the present and then go pay for yourself.

West Flight just save up budget and.

Save up it's so much more freeing.

And statistically, what you save by not paying on a credit card in turn could actually help. You have hundreds of dollars throughout the year to spend on an airline ticket that you pay for.

And I'm going to call out all the Ramsay fans who they're what we call ish where they go, I did everything, but I still have my credit card. I pay it off every month. Rachel. So I'm fine. And I've convinced a whole bunch of people to try a 30 day credit card challenge where they just, oh, I saw this, put it in a block of ice and we're starting to get the results. And there was an interesting someone just said this. I thought it was interesting. They said, A few months ago, I decided to ditch the Apple Card and just use the money I have. I just wanted to try it out. They said, I've definitely seen a noticeable reduction in my spending and I've created more margin in my budget for savings. And they said, it's just the little things. There's something about checking my balance, seeing it instantly go down after a purchase that really work to optimize my spending. I go out to lunch less, I buy less extra stuff at the grocery store. You just make more intentional decisions.

It's your money.

Even if that's you, you're the perfect spender, as I call them. You're still spending more than you would have.

It's true. All right, next save $1,000. Emergency funds. People are like inflation 2023. This is the same advice you all gave in 1993. Shouldn't it change with expenses being higher and things being more expensive?

That's a big one. And funny enough, when Dave came up with this principle baby step 130 years ago, $1,000 wasn't enough back then to get the new HVAC system and cover the big life emergencies. And so the principle of it is, it's meant to be a starter emergency fund. Dave started this because people were trying to get out of debt, but they'd have these little ankle biters that would knock them back and knock them back. And so the goal is to cover the ankle biters if you have a big emergency. Number one, we want you to have good insurance in place to cover some of that, the health stuff. And number two, you pause the baby steps, you save up fast, sell stuff, whatever you need to do to cover the expense. Most of these emergencies are not the money is due today or else the house is getting foreclosed on.

Right. So, yeah, the $1,000, it's meant to be a quick step, 230 days or less, because we want you to get traction. And so much of personal finance is behavior change. And for some people, they can't even cover a $400 emergency in cash.

Yeah, four out of ten people have zero in savings.

That's right, is what we found. So even $1,000 feel like an uphill battle. But when you do it quickly and you have it, and then you can move on to paying off debt, that's what it's there for. It's for the quick win. It's for the ankle biter stuff that comes up in order to pay off debt. Which leads us to number four, George. Pay off your debt. Smallest amount to largest amount, regardless of interest rates.

That's where the math nerds show up.

All the math nerds are like, why in the heck would you not pay off the 25% credit card versus, well.

You'Ll save $300 in interest, Rachel, if you pay off the highest interest first. That's so dumb. And I'm like, or you could have paid zero in interest if you never went into debt. So why are we having this theoretical discussion? Yeah, it's so silly.

But the reason we do it again is what I was saying earlier is these quick wins. And when you pay off that smallest debt, even if it's a $400 credit card bill that's been just like, laying around, right? You pay it off, you start to actually win, and you start to feel like, oh, my gosh, I can do this. And so it's a powerful motivator.

Yeah. Getting out of debt is way more about hope and momentum and progress than it is about mathematical interest. And we've done the math. The amount is negligible about how much you're really going to save by doing the avalanche. And I just have not seen people come and drove saying, Rachel, I did the debt avalanche, and that's why we got out of debt. It's likely you'll stay in debt longer or give up or fall off the wagon if you don't see that progress fast.

All right, last but not least, if crypto was yours, George, I feel like this is mine. Married couples to combine accounts, you would think that.

I just told you, you got three heads.

Rachel telling us to do like people get so mad. My last two, where's the anger coming from on Instagram, George? The last two reels I've done about this, over like 3 million views each. And all in the comments, they're like, this woman says a woman, says a.

Woman, says a woman.

That's what a lot of them say. And I'm like, I'm sorry, can I.

Go out on a limb and say those guys are single?

And I'm like, yes.

She's going to say that out loud.

Oh, man, people get pissed about this.

Well, they see joint bank accounts as she's going to take you to the cleaners. That's the very toxic mentality that some.

Guys out there and I always have the asterisk you guys. And on the show we do this. And we've actually had callers that call in with situations and we tell them the opposite of this advice. If there's an abuse situation, if there's an addiction that's not being addressed, if there are things that you have to do to keep yourself safe, absolutely. I am not against that. But if you're just the married couple out there both bringing in an income.

But my money and her money, she.

Pays these bills, I pay these. You go on vacation, they get the hotel, you get the I mean, you're roommates. You are acting like you're roommates. And it's never just about the money. It's never just about the account. It's the idea that you actually don't see yourself fully as a team and don't fully trust your spouse. And if that is you, then you need to ask, like, okay, why is that? Because there's probably going to be other issues going on that are going to come up in other parts of your marriage. So we can go on and on about but I'm telling you, people that win with money when you're married, you see yourself as a team, you win faster and your marriage becomes better. So many people have stood on the stage, george to scream they're debt free, and they talk about how unified they are.

It's transparency, accountability, communication. All the hallmarks of a great marriage.

Be married, be a teamwise.

There you go. That is our most hated financial advice. And you're only fueling us. This is the Ramsey show.

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This is the Ramsay show. I'm George Camel, joined by Rachel Cruz. This hour, the number to call is triple 8825-5225. You jump in, we'll talk about your life and your money. Derek is up next in Minnesota. Derek, welcome to the show. Derek, are you with us?

Hey, guys. How are you doing?

We're doing well. How are you?

Pretty good. So my question is, I qualify for a VA home loan. I'm in college right now, so I'm not looking at buying a house, but probably in a couple of years, once I graduate, I'm looking for it.

Okay.

And I'm wondering what the advantage of your 15 conventional loan versus a VA home loan would be?

Cool.

Okay, so talk to us about this home purchase. Are you out of debt? Do you have an emergency fund? How far away are you from this decision?

Well, I got about year and a half until I graduate. I have no debt. I'll have a fully funded emergency fund by that point, and I already have a job offer afterwards, which would be roughly about $75,000 a year.

Awesome. Way to go, man.

Yeah.

Crushing it. And thank you for your service as well. So are you a veteran yourself?

Yeah, I'm a vet myself. I just got out of the army a month ago.

Oh, wow.

Amazing. Very cool. Okay, so let's talk through the VA loan versus the 15 year. So the 15 year loan is as conventional as it gets, so there's not going to be any special fees or anything like that? There's a set fixed interest rate, and it's a 15 year term, and it's that simple. The VA loan, there's virtually no down payment. So the reason people find the VA loans attractive is you can get in this thing with 0% down. The problem with that is that means broke people can get into a house, which can make them broker because they have no equity. And if the market shifts like it has been, they could be underwater on this house with too big of a payment. On top of other fees. And so the VA loan does have an extra fee called a funding fee, which will add one and a quarter percent, up to a little over 3% of the loan amount, which will make your overall payments and your interest higher. And there's also a lot of property requirements that you have to look into. So there are some restrictions there. And do you have any service connected disabilities?

Just a little bit, but nothing that affects my job. I just get 10% for that.

Okay.

It's not too much.

There are situations where if your disability rating is high enough, that funding fee can be waived, which can make this a decent option. But those circumstances are very unique. And so if I'm in your shoes, if you're going, hey, the 15 year is crazy unaffordable, that would make me question if you're ready to buy a home.

Got you.

So I would want you to have a good down payment before you jump into this.

Yeah.

Overall, Derek, the VA home loans usually are just more expensive because of all the fees and everything. And then, just like George said, it doesn't require much of a down payment, and we always say somewhere between five to 20% down. So, again, those are the big differences. So if I were you, I probably would just go with the conventional 15% or 15 year loan, and you can compare different interest rates if there's difference there, maybe that actually will save you if the VA loan, for some reason has a lower interest rate. But I would ask around and look at your different options when you're ready to buy a home. I would not buy it while I'm in school.

Don't feel like you have to buy just because you've graduated and have a great job.

Yeah. You could even rent for a little bit. If I were you, Derek, I would save up 5% to 10% for a down payment, regardless of which loan you choose to go with, but I would probably just go with the 15 year conventional loan if it were me.

Got you.

Does that help you out?

Yeah, it does. The only reason I was asking is because in college, a few thousand dollars feels like a lot. I always keep thinking about the buying versus renting for a couple of years after graduating and whatnot and stuff like that.

It's great that you're thinking that far ahead. And what I would do if I was in your shoes is start crunching some numbers and go, hey, the homes in my area that I would want to go for are $250,000. Okay, so how much down payment do I need to get that mortgage payment to be about a quarter of my take home pay of my after tax income. And so that'll help you start to get a picture of what you're actually aiming at, because right now, there's this pie in the sky of I want to be a homeowner, which is great, but having those very specific goals is going to help you take the next steps. So thank you for your service. We're wishing you the best man. Joel is up next in Modesto, California. Joel, welcome to the show.

Hey, George. Hey, Rachel. Thanks for taking my call.

Sure. How can we help?

So my wife and I are on baby step two. We just moved into our home into September. We're renting, and essentially we're down to our last payment, which is my wife's car. It's a 2019 Kia Soul, and we are just debating about whether or not we should sell it and get a return on that and clear up all of our debt.

A return, you say? Tell me more about this return. What's the car worth and what do you owe?

Yeah, so currently we owe 5600. So by the end of the year, it'll be about five grand. And then we could flip it for about between ten and 11,000.

Okay, you could sell it for 10,000.

Yeah. If we did private sale, that was.

The KB, and then you'd take that five grand and get a different car.

Yeah. I was thinking either just another sole or just anything that we could get that was relatively reliable. It is our only car, and my wife and I both work.

How much do you guys make a year?

So currently I'm per diem. I'm looking to get a full time job, but our income is a little bit variable. But I would say we're in between the 35 to 5000 a month bringing in. If we both have a good month, it's about five grand after tax.

After tax.

And in California, I feel like that would disappear pretty fast.

Yeah, well, it definitely goes by at the beginning of the month, our rent is 1500, which is actually pretty good for our housing situations. We have a three bedroom, but yeah, it does go by with all the expenses and groceries and such.

Yeah. I mean, Joel, if you guys found another great car for five grand, you could do this deal. But also, if you told me it was 20 grand, that's one thing. But five grand, you guys can knock that out. Just keep paying on it.

If it's been a reliable car, I don't know that it's worth the spread on this thing, because what I don't want you to do is call us back and say, hey, we got that car for five grand. It's given us a lot of issues, and it's our only car now. We're in a real bind. So we're going to go get a new car for 50 grand. That's usually the emotional role.

Unless you all found a car for that price that you guys that you feel real good about and you're like, yeah, we're great with this.

I just don't know that it's worth the hassle.

Yeah, but it's just five grand.

I.

Think you guys can just pay that off.

Okay. Yeah. No, and honestly, we were thinking that that's what my wife has been trying to tell me. I think just the weight of you're.

Ready for it, Joel? You're ready to be done?

Yeah, exactly. I'm ready.

This is like you throw in the towel, we can just clean this.

And this is your last debt. So how much debt have you guys paid off in this process?

Yeah, funny enough, we actually paid my wife's $1,000 credit card the day after our daughter was born.

Good.

We've been doing good. And I want to say altogether we've paid off about four or five grand yeah. Since we've been married.

Awesome.

Good for you, you guys. That's awesome.

I think increasing the shovel is going to be the key to getting rid of this.

Getting your job. Yeah.

I would have an aggressive goal and say, hey, we got to be able to throw $1,000 a month of this thing and be done in under six months. Then you go, okay, what's the gap? We can throw 700 a month now. How do we get an extra $300 a month? I'm going to go do these side hustles. You go do this. That motivates me to find out what the gap is and then get there and set a goal. That's a little bit UN comfortable for you.

Yeah. Would you say that with our daughter? She's four months old. Would you say that we're still in a little bit of stork mode? Because I guess that's kind of my only hesitancy with. I want to knock out the debt, but I also want to be here for kind of this precious first year. So what would you guys say about that?

Well, stork mode is usually, hey, let's wait until mom and baby are home. They're healthy, they're safe, then let's continue. And so technically, you're outside of those boundary lines, and I think at this point, the best thing you can do, your four month old is not going to remember dad doing side hustles right now.

Yeah, I was going to say, Joel, it only gets harder if I were to be honest. So for now, I'm like, I would just put my head down, get it done with, and then you're going to look up and be like, okay, we're free from that. We can get our time back and all of it. So I think it only because then she's going to be looking at you being like, dad, they're going to start talking and then you're like, I don't want to leave. I don't want you.

It's really encouraging. Rachel, as a father of a now two month old, she's like, it's only going to get harder, you idiot. Good luck with that. Thank you. Very encouraging.

Congrats, Joel.

You guys are doing awesome. You guys will get there soon enough, my friend. This is the Ramsay show.

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Welcome back to the Ramsey Show. I'm George Camel, joined by Rachel Cruz. Hey, if you're a new listener to the show, first of all, welcome. We're glad you're here. Don't know what brought you here, but we're blessed to have you. And if you want to dive deeper on all the stuff we're talking about the Ramsey, baby steps, so on and so forth, you can go to Ramsesolutions.com and click on the Get Started button, and we'll help you figure out the next best step for your financial journey based on where you're at today. That's Ramsaysolutions.com. Click get started. All right, let's get to the phones. Isabel joins us in San Diego. Isabel, welcome to the show.

Hi. So I'm a freshman in community college here in California, and I'm 16. And I have a guaranteed spot transferring to whatever institution I tagged to. And my parents are moving out of state this year, which means I only have one year of in state tuition, and I will have a full ride with that in state tuition, and I have enough credits where I can graduate in one year after I transfer. But in order to do that, I would have to pay twelve K for summer classes in total, and that would be the only cost. And if I do it in more than one year, it would cost me over sixty K for the living expenses and everything.

Wow.

This is my only option.

So your options are pay twelve K or 60.

Yeah. And so twelve K is obviously what I'm going with. And the thing is, my parents cannot afford that. Twelve K is way too much, especially in a couple of months, and there's no way they're going to be able to afford it. I can't work a job I am currently taking 30 credits. I'm going to be taking 36 next semester. And I also home school my sister. I just do not have the time to work a job. And also my parents commute, so there's no way for me to get to a job. There's a plethora of issues. I can't work a job, I can't save up for it. So the only option would be loans. The thing is, I'm going to be 16 still at the time where I have to pay it, and my parents don't want to help me take out loans. So I think my question is how do I convince them or find another way to pay for it?

Okay.

Wow. Are you like some kind of prodigy? I'm so confused and impressed at the same time.

No, I graduated high school at 15 because I took an exam where? In California. They discontinued it this year, but they let you graduate early if you pass an exam with certain things.

So you are a prodigy.

No.

You're really smart. For real, though, Isabel, because that's going to be part of my answer.

You said you're graduating in one year.

Okay. So I want to make sure I get all this right because I think there is a plan. Okay. I feel very hopeful. I feel very hopeful. Okay, so you are 16, you are in community college now, and it's free. But the problem is your parents are going to be moving out of state. When are they moving out of state?

At the end of this year. And for the college I'm going to be transferring to, they do your tax forms for financially the year before, so I'm going to be a resident for this year, so it'll be free, but the next year. So my second year there, it won't be free. So I have to do it in one year, which I can.

2024 is what, like in 2024?

2024 to 2025 is when I'm going to be transferring, and that's going to be my only year.

And that's going to be your year. But it's still free then?

Yeah, it's still free, except for the twelve for the summer classes.

Okay, so my question is, what state are they moving to?

Nevada.

And are you not going with them?

No, because I'm going to be transferring.

You're going to be on your own at 17 years old, 1617 years old, and you are going to be technically what, a junior in college. With your credits?

With my credits. I'll be a senior?

You'll be a senior. Okay. So how many credits are left with this? Twelve grand, because I understand the summer school thing. So how many credits are in the summer school program?

Okay, so I'm going to be transferring with 70, I need 120 total. I'm going to be taking 20 over the summer, which is doable, because I took 20 over this summer.

But those 20 cost twelve grand, and you can't do that, right?

Yeah. Okay. Those 20 cost twelve grand, so those.

Don'T count because you may not be able to do this summer, is what I'm going to be getting at. But you'll be able to get 100 of the other credits done free. Right. So you have 20 credits left and the 20 credits do what?

After I'm transferring with 70, I had to do 20 over the summer, and I'll have 30 left in the year. And those are free.

The 30 left are free. Okay, so you have 20 credits that you need. They cost twelve grand. You don't have twelve grand. We're not going to tell you to take out loans, Isabelle. So you have 20 credits left to get a college degree.

Yes.

So what I would do, Isabelle, is I would look at schools in Nevada and I would say, hey, I'm going to, for a year, stay here in California, get it free, and then in order to get these 20 credits, I'm going to be moving schools in Nevada. And here's the beautiful thing, Isabelle, you are brilliant. You are 16 years old as basically a junior in college right now. And so whether it takes you for those 20 credits a full semester to do, you're doing double that now, right? So you're going to be doing half of that in Nevada, taking in state tuition from your parents, applying for every scholarship and grant, and you're going to do it. It's going to look a lot different than your plan. But I'm telling you, Isabelle, at 16 years old, I would not take out $12,000. You're not even able to because your parents won't pay for it or won't sign it, which is good on them. I'm proud of them. I am. So I think you're going to have to look at multiple options and lower your expectations. And there's no rush either, Isabelle.

I know you're moving a million miles per hour.

You are. And you're doing all of this because I get because it's free and you want to take advantage of that. So I'm all for that. But everything else can just take a breath. Take a breath and you can slow it down. Do it over the course of a year when you're 18 years old and work part time and do it then and graduate debt free. The rush and the urgency is going to cause you not to be able to have the capacity to look at all the different options out there. And it may cause you to make a bad decision because you're so laser focused on one way. Does that make sense?

Yeah, I just had a question about that because I thought about that, too. Like taking credits in Nevada. The thing is, for UCS, they won't transfer it. I called them and everything. They won't transfer those 20 credits. So I have to take those 20 credits over the summer. So my plan kind of is contingent on convincing my parents to co sign it.

No.

Delete that plan.

Don't do that, Isabelle. No. I would look at other options. Maybe you don't go to this school. Maybe you just go to Nevada. Go to Nevada with your parents at the end of year, the and go to school in Nevada and get scholarships and grants and graduate from a school in Nevada. California. There's other places that have degrees other than just California.

This plan is so contingent on every variable working, which scares me.

Yes.

And if I'm your big, like, this is not it's not wise. We talked to so many people on the show, Isabel, so many people, and they are still paying off loans. Almost every caller we have with debt still has student loans. And there's a way around this, and I feel confident in that because of how freaking smart you are. And so the scholarships and grants and everything else, there's going to be options out there for you.

The other piece of the puzzle is you said you're homeschooling your sister. Where is she going?

Okay, so I'm going to stop homeschooling her because they expect me to transfer by the end of this year. One of my brothers is going to start staying home and doing that.

Okay.

Wouldn't that free up some time for you?

It's going to be by the end of next year. So still, for this semester, I'm going to be homeschooling her. So end next semester.

But your parents are moving without her.

Without her?

No. Okay, so for this year, from 2023 to 2024, I'm going to be homeschooling her. And then they're going to move at the end of this summer. Yeah. And then my brother is going to go home school her.

Okay. Can we delay their move? What's the urgency for them to move? They're buying a house and they've already bought it.

I have no clue. But they said, we're buying a house, we're moving.

They probably went out of California.

My mom's been here for 50 years. She's been paying taxes since longer than I've been alive. She just does not want to be here.

I know. In my head, though, I'm like, if I am able to let my daughter go to school debt free by sticking around for a few more months, I'm like, that would be ideal. But it sounds like that's not part.

Of the yeah, that's out of your control, Isabelle.

You're not going to be able to oh, man.

Honestly, girl, I would just be looking at other options. And you're so young. It's not like you're 24, still trying to get your undergrad degree. I'm like, you have time. Time is on your side. So slow it down. Slow it down. And look at options. Do this wisely. You don't need debt, Isabel. You don't need debt.

Don't need it. And here's one more piece of homework, since you're very good at it. Go watch our free documentary, borrowed future. You can watch it on YouTube. Go to borrowedfuture.com, check that out, and you'll see why Rachel has such urgency.

I'm proud of you, girl.

To help you go to school debt free.

I think you're smart. Great.

You got this. That puts this hour of The Ramsey Show in the books.

Listen, folks, this show has always been about you and for you. So we want to hear from you right now. The Ramsay Show annual survey is live. Text survey to 33789 or go to ramsaysolutions.com survey. When you fill out the survey, you'll be entered to win a $500 gift card. That's survey text it to 33789. Thanks for helping us understand how to serve you best.

Live from the headquarters of Ramsay Solutions, it's The Ramsay Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by Rachel Cruz this hour, and it's a free call at if you've got a question, a conundrum, maybe you just need us to settle the score between spouses or family. We're happy to do whatever you want on this show. And Hannah is going to kick us off in Akron, Ohio, this hour. Hannah, welcome to the show.

Hi. Thanks for having me.

Sure. What's going on?

So I am 22, my boyfriend's 23. And my question is, all of our debt will be paid off by April of 2025. That's credit card, two vehicles, and credit card and two vehicles. All you have left will be our new mortgage we just acquired last year. But our problem is our house is sitting on land that's not in our name. So should I stay on our plan to pay everything off now in 2025 or keep that extra money, start piling it into a savings to put a down payment on the property by this next year?

So you're looking to buy the land?

Yes.

How did that not happen with the sale of the house? When you guys bought the house, what.

Was the original deal was that me and my boyfriend were looking for a house? We couldn't get approved for a house by itself, so we bought a modular home, and my grandma said, oh, you can put it on my property, and then you guys can eventually, when you can buy the property and keep it in the family name. Okay, cool. So we did that, and she has just been letting us have it here. So it's not just smojo that we have it on, it is family.

Sure.

However, she needs to get out of her debt that she has on the property. So ideally, we don't want to cut her short on buying the property just to pay off what she has, but we also want to give her a fair price for it. So we've been here for about a year. We can financially, I think, buy it by end of next year, but I don't know if I should stockpile, all my extra I'm putting into paying off my credit card and our two vehicles or put it towards a down payment.

Okay, can we go like a little high level conversation here, Hannah, for a second?

Yeah.

Okay. So when you are talking about your finances with your boyfriend, you're using a lot of like, we statements. We're doing this, our debt, all of it. So just doing this for as long as we have. When you are not legally married, there is not an ours we conversation, it's a Hannah's conversation. And what's your boyfriend's name?

Joey.

Joey?

Yes.

And Joey's money.

Right.

So there's going to be two separate lanes here and I know that's going to be difficult for you to kind of untangle in your head because it has been so unified. But what ends up happening is that you combine emotionally, acting like you're married, combining accounts, paying on each other's debt, all of it without any legal representation and no legal documents here, that if something happens, I'll say if that, it's a complete mess. And our job is to be there for the people when it's a complete mess. So those are a lot of the calls and some of the stories that we hear on that side. So what I have learned is as separate as you can live, that could be financially, physically, all the things like as separate as you can live until you're married, it is a cleaner break. There is something about it that it just makes it cleaner on an emotional and financial side. So I'm going to ask you, Hannah, how much do you bring in with your job? What do you make?

50,000.

You make 50,000, okay. Are any of your credit cards have his name attached to them at all or are there credit cards with just Hannah's name?

Just the credit card that's in my name. He has his own that he pays.

Perfect. How much do you have in your credit card? How much debt do you have on your credit card?

2000.

402,400. Okay, perfect. And then you have a car, is it just under your name? One of the cars?

Yes.

Okay. And how much do you owe on that one?

5000.

5000, perfect. Okay. And what does Joey make a year?

80,000.

80,000, perfect. And for his credit cards, how much does he owe?

Only like 1000.

1000, perfect. And what about his car?

29.

29 truck. 29,000, okay, perfect. Okay, cool.

Okay.

So what I would do, Hannah, is I would be working to pay using your be paying off your credit card, you paying off your car and he's working his plan. You can do it at the same time. But I would not be mixing numbers. And you guys have your own plan now, the mortgage, is it in both your names?

It is. We had to do it that way to get approved.

Yes, because you couldn't afford it otherwise. Right. Okay. So that's done. So my next piece of advice, then would be to, if you decide on your own, Hannah, to buy this property, which I don't think you can afford right now on your grandmother's property. I don't see that happening soon. And if I were Joey, I would not be tying my name into land deeds and loans and all of it with a family loan on a family property that I'm not legally bound to like. He's the one. And honestly, Hannah, he'd be the one that gets screwed in this whole situation if you guys break up. So my next thing would be it's been eight years. Do what I said.

I hope not. It's been eight years.

Yeah. Hannah and you all are 22 and 23.

The only reason we're not married is because we don't have the funds to do that.

Hannah wrong answer. You're telling me you had the funds to get a mortgage, but not to get married?

Walmart and buy a silver silver band, go on Amazon? I could go right now on Amazon and get you guys two rings for $9.99. You go to the Corals and get married. Go get married. Do it.

I've said that. But it's not good enough. It's not special enough, Joey.

For him or for you?

For him.

He's making excuses.

You guys are acting like you're married anyways. So what does a certificate do? It didn't change it that much.

He wants to become a real estate mogul with you, but not put a ring on it. He's making excuses.

He's heard it from both sides, my dad and Hannah. Okay.

Let me just tell you this, okay?

You should be glad Rachel's on this call, because my blood is your life is like a Common Core math problem. It's so messed up, it hurts my brain. You guys got yourself into a mess and you're digging a hole deeper by getting entrenched in Grandma's financial situation, taking on land debt on top of a mortgage that's in both of your names, but you're not married to help Grandma out, right?

Yeah.

Did you hear how crazy that sentence was?

I know, and I know it was a crazy situation.

How about this?

How about we back out of this land deal because we can't afford it and we're 22 trying to figure out our life. I think we get out of this modular home. Number one. That modular home is going down in value.

It's not a great investment anyways, so.

I would get out of that thing as soon as you could. Good luck finding another renter for it. Right?

Yeah. That was kind of from the beginning of why it even happened.

But we have to think about the future when we make decisions today. And I really pray that we can resolve this. That you guys can get out of this mess. That you get married, that you step foot, get on the right foot with this thing, but right now. There's no land with this deal.

No, you can't you can't afford it, Hannah. You can't afford it. And it's not your responsibility either. And this so I would yep. Separate those finances. You guys work your plan. Tell Joey to go on Amazon. I can send them a link. I'll send them a link.

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Welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz. We're co hosting The Ramsey Show today, but we also co host Smart Money Happy Hour, which you can find on YouTube, podcasts Spotify, Ramsey network app, wherever you like to listen. And if you want a little easier listening, you want that show. You can share with a friend who doesn't really get Ramsey. Know Ramsey. That's a perfect little appetizer, if you will, for the Ramsey universe.

You know what's another little great appetizer?

What's that?

I have a kids book called I'm Glad for What I Have, and it's pre order right now. So if you have friends that you're like, oh, it would be great to know about content. It's about contentment and it has little animals. It rhymes, it's very short, and it's beautifully illustrated. Beautifully illustrated. So if you have a friend that's going to have a baby or you're going to a baby shower or maybe like a birthday party, you can put that in the kids gift. And then the parents will be like, this is a great message. We should talk about money more. And then you can introduce them.

That's what we're trying to do here, just secretly get you to talk about money and influence your kids and your adults in your life and the people that you love.

So, yeah, that's go to Ramsaysolutions.com. And in the store you can pre order. I'm glad for what I have.

I can't wait to read it to.

My little look at the pictures in that YouTube people you get to see a little bit. Isn't that just beautiful?

It really is. I can't wait to read it to Mia. At what age can kids understand? You reading to know not like fully understand, but what age you start reading to your kids?

I don't know. James has kids, too.

Six months a year. What age do you start reading to them?

No. Do they start understanding, like, two ish?

Probably at what point is it not pointless? By the time you start to realize that they understand, it's too late. So just start early, get them.

True.

That is probably true.

Well, James has, like, Einstein babies. They're like, prodigy level. Just perfect children. Love it. All right, let's get to the phones. Roman is in Jacksonville, Florida. Roman, welcome to the show. Hi.

My name is Roman. Very nice to speak with you all. Glad you are taking the time to do this. I'm a disabled combat veteran. I served in Afghanistan. That resulted in me being retired from the army at the age of 22. Upside down. 14 years later, I finally won my battle with the VA of getting compensation for those issues that I accrued while deployed.

Wow.

And I found myself sitting in a unique situation. I'm on the baby steps, but it is a daycare facility with no adult supervision.

Whoa.

Here's the numbers. I make $7,180 a month. That's net tax free because of the type of income that it is. Compensation from the VA and other disability sources, that's $86,000 annually. The out of whack baby step that is most glaring is the house purchase. Life, as you can imagine with my story has thrown me a number of curveballs, but I was presented the opportunity to secure housing for myself. I have other debts, but I was able to buy my home from family for $38,000. I currently owe $8,000 more. I pay $2,500 a month. It'll be paid off February 2023.

Awesome.

That's a huge chunk.

You mean 24, 25 in a few months?

Yes, that's what I meant.

24.

I wrote the wrong year.

No, you're good.

Outside of that debt, I owe about 30K on a car, and I have $6,300 in credit card debt. If I follow your one through seven steps, which I've not, obviously paying off the house in this manner, that would come later, but I had to do it. The house is valued at $268,000 with.

The I got a great deal.

It's within the family, but done the proper way. So I find myself burdened by that large payment each month. But that burden comes from poor management of my funds. So my question is, pretty much hearing that, knowing that I'm trying to pursue these steps, what do I do?

What's your house payment right now? Just the actual payment itself without the extra 2500 even. Okay, you're not putting extra. That's just what it is.

I'm buying it from my uncle who owns it. Free and clear. And I'm paying 2500 monthly. I have three more months, 3.2 more months.

Got it. So this is like a handshake type deal. This is not your traditional loan, correct?

No mortgage, no interest, no nothing.

Okay. And you guys agreed it's going to get paid by this time?

Oh, yeah, I've got it in contract with him. I was not doing anything else well, financially. And I committed to myself. I will put down roots and have a stable, safe place for myself if that's the only bill I pay.

Okay.

It got to that point. So I stuck to it. Never missed a payment, don't intend to.

Where does the other four and a half $1,000 going?

So right now, 71, 80 is my income. My bill pay goes $2,500 to mortgage. I pay 825 in alimony and child support. I have 253 auto insurance, 154 home insurance, cell phone bill, car note and.

Then how much do you own the car?

I'm sorry?

You owe $30,000. How much is it worth.

If I sold it today? 18. So I'm ten under.

What's the payment?

612 a month.

Okay, well, I think there's still a bunch of money left over. You may be better off in your weird situation that you find yourself in. Having to pay this mortgage back to your uncle is put extra on the mortgage, get rid of it as soon as possible to free up $2,500 to then attack the car and the credit card.

Which puts me right back on track with the baby steps.

Yes, they're out of the house thing.

Out, but then doing everything one through other numbers.

Yeah, well, because you got to keep making this mortgage payment, you could start attacking your consumer debt and you'd still have this going on. But in your shoes, with this big old mortgage, freeing that 2500 up fast could work to get rid of your other debt faster. So either way, you're fine. If you want to do 2500 on that mortgage, any extra money you have left over, put towards your start with your credit card, knock that out, then move on to the car loan, finish that out.

Right.

You'd still be okay either way. I think if you did the math, it'd probably be wouldn't be much difference.

Got it.

Awesome. Well, you're right.

It's a weird situation.

Yeah. The one comment I'd say I know you are busy in other callers I look you the investment question then becomes a thing when it does come time to invest, with all of my income being tax free, what's the best place to park those funds when I have no other obligations?

Well, when you're looking at just retirement, I would open up a Roth. Does the military have any benefits in that regard?

Not when they retire you.

Yeah. Up until then, yeah.

Outside of your traditional retirement plans, you've got the IRA. So I would open up a Roth IRA, max that out every year. That's going to put you $6,500. It'll go up every year. And you've got catch up contributions after 50. How old are you?

37.

Okay. So you got plenty of time, which is great. And having no payments at your age, I mean, you'll be debt free shortly.

And you're not working right, roman, this money is correct.

This comes unless I commit a felony and go to federal prison.

Let's avoid that.

Let's avoid that.

Well, Roman, thanks for your service and all you've done. Thank you.

Absolutely. And the other places you could invest is outside of retirement in a brokerage account. You could invest in index funds over there. You could also get into real estate if you want to save up and get yourself a paid for rental property or something like that. That's another great avenue to build wealth.

Yeah. Winston and I, we opened up just a mutual fund, just a gross stock mutual fund and put some extra savings in there. It's not know, you don't get the tax benefit like a Roth, but that's the place we just put some savings and if we ever need it, we're able to, without, know, be able to get it. But we just let it sit in there and have the growth too.

That's a good factor there. You will have your taxes on the gains. That's something to think about with short term gains, long term capital gains. But it's a great place to invest outside of retirement. It's nice having that bucket on top of retirement because you can't tap into the retirement piggy bank until 60.

That's right.

So this is a great way to save up for big purchases. Dave does this. He gets a big royalty check from a book or something and he'll put it in index funds in a brokerage account and just let it pile up until he wants to buy something.

Yep, that's right.

It's a good problem to have.

Yes. That's great, Roman.

But yeah, traditional baby steps for those wondering. He's like, I did this out of whack. We want you to be out of consumer debt first with a fully funded emergency fund of three to six months before you start saving up for a home purchase. So that is the correct order, because we find people that get into homes before they should with a pile of debt on the other side leads to a more stressful life. You become house poor and that house becomes a burden instead of a blessing. And that's not the American dream. That becomes the American nightmare real quick. This is the Ramsey show. You're listening to the Ramsey show. I'm George Camel, joined by Rachel Cruz. This hour. Good news for those of you who love a survey. The Ramsey Show annual listener survey is now live. And this really is one of the most helpful things for our team. All the personalities we gather, we look at the data, what you guys are saying, and it actually affects this show. And so please let us know what are your favorite parts of the show? What do you like? What do you not like?

What do you want to hear more about? What kind of topics? Whatever it is, we want to hear from you. And there are two ways to participate in this. If you're a texter, you can text the word survey survey to this number 33789. Survey to 33789. Or you can go to ramsaysolutions.com survey. If you're more of a web browser type, either way is fine. It'll get to us. And if you sign up today, you'll be entered to win a $500 gift card just for taking the survey and letting us know your thoughts. So go take that survey today. Survey to 33789 ramsaysolutions.com survey. The number to call if you want to jump in is triple 825-5225. Julie has chosen to do so, and she's in Austin, Texas. Julie, what's going on?

Hello. Thank you so much for having me. How are you?

We're doing great.

We're great. Glad you called.

Julie, Rachel already likes you. I can tell.

She's so nice.

She likes your attitude.

Do what?

Oh, gosh. I said I can relate to you because you're a mom like me.

Not fair. I can't be a mother. I'm kidding.

Oh, they're amazing. I have a primary question, and then I have a few other questions as well. But my primary is I sell real estate. And so I'm really good at making a bunch of money really fast, and I'm not so great at keeping that consistent. So the last three or four years of my career, I've been living on gross commission income and not net, and so I'm in trouble with the IRS. Oh, boy. I owe the IRS $150,000 on my home, and I'm wondering if I need to sell my home in order to take care of that. This last summer, we had a series of unfortunate events in our family, which has never happened before, and that was multiple car accidents at different times, which depleted our savings account, our HSA, and medical savings. And so we're really starting back at baseline for savings as well. And so I feel very vulnerable just even calling today and asking, Where do I even start? So, thankfully, our debt is relatively low, and I have $60,000 coming in for income the next three weeks. When these unfortunate events happened in our world, late July, early August, the nail in the wall for us was my real estate income.

Everything that was in escrow, which was about five transactions, exploded. They fell out of escrow for a variety of different reasons, and I didn't have any income coming in until just now, this month. So we were able to pay and cover all the bare minimums. We cut our budget in half, do all the half twos. I mean, we got down to bare bones. Who's we? Julie out of us for doing that, my husband and I.

Okay. What does he have?

Three teenagers? He makes 84.

Okay.

And I sell about 10 million a year, which brings in gross about 300. But again, it's not consistent, and I think that's I would say I'm more comfortable saying 8 million.

So we're talking anywhere between two and 300K is fair.

Correct.

For the last few years. Okay.

Has the IRS been in contact with you? What are they?

Um I don't know if this was legit or not, but I had a company help me get on a payment plan with the IRS, and I can't locate them anymore. I paid them 2000, $3,000 to get me on a payment plan. I'm so embarrassed.

No, it's okay. I feel.

When you're in a vulnerable state like that and you're desperate, you kind of just make decisions, and usually in hindsight, you look back and you're like, oh, wow. My desperation drove some of those unwise decisions.

Right.

But when you're in that pinch, you're like, what's? Anything I can do to help this situation? So I understand how that happens. Okay.

The little bit of debt that we have left, we've got $25,000 in credit card. Partially a lot of that was put on just so we could make it through these last few months. We've got one car loan at $6,000, and then student loan 15, and then that's it.

Okay. Well, the great thing is, julie, you guys make great money. I would move this IRS debt to the front. I would stay current on the student loans and the car and the credit cards, but I would not be paying extra on anything. I would pay minimum payments on all of those, and I would put as much as I could towards this IRS debt. The IRS debt is always kind of the red flag debt when we hear people, because they can garnish wages. I mean, it's insane, right? So we want them out of your life as soon as possible.

It gets a fast pass to the front of the line.

It does get a fast pass to.

The terrible analogy for rachel.

Thanks. I appreciate that, george, to lighten the mood. So what I would do, julie, honestly, because you're amazing. Like, you're an incredible at what you do. Obviously, the market isn't necessarily on your side right now. Like, it's been probably in the last three years, so you're probably feeling a little bit of that. But if I were you guys, your husband makes great money. I would just say, hey, you've already cut your lifestyle in half. What's the bare bones we could live on? Because if you guys could find a way to live on 70 right. That frees up 14,000 of his income, all of your income, and together, you guys could get this debt out within, I don't know, a year, 13 months. And if you hustle, julie, if you were like, all right, I am laser focused. If you guys called me and you were making 70 and that was it, then there may be some really big conversations we'd have to have. But I don't know. George, you chime in but you're going.

To make 150 grand in six months potentially, right?

Yeah. I really shifted after everything stopped. I expanded the market that I was in and just took anything that was coming in. And the fruit is here.

Good.

Yeah.

So that's the deal. Think about it this way. In six months you could have this IRS debt paid off. But here's the key. That money from your real estate doesn't even touch your life. It hits your bank account, it goes right to the IRS. That's it.

That's what you want me to do?

Yes.

Put that as primary.

Every single cent you make from real estate right now go to the IRS. In six months. The IRS debt is paid if you make 150 gross right now, we still have to worry about taxes for the future income you're making. But then we can knock out your other debt. You've got what, another 30. How much did you have total? 25. Six and 15. So you got 46 in consumer debt.

Car first. Yeah.

So just knock out smallest to largest balance from there. That's probably going to knocked out three months later.

Are you guys budgeting Julie at all, you and your husband?

Oh, yes. We have weekly budget meetings now. This is all new for us. Like the last couple of months.

Do you guys use every dollar our budgeting app?

I do because it's a daily going through our bank account. He's wired differently and likes the spreadsheet.

Okay, that's good. I just want to make sure yeah. That you guys have some kind of plan that you're doing because that's going to be helpful too and it's going to be uncomfortable. Julie, I mean, I know you already feel that with already cutting the lifestyle down, but you're a high producer. I mean, you're amazing of killing and doing so well with your work. So income wise, I'm not worried about you guys because you're bringing in great income.

A year from now you could be completely debt free with an emergency.

So I think the thing is, Julie, it's now up to Julie and your husband to look at yourselves. And I'm sure you have just to be like, okay, we're the like, we shouldn't be in this situation because we make great money. And so making sure our taxes are done correctly is very important. And then making sure we live within our lifestyle. And when you do that, it changes the game. You guys will be able to actually enjoy your money that you've worked really hard for and you shouldn't have to depend on credit cards to make ends meet anymore. You shouldn't have to take out a car loan for a car.

No more living levita loca. It's over. I'm sorry, but here's what you do need to do. Go get in touch with a Ramsey trusted tax pro@ramseysolutions.com. They can help you navigate this. You don't need to get on a payment plan with some sketchy company. They'll help you navigate this. But it's time. And from now on, quarterly estimated payments. That is how you avoid the IRS down your back and how you stay on top of this stuff. For anyone out there who's on that kind of commission type job, this is The Ramsey Show, folks.

Changing your family tree takes more than rice and beans and side hustles. It's also about transferring the big financial risks off your family by having the right kinds of coverage in place. That's why my team created the Coverage checkup quiz. It only takes about five minutes to find out what types of insurance you need and don't need to protect your finances. Make this quiz one of your regular checkups, starting right now@ramsaysolutions.com. Checkup. That's Ramsaysolutions.com checkup.

Welcome back to the Ramsay show. I'm George Campbell, joined by my good friend Rachel Cruz. It's a free call at triple 8825-5225. Dale is up next in Birmingham, Alabama. Dale, welcome to the show.

Hi, guys. I hope these are easy questions for you.

Me too, man. I can't take anything today.

Great.

What's going on?

I am 57 years old. My salary is 143, and I have the retirement bug. My wife will be 63 the end of this month and she works part time and makes between 15 and 18,000. We've met with a local Social Security advisor, and he is a fiduciary. But he made some suggestions that I wanted to run by you guys.

Okay.

The first, he thinks my wife should go ahead and apply for Social Security at 63 instead of waiting. He thinks that the Social Security plus her part time salary will keep her out of that 50% penalty. What do you guys think about that?

To have her take Social Security earlier at 63?

Yes. At 63.

What's she going to do with the money?

Save it.

So invest it because you guys don't need it to live?

No, we're completely debt free. The kids are grown and gone.

Awesome. What's your total nest egg?

Just a little over a million.

Awesome.

Good for you guys.

Yeah, that's great. I'm going to use that amazing income. You have to try to sock away as much as I can in these tax advantage retirement plans in the meantime. But my thoughts around Social Security rachel might have different thoughts, but I like taking it early. If you're going to invest it, because investing it, even though it's a smaller pile of money you get every month, investing that will generally cause you to be in a better financial position in the long run versus waiting and taking it later. And also it'd be nice to know if we knew our death day, that would really help us crunch the numbers accurately. But we don't we don't know when the good Lord is going to take us. So that's part of the equation here.

Well, part of me wants to know for planning, but part of me doesn't want to know.

Yeah, exactly, that's true.

So, yeah, it doesn't sound like they're giving crazy advice to go ahead and take Social Security at 63.

Yeah, if you're able to kind of have that principled approach, though, because, again, if you take it early, you're getting the smaller amount, and if you go just spend it, then it feels like, oh, my gosh, it could have been higher later. But if you invest it, then you're actually going to end up making more and it's in your hands, which is great. So, yeah, I'm with George on that one.

Okay, my next question is with my salary, I max out my 401K with catch up contributions.

Good.

I max out my HSA, I max out a Roth IRA.

Good.

And the financial advisor is wanting me to start taking some of that out using the rule of 55 so that I don't pay the excise tax, but to start putting that into annuities and just go ahead and take the tax hit now. But he's telling me that'll be better.

In the long run when you're running.

Out with the annuity. That part feels fishier to me. I'm not saying that they're giving you terrible advice, but I'm generally not a fan of annuities. What was his purpose in saying, hey, put this money here, take this money out. Let's put an annuity to give you future income? What's the benefit there?

Financially, he's pitching it as being better, having a tax advantage, and he's also threatening minimum requirements distributions later on out of our nest egg. A little over 800,000 of that is qualified money and a 401.

Okay. What kind of annuity was he talking about here? There's different types.

I do not recall.

There's fixed annuities, variable annuities, indexed annuities.

Annuity is not variable.

Okay. Yeah. I don't want to speak ill on this financial advisor, because they might be a great person, but I always wonder, why are they pushing me to this? What's their end game? Do they get a commission by getting me in an annuity versus me pitching into my 401K? Yeah, that's something to think about.

Yes.

In the annuity, there's a vested interest.

I'm sorry. I know that he gets paid for annuity. He told us the percentage.

Okay. And there's nothing wrong with getting paid to put you into certain products. But I just wonder, is that a piece of the puzzle?

Yeah. And honestly, Dale, I mean, like, with annuities, I mean, it's great because there's basically you can predict there's that confidence factor of what I'm going to get out. But also you can miss so much of that growth putting it somewhere else, too. So you guys are just in a really great position. And so I'm not keen on all the tax details stuff. I would sit down probably with like a Ramsey Smart tax. I would sit down with somebody and dive into those numbers because I don't want to steer you one way or the other on that. But I feel like the plan you guys are on because again, annuities, I feel like are more if you're the only time I would even consider annuity for me just from a mindset perspective is if I'm so fearful of the market, I don't know what's going to happen. And just knowing that there's predictable income that's going to be coming in and it just is. Okay? But you guys don't have any place to have that fear because you guys have done incredible. You make great money, you continue to invest. And so I wouldn't mess with Adele personally.

Okay.

But I would get a second opinion because again, and unless George, you can speak into it the deep detail of all the taxes, if there is an advantage there, I would get a second opinion and just making sure this guy isn't just selling you a product.

Well, you also have some Roth money as well, so you have to factor that in as far as you're not going to have RMDs there. And you can strategically start pulling from different buckets. Your Roth account, which is tax free, your 401K traditional. You'll pay taxes on that. You're outside of retirement money in a brokerage account, you can dip into that. And so there's a lot of ways to look at this, but I want to be leery about telling you one way or another to jump into this. But it's always a red flag when annuities are brought up and it's being pitched by someone, it's at least something to pause and really get a second opinion on this because if you didn't.

Do it, Dale, you guys are going to be in a great position. Just hear us say that you got.

No debt, you'll have a million plus. And every seven years, if the market returns are around 10%, that money would double. And so at 63, 64, you got 2 million. At 70, you got 3 million. And so as long as you're not withdrawing a crazy amount on these retirement accounts, you guys should be more than fine.

Okay? And again, that's the first time I've ever heard this annuity spend. Taking money from putting it into annuity. That was a red flag to me as well.

Yeah, it's good.

And my final question is if I am going to have minimum required distribution issues later on, should I cut my 401 back to just maximize the company benefit?

No, I wouldn't minimize investing because of future tax implication. I'm going to put as much as I can in those accounts and we'll deal with Uncle Sam later on and we can be strategic about that.

Okay.

Because there's certain things you can do where if you pull from the tax free account, you're not paying taxes on that. And then you can pull a little bit from the tax advantage account, and so you can start to minimize and work with a tax pro on how to, of course, legally do all of this to where you're not paying a whole bunch of taxes every single year.

Got. You keep working and don't worry about problems that might come up 30 years from now.

Yes, that's right. Exactly. Dale, I'm so proud of you, man. What a beautiful picture well done. Of just what life looks like on the baby steps.

You're what everyone wants to be.

Dale just calm, cool, collected. Dale with a million bucks, no payments, no mortgage payment.

We're good.

Maxing out every retirement account known to man. You're going to be okay. Making 143,000. That's a nice story. Rachel usually when people talk to us about these situations in retirement and they're in their late 50s, it's sad stories where they haven't done anything hard.

That's right.

And so it's a great reminder to start early and early doesn't mean when you're 20, if you're 50, start today. That's the next best time to invest. And so don't get yourself down and go, I missed the boat. There's no point now of investing in a 401. And the other thing is, a lot of people are spooked by the market and the economy, and I'm heading into retirement. Rachel I don't want to invest, but we've seen long term, the American economy is going to be okay.

Yes. We went and looked and ran all the numbers. Even when you go back out from when inflation was like really high in the events, like September 11 or the recession in seven, eight. And so you can even start to map all of that and you watch the growth still come back.

Still come back a year or two.

Later, we bounce back. Yeah, there's still downtimes. But it's the long term play, especially for everyone listening, that's 50 and below. It's a long term play. Long term play.

Do not pull your money out of the market, please. I want you to retire with dignity. And that means playing the long game. Think long term. That's the key to building wealth. This is the Ramsey Show,

live from the headquarters of Ramsey Solutions. It's The Ramsey Show where we help people build wealth, do work that they love and create amazing relationships. I'm George Camel, joined by Rachel Cruz. This hour. And this is your show. We're here, but it's really about you. So call us triple 8825-5225. And if you're wondering, is that the same George and Rachel from Smart Money Happy Hour? You would be correct.

You would be correct.

We have a great time filming and creating that show just downstairs in one of our studios. So check that out as well, if you like what you hear today. Jeff is in San Bernardino, California. Jeff, welcome to the show.

How you doing? Good. So I had a quick question about I'm finally taking your advice. I sat down with my wife, and we're paying everything off now.

Yay. Good job, Jeff. Congratulations.

Except we're, like, way too much into that right now. But right now, my credit card I should be having paid off in the next one year. Right. So we had bought a truck, but unfortunately, that thing's a limit, and we're going through that whole thing, and I'm hoping to get rid of that by the end of next year. And then I had to pull out of my retirement account money to buy my wife a new car because the other one is just not safe to drive. So we're now paying the credit card first because that's the highest payment or the highest interest rate.

What's the balance?

That thing is 30,000.

Okay. And what other debt do you have?

I have the truck, which is 24,000, and that's the lemon.

Okay.

And then we have my wife's car, which is at 43,000.

Goodness gracious.

Wait, $43,000 for your wife's car? But you took money out of your 401K, you said.

Yeah, so we bought it new. Only because I know I'm going to get rid of the truck, and I should be getting the money back from that truck. Whatever money I get from you just.

Said it's a lemon. How are you going to get the money back?

So the truck I bought my wife, the truck is still sitting in my driveway.

How much can you sell the truck for?

Well, I got a lawyer already, and they're going to try to give me pretty much what I paid for it.

There's a lot of try and maybe and you sound very confident this is all just going to happen.

I'm hoping.

What if the truck is worth nothing because it's a lemon?

Well, it's brand new, but it only has, like, 30,000 miles, and it's still under warranty.

Okay.

It's only a year and a half old.

Okay.

So it's still under warranty, and I fixed the transmission, like, four times already. And there's a whole bunch of great.

Lesson for those of you out there who are going, I'm going to get a new car because it's so reliable. Not always. Look at our friend jeff so you got a credit card and two car. What else?

That's it.

Okay.

And then the house.

How much do you guys make a year, Jeff?

After taxes, we take home about 150. And if I do overtime, we could get up to probably maybe 180 to 200.

Okay. And why is it going to take you a year to pay off 30,000 in credit card debt when you net 150?

Pretty much because the two car payments are killing me.

What could you sell your wife's car, Jeff? $43,000. How much could you sell it for?

Probably pretty close to the same. It was also brand new. It's a Honda Accord, but we were planning on. Keeping that thing till it completely dies.

Well, that would be a plan to.

Pay off your credit card debt. We got to get rid of stuff.

Okay.

You just told me the car payment is killing you. So this plan of using this car.

Forever, just the two car payments, like, when I only had the car payment for the truck, I was okay. But now I'm paying for the truck and paying for her car. And then my car is eleven years old and it has 300,000 miles on it and I'm afraid it may not last another two years. Right. But I'm going to drive it until it's going to be too expensive to fix it.

Yeah.

Okay. What's your question today?

So pretty much when I get the credit card paid off and I'm then paying down my wife's car, I'm afraid my car is not going to make it right. And I have a decent interest payment, which is 5% for her car. And if I have to end up getting another car for me, should I put some money aside while I'm paying off my wife's car in case I do have to buy a new car and it's a higher interest because interest rates are going crazy high right now. So should I then save money and buy another car cash, and just not put as much money towards my wife's.

Car and it's going to be a used car?

Yes.

No more new cars, no more loans. No more even thinking about interest.

Not even if I drive it to no. Yeah, because that car payment that you're paying, you're paying interest on top of that versus if you invested that car payment, you would have, what was it, like $2.2 million or something? I mean, millions of dollars. So it's mathematically, Jeff. It's a depreciating asset. It's not worth it.

No.

Always cash for cars. Always cars.

I am rooting for Jeff more than anything. But what I'm hearing a lot of right now, if I was your friend, they'd be like, jeff, you have justified your way into every financial mistake. Everything is well, here's what I was going to do. And what if I just drove it? I think we need to just cut all that. Let's start from scratch and go, hey, clean slate. We need to get rid of these cars.

Yeah.

And the good thing is, Jeff, you guys, because you will be working overtime. So I'm going to just have a little dream session. Let's say you're making 200,000. You're bringing home 200, I think is what I heard. You right.

You said you could bring home 180.

That's like if I never see the kids, though, and all that.

Hold on, that feels also aggressive.

Let's just say 180 for fun. Okay, so you already have a car. You have a truck sitting in the driveway. That's a lemon. You think you can sell it for 24? You have a loan for 24. You think you'll be able to just go be even. Right.

So I guess the manufacturer already said they would give us I think it was 40,000. My lawyer is saying like 70,000. So it was $55,000.

So you're telling me you're going to get cut a check for potentially $70,000.

My guess is probably $55. I'm guessing it's going to be but.

This could be a year from now. We don't know when this is going to actually happen.

Yeah, that's true.

I don't want to bank on that. Let's call that gravy money later on down the line. But right now, don't make all your plans based on waiting on this check.

Yeah. And I'm not. That's why I'm still just having it sit in the driveway and just doing the payments.

But we can't sell it until it's.

Fixed until I figure out if the company is going to buy it back, which it sounds like they're going to, but it's just but in the meantime.

You'Re making a payment on a car sitting in the driveway.

Yeah, exactly.

That scares.

Can like I said, we can kind of afford it, but it's.

Just jeff, you know what that was? That was another justification. We need a little ding every time.

You do one of mean and I wouldn't sit around waiting on them to do something if nothing has happened by January, I'm on my own. I'm selling the truck. I don't care what the I can't be paying on something that is just sitting there. So no, I would be out on that. I would cut lifestyle down, Jeff. I would cut up those credit cards and you guys attack that credit card debt. But you make great income, work extra for a year of your life, go crazy. And you guys can have this cleaned up.

Hey, Jeff, hang on the line. We're going to send you financial Peace University. Since you're new to this stuff, it's going to lay it all out beautifully so that you can get on a plan, ditch debt and build wealth.

Here's the thing about investing advice. You can find it just about anywhere. But that doesn't mean it'll always help you with your personal goals. Here's another option. Check in with a SmartVestor pro. These financial advisors can review your plan or help create one that's personalized to you. To find a SmartVestor pro in your area, go to ramseysolutions.com. Slash SmartVestor. Go to ramseysolutions.com. Slash SmartVestor.

Ramseysolutions is a paid non client promoter of participating pros. Learn more@ramseysolutions.com slash SmartVestor. This is the Ramsey show. I'm George Camel, joined by Rachel Cruz. Our question of the day is sponsored by Neighborly, your hub for home services. With the Neighborly app, you have fast, easy access to any home service you need from experts you can trust near you. Download the Neighborly app today to find and schedule service with any of Neighborly's locally owned and operated service providers.

All right, today's question is a good one. From Sam in Utah. My wife wants to buy a one $500 stroller for our baby to be born next year. I think it's unreasonable and stupid to spend that much money that spend so much money on it. We are debt free, including the house, with a household income of $300,000. She makes about half of our income and she thinks she has a right to spend $1,500 on a baby after four years of infertility treatments. Am I off base?

Whoa. That was a loaded question, rachel okay.

So does she have the right to spend like, that language? Let's remove that just for the fun of this.

Even if she was a stay at home spouse and made $0, I don't like this language. Well, she has no right because she doesn't make this or she makes this.

Yeah.

It's not about just weird.

Yeah. She has a right because she's part of the partnership of marriage that you guys are in. So she has a right to voice her opinion and all of that right. Just like he would.

Yeah.

You guys are debt free, including the house, making $300,000. I'm saying yes. I'm saying yes.

And let's be clear why, rachel because this is an interesting conversation. It goes beyond strollers. This is why I get mad at.

Me for saying that.

Yeah.

When people say, I think it's stupid and unreasonable to spend that much money on a blank, on a car, on a house. And what we always go back to is, are you doing it with cash and are you doing it for the right reasons or are you doing it with debt to impress people?

Right.

And this is not one of those situations. They've followed the baby steps. They make $300,000.

Now.

She probably looks at him and goes, you're going to buy a circular saw from Lowe's for one $200? That's stupid and unreasonable. And he's going, well, honey, instead of paying for this project or renting it and she's going, I'm going to be walking around town with the baby. I want a nice stroller to do that.

Yes, I know. And it is out of all the baby equipment, your car seat, stroller, there's a couple of these things that they get the wear and tear. You use them a lot. So if you have the money to get a nice one that you love, get the nice one. And, George, right in front of me, I happen to see something.

This is a special treat. We did not plan this.

This was not planned.

My wife and my newborn baby are in the lobby right now and we have a very expensive stroller on display that we maybe had a minimal fight over. What do you mean this wasn't planned? I picked this for stay because you were on and just had a baby. It was totally planned. Yeah, but I didn't know my wife.

Was going to visit with the stroller. She's never watched me do cherry on top. Are we able to get a shot?

Yeah, I think we're going to try to get a shot.

Deanna is holding Mia. Will she be able to be in.

The she's on our team. There's my wife, Whitney in the white. And then Deanna is in the deanna's holding the baby.

Holding.

The baby holding Mia. And let's look at the stroller.

Price is right.

We're showing off the stroller in there. Go. Can we turn the can't?

Yeah.

There we go. Okay.

Wait, we didn't see it. Do it again. One more time.

There we go.

One more time.

There's the stroller.

There it is.

This is an up a baby Vista V two stroller that Rachel and I talked about. And I had qualms with this.

Rachel.

Yes, you did.

And we used gifts from family money and all kind and part of our own money to buy this very expensive stroller. It was not $1,500, but it's an expensive stroller. Yeah, but we've also worked really hard and we've followed the baby steps. We don't have any debt and we budgeted for this thing. And let me tell you, when we're walking that baby around the neighborhood, whitney is like, I feel like this is the Rolls Royce of strollers. Like, she enjoys walking. It's so smooth and it's worth it. And it's worth it as a new mom who's got enough going on. Get the stroller, guys.

Yeah.

The guys don't understand. And so I'm trying to grapple with it.

If you have credit card debt and student loans to pay and I mean, you could fill in the blank, right. Lots of other different situations. It probably wouldn't be wise for you to do that. Your money would be better off put towards other things like debt and all that. But being debt free, having the cash to do it, having a great income, yes, it's fine. It's fine.

It's not like it's an unreasonable portion of their world. If they were going to buy a $300,000 car and they made $300,000, I'd say let's pump the brakes. Literally.

We need to think literally and up. A baby has a great braking system, doesn't it?

There you go. Hashtag not sponsored, but it is known as like, the bougie stroller.

It's a great stroller. And we had one and we have all three kids now because it has the adjustable you put the toddler seat, the rumble seat in the front, and then you get the little kick down thing for the little one. All of it. That thing went with us for six plus years.

Yeah.

And it was great.

There you go.

So there you go. Because, listen, y'all, we've talked so much on this show about sacrificing your lifestyle to get out of debt, because that's normally what people call in for that they're deeply in debt and they're like, we want to get out. And it requires sacrifice. So we're the people that are always like, don't go out to eat, don't go shopping. You've got to pay this debt off. That's the show. And when we get a question like this, we celebrate, especially when Rachel's on you can do it. This is when you can spend. You live like no one else, so later you can live and give like no one else. And those of you on Baby steps 4567, enjoy your money too. At that point, especially, you all on baby step seven. Still, people are like, oh, I still feel like I have the rice and beans mentality. It seems weird to spend, and it's hard for me to spend all of that. Enjoy your money. When you've worked that hard to get to that place, you're free from that. Like, you can enjoy it. So you want to be always giving, always saving, and always spending.

You lose this one, buddy.

You lose.

We have I don't have a ton of empathy here.

We're on your way.

But to be fair, I was Sam at the beginning when we were starting to add things to the registry and.

It was getting crazy.

Yeah. And again, I don't know what strollers cost these days.

Yeah, and you can get it cheap. And those of you that are in debt and you're having a baby, you can get fine strollers that are way less expensive and they're going to be okay.

And you know what, Sam? If you want to split the difference, go to Facebook Marketplace and get a used one for $800 instead of 1500 if that's the compromise that you guys want to make. But whatever it is, you have to agree on it as a couple. That's important.

That's right.

All right, let's move on to the phones. Corey is in Wichita, Kansas. Corey, welcome to the show.

Hey, Rachel. Hey, George.

Hey.

So I got a question for you. I've got 30,000 in a CD. I'm saving that for my three year old daughter, her future. Would it be smart to take it out right now and put it towards my house and get it paid off.

In a year and a half, or.

Should I just save that money?

What happens if you don't touch that money and you just pay off the house with future income? How much longer would it take?

Another half a year.

Okay, so we're arguing about six months here at the end of the day.

Yeah.

And is this all the money you have saved for her college?

Yes.

Okay. No 529, no ESAs, anything like that?

Not yet. I just recently started listening to you guys and we've got everything paid off about the house, and I'm just not sure I would like to be just completely debt free.

Yeah, I think, Corey, you can do both, like George said. Yeah. Even just say you took this money, paid off the house, then that frees up a ton of income for you to go and open up another savings account or a 529 plan and invest and she's going to be fine. She's three years old. If she was 18, this would be another discussion. But there's plenty of time for you to save or on the flip side, too, Corey, if you didn't touch it and you paid off the house in six months longer, great. You know what I mean? It's kind of either way, you're going to be fine. So I almost would be tempted just to pay off the house, honestly.

I know. I have an idea that could split the difference. What if you took when does the CD mature? We can take it out without any interest. Penalties.

March 2024.

Okay, let's say in March, which one reason why I don't love CDs. But in March of 2024, what if you took five or ten grand and put that into a 529 plan and then used 20 grand towards the house?

Okay.

And here's what that does.

Not bad idea.

Then you're invested in the stock market and so that $10,000 that you put in there could grow to 60 or 70 by the time she's 18. But also you're feeling a little bit of progress on this house and you'll pay it off in a year and seven months or eight months. And so I think it's splitting hairs, but when we look at the baby steps four, five, six are you already investing 15% of your own for retirement?

So that's where I get a little confused. I'm doing 6%. My wife's doing 8%. So we're at 14 right now. Is going to do another percent?

No, because when you double the people, you need double the money. So you both need to do 15% of each of your incomes to get to 15% of household income. I would focus on that first. Get your own mask on now then, let's put a little bit away for college. Each year might be $1,000, $2,000. Any money beyond that, let's start throwing at the house and that'll knock you out of this analysis. Paralysis. Thanks so much for the call, man.

Doing great.

Corey is the Ramsay show.

Are you a small business owner who feels stuck in the daily grind of running your business? Well, you're not alone. We've helped thousands of business owners just like you get unstuck with learnings from the entree leadership stages of business. Our free assessment will tell you which stage your business is in today and what you can do this week to get out of the daily grind. So don't wait. Go to ramseysolutions.com slash BIZQUIZ to take our free stages of business assessment today.

Welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz this hour open phones at triple 8825-5225. Crystal joins us up next in Hartford, Connecticut. Crystal, what's going on?

Yes, hello. Hey, how are you guys?

So good. How can we help you today?

Well, I've had it moment and I am writing everything down, figuring out where to go from here. My biggest concern is with everything that I've figured out, it's going to take me more than three years to clean up my consumer debt.

Okay.

And I'm just worried, being 46 years old and having no retirement up to this point, pausing my 401 with my company that I'm at currently. Okay, what's in your only have about $4,000.

Okay.

And it's just been a series of really bad financial decisions with other 401 that I had. Like, I've changed careers a couple of times, and I've just cashed them out oh, no. And used them for everyday expenses, living expenses. As I was transitioning into these new careers, like, I've made two major career changes, and that's why I'm a little nervous on pausing the 401.

Well, here's some good news. If you pause, you can't rob a cookie jar that has no cookies in it.

Right.

So there's one behavior change, which I think is what? The reason you're calling in today is because you're like, listen, I've been living like this for years, maybe decades, and it's time. And so that means you're going to have to do some radical things that make you uncomfortable just for a season to get this debt cleaned up. So how much debt do you have?

Well, the big one is student loans that I've not even using the education that I got.

That's the American story.

Yeah. I have $66,000 in student loans that I've been paying since 2000 on oh.

My gosh, 23 years.

Yeah, exactly.

I'm guessing the balance has grown.

I'm sure the original balance has grown from when I've gotten out. And I think I applied for the income based repayment plan in maybe 2003 or four, I want to say, and it hasn't made a dent. I don't believe their lies anymore that it's going to be forgiven after you make certain number of qualified payments. It's just a big starting today, you're.

Going to believe in crystal instead of some government plan. What's your other debt?

I did a big old debt consolidation personal loan of $36,000. But I didn't change my spending habits after I did that.

That's the problem with consolidation.

Yeah, exactly.

It makes you feel like you did.

Something, and then you keep living the behavior.

We're up over 100,000 now in debt. What else do you have?

I have a car that's worth 17, but I don't make the payments on it. It's just in my name. Who makes the payment? My brother.

And he's okay with this? Is he helping you out?

No, he's driving it. He just has way worse credit than me.

So you have a car loan? I have a car loan, yeah. So how much is that for?

$16,000.

Okay.

And about 3000 in credit cards. Not really much in credit cards currently because I whacked out about on my debt. Snowball about $3,000 already.

Good for you. Great.

And what's your income?

So I looked it back last year and it's like $68,000 as a truck driver take home take home pay.

Okay, so you probably made closer to 90 gross.

Yeah, probably a little bit under.

Okay.

Because we get a tax credit because we're basically living in a moving house, so we're allowed to take a per diem credit for every day we're out on the road.

Okay, is this all the debt? Is there anything we didn't cover?

No. If you can hear my dog, I cash flow vet appointments. Every time I have a vet appointment, I stop and I cash flow that.

Now, Crystal, we are in a pickle here.

Yeah.

We make sixty eight K and we have what, $125,000 in consumer debt.

Yes. And that's what my concern was, because from what I can see, where I've gotten my extra payments is I've got it to where I'm contributing roughly between 700 extra a month to the debt and 1000 extra a month.

And is this while you pause investing or have you not done that yet?

I have not paused my investing.

How much would be in your paycheck extra if you did that? Do you know?

Anywhere from on a bad week, about $90 to upwards of $150 a week that's per paycheck contribute anything per week.

Okay, so we're talking hundreds of extra dollars you could throw at this debt.

Yeah.

So crystal, I think here's the thing. Number one, you still have time. You're not 65 years old. There's catch up contributions you can do later down the road. But what I would say to you right now is I would rather not have consumer debt be debt free and then catching up with my retirement than having money in a can't touch right now. But I'm drowning in $125,000 in debt. And so what you have to realize, Crystal, and you have realized because I've heard this on the call, which I think is so great, know, you have to be able to say, okay, what I've been doing isn't working. So now I have to try a completely new plan. So the plan that we're going to talk about has helped literally millions of people do this. And it's a plan with specific steps in a specific order for a specific reason. Because being able to wipe out this consumer debt, taking everything possible. Right. Because I mean, you're scattered all over the place with some stuff and so bringing everything in, actually getting traction for the first time in your life, Crystal, like you're going to start to feel it.

You're going to actually start to feel you winning. Not through debt consolidation, not through a loan that's sitting there, you're wondering about repayment plans. I mean, none of that. Crystal is going to be doing it and you getting motivated to do that.

And then Crystal heard you talk about the different classrooms that you grew up in and stuff like that. And my family has always been a paycheck to paycheck family yeah, absolutely. And I just don't think I've ever learned how to break that's right. The habits of this I know George has talked about don'tie your money up in CDs. Well, as I'm going along, I'm having CDs that are maturing and I'm just immediately cashing them out and paying good for you as well. Yeah.

How much do you have saved? How much are in that? How much do you have saved?

I just did one for $1,000. So I cashed it out. I put that good for you towards the most recent vet bill, which the cash flow thing. So the next one, there's three of them that are going to be maturing at the end of November. That'll be $3,000.

Okay, so here's the deal, Crystal. Quit playing with these CDs. It's not helping you get out of debt. So here's what you need to do. Put $1,000 aside in a savings account and don't play with these accounts anymore. The rest of the money needs to go towards knocking out this debt. And you said three years, which tells me you can throw $40,000 a year at your consumer debt. You'll knock out all 125 in three years, right?

Yeah, that's how I got it planned out. I should be debt free in three years.

That's a great goal. Anything you can do to get your income up and your expenses down is going to speed up that process. So my goal for you would be, how do we get even more aggressive and do this in two years? Two and a half years.

And hold on the line, Crystal, because I'm going to set you up with Financial Peace University, which is our nine week course. Nine lesson course, which will help you get all the basics and every dollar premium. I want you to do that, too. And we have a webinar, actually, if you guys go to everydollar.com slash budgeting to check out webinars that we're doing to walk through the budgeting process. So, Crystal, hang on the line. I'll get you those two things to start this because you're on the cusp of change and it's going to be uncomfortable. But, man, Crystal, in four years is going to be a completely different person financially.

You this is the Ramsay Show, our scripture of the day. Jeremiah 17 seven. But blessed is the one who trusts in the Lord, whose confidence is in him. Corey Ten Boom said, hold everything in your hands lightly, otherwise it hurts when God prize your fingers.

Hmm. That's a good one, corey Timbin. She's incredible. Is it the hiding place? Have you read that?

Oh, back in the great book.

Real or true story.

Yeah.

Corey Timpin love that quote, though.

So good.

Yeah. You should steal that one, Rachel. Not steal, but give with credit. I should whenever you're talking about generosity.

Yep.

It's a great way to look at it. All right, let's get to the phones. Julie is in Vancouver, British Columbia, all the way. Let's go. Julie, what's going on?

Hi there.

I've had a bit of a rough go lately, and I'm trying to look for some advice on the next steps forward.

Okay. What's been going on?

I have two small kids, and unexpectedly, my husband decided to exit the situation back in July.

Oh, my gosh, Julie. I'm so sorry.

That's okay. Things happen. Anyways, he left the country, so I won't be getting any child support. And I did manage. Yeah. Very unexpected. Not who I knew before. It was quick, and I was able to get the condo that we have put under neem on parents, so I have that. But I'm just facing a challenge in terms of what to decide to do, because the cost of it, to me, I'm pretty good. Budgeting far exceed what I should be paying and what I can pay. But at the same time, rents aren't a lot different in my region.

Yeah.

And so I'm trying to get some advice on what I should do here.

Do you have family in the area?

No.

Okay. Are you working?

Yeah.

Okay. And how much are you bringing in a month?

About $4,600.

Okay. How much is the rent right now?

The mortgage is 2550 a month and an Ho of 420.

Oh, my goodness.

Wow.

Yeah.

That's two thirds of your money is just disappearing.

In the area. Julie, have you looked at other options? Have you looked around to see what else is out there?

Certainly I've looked at rents, and if you're real lucky, you might get a very rough looking basement apartment for about 2000, 202,400. And that's something I don't really love to put my kids in.

Yeah.

The reason I wanted to buy initially was because there's a lot of renovations that happen around here where the landlords, they can find a reason to evict people to up the rent.

Okay.

So that happens a lot. Especially too.

What do you do for a job, Julie? What are you doing?

I'm a program coordinator, and I work for a really great spot right now, and that's part of why I stay here. They allow me a lot of flexibility when I'm with two small kids. I didn't get my younger one into daycare until she was two because I worked with her the first year. Right now, I got to be able to pick up my kids from school. I got to have them home if they're sick. And so the level of flexibility I have to do that is sure worth of weight and gold. Really?

Yeah. No, absolutely.

Are the prospects of getting this guy legally to pay anything, is that out of the picture now?

Yeah, he's in a place that he.

Can'T get him interesting. Okay.

His country doesn't have any treaties or anything like that, really?

But I just still wonder if there are laws in Canada that would require him to pay.

Yeah, I can take it. Through to get it put against if he ever came back, but they can't.

Actually obtain it in any oh, I'm so know. You know, Canadian housing is crazy, both rent and mortgages and home buying. But I do wonder how long you're going to be able to sustain paying this mortgage payment if you continue making the same amount of income.

Yeah, that's what I'm faced with.

How much equity do you have? If you sold this place, what would you walk away with?

Maybe six hundred K, and I owe 430.

Okay, so you're saying you would sell it for 600K?

Yeah.

Okay, so you'd have about 200,000 in equity.

Yeah.

Just under 150 after fees and all that.

Yeah, I think month to month. Julie because all of this is so new, there's so much stress that you're want. I would need my income freed up to have a level of peace, and that's not going to happen in the current situation because it's more than half your paycheck. I mean, almost three, four, so julie I would sell it. I would sell it. And unless you can see your income going up, that's the only other factor that would change. But I would sell it. I would rent somewhere for a year. You have that equity. And just to kind of get your bearings again. But there's also that hard reality, Julie, too, of the job you have, which has great flexibility, which is such a gift, but what you make and the city you live in we talk to people in La. Or San Francisco area, these places that are so high in cost of living and what they make, you can't make the math work. And so I don't want you to make that decision right now, because that's a bigger decision of changing jobs or moving or that would have to be a decision that you eventually will have to face.

But I don't want you to face that right now in the middle of everything you've just walked through. But I think one decision you could make that's going to just free you up some for me is selling.

Yeah. Especially because your life circumstances have drastically changed. And now that you're a single income household, a single mom, your needs have changed and your income's changed. And we have to know, as John Deloney would say, choose reality. And the reality is life is different. This is really hard. And not having this mortgage over your head will at least free you up and keep you more nimble as you take that next step.

Man I've talked to you only for like, three minutes, julie and my anger towards him, I can't even imagine. I can't even imagine how you're feeling. But do you have good community around you? Do you have a support system? Friends or family?

Not a big one locally, no, but.

I'm where's your family?

I work in mental health, thankfully.

Okay. Yeah.

I'm keeping my head on pretty straight. It's more just that reality of my kids and what they'll have to in terms of the life experience is really unfortunate.

Sure. Yeah. And so, yeah, you're in mental health, so, you know, but I'm like I just even from that side of it.

I wish I could snap my fingers and make this all fixed.

I know, but the healing process and it's a journey and julie, you're courageous and you can do this. Your kids are so lucky to have you. You're a really good.

You know, just keep pulling it. Think I think what really holds me is I'm pretty good at logic and the numbers don't lie. It's just that level of insecurity. That's the reason I want to buy in the first place, for that safety that no one can kick me out unless it'll pay. Right. But that maybe is the reality too, right?

Yeah. And that makes so much sense. I mean, grasping for anything of control or predictability right now feels so safe and so great, I would imagine. Right. So I understand that even saying to sell it and finding somewhere cheaper, that kind of uproots even more of that chaotic feeling. And so I do think once you get in a rhythm of somewhere new and actually having some margin financially to go and buy it, I think eventually you will buy another place. Truly.

Right.

Like, this isn't just a you'll never buy something else, but it's going to be within reason and it's going to be a blessing to you and it's.

Not going to cheapest. In my city. 1979. A little condo.

Do you have any debt, Julie, other than that mortgage?

No.

And you have an emergency fund?

Small one.

Okay.

Working on it.

That's going to also give you some security and peace as you step into that next phase. But man, we are heartbroken for you. Julie and like Rachel said, you're a warrior and we know you're going to come out of this on the other side, but right now you're in the real crappy part where you're left to pick up the pieces. That puts this hour of The Ramsey Show in the books. My thanks to my co host Rachel Cruz, all the folks in the booth keeping the show afloat, and you, America. Until next time, spend wisely, save intentionally and give generously.

Hey, guys, I'm Rachel.

And I'm George.

And you've probably heard our voices before on The Ramsey Show.

And do we have a surprise for you.

Yep, we have our very own show, smart Money Happy Hour, where we talk about pop culture, current events and of course, money. George it's a great show. And what else do we talk about?

So much, rachel not enough and yet too much. We talk about guilt, tipping, because tipping is out of control and I won't stand for it anymore, which is why I'm sitting.

I'm glad you're taking such a stand.

And we also talk about something else. I'm passionate about Disney adults. Why is it a thing?

Listen, some adults still find the magic.

Sure. We also talk about toxic money traits and girl math. And if you don't know what those are, you have to listen to the podcast.

Yeah, there's a lot there. You guys, it's pretty fun.

We keep you relevant, is what I'm trying to say.

We help you out.

So pull up a chair to the happy hour you wish your friends were having. We promise you won't regret it. And if you don't have friends, we'll be your friends.

We will. We're great friends. So make sure to check it out on Apple, Spotify, YouTube or the Ramsey Network app.